[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) [Third Quarter 2025 Highlights](index=1&type=section&id=Third%20Quarter%202025%20Highlights) RBB Bancorp's Q3 2025 net income rose **8.7%** to **$10.1 million**, driven by core earnings, lower credit costs, and improved net interest margin, with better credit quality Third Quarter 2025 Highlights | Metric | Q3 2025 | Q2 2025 | Change (QoQ) | | :----------------------------------- | :------ | :------ | :----------- | | Net Income | $10.1 million | $9.3 million | +8.7% | | Diluted EPS | $0.59 | $0.52 | +$0.07 | | Return on Average Assets | 0.97% | 0.93% | +0.04 percentage points | | Net Interest Margin | 2.98% | 2.92% | +0.06 percentage points | | Loans Held for Investment Growth | $67.9 million | - | 8.3% annualized | | Common Stock Repurchases | $12.5 million | - | - | | Classified & Criticized Loans | $126.2 million | $182.3 million | -$56.1 million (-30.8%) | | Nonperforming Assets | $54.3 million | $61.0 million | -$6.7 million (-11.0%) | | Book Value Per Share | $30.18 | $29.25 | +$0.93 | | Tangible Book Value Per Share | $25.89 | $25.11 | +$0.78 | - **Net income** for Q3 2025 was positively impacted by **higher net interest income**, **lower credit costs**, and a **lower effective tax rate**, compared to Q2 2025 which included a **$5.2 million** pre-tax Employee Retention Credit (ERC) income offset by **$1.2 million** in associated professional costs[3](index=3&type=chunk) - The President and CEO, Johnny Lee, attributed the **increase in net income** to **core earnings growth** and **reduced credit costs**, highlighting continued **loan growth's** support for increased **asset yields** and **net interest income**, and progress in addressing **non-performing and criticized loans**[4](index=4&type=chunk) [Financial Performance Analysis](index=2&type=section&id=Financial%20Performance%20Analysis) [Net Interest Income and Net Interest Margin](index=2&type=section&id=Net%20Interest%20Income%20and%20Net%20Interest%20Margin) Net interest income increased from higher loan interest, despite rising deposit expenses, with net interest margin expanding due to higher asset yields and lower cost of funds Net Interest Income and Net Interest Margin | Metric | Q3 2025 | Q2 2025 | Change (QoQ) | | :--------------------------------- | :------ | :------ | :----------- | | Net Interest Income | $29.3 million | $27.3 million | +$1.9 million | | Interest Income | +$3.2 million | - | - | | Interest Expense | +$1.2 million | - | - | | Net Interest Margin (NIM) | 2.98% | 2.92% | +0.06 percentage points | | Yield on Average Interest-Earning Assets | 5.85% | 5.79% | +0.06 percentage points | | Yield on Average Loans | 6.12% | 6.03% | +0.09 percentage points | | Average Cost of Funds | 3.12% | 3.14% | -0.02 percentage points | | Average Cost of Interest-Bearing Deposits | 3.63% | 3.66% | -0.03 percentage points | - The increase in interest income was mainly due to a **$2.4 million increase** in interest and fees on loans, while the increase in interest expense was primarily from a **$1.0 million increase** in interest on deposits[6](index=6&type=chunk) - The **NIM expansion** was supported by 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**[7](index=7&type=chunk) [Provision for Credit Losses](index=2&type=section&id=Provision%20for%20Credit%20Losses) Provision for credit losses decreased in Q3 2025 from net loan growth and lower unfunded commitment provisions, despite increased net charge-offs from a commercial construction loan Provision for Credit Losses | Metric | Q3 2025 | Q2 2025 | Change (QoQ) | | :--------------------------------- | :------ | :------ | :----------- | | Provision for Credit Losses | $625 thousand | $2.4 million | -$1.8 million | | Provision for Loan Loss | $750 thousand | - | - | | Decrease in Provision for Unfunded Commitments | $125 thousand | - | - | | Net Charge-offs | $6.9 million | - | - | | Net Charge-offs (annualized % of avg. loans) | 0.84% | 0.42% | +0.42 percentage points | - The Q3 2025 **Provision for credit losses** was mainly due to **net loan growth ($750 thousand)** and a **decrease in provision for unfunded commitments ($125 thousand)**[9](index=9&type=chunk) - **Net charge-offs** of **$6.9 million** in Q3 were almost entirely related to a **commercial construction loan**, for which **$6.6 million** had been reserved in prior periods[9](index=9&type=chunk) [Noninterest Income](index=2&type=section&id=Noninterest%20Income) Noninterest income decreased in Q3 2025, primarily due to the absence of prior quarter's ERC funds, with other income seeing a slight rise from equity investments Noninterest Income | Metric | Q3 2025 | Q2 2025 | Change (QoQ) | | :----------------- | :------ | :------ | :----------- | | Noninterest Income | $3.3 million | $8.5 million | -$5.2 million | | ERC Funds (Q2 2025) | $0 | $5.2 million | -$5.2 million | | Other Income Increase | $148 thousand | - | - | - The **$5.2 million decrease** in **noninterest income** was largely attributable to the **$5.2 million** in **ERC funds** received in Q2 2025, with no such amounts recognized in Q3 2025[10](index=10&type=chunk) [Noninterest Expense](index=2&type=section&id=Noninterest%20Expense) Noninterest expense decreased in Q3 2025, driven by lower legal and professional expenses (including no ERC advisory costs) and reduced salaries and employee benefits Noninterest Expense | Metric | Q3 2025 | Q2 2025 | Change (QoQ) | | :-------------------------- | :------ | :------ | :----------- | | Noninterest Expense | $18.7 million | $20.5 million | -$1.8 million | | Legal & Professional Expenses | -$1.5 million | - | - | | ERC Advisory Costs (Q2 2025) | $0 | $1.2 million | -$1.2 million | | Salaries & Employee Benefits | -$480 thousand | - | - | | Efficiency Ratio | 57.36% | 57.22% | +0.14 percentage points | - The decrease in **noninterest expense** was primarily due to a **$1.5 million reduction** in **legal and professional expenses**, which included **$1.2 million** of **ERC advisory costs** in Q2 2025[11](index=11&type=chunk) [Income Taxes](index=3&type=section&id=Income%20Taxes) The effective tax rate decreased in Q3 2025 due to a California tax law change impacting income apportionment, with the FY2025 annual rate estimated at 26% to 27% Income Taxes | Metric | Q3 2025 | Q2 2025 | Change (QoQ) | | :----------------- | :------ | :------ | :----------- | | Effective Tax Rate | 23.5% | 27.8% | -4.3 percentage points | | Estimated Annual Effective Tax Rate (FY2025) | 26%-27% | - | - | - The decrease in the **effective tax rate** was mainly attributed to a **change in California tax law (Senate Bill 132)** impacting how banks apportion income for state tax purposes[13](index=13&type=chunk) [Balance Sheet Analysis](index=3&type=section&id=Balance%20Sheet%20Analysis) [Overall Balance Sheet](index=3&type=section&id=Overall%20Balance%20Sheet) RBB Bancorp's total assets increased to **$4.2 billion** at September 30, 2025, reflecting quarter-over-quarter and year-over-year growth Overall Balance Sheet | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | Change (QoQ) | Change (YoY) | | :---------- | :----------- | :----------- | :----------- | :----------- | :----------- | | Total Assets | $4.2 billion | $4.09 billion | $3.99 billion | +$118.4 million (+2.9%) | +$218.0 million (+5.5%) | [Loan and Securities Portfolio](index=3&type=section&id=Loan%20and%20Securities%20Portfolio) Loans held for investment grew across key categories with favorable new origination yields, while available-for-sale securities slightly decreased and net unrealized losses improved Loan and Securities Portfolio | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | Change (QoQ) | Change (YoY) | | :-------------------------------- | :----------- | :----------- | :----------- | :----------- | :----------- | | Loans Held for Investment (HFI) | $3.3 billion | $3.23 billion | $3.09 billion | +$67.9 million (+8.3% annualized) | +$210.7 million (+6.8%) | | Loan Originations (Q3 2025) | $187.8 million | - | - | - | - | | Average Yield on Originations (Q3 2025) | 6.70% | - | - | - | - | | SFR Mortgage Loans Increase (QoQ) | +$47.9 million | - | - | - | - | | CRE Loans Increase (QoQ) | +$13.2 million | - | - | - | - | | C&I Loans Increase (QoQ) | +$8.4 million | - | - | - | - | | Loan to Deposit Ratio | 98.1% | 101.5% | 100.0% | -3.4 percentage points | -1.9 percentage points | | Available for Sale Securities (AFS) | $410.6 million | $413.1 million | - | -$2.5 million | - | | Net Unrealized Losses (AFS) | $20.5 million | $23.1 million | - | -$2.6 million | - | - The net increase in **loans HFI** from June 30, 2025, was largely due to increases in **single-family residential mortgage loans**, **commercial real estate loans**, and **commercial and industrial loans**[15](index=15&type=chunk) - The decrease in **AFS securities** was primarily due to **maturities and paydowns of $62.3 million**, partially offset by **purchases of $58.3 million** during the quarter[16](index=16&type=chunk) [Deposits](index=3&type=section&id=Deposits) Total deposits grew significantly in Q3 2025, driven by increases in both interest-bearing and noninterest-bearing deposits, with wholesale time deposits used to repay FHLB advances Deposits | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | Change (QoQ) | Change (YoY) | | :-------------------------------- | :----------- | :----------- | :----------- | :----------- | :----------- | | Total Deposits | $3.4 billion | $3.19 billion | $3.09 billion | +$178.3 million (+22.2% annualized) | +$274.3 million (+8.9%) | | Interest-Bearing Deposits Increase (QoQ) | +$171.7 million | - | - | - | - | | Noninterest-Bearing Deposits Increase (QoQ) | +$6.6 million | - | - | - | - | | Wholesale Time Deposits Increase (QoQ) | +$84.3 million | - | - | - | - | | Noninterest-Bearing Deposits (% of total) | 16.4% | 17.1% | - | -0.7 percentage points | - | - The increase in **interest-bearing deposits** included increases in **wholesale time deposits ($84.3 million)**, **retail time deposits ($57.4 million)**, and **interest-bearing non-maturity deposits ($30.0 million)**[17](index=17&type=chunk) - **Wholesale time deposits** were raised to repay **$50.0 million** in maturing **FHLB advances**[17](index=17&type=chunk) [Credit Quality](index=3&type=section&id=Credit%20Quality) Credit quality improved in Q3 2025 with significant decreases in nonperforming assets, nonperforming loans, special mention, and substandard loans, while the allowance for loan losses decreased but improved as a percentage of nonperforming loans [Nonperforming Assets](index=3&type=section&id=Nonperforming%20Assets) Nonperforming assets decreased, though other real estate owned (OREO) increased due to the foreclosure of two SBA loans Nonperforming Assets | Metric | Sep 30, 2025 | Jun 30, 2025 | Change (QoQ) | | :-------------------------------- | :----------- | :----------- | :----------- | | Nonperforming Assets | $54.3 million | $61.0 million | -$6.7 million (-11.0%) | | Nonperforming Assets (% of total assets) | 1.29% | 1.49% | -0.20 percentage points | | Other Real Estate Owned (OREO) | $8.8 million | $4.2 million | +$4.6 million | | OREO Exposure (incl. SBA guarantees) | $5.1 million | - | - | - The increase in **OREO** in Q3 related to the foreclosure of **2 SBA loans** with **$3.7 million** guaranteed[18](index=18&type=chunk) [Nonperforming Loans](index=3&type=section&id=Nonperforming%20Loans) Nonperforming loans decreased significantly due to net charge-offs, loans returning to accrual, payoffs, and OREO transfers, partially offset by new nonaccrual additions Nonperforming Loans | Metric | Sep 30, 2025 | Jun 30, 2025 | Change (QoQ) | | :------------------- | :----------- | :----------- | :----------- | | Nonperforming Loans | $45.4 million | $56.8 million | -$11.3 million | | Net Charge-offs | $6.9 million | - | - | | Loans Migrating to Accrual | $5.0 million | - | - | | Payoffs and Paydowns | $1.2 million | - | - | | Moving to OREO | $970 thousand | - | - | | Additions to Nonaccrual | $2.8 million | - | - | [Special Mention Loans](index=3&type=section&id=Special%20Mention%20Loans) Special mention loans substantially decreased, primarily from the upgrade of a large construction loan and other payoffs, despite some new downgrades Special Mention Loans | Metric | Sep 30, 2025 | Jun 30, 2025 | Change (QoQ) | | :-------------------------------- | :----------- | :----------- | :----------- | | Special Mention Loans | $49.3 million | $91.3 million | -$42.0 million | | Special Mention Loans (% of total loans) | 1.49% | 2.82% | -1.33 percentage points | | Upgrade of Construction Loan | $44.4 million | - | - | | Downgrades to Substandard | $8.4 million | - | - | | Payoffs and Paydowns | $2.9 million | - | - | | Downgrades to Special Mention | $10.8 million | - | - | - The **$42.0 million decrease** in **special mention loans** was primarily due to the upgrade of one **$44.4 million completed construction loan**[20](index=20&type=chunk) [Substandard Loans](index=3&type=section&id=Substandard%20Loans) Substandard loans decreased due to payoffs, net charge-offs, upgrades, and transfers to OREO, partially offset by new downgrades Substandard Loans | Metric | Sep 30, 2025 | Jun 30, 2025 | Change (QoQ) | | :---------------- | :----------- | :----------- | :----------- | | Substandard Loans | $76.9 million | $91.0 million | -$14.1 million | | Payoffs and Paydowns | $16.6 million | - | - | | Net Charge-offs | $6.9 million | - | - | | Upgrades to Pass-Rated | $5.0 million | - | - | | Transfers to OREO | $970 thousand | - | - | | Downgrades to Substandard | $15.4 million | - | - | [Delinquent Loans](index=3&type=section&id=Delinquent%20Loans) Loans 30-89 days past due, excluding nonperforming loans, decreased significantly, mainly due to loans returning to current status Delinquent Loans | Metric | Sep 30, 2025 | Jun 30, 2025 | Change (QoQ) | | :------------------------------------------------ | :----------- | :----------- | :----------- | | 30-89 Day Delinquent Loans (excl. NPLs) | $6.5 million | $18.0 million | -$11.5 million | | 30-89 Day Delinquent Loans (% of total loans) | 0.20% | 0.56% | -0.36 percentage points | | Loans Returning to Current Status | $13.0 million | - | - | | Loans Migrating to Nonaccrual Status | $2.4 million | - | - | | New Delinquent Loans | $4.0 million | - | - | [Allowance for Credit Losses](index=5&type=section&id=Allowance%20for%20Credit%20Losses) The total allowance for credit losses decreased due to net charge-offs, but the allowance for loan losses as a percentage of nonperforming loans improved significantly Allowance for Credit Losses | Metric | Sep 30, 2025 | Jun 30, 2025 | Change (QoQ) | | :------------------------------------------ | :----------- | :----------- | :----------- | | Allowance for Credit Losses | $45.4 million | $51.6 million | -$6.2 million | | Allowance for Loan Losses | $44.9 million | $51.0 million | -$6.1 million | | Reserve for Unfunded Commitments | $504 thousand | $629 thousand | -$125 thousand | | Allowance for Loan Losses (% of loans HFI) | 1.36% | 1.58% | -0.22 percentage points | | Allowance for Loan Losses (% of nonperforming loans HFI) | 98.70% | 89.79% | +8.91 percentage points | Allowance for Credit Losses Activity (Q3 2025) | (dollars in thousands) | Allowance for loan losses | Reserve for unfunded commitments | Allowance for credit losses | | :--------------------------------- | :------------------------ | :------------------------------- | :-------------------------- | | Beginning balance | $51,014 | $629 | $51,643 | | Provision for (reversal of) credit losses | 750 | (125) | 625 | | Less loans charged-off | (7,019) | — | (7,019) | | Recoveries on loans charged-off | 147 | — | 147 | | Ending balance | $44,892 | $504 | $45,396 | [Shareholders' Equity & Dividends](index=5&type=section&id=Shareholders'%20Equity%20%26%20Dividends) [Shareholders' Equity](index=5&type=section&id=Shareholders'%20Equity) Total shareholders' equity slightly decreased quarter-over-quarter from repurchases and dividends, offset by net income and lower unrealized losses, but increased year-over-year from net income and equity compensation Shareholders' Equity | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | Change (QoQ) | Change (YoY) | | :-------------------------------- | :----------- | :----------- | :----------- | :----------- | :----------- | | Total Shareholders' Equity | $514.3 million | $517.6 million | $509.7 million | -$3.3 million | +$4.6 million | | Common Stock Repurchases (Q3 2025) | $12.5 million | - | - | - | - | | Common Stock Cash Dividends Paid (Q3 2025) | $2.8 million | - | - | - | - | | Net Income (Q3 2025) | $10.1 million | - | - | - | - | | Lower Net Unrealized Losses on AFS (Q3 2025) | $1.6 million | - | - | - | - | | Book Value Per Share | $30.18 | $29.25 | $28.81 | +$0.93 | +$1.37 | | Tangible Book Value Per Share | $25.89 | $25.11 | $24.64 | +$0.78 | +$1.25 | - The decrease in **shareholders' equity** for Q3 2025 was primarily due to **$12.5 million in common stock repurchases** and **$2.8 million in cash dividends**, partially offset by **$10.1 million in net income** and **$1.6 million in lower net unrealized losses** on AFS securities[26](index=26&type=chunk) [Dividend Announcement](index=5&type=section&id=Dividend%20Announcement) The Board declared a quarterly cash dividend of $0.16 per common share, payable November 12, 2025, to shareholders of record October 31, 2025 - A **quarterly cash dividend of $0.16 per common share** has been declared[28](index=28&type=chunk) - The dividend is **payable on November 12, 2025**, to **shareholders of record on October 31, 2025**[28](index=28&type=chunk) [Corporate Information & Disclosures](index=6&type=section&id=Corporate%20Information%20%26%20Disclosures) [Corporate Overview](index=6&type=section&id=Corporate%20Overview) RBB Bancorp is a Los Angeles-based financial holding company with **$4.2 billion** in assets, whose subsidiary Royal Business Bank serves Asian-centric communities across multiple states with comprehensive banking services - RBB Bancorp is a community-based **financial holding company** headquartered in Los Angeles, California, with **total assets of $4.2 billion** as of September 30, 2025[29](index=29&type=chunk) - Royal Business Bank, a wholly-owned subsidiary, offers full-service commercial banking, including remote deposit, E-banking, mobile banking, various loan types (commercial, real estate, SBA, residential), trade finance, depository accounts, and wealth management services[29](index=29&type=chunk) - The Bank serves predominantly Asian-centric communities across multiple states, including California (Los Angeles, Orange, Ventura Counties), Nevada (Las Vegas), New York (Brooklyn, Queens, Manhattan), New Jersey (Edison), Illinois (Chicago), and Hawaii (Oahu), with a network of 24 branches and one loan operation center[29](index=29&type=chunk) [Conference Call Details](index=6&type=section&id=Conference%20Call%20Details) Management will host a conference call on October 21, 2025, to discuss Q3 2025 financial results, with dial-in, webcast, and replay options available - A conference call will be held on **Tuesday, October 21, 2025, at 11:00 a.m. Pacific time/2:00 p.m. Eastern time**[30](index=30&type=chunk) - Participants can dial 1-888-506-0062 (Participant ID: 341289, Conference ID: RBBQ325) or access a live webcast via the Royal Business Bank website[31](index=31&type=chunk)[32](index=32&type=chunk) - A replay of the call will be available until November 4, 2025, by dialing 1-877-481-4010 (Passcode: 53065) or through the website[31](index=31&type=chunk)[32](index=32&type=chunk) [Disclosure](index=6&type=section&id=Disclosure) The press release includes non-GAAP financial measures for tangible common equity, tangible assets, and adjusted earnings, providing supplemental operational performance information reconciled to GAAP - The press release contains **non-GAAP financial disclosures** for **tangible common equity**, **tangible assets**, and **adjusted earnings**[33](index=33&type=chunk) - These non-GAAP measures are used to provide meaningful supplemental information on operational performance and enhance investors' understanding, with reconciliations to GAAP measures provided[33](index=33&type=chunk) [Safe Harbor Statement](index=7&type=section&id=Safe%20Harbor%20Statement) The report contains forward-looking statements subject to risks like economic conditions, regulatory changes, credit quality, interest rate fluctuations, cybersecurity, and geopolitical events, with no obligation to update - The report includes **forward-looking statements** about the Company's business plans, financial position, and operating results, which are subject to **risks and uncertainties**[34](index=34&type=chunk) - **Key risks** include business and economic conditions, regulatory supervision, credit risks, interest rate fluctuations, real estate market conditions, cybersecurity threats, and geopolitical events[34](index=34&type=chunk) - The Company explicitly disclaims any obligation to update **forward-looking statements** to reflect future occurrences or unanticipated events, except as required by law[34](index=34&type=chunk) [Financial Statements](index=8&type=section&id=Financial%20Statements) [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets provide a snapshot of the company's financial position, detailing assets, liabilities, and shareholders' equity across multiple quarters Condensed Consolidated Balance Sheets (Dollars in thousands) | | September, 30, 2025 | June, 30, 2025 | March, 31, 2025 | December, 31, 2024 | September, 30, 2024 | | :------------------------------------------ | :-------------------- | :------------- | :-------------- | :----------------- | :------------------ | | **Assets** | | | | | | | Cash and cash equivalents | $234,930 | $191,852 | $238,823 | $257,745 | $349,390 | | Investment securities available for sale | 410,631 | 413,142 | 378,188 | 420,190 | 305,666 | | Loans held for investment, net | 3,257,685 | 3,183,681 | 3,091,131 | 3,005,501 | 3,048,211 | | Total assets | $4,208,455 | $4,090,040 | $4,009,400 | $3,992,477 | $3,990,477 | | **Liabilities** | | | | | | | 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 | | Total liabilities | 3,694,120 | 3,572,387 | 3,499,094 | 3,484,600 | 3,480,749 | | **Shareholders' equity** | | | | | | | 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 | [Condensed Consolidated Statements of Income](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) The condensed consolidated statements of income present the company's revenues, expenses, and net income for the three and nine months ended September 30, 2025 and 2024 Condensed Consolidated Statements of Income (In thousands, except share and per share data) | | For the Three Months Ended September 30, 2025 | For the Three Months Ended June 30, 2025 | For the Three Months Ended September 30, 2024 | For the Nine Months Ended September 30, 2025 | For the Nine Months Ended September 30, 2024 | | :------------------------------------------ | :------------------------------------------ | :--------------------------------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Total interest and dividend income | $57,392 | $54,205 | $54,425 | $163,933 | $162,106 | | 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 | 2,387 | 3,300 | 9,758 | 3,857 | | Net interest income after provision for credit losses | 28,652 | 24,947 | 21,245 | 73,016 | 69,530 | | Total noninterest income | 3,293 | 8,478 | 5,746 | 14,066 | 12,606 | | Total noninterest expense | 18,683 | 20,493 | 17,421 | 57,698 | 51,514 | | Income before income taxes | 13,262 | 12,932 | 9,570 | 29,384 | 30,622 | | Income tax expense | 3,114 | 3,599 | 2,571 | 7,613 | 8,342 | | Net income | $10,148 | $9,333 | $6,999 | $21,771 | $22,280 | | Diluted EPS | $0.59 | $0.52 | $0.39 | $1.24 | $1.22 | | Cash dividends declared per common share | $0.16 | $0.16 | $0.16 | $0.48 | $0.48 | [Average Balance Sheet and Net Interest Income (Three Months Ended)](index=11&type=section&id=Average%20Balance%20Sheet%20and%20Net%20Interest%20Income%20(Three%20Months%20Ended)) This section details average balances of interest-earning assets and liabilities, with corresponding interest and rates, for the three months ended September 30, 2025, June 30, 2025, and September 30, 2024, providing insight into net interest income and margin Average Balance Sheet and Net Interest Income (Three Months Ended) | (tax-equivalent basis, dollars in thousands) | September 30, 2025 | June 30, 2025 | September 30, 2024 | | :------------------------------------------ | :----------------- | :------------ | :----------------- | | **Interest-earning assets** | | | | | Total interest earning assets (Average Balance) | $3,896,632 | $3,754,850 | $3,648,929 | | Total interest earning assets (Yield) | 5.85% | 5.79% | 5.94% | | **Interest-bearing liabilities** | | | | | Total interest-bearing liabilities (Average Balance) | $3,030,734 | $2,903,797 | $2,801,759 | | Total interest-bearing liabilities (Rate) | 3.68% | 3.71% | 4.24% | | Net interest income | $29,303 | $27,357 | $24,569 | | Net interest margin | 2.98% | 2.92% | 2.68% | | Total cost of deposits | 3.03% | 3.05% | 3.63% | | Total cost of funds | 3.12% | 3.14% | 3.57% | [Average Balance Sheet and Net Interest Income (Nine Months Ended)](index=13&type=section&id=Average%20Balance%20Sheet%20and%20Net%20Interest%20Income%20(Nine%20Months%20Ended)) This section provides average balances of interest-earning assets and liabilities, with corresponding interest and rates, for the nine months ended September 30, 2025 and 2024, offering a broader view of net interest income and margin trends Average Balance Sheet and Net Interest Income (Nine Months Ended) | (tax-equivalent basis, dollars in thousands) | Nine Months Ended September 30, 2025 | Nine Months Ended September 30, 2024 | | :------------------------------------------ | :----------------------------------- | :----------------------------------- | | **Interest-earning assets** | | | | Total interest-earning assets (Average Balance) | $3,779,216 | $3,661,295 | | Total interest-earning assets (Yield) | 5.80% | 5.92% | | **Interest-bearing liabilities** | | | | Total interest-bearing liabilities (Average Balance) | $2,927,448 | $2,811,296 | | Total interest-bearing liabilities (Rate) | 3.71% | 4.22% | | Net interest income | $82,847 | $73,460 | | Net interest margin | 2.93% | 2.68% | | Total cost of deposits | 3.07% | 3.60% | | Total cost of funds | 3.14% | 3.55% | [Selected Financial Highlights (Performance Ratios)](index=14&type=section&id=Selected%20Financial%20Highlights%20(Performance%20Ratios)) This section presents key performance ratios, including profitability, asset utilization, and efficiency metrics, for the three and nine months ended September 30, 2025, and comparative periods Selected Financial Highlights (Performance Ratios) | Metric | Sep 30, 2025 (3M) | Jun 30, 2025 (3M) | Sep 30, 2024 (3M) | Sep 30, 2025 (9M) | Sep 30, 2024 (9M) | | :------------------------------------------ | :------------------ | :---------------- | :------------------ | :------------------ | :------------------ | | Book value per share | $30.18 | $29.25 | $28.81 | $30.18 | $28.81 | | Tangible book value per share (1) | $25.89 | $25.11 | $24.64 | $25.89 | $24.64 | | Return on average assets, annualized | 0.97% | 0.93% | 0.72% | 0.72% | 0.76% | | Return on average shareholders' equity, annualized | 7.85% | 7.29% | 5.47% | 5.67% | 5.82% | | Return on average tangible common equity, annualized (1) | 9.16% | 8.50% | 6.40% | 6.62% | 6.81% | | Net interest margin | 2.98% | 2.92% | 2.68% | 2.93% | 2.68% | | Efficiency ratio (3) | 57.36% | 57.22% | 57.51% | 59.58% | 59.90% | | Common stock dividend payout ratio | 27.12% | 30.19% | 41.03% | 38.71% | 39.34% | [Selected Financial Highlights (Credit Quality & Capital Ratios)](index=15&type=section&id=Selected%20Financial%20Highlights%20(Credit%20Quality%20%26%20Capital%20Ratios)) This section provides detailed credit quality metrics, including loan classifications and allowance for loan losses, alongside key capital ratios, for the quarter ended September 30, 2025, and comparative periods Selected Financial Highlights (Credit Quality Data) | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :------------------------------------------------ | :----------- | :----------- | :----------- | | Special mention loans | $49,349 | $91,317 | $77,501 | | Special mention loans to total loans HFI | 1.49% | 2.82% | 2.51% | | Substandard loans | $76,880 | $91,019 | $79,831 | | Substandard loans to total loans HFI | 2.33% | 2.81% | 2.58% | | Loans 30-89 days past due, excluding nonperforming loans | $6,533 | $18,003 | $10,625 | | Nonperforming loans | $45,484 | $56,817 | $60,662 | | Nonperforming assets | $54,314 | $60,987 | $60,662 | | Nonperforming assets to total assets | 1.29% | 1.49% | 1.52% | | Allowance for loan losses | $44,892 | $51,014 | $43,685 | | Allowance for loan losses to total loans HFI | 1.36% | 1.58% | 1.41% | | Allowance for loan losses to nonperforming loans HFI | 98.70% | 89.79% | 72.01% | | Net charge-offs to average loans | 0.84% | 0.42% | 0.16% | Selected Financial Highlights (Capital Ratios) | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :--------------------------------- | :----------- | :----------- | :----------- | | Tangible common equity to tangible assets (2) | 10.67% | 11.07% | 11.13% | | Tier 1 leverage ratio | 11.50% | 12.04% | 12.19% | | Tier 1 common capital to risk-weighted assets | 17.28% | 17.61% | 18.16% | | Total capital to risk-weighted assets | 23.64% | 24.00% | 24.80% | [Loan Portfolio Detail](index=16&type=section&id=Loan%20Portfolio%20Detail) This section provides a detailed breakdown of the loan portfolio by type, highlighting composition and changes across single-family residential mortgages, commercial real estate, construction, commercial and industrial, and SBA loans Loan Portfolio Detail (dollars in thousands) | Loans: | As of September 30, 2025 | As of June 30, 2025 | As of September 30, 2024 | | :-------------------------------- | :----------------------- | :------------------ | :----------------------- | | Single-family residential mortgages | $1,650,989 (50.0%) | $1,603,114 (49.6%) | $1,473,396 (47.7%) | | Commercial real estate (1) | 1,286,603 (39.0%) | 1,273,442 (39.4%) | 1,252,682 (40.5%) | | Construction and land development | 159,152 (4.8%) | 157,970 (4.9%) | 180,196 (5.8%) | | Commercial and industrial | 146,667 (4.4%) | 138,263 (4.3%) | 128,861 (4.2%) | | SBA | 54,033 (1.6%) | 55,984 (1.7%) | 48,089 (1.6%) | | Other loans | 5,133 (0.2%) | 5,922 (0.1%) | 8,672 (0.2%) | | Total loans | $3,302,577 (100.0%) | $3,234,695 (100.0%) | $3,091,896 (100.0%) | | Allowance for loan losses | (44,892) | (51,014) | (43,685) | | Total loans, net | $3,257,685 | $3,183,681 | $3,048,211 | [Deposits Detail](index=16&type=section&id=Deposits%20Detail) This section provides a detailed breakdown of deposits by type, including noninterest-bearing demand, savings, NOW, money market, and time deposits, highlighting their composition and changes Deposits Detail (dollars in thousands) | Deposits: | As of September 30, 2025 | As of June 30, 2025 | As of September 30, 2024 | | :-------------------------------- | :----------------------- | :------------------ | :----------------------- | | Noninterest-bearing demand | $550,488 (16.4%) | $543,885 (17.1%) | $543,623 (17.6%) | | Savings, NOW and money market accounts | 721,697 (21.4%) | 691,679 (21.7%) | 666,089 (21.5%) | | Time deposits, $250,000 and under | 872,463 (25.9%) | 848,379 (26.6%) | 926,877 (30.0%) | | Time deposits, greater than $250,000 | 953,785 (28.3%) | 920,481 (28.8%) | 808,304 (26.1%) | | Wholesale deposits (1) | 268,064 (8.0%) | 183,807 (5.8%) | 147,291 (4.8%) | | Total deposits | $3,366,497 (100.0%) | $3,188,231 (100.0%) | $3,092,184 (100.0%) | [Non-GAAP Reconciliations](index=17&type=section&id=Non-GAAP%20Reconciliations) [Tangible Book Value Reconciliations](index=17&type=section&id=Tangible%20Book%20Value%20Reconciliations) This section reconciles tangible book value to GAAP shareholders' equity, calculating tangible book value per share and tangible common equity to tangible assets ratio, offering insights into capital strength Tangible Book Value Reconciliations (dollars in thousands, except share and per share data) | | September 30, 2025 | June 30, 2025 | September 30, 2024 | | :------------------------------------------ | :----------------- | :------------ | :----------------- | | Total shareholders' equity | $514,335 | $517,653 | $509,728 | | Goodwill | (71,498) | (71,498) | (71,498) | | Core deposit intangible | (1,495) | (1,667) | (2,194) | | Tangible common equity | $441,342 | $444,488 | $436,036 | | Total assets-GAAP | $4,208,455 | $4,090,040 | $3,990,477 | | Tangible assets | $4,135,462 | $4,016,875 | $3,916,785 | | Common shares outstanding | 17,043,897 | 17,699,091 | 17,693,416 | | Book value per share | $30.18 | $29.25 | $28.81 | | Tangible book value per share | $25.89 | $25.11 | $24.64 | | Tangible common equity to tangible assets ratio | 10.67% | 11.07% | 11.13% | [Return on Average Tangible Common Equity](index=17&type=section&id=Return%20on%20Average%20Tangible%20Common%20Equity) This section reconciles the return on average tangible common equity (ROATCE) to its most comparable GAAP measure, providing an adjusted view of profitability relative to tangible capital Return on Average Tangible Common Equity (dollars in thousands) | | Three Months Ended September 30, 2025 | Three Months Ended June 30, 2025 | Three Months Ended September 30, 2024 | Nine Months Ended September 30, 2025 | Nine Months Ended September 30, 2024 | | :------------------------------------------ | :------------------------------------ | :--------------------------------- | :------------------------------------ | :----------------------------------- | :----------------------------------- | | Net income available to common shareholders | $10,148 | $9,333 | $6,999 | $21,771 | $22,280 | | Average shareholders' equity | 512,874 | 513,691 | 508,720 | 512,945 | 511,222 | | Adjusted average tangible common equity | $439,768 | $440,413 | $434,896 | $439,668 | $437,199 | | Return on average common equity, annualized | 7.85% | 7.29% | 5.47% | 5.67% | 5.82% | | Return on average tangible common equity, annualized | 9.16% | 8.50% | 6.40% | 6.62% | 6.81% | - **ROATCE** is a **non-GAAP measure** used by management and regulators to assess **capital strength** and **business performance**, excluding **goodwill** and **other intangible assets** (excluding mortgage servicing rights)[59](index=59&type=chunk)

Core Insights - RBB Bancorp reported a net income of $10.1 million, or $0.59 diluted earnings per share, for Q3 2025, an increase from $9.3 million, or $0.52 per share, in Q2 2025, driven by higher net interest income, lower credit costs, and a reduced effective tax rate [3][9][4] Financial Performance - Net interest income rose to $29.3 million in Q3 2025 from $27.3 million in Q2 2025, attributed to a $3.2 million increase in interest income, primarily from loans [5] - The net interest margin (NIM) improved to 2.98% in Q3 2025, up from 2.92% in Q2 2025, due to a higher yield on average interest-earning assets [6][9] - Noninterest income decreased to $3.3 million in Q3 2025, down from $8.5 million in Q2 2025, mainly due to the absence of Employee Retention Credit (ERC) funds received in the previous quarter [11] - Noninterest expense decreased to $18.7 million in Q3 2025 from $20.5 million in Q2 2025, primarily due to lower legal and professional expenses [12] Credit Quality - The provision for credit losses was $625,000 in Q3 2025, significantly lower than $2.4 million in Q2 2025, reflecting improved credit conditions [8] - Nonperforming assets decreased to $54.3 million, or 1.29% of total assets, down from $61.0 million, or 1.49% of total assets, in Q2 2025 [18] - Classified and criticized loans fell by $56.1 million, or 30.8%, to $126.2 million at the end of Q3 2025 [9][21] Balance Sheet Highlights - Total assets increased by $118.4 million, or 2.9%, to $4.2 billion as of September 30, 2025, compared to June 30, 2025 [14] - Loans held for investment totaled $3.3 billion, reflecting an increase of $67.9 million, or 8.3% annualized, from the previous quarter [15] - Total deposits rose to $3.4 billion, an increase of $178.3 million, or 22.2% annualized, compared to Q2 2025 [17] Shareholder Information - The Board of Directors declared a quarterly cash dividend of $0.16 per common share, payable on November 12, 2025 [28] - Total shareholders' equity was $514.3 million as of September 30, 2025, a decrease from $517.7 million at the end of Q2 2025, primarily due to stock repurchases [26][27]

Core Insights - RBB is projected to report quarterly earnings of $0.41 per share, a 5.1% increase year-over-year, with revenues expected to reach $31.67 million, reflecting a 4.5% increase compared to the same period last year [1] Earnings Estimates - There has been no revision in the consensus EPS estimate for the quarter over the past 30 days, indicating that analysts have not changed their initial projections [2] - Changes in earnings estimates are crucial for predicting investor reactions, as empirical research shows a strong correlation between earnings estimate revisions and short-term stock price performance [3] Key Metrics Projections - Analysts predict the 'Efficiency Ratio' will be 57.7%, slightly up from 57.5% reported in the same quarter last year [5] - 'Non Performing Assets' are expected to reach $55.11 million, down from $60.66 million reported in the same quarter last year [5] - The 'Average Balance - Total interest earning assets' is projected at $3.83 billion, an increase from $3.65 billion reported in the same quarter last year [6] - 'Non Performing Loans' are estimated at $53.85 million, down from $60.66 million reported in the same quarter last year [6] Capital Ratios - The 'Tier 1 risk-based capital ratio' is expected to be 17.6%, down from 18.8% a year ago [7] - The 'Total risk-based capital ratio' is projected to reach 23.2%, compared to 24.8% from the previous year [7] - The 'Tier 1 leverage ratio' is expected to be 11.9%, down from 12.2% reported last year [7] Income Estimates - 'Total noninterest income' is projected to be $3.06 million, significantly lower than the $5.75 million reported in the same quarter last year [8] - The consensus estimate for 'Net Interest Income' stands at $28.61 million, up from $24.55 million reported in the same quarter last year [8] Stock Performance - RBB shares have shown a return of -6.1% over the past month, contrasting with the Zacks S&P 500 composite's +1% change, indicating underperformance relative to the market [8]

Group 1 - RBB Bancorp operates two dozen branches across LA County, Orange County, Ventura County, Las Vegas, and New York, focusing on Asian-centric communities [1] - The investment group European Small Cap Ideas provides exclusive access to actionable research on Europe-focused investment opportunities, emphasizing high-quality small-cap ideas for capital gains and dividend income [1] - The group features two model portfolios: the European Small Cap Ideas portfolio and the European REIT Portfolio, along with weekly updates and educational content [1]

Group 1 - RBB Bancorp operates two dozen branches across LA County, Orange County, Ventura County, Las Vegas, and New York, focusing on Asian-centric communities [1] - The investment group European Small Cap Ideas provides exclusive access to actionable research on Europe-focused investment opportunities, emphasizing high-quality small-cap ideas for capital gains and dividend income [1] - The group features two model portfolios: the European Small Cap Ideas portfolio and the European REIT Portfolio, along with weekly updates and educational content [1]

Core Viewpoint - RBB Bancorp will release its financial results for the third quarter ended September 30, 2025, on October 20, 2025, after market close [1] Group 1: Financial Results Announcement - The financial results will be discussed in a conference call scheduled for October 21, 2025, at 11:00 a.m. Pacific Time [2] - Interested parties can access the conference call via phone or through a live webcast on the Company's website [3] Group 2: Corporate Overview - RBB Bancorp is a community-based financial holding company with total assets of $4.1 billion as of June 30, 2025 [4] - The Company operates Royal Business Bank, which provides a range of banking services primarily to Asian-centric communities across various locations in California, Nevada, New York, New Jersey, Illinois, and Hawaii [4] - The Bank offers services including remote deposit, E-banking, mobile banking, various types of loans, trade finance, and wealth management [4] - RBB Bancorp has multiple branches across several states, with its administrative and lending center located in Los Angeles, California [4]

[PART I – FINANCIAL INFORMATION (UNAUDITED)](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION%20%28UNAUDITED%29) This section presents the unaudited consolidated financial statements and related notes of RBB Bancorp and its subsidiaries [ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)](index=3&type=section&id=ITEM%201.%20CONSOLIDATED%20FINANCIAL%20STATEMENTS%20%28UNAUDITED%29) This section presents the unaudited consolidated financial statements of RBB Bancorp and its subsidiaries, including balance sheets, statements of income, comprehensive income, changes in shareholders' equity, and cash flows. It also includes detailed notes explaining business operations, significant accounting policies, investment securities, loans and credit losses, loan servicing, goodwill and intangibles, deposits, debt, borrowing arrangements, income taxes, commitments, leases, related party transactions, stock-based compensation, regulatory matters, fair value measurements, earnings per share, revenue from customer contracts, segment information, affordable housing investments, stock repurchases, and subsequent events [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) This statement presents the company's financial position, including assets, liabilities, and equity, at specific reporting dates | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Total assets | $4,090,040 | $3,992,477 | | Loans held for investment, net | $3,183,681 | $3,005,501 | | Total deposits | $3,188,231 | $3,083,789 | | Total liabilities | $3,572,387 | $3,484,600 | | Total shareholders' equity | $517,653 | $507,877 | [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) This statement details the company's revenues, expenses, and net income over specific reporting periods | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--------------------------------------- | :------------------------------------ | :----------------------------------- | :------------------------------------ | :----------------------------------- | :----------------------------------- | | Total interest and dividend income | $54,205 | $52,336 | $52,886 | $106,541 | $107,681 | | Total interest expense | $26,871 | $26,173 | $28,921 | $53,044 | $58,839 | | Net interest income | $27,334 | $26,163 | $23,965 | $53,497 | $48,842 | | Provision for credit losses | $2,387 | $6,746 | $557 | $9,133 | $557 | | Total noninterest income | $8,478 | $2,295 | $3,488 | $10,773 | $6,860 | | Total noninterest expense | $20,493 | $18,522 | $17,124 | $39,015 | $34,093 | | Net income | $9,333 | $2,290 | $7,245 | $11,623 | $15,281 | | Basic Net income per share | $0.53 | $0.13 | $0.39 | $0.66 | $0.83 | | Diluted Net income per share | $0.52 | $0.13 | $0.39 | $0.65 | $0.82 | [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This statement reports net income and other comprehensive income components, reflecting total changes in equity from non-owner sources | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :------------------------------------ | :----------------------------------- | :------------------------------------ | :----------------------------------- | :----------------------------------- | | Net income | $9,333 | $2,290 | $7,245 | $11,623 | $15,281 | | Total other comprehensive income/(loss) | $1,282 | $2,962 | $67 | $4,244 | $(1,403) | | Total comprehensive income | $10,615 | $5,252 | $7,312 | $15,867 | $13,878 | [Consolidated Statements of Changes in Shareholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders%27%20Equity) This statement outlines the changes in shareholders' equity resulting from net income, dividends, stock transactions, and other comprehensive income - Shareholders' equity at **June 30, 2025**, was **$517,653 thousand**, increasing from **$510,306 thousand** at March 31, 2025, primarily due to net income of **$9,333 thousand** and other comprehensive income of **$1,282 thousand**, partially offset by cash dividends and stock repurchases[17](index=17&type=chunk) - For the six months ended **June 30, 2025**, shareholders' equity increased to **$517,653 thousand** from **$507,877 thousand** at January 1, 2025, driven by net income of **$11,623 thousand** and other comprehensive income of **$4,244 thousand**, despite cash dividends of **$5,719 thousand** and stock repurchases of **$1,499 thousand**[17](index=17&type=chunk) [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement categorizes cash inflows and outflows from operating, investing, and financing activities over specific periods | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :---------------------------------- | :------------------------------------ | :------------------------------------ | | Net cash provided by operating activities | $29,430 | $16,521 | | Net cash used in investing activities | $(172,441) | $(29,238) | | Net cash provided by (used in) financing activities | $77,118 | $(165,887) | | Net decrease in cash and cash equivalents | $(65,893) | $(178,604) | | Cash and cash equivalents at end of period | $191,852 | $252,769 | [NOTE 1 - BUSINESS DESCRIPTION](index=12&type=section&id=NOTE%201%20-%20BUSINESS%20DESCRIPTION) This note describes RBB Bancorp's operations, primary business, and strategic focus within Asian-centric communities - RBB Bancorp operates as a bank holding company with total assets of **$4.1 billion**, total loans of **$3.2 billion**, total deposits of **$3.2 billion**, and total shareholders' equity of **$517.7 million** as of **June 30, 2025**[23](index=23&type=chunk) - The Company's primary business is providing business-banking products and services to Asian-centric communities through **24 full-service branches** across California, Nevada, New York, Illinois, New Jersey, and Hawaii[24](index=24&type=chunk) - RBB Bancorp holds both Minority Depository Institution (MDI) and Community Development Financial Institution (CDFI) designations, which provide access to federal support and funding programs[25](index=25&type=chunk)[26](index=26&type=chunk) [NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=12&type=section&id=NOTE%202%20-%20BASIS%20OF%20PRESENTATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note explains the basis for preparing the unaudited financial statements and summarizes the company's key accounting policies - The unaudited consolidated financial statements are prepared in accordance with SEC rules for Form 10-Q and GAAP for interim financial reporting, reflecting normal recurring adjustments[29](index=29&type=chunk) - The Company recognized **$5.2 million (pre-tax)** in Employee Retention Credit (ERC) refunds from the IRS in Q2 2025, included in other income, with associated professional and tax advisory costs of **$1.2 million** recognized in legal and professional expense[35](index=35&type=chunk)[36](index=36&type=chunk) - **ASU 2023-07**, Segment Reporting, was adopted on **December 31, 2024**, with no material impact. Other ASUs (2023-06, 2023-09, 2024-03) are not yet effective and are not expected to have a material impact[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk) [NOTE 3 - INVESTMENT SECURITIES](index=16&type=section&id=NOTE%203%20-%20INVESTMENT%20SECURITIES) This note provides details on the composition, fair value, and unrealized gains or losses of the company's investment securities portfolio | Security Type | June 30, 2025 Fair Value (in thousands) | December 31, 2024 Fair Value (in thousands) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Total available for sale | $413,142 | $420,190 | | Total held to maturity | $3,995 | $4,948 | | Total Investment Securities | $417,137 | $425,138 | - As of **June 30, 2025**, total available for sale securities had gross unrealized losses of **$24,687 thousand**, primarily attributed to yield curve movement rather than credit loss, with no ACL recorded[41](index=41&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk) - The weighted-average life of the total investment portfolio increased to **5.2 years** at **June 30, 2025**, from **5.0 years** at December 31, 2024, mainly due to a decrease in commercial paper[248](index=248&type=chunk) [NOTE 4 - LOANS AND ALLOWANCE FOR CREDIT LOSSES](index=20&type=section&id=NOTE%204%20-%20LOANS%20AND%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) This note presents a detailed breakdown of the loan portfolio and the methodology for the allowance for credit losses | Loan Type (HFI) | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Real Estate: Construction and land development | $157,970 | $173,290 | | Real Estate: Commercial real estate | $1,273,442 | $1,201,420 | | Real Estate: Single-family residential mortgages | $1,603,114 | $1,494,022 | | Commercial: Commercial and industrial | $138,263 | $129,585 | | Commercial: SBA | $55,984 | $47,263 | | Other | $5,922 | $7,650 | | Total loans HFI | $3,234,695 | $3,053,230 | | Allowance for loan losses | $(51,014) | $(47,729) | | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :------------------------------------ | :----------------------------------- | :------------------------------------ | | Provision for credit losses | $2,387 | $6,846 | $604 | | Charge-offs | $(3,339) | $(2,727) | $(567) | | Recoveries | $34 | $84 | $16 | | Ending allowance balance | $51,014 | $51,932 | $41,741 | - Nonaccrual loans totaled **$56.8 million** at **June 30, 2025**, a decrease from **$81.0 million** at December 31, 2024. Loans modified due to financial difficulty totaled **$8.4 million** in Q2 2025, with **$35.5 million** of Construction and Land Development loans remaining on nonaccrual and having defaulted on modified terms[66](index=66&type=chunk)[71](index=71&type=chunk)[74](index=74&type=chunk)[281](index=281&type=chunk) [NOTE 5 - LOAN SERVICING](index=28&type=section&id=NOTE%205%20-%20LOAN%20SERVICING) This note describes the company's loan servicing activities, including the fair value of servicing assets and related income | Loan Type | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------- | :----------------------------- | :----------------------------- | | Mortgage loans | $877,300 | $922,183 | | SBA loans | $91,866 | $92,678 | | Commercial real estate loans | $2,438 | $3,761 | | Construction loans | $8,276 | $7,315 | | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :------------------------------------ | :----------------------------------- | :------------------------------------ | | Loan servicing income, net of amortization | $541 | $588 | $579 | - Fair value of mortgage loan servicing assets was **$10.3 million** at **June 30, 2025**, using a **10.63%** discount rate, **7.57%** prepayment speed, and **0.13%** default rate. SBA loan servicing assets fair value was **$2.2 million**, using an **8.5%** discount rate, **20.42%** prepayment speed, and **1.66%** default rate[80](index=80&type=chunk) [NOTE 6 - GOODWILL AND INTANGIBLES](index=30&type=section&id=NOTE%206%20-%20GOODWILL%20AND%20INTANGIBLES) This note details the company's goodwill and other intangible assets, including amortization and impairment assessments - Goodwill remained stable at **$71.5 million** at both **June 30, 2025**, and December 31, 2024, with no impairment identified[81](index=81&type=chunk) - Core deposit intangible (CDI) assets decreased to **$1.7 million** at **June 30, 2025**, from **$2.0 million** at December 31, 2024, with amortization expense of **$172 thousand** for Q2 2025[82](index=82&type=chunk)[83](index=83&type=chunk) | Year | CDI Amortization Expense (in thousands) | | :---------------- | :------------------------------------ | | Remainder of 2025 | $328 | | 2026 | $501 | | 2027 | $417 | | 2028 | $297 | | 2029 | $64 | | Thereafter | $60 | | Total | $1,667 | [NOTE 7 - DEPOSITS](index=32&type=section&id=NOTE%207%20-%20DEPOSITS) This note provides a breakdown of the company's deposit base by type and maturity, including wholesale and uninsured deposits | Time Deposits Maturities Periods | $250,000 and under (in thousands) | Greater than $250,000 (in thousands) | Total (in thousands) | | :------------------------------- | :-------------------------------- | :----------------------------------- | :------------------- | | One year or less | $1,003,896 | $940,868 | $1,944,764 | | One year to three years | $6,304 | $1,125 | $7,429 | | Over three years | $474 | — | $474 | | Total | $1,010,674 | $941,993 | $1,952,667 | - Wholesale time deposits increased to **$183.8 million** at **June 30, 2025**, from **$147.5 million** at December 31, 2024, including brokered deposits of **$133.0 million**[85](index=85&type=chunk) - Time deposits held through CDARS and ICS programs totaled **$120.4 million** and **$142.8 million**, respectively, at **June 30, 2025**[86](index=86&type=chunk) [NOTE 8 - LONG-TERM DEBT](index=32&type=section&id=NOTE%208%20-%20LONG-TERM%20DEBT) This note outlines the company's long-term debt obligations, including subordinated notes and their interest terms - The Company has **$120.0 million** of **4.00%** fixed-to-floating rate subordinated notes, maturing **April 1, 2031**, with interest fixed until **April 1, 2026**, then floating at three-month SOFR plus **329 basis points**[87](index=87&type=chunk) - Interest expense on these notes was **$1.2 million** for Q2 2025 and **$2.4 million** for the six months ended **June 30, 2025**[88](index=88&type=chunk) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Principal | $120,000 | $120,000 | | Unamortized debt issuance costs | $(280) | $(471) | | Long-term debt, net | $119,720 | $119,529 | [NOTE 9 - SUBORDINATED DEBENTURES](index=33&type=section&id=NOTE%209%20-%20SUBORDINATED%20DEBENTURES) This note describes the company's subordinated debentures, their interest rates, and their qualification as Tier 1 capital - Subordinated debentures totaled **$15.3 million** at **June 30, 2025**, consisting of TFC Trust, FAIC Trust, and PGBH Trust, all with variable interest rates based on three-month CME Term SOFR plus applicable spreads[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk) - These debentures qualify as Tier 1 capital for regulatory reporting purposes, subject to limitations[95](index=95&type=chunk) - Interest expense on subordinated debentures was **$283 thousand** for Q2 2025 and **$565 thousand** for the six months ended **June 30, 2025**[94](index=94&type=chunk) [NOTE 10 - BORROWING ARRANGEMENTS](index=33&type=section&id=NOTE%2010%20-%20BORROWING%20ARRANGEMENTS) This note details the company's available and utilized borrowing capacities with the FHLB, FRB, and other financial institutions - At **June 30, 2025**, the Company had a secured borrowing capacity of **$1.1 billion** with the FHLB, with **$180.0 million** in outstanding putable term advances at a weighted average rate of **3.51%**[97](index=97&type=chunk)[99](index=99&type=chunk) - The Company also had a secured borrowing capacity of **$62.5 million** with the FRB and could borrow up to **$97.0 million** on an unsecured basis from other financial institutions, with no amounts outstanding on these lines at **June 30, 2025**[99](index=99&type=chunk)[100](index=100&type=chunk) [NOTE 11 - INCOME TAXES](index=35&type=section&id=NOTE%2011%20-%20INCOME%20TAXES) This note presents information on the company's income tax provision and effective tax rates | Period | Income Tax Provision (in thousands) | Effective Tax Rate | | :------------------------------------ | :-------------------------------- | :----------------- | | Three Months Ended June 30, 2025 | $3,599 | 27.8% | | Three Months Ended March 31, 2025 | $900 | 28.2% | | Three Months Ended June 30, 2024 | $2,527 | 25.9% | | Six Months Ended June 30, 2025 | $4,499 | 27.9% | | Six Months Ended June 30, 2024 | $5,771 | 27.4% | - The Q2 2025 income tax provision included a discrete adjustment of **$379 thousand** due to a change in California tax law, expected to reduce the annual effective tax rate in future periods[237](index=237&type=chunk) [NOTE 12 - COMMITMENTS AND CONTINGENCIES](index=35&type=section&id=NOTE%2012%20-%20COMMITMENTS%20AND%20CONTINGENCIES) This note discloses the company's off-balance sheet commitments and potential liabilities | Commitment Type | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Commitments to make loans | $56,927 | $84,241 | | Unused lines of credit | $89,876 | $85,580 | | Commercial and similar letters of credit | $2,213 | $2,393 | | Standby letters of credit | $5,187 | $3,293 | | Total | $154,203 | $175,507 | - The reserve for off-balance sheet commitments was **$629 thousand** at **June 30, 2025**, a decrease from **$729 thousand** at December 31, 2024[107](index=107&type=chunk) - Unfunded commitments for affordable housing partnerships and Small Business Investment Company funds totaled **$10.7 million** at **June 30, 2025**, up from **$5.7 million** at December 31, 2024[108](index=108&type=chunk) [NOTE 13 - LEASES](index=37&type=section&id=NOTE%2013%20-%20LEASES) This note provides information on the company's lease agreements, right-of-use assets, and lease liabilities | Period | Total future minimum lease payments (in thousands) | | :---------------- | :--------------------------------------- | | Remainder of 2025 | $2,476 | | 2026 | $5,854 | | 2027 | $5,758 | | 2028 | $4,841 | | 2029 | $2,674 | | Thereafter | $8,289 | | Total | $29,892 | | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------ | :----------------------------- | :----------------------------- | | ROU assets | $25,554 | $28,048 | | Lease liabilities | $27,294 | $29,705 | | Weighted-average remaining lease term (in years) | 6.28 | 6.65 | | Weighted-average discount rate | 2.89% | 2.83% | [NOTE 14 - RELATED PARTY TRANSACTIONS](index=37&type=section&id=NOTE%2014%20-%20RELATED%20PARTY%20TRANSACTIONS) This note reports on financial transactions and balances with principal officers, directors, and their affiliates - Deposits from principal officers, directors, and their affiliates increased to **$44.1 million** at **June 30, 2025**, from **$32.5 million** at December 31, 2024[113](index=113&type=chunk) - Certain directors and their affiliates own **$6.0 million** of RBB's subordinated debentures at both **June 30, 2025**, and December 31, 2024[113](index=113&type=chunk) [NOTE 15 - STOCK-BASED COMPENSATION](index=37&type=section&id=NOTE%2015%20-%20STOCK-BASED%20COMPENSATION) This note details the company's stock-based compensation plans, including stock options and restricted stock units - Stock-based compensation expense for stock options was **$12 thousand** for Q2 2025 and **$26 thousand** for the six months ended **June 30, 2025**. Unrecognized expense was **$91 thousand** at **June 30, 2025**, to be recognized over **1.8 years**[117](index=117&type=chunk) - Compensation expense for Restricted Stock Units (RSUs) was **$537 thousand** for Q2 2025 and **$779 thousand** for the six months ended **June 30, 2025**. Unrecognized expense was **$2.8 million** at **June 30, 2025**, to be recognized over **2.6 years**[125](index=125&type=chunk) - As of **June 30, 2025**, **868,747 shares** of common stock were available for issuance under the Amended OSIP, representing **4.9%** of outstanding shares[116](index=116&type=chunk) [NOTE 16 - REGULATORY MATTERS](index=41&type=section&id=NOTE%2016%20-%20REGULATORY%20MATTERS) This note summarizes the company's compliance with regulatory capital requirements and its 'well-capitalized' status - The Company and the Bank were in compliance with all Basel III capital adequacy requirements and the capital conservation buffer at **June 30, 2025**, and December 31, 2024, and were considered 'well-capitalized'[129](index=129&type=chunk)[130](index=130&type=chunk)[313](index=313&type=chunk) | Capital Ratio | Consolidated June 30, 2025 | Bank June 30, 2025 | Minimum Required for Capital Adequacy Purposes | To Be Well-Capitalized Under Prompt Corrective Provisions | | :------------------------------------ | :------------------------- | :----------------- | :--------------------------------------------- | :---------------------------------------------------- | | Tier 1 Leverage Ratio | 12.04% | 13.20% | 4.0% | 5.0% | | Common Equity Tier 1 Risk-Based Capital Ratio | 17.61% | 19.96% | 4.5% | 6.5% | | Tier 1 Risk-Based Capital Ratio | 18.17% | 19.96% | 6.0% | 8.0% | | Total Risk-Based Capital Ratio | 24.00% | 21.21% | 8.0% | 10.0% | - Dividend payments are subject to restrictions under California Financial Code, California General Corporation Law, and Federal Reserve guidance[134](index=134&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk) [NOTE 17 - FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS](index=43&type=section&id=NOTE%2017%20-%20FAIR%20VALUE%20MEASUREMENTS%20AND%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) This note explains the fair value hierarchy and provides fair value measurements for the company's financial instruments - The Company categorizes financial assets and liabilities into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs) based on the fair value hierarchy[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk) - Securities available for sale are primarily Level 2, while interest rate lock contracts are Level 3. Collateral-dependent individually evaluated loans and OREO are measured on a non-recurring basis using Level 3 inputs (third-party appraisals with management adjustments)[141](index=141&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk) | Financial Instrument | Fair Value Hierarchy | June 30, 2025 Fair Value (in thousands) | December 31, 2024 Fair Value (in thousands) | | :------------------------------------ | :------------------- | :------------------------------------ | :------------------------------------ | | Investment securities – AFS | Level 2 | $413,142 | $420,190 | | Loans, net | Level 3 | $3,127,634 | $2,942,026 | | Deposits | Level 2 | $3,185,653 | $3,078,409 | | FHLB advances | Level 3 | $173,205 | $198,783 | | Long-term debt | Level 3 | $111,978 | $109,463 | | Subordinated debentures | Level 3 | $15,118 | $14,975 | [NOTE 18 - EARNINGS PER SHARE](index=48&type=section&id=NOTE%2018%20-%20EARNINGS%20PER%20SHARE) This note presents the calculation of basic and diluted earnings per common share for various periods | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :------------------------------------ | :------------------------------- | :----------------------------- | | Net income (in thousands) | $9,333 | $11,623 | | Basic earnings per common share | $0.53 | $0.66 | | Diluted earnings per common share | $0.52 | $0.65 | | Weighted-average common shares outstanding (Basic) | 17,746,607 | 17,737,212 | | Weighted-average common shares outstanding (Diluted) | 17,797,735 | 17,784,237 | - Options to purchase **155,500 shares** and **106,771 shares** were excluded from diluted EPS calculations for the three and six months ended **June 30, 2025**, respectively, due to their anti-dilutive effect[155](index=155&type=chunk) [NOTE 19 – REVENUE FROM CONTRACTS WITH CUSTOMERS](index=48&type=section&id=NOTE%2019%20%E2%80%93%20REVENUE%20FROM%20CONTRACTS%20WITH%20CUSTOMERS) This note details the components of revenue from customer contracts and other noninterest income sources | Revenue Type | Three Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Total in-scope noninterest income | $1,381 | $2,494 | | Noninterest income, not in scope | $7,097 | $8,279 | | Total Noninterest Income | $8,478 | $10,773 | - Major in-scope revenue streams include fees and service charges on deposit accounts, wealth management fees, and gain/loss on sales of OREO. Noninterest income outside ASC 606 primarily includes net loan servicing income, BOLI income, and the ERC refund[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk) [NOTE 20 - SEGMENT INFORMATION](index=50&type=section&id=NOTE%2020%20-%20SEGMENT%20INFORMATION) This note describes the company's operating segments and how performance is evaluated by management - The Company's reportable segments are determined by the Chief Executive Officer and Chief Financial Officer, who evaluate performance using consolidated net income, total assets, total loans, and total deposits[162](index=162&type=chunk)[163](index=163&type=chunk) | Metric | June 30, 2025 (in thousands) | | :-------------------- | :----------------------------- | | Total Assets | $4,090,040 | | Total Loans | $3,234,695 | | Total Deposits | $3,188,231 | | Consolidated net income | $9,333 | [NOTE 21 - QUALIFIED AFFORDABLE HOUSING PROJECT INVESTMENTS](index=52&type=section&id=NOTE%2021%20-%20QUALIFIED%20AFFORDABLE%20HOUSING%20PROJECT%20INVESTMENTS) This note reports on the company's investments in affordable housing projects and associated tax credits - Investments in qualified affordable housing projects totaled **$15.6 million** at **June 30, 2025**, with unfunded commitments of **$9.8 million**[166](index=166&type=chunk) - Tax credits recognized from these investments were **$515 thousand** for Q2 2025 and **$912 thousand** for the six months ended **June 30, 2025**[167](index=167&type=chunk) [NOTE 22 - REPURCHASE OF COMMON STOCK](index=52&type=section&id=NOTE%2022%20-%20REPURCHASE%20OF%20COMMON%20STOCK) This note details the company's common stock repurchase programs and shares repurchased during the period - The Board authorized a new **$18.0 million** stock repurchase program through **June 30, 2026**, with **$16.5 million** available at **June 30, 2025**[168](index=168&type=chunk) - The Company repurchased **87,731 shares** at a weighted average price of **$17.04** during Q2 2025[168](index=168&type=chunk) [NOTE 23 - SUBSEQUENT EVENTS](index=52&type=section&id=NOTE%2023%20-%20SUBSEQUENT%20EVENTS) This note discloses significant events that occurred after the balance sheet date but before the financial statements were issued - On **July 21, 2025**, the Board declared a common stock cash dividend of **$0.16 per share**, payable **August 12, 2025**[169](index=169&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=52&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the Company's financial condition and results of operations, including a cautionary note on forward-looking statements, critical accounting policies, and an overview of financial performance. It details the analysis of results of operations, covering net interest income, provision for credit losses, noninterest income, noninterest expense, and income tax expense. Furthermore, it analyzes the financial condition by examining total assets, cash and cash equivalents, investment securities, loans, allowance for credit losses, goodwill and intangibles, liabilities, deposits, borrowings, capital resources, liquidity management, regulatory capital requirements, contractual obligations, and off-balance sheet arrangements. The section concludes with a discussion of non-GAAP financial measures [CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS](index=52&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section warns that the report contains forward-looking statements subject to various risks and uncertainties - The report contains forward-looking statements subject to risks and uncertainties, including business and economic conditions, credit risks, regulatory compliance, interest rate fluctuations, and geopolitical conditions[170](index=170&type=chunk)[171](index=171&type=chunk)[178](index=178&type=chunk) - Actual results may differ materially from expectations, and the Company does not undertake to update any forward-looking statements[170](index=170&type=chunk)[174](index=174&type=chunk) [CRITICAL ACCOUNTING POLICIES](index=54&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) This section identifies key accounting policies that involve significant management estimates and judgments - Critical accounting policies include the allowance for credit losses (ACL) on loans held for investment, goodwill, and income taxes, which involve significant management estimates and assumptions[176](index=176&type=chunk) - A sensitivity analysis of the ACL at **June 30, 2025**, showed a **25% decrease** in prepayment speed would increase ACL by **$1.8 million** (**3.58%**), and a **one percentage point increase** in unemployment rate would increase ACL by **$1.2 million** (**2.42%**)[177](index=177&type=chunk) - Under a Moderate Stress scenario, the ACL would increase by **$9.3 million** (**18.03%**), and under a Major Stress scenario, it would increase by **$25.3 million** (**49.07%**) at **June 30, 2025**, with the Company projected to remain well-capitalized[179](index=179&type=chunk) [GENERAL](index=56&type=section&id=GENERAL) This section provides a general overview of RBB Bancorp's business, financial position, and market focus - RBB Bancorp, a bank holding company, had total assets of **$4.1 billion**, gross loans HFI of **$3.2 billion**, total deposits of **$3.2 billion**, and total shareholders' equity of **$517.7 million** at **June 30, 2025**[182](index=182&type=chunk) - The Bank serves Asian-centric communities through 24 branches across multiple states, offering commercial and investor real estate loans, business loans, SBA loans, mortgage loans, and a full range of depository services[182](index=182&type=chunk)[184](index=184&type=chunk) - The Company maintains its Minority Depository Institution (MDI) designation, which provides support from federal regulatory agencies[183](index=183&type=chunk) [OVERVIEW](index=56&type=section&id=OVERVIEW) This section provides a summary of the company's financial performance and key changes in financial condition for the reporting period | Metric | Q2 2025 (in thousands) | Q1 2025 (in thousands) | Q2 2024 (in thousands) | | :-------------------------- | :--------------------- | :--------------------- | :--------------------- | | Net income | $9,333 | $2,290 | $7,245 | | Diluted EPS | $0.52 | $0.13 | $0.39 | | Provision for credit losses | $2,387 | $6,746 | $557 | - Net income for Q2 2025 included a **$5.2 million (pre-tax) Employee Retention Credit (ERC) refund**, partially offset by **$1.2 million (pre-tax)** in associated professional and advisory costs[188](index=188&type=chunk) - Total assets increased by **$97.6 million** to **$4.1 billion** at **June 30, 2025**, driven by a **$181.5 million** increase in gross loans HFI, partially offset by a **$65.9 million** decrease in cash and cash equivalents[190](index=190&type=chunk) - Total deposits increased by **$104.4 million** to **$3.2 billion** at **June 30, 2025**, while FHLB advances decreased by **$20.0 million**. The all-in average spot rate for total deposits was **2.95%** at **June 30, 2025**[192](index=192&type=chunk) - Nonperforming assets decreased by **$3.6 million** to **$61.0 million (1.49% of total assets)** at **June 30, 2025**. The Allowance for Loan Losses (ALL) as a percentage of loans HFI decreased to **1.58%** at **June 30, 2025**, from **1.65%** at March 31, 2025[193](index=193&type=chunk)[194](index=194&type=chunk) - Shareholders' equity increased to **$517.7 million** (**$29.25** book value per share) at **June 30, 2025**, due to net income, lower unrealized losses on AFS securities, and equity compensation, partially offset by dividends and stock repurchases[195](index=195&type=chunk) [ANALYSIS OF RESULTS OF OPERATIONS](index=58&type=section&id=ANALYSIS%20OF%20RESULTS%20OF%20OPERATIONS) [Financial Performance](index=58&type=section&id=Financial%20Performance) This section summarizes key financial performance metrics, including net interest income, net income, and efficiency ratio | Metric | Q2 2025 | Q1 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------ | :------ | :------ | :------ | :------- | :------- | | Net interest income (in thousands) | $27,334 | $26,163 | $23,965 | $53,497 | $48,842 | | Net income (in thousands) | $9,333 | $2,290 | $7,245 | $11,623 | $15,281 | | Diluted EPS | $0.52 | $0.13 | $0.39 | $0.65 | $0.82 | | Return on average assets, annualized | 0.93% | 0.24% | 0.76% | 0.59% | 0.79% | | Return on average shareholders' equity, annualized | 7.29% | 1.81% | 5.69% | 4.57% | 6.00% | | Efficiency ratio | 57.22% | 65.09% | 62.38% | 60.70% | 61.21% | [Net Interest Income/Average Balance Sheet](index=60&type=section&id=Net%20Interest%20Income%2FAverage%20Balance%20Sheet) This section analyzes changes in net interest income and net interest margin based on average balance sheet components and interest rates - Net interest income increased by **$1.2 million** to **$27.3 million** in Q2 2025 compared to Q1 2025, driven by a **$1.9 million** increase in interest income (mostly from loans) offset by a **$698 thousand** increase in interest expense[208](index=208&type=chunk) - Net Interest Margin (NIM) expanded by **4 basis points** to **2.92%** in Q2 2025 from **2.88%** in Q1 2025, due to a **3 basis point increase** in asset yield and a **1 basis point decrease** in the overall cost of funds[209](index=209&type=chunk) - Compared to Q2 2024, net interest income increased by **$3.4 million** to **$27.3 million** in Q2 2025, primarily due to lower interest expense (**$2.1 million decrease**) and higher interest income (**$1.3 million increase**). NIM increased by **25 basis points** to **2.92%** from **2.67%**[212](index=212&type=chunk)[215](index=215&type=chunk) - For the six months ended **June 30, 2025**, net interest income increased by **$4.7 million** to **$53.5 million** compared to the same period in 2024, mainly due to a **$5.8 million decrease** in interest expense, partially offset by a **$1.1 million decrease** in interest income. NIM increased by **22 basis points** to **2.90%**[216](index=216&type=chunk)[219](index=219&type=chunk) [Provision for Credit Losses](index=66&type=section&id=Provision%20for%20Credit%20Losses) This section discusses the provision for credit losses, net charge-offs, and their impact on the allowance for credit losses - The provision for credit losses decreased to **$2.4 million** in Q2 2025 from **$6.7 million** in Q1 2025, reflecting a **$1.5 million increase** in general reserves due to net loan growth and a **$924 thousand increase** in specific reserves for one lending relationship[220](index=220&type=chunk) - Net charge-offs were **$3.3 million** in Q2 2025, compared to **$551 thousand** in Q2 2024, and **$5.9 million** for the six months ended **June 30, 2025**, compared to **$735 thousand** for the same period in 2024[221](index=221&type=chunk)[222](index=222&type=chunk) - The provision for the first six months of 2025 was **$9.1 million**, significantly higher than **$557 thousand** in the prior year, primarily due to increased net charge-offs and specific reserves[222](index=222&type=chunk) [Noninterest Income](index=66&type=section&id=Noninterest%20Income) This section details the components and drivers of the company's noninterest income, including significant one-time items | Noninterest Income Component | Q2 2025 (in thousands) | Q1 2025 (in thousands) | Q2 2024 (in thousands) | YTD 2025 (in thousands) | YTD 2024 (in thousands) | | :--------------------------------------- | :--------------------- | :--------------------- | :--------------------- | :---------------------- | :---------------------- | | Service charges and fees | $1,060 | $1,017 | $1,064 | $2,077 | $2,056 | | Gain on sale of loans | $358 | $81 | $451 | $439 | $763 | | Loan servicing income, net of amortization | $541 | $588 | $579 | $1,129 | $1,168 | | Increase in cash surrender value of life insurance | $411 | $403 | $385 | $814 | $767 | | Gain on OREO | — | — | $292 | — | $1,016 | | Other income | $6,108 | $206 | $717 | $6,314 | $1,090 | | Total noninterest income | $8,478 | $2,295 | $3,488 | $10,773 | $6,860 | - Noninterest income significantly increased by **$6.2 million** to **$8.5 million** in Q2 2025 compared to Q1 2025, primarily due to a **$5.2 million Employee Retention Credit (ERC) refund**[224](index=224&type=chunk) - Compared to Q2 2024, noninterest income increased by **$5.0 million**, mainly due to the ERC refund, partially offset by a **$292 thousand decrease** in gain on OREO[226](index=226&type=chunk)[227](index=227&type=chunk) - For the six months ended **June 30, 2025**, noninterest income increased by **$3.9 million** to **$10.8 million**, driven by the ERC refund, partially offset by decreases in gain on sale of loans and OREO-related gains[228](index=228&type=chunk) [Noninterest Expense](index=68&type=section&id=Noninterest%20Expense) This section analyzes the components and changes in the company's noninterest expenses, including salaries and professional fees | Noninterest Expense Component | Q2 2025 (in thousands) | Q1 2025 (in thousands) | Q2 2024 (in thousands) | YTD 2025 (in thousands) | YTD 2024 (in thousands) | | :------------------------------------ | :--------------------- | :--------------------- | :--------------------- | :---------------------- | :---------------------- | | Salaries and employee benefits | $11,080 | $10,643 | $9,533 | $21,723 | $19,460 | | Legal and professional | $2,904 | $1,515 | $1,260 | $4,419 | $2,140 | | Total noninterest expense | $20,493 | $18,522 | $17,124 | $39,015 | $34,093 | - Noninterest expense increased by **$2.0 million** to **$20.5 million** in Q2 2025 compared to Q1 2025, mainly due to a **$1.4 million increase** in legal and professional expense (including **$1.2 million for ERC advisory costs**) and a **$437 thousand increase** in salaries and employee benefits[234](index=234&type=chunk) - The efficiency ratio decreased to **57.22%** in Q2 2025 from **65.09%** in Q1 2025, primarily due to higher noninterest income from the ERC refund, partially offset by increased noninterest expense from ERC advisory costs[234](index=234&type=chunk) - For the six months ended **June 30, 2025**, noninterest expense increased by **$4.9 million** to **$39.0 million** compared to the same period in 2024, driven by increases in salaries and employee benefits (**$2.3 million**) and legal and professional fees (**$2.3 million**)[236](index=236&type=chunk) [Income Tax Expense](index=70&type=section&id=Income%20Tax%20Expense) This section provides an analysis of the company's income tax provision and effective tax rates for the reporting periods | Period | Income Tax Provision (in thousands) | Effective Tax Rate | | :------------------------------------ | :-------------------------------- | :----------------- | | Three Months Ended June 30, 2025 | $3,599 | 27.8% | | Three Months Ended March 31, 2025 | $900 | 28.2% | | Three Months Ended June 30, 2024 | $2,527 | 25.9% | | Six Months Ended June 30, 2025 | $4,499 | 27.9% | | Six Months Ended June 30, 2024 | $5,771 | 27.4% | - The Q2 2025 income tax provision included a discrete adjustment of **$379 thousand** resulting from a change in California tax law, which is expected to reduce the annual effective tax rate in future periods[237](index=237&type=chunk) [ANALYSIS OF FINANCIAL CONDITION](index=71&type=section&id=ANALYSIS%20OF%20FINANCIAL%20CONDITION) [Total Assets](index=71&type=section&id=Total%20Assets) This section discusses the primary drivers of changes in the company's total assets over the reporting period - Total assets increased by **$97.6 million** to **$4.1 billion** at **June 30, 2025**, from **$4.0 billion** at December 31, 2024, primarily due to a **$181.5 million** increase in gross loans HFI, partially offset by a **$65.9 million** decrease in cash and cash equivalents[240](index=240&type=chunk) [Cash and Cash Equivalents](index=71&type=section&id=Cash%20and%20Cash%20Equivalents) This section analyzes the changes in cash and cash equivalents resulting from operating, investing, and financing activities - Cash and cash equivalents decreased by **$65.9 million (25.6%)** to **$191.9 million** at **June 30, 2025**, from **$257.8 million** at December 31, 2024[241](index=241&type=chunk) - This decrease was due to **$172.4 million** used in investing activities (net increase in loans, AFS securities decrease, loan/OREO sales), partially offset by **$29.4 million** from operating activities and **$77.1 million** from financing activities (deposit growth, FHLB advances decrease)[241](index=241&type=chunk) [Investment Securities](index=71&type=section&id=Investment%20Securities) This section details the composition, fair value, and unrealized gains or losses within the company's investment securities portfolio | Security Type | June 30, 2025 Fair Value (in thousands) | December 31, 2024 Fair Value (in thousands) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Total securities, available for sale | $413,142 | $420,190 | | Total securities, held to maturity | $3,995 | $4,948 | | Total securities | $417,137 | $425,138 | - The weighted-average life of the total investment portfolio increased to **5.2 years** at **June 30, 2025**, from **5.0 years** at December 31, 2024, due to a decrease in commercial paper[248](index=248&type=chunk) - Unrealized losses on investment securities were primarily attributed to changes in interest rates, with no Allowance for Credit Losses (ACL) recorded on AFS or HTM securities as of **June 30, 2025**, or December 31, 2024[252](index=252&type=chunk) [Loans](index=74&type=section&id=Loans) This section provides a detailed breakdown and analysis of the loan portfolio - Loans HFI increased by **$181.5 million (12.0% annualized)** to **$3.2 billion** at **June 30, 2025**, driven by increases in SFR mortgages (**$109.1 million**), CRE loans (**$72.0 million**), C&I loans (**$8.7 million**), and SBA loans (**$8.7 million**)[254](index=254&type=chunk) | Loan Type (HFI) | June 30, 2025 % of Total | December 31, 2024 % of Total | | :-------------------------------- | :----------------------- | :----------------------- | | Single-family residential mortgages | 49.6% | 48.9% | | Commercial real estate | 39.4% | 39.3% | | Construction and land development | 4.9% | 5.7% | | Commercial and industrial | 4.3% | 4.2% | | SBA | 1.7% | 1.5% | | Other loans | 0.1% | 0.4% | - The majority of the loan portfolio (**88.3%**) is based on collateral or businesses located in California and New York[256](index=256&type=chunk) - SFR loans had a weighted-average LTV of **55.2%** and a weighted average FICO score of **764** at **June 30, 2025**[263](index=263&type=chunk) [Analysis of the Allowance for Loan Losses](index=80&type=section&id=Analysis%20of%20the%20Allowance%20for%20Loan%20Losses) This section examines the allowance for loan losses, nonperforming assets, and credit quality trends within the loan portfolio | Loan Type (HFI) | ALL as a % of Loan Type (June 30, 2025) | ALL as a % of Loan Type (December 31, 2024) | | :-------------------------------- | :-------------------------------------- | :------------------------------------------ | | Construction and land development | 5.05% | 3.49% | | Commercial real estate | 1.68% | 1.82% | | Single-family residential mortgages | 1.19% | 1.17% | | Commercial and industrial | 1.08% | 1.03% | | SBA | 1.41% | 1.38% | | Other | 3.88% | 3.74% | | Total Allowance for Loan Losses | 1.58% | 1.56% | - The Allowance for Credit Losses (ACL) totaled **$51.6 million** at **June 30, 2025**, an increase of **$3.2 million** from **$48.5 million** at December 31, 2024, due to a **$9.1 million** provision for credit losses offset by **$5.9 million** in net charge-offs[276](index=276&type=chunk) - Nonperforming assets decreased to **$61.0 million (1.49% of total assets)** at **June 30, 2025**, from **$81.0 million (2.03% of total assets)** at December 31, 2024[282](index=282&type=chunk) - Special mention loans increased by **$26.0 million** to **$91.3 million (2.82% of total loans)** at **June 30, 2025**, and substandard loans increased by **$1.9 million** to **$91.0 million**[287](index=287&type=chunk)[288](index=288&type=chunk) [Goodwill and Other Intangible Assets](index=83&type=section&id=Goodwill%20and%20Other%20Intangible%20Assets) This section reports on the carrying value and changes in the company's goodwill and other intangible assets - Goodwill remained at **$71.5 million** at **June 30, 2025**, and December 31, 2024. Other intangible assets (core deposit intangibles) were **$1.7 million** at **June 30, 2025**, down from **$2.0 million** at December 31, 2024[289](index=289&type=chunk) [Liabilities](index=83&type=section&id=Liabilities) This section discusses the primary drivers of changes in the company's total liabilities over the reporting period - Total liabilities increased by **$87.8 million** to **$3.6 billion** at **June 30, 2025**, from **$3.5 billion** at December 31, 2024, primarily due to a **$104.4 million** increase in deposits, offset by a **$20.0 million** decrease in FHLB advances[290](index=290&type=chunk) [Deposits](index=83&type=section&id=Deposits) This section analyzes the composition, growth, and cost of the company's deposit base - Total deposits increased by **$104.4 million (6.8% annualized)** to **$3.2 billion** at **June 30, 2025**, with interest-bearing deposits increasing by **$123.6 million** and noninterest-bearing deposits decreasing by **$19.1 million**[291](index=291&type=chunk) | Deposit Type | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Noninterest-bearing demand deposits | $543,885 | $563,012 | | Total interest-bearing deposits | $2,644,346 | $2,520,777 | | Total deposits | $3,188,231 | $3,083,789 | - Wholesale deposits increased to **$183.8 million** at **June 30, 2025**, from **$147.5 million** at December 31, 2024. Estimated uninsured deposits were **$1.5 billion** at **June 30, 2025**[291](index=291&type=chunk)[296](index=296&type=chunk) [FHLB Borrowings](index=86&type=section&id=FHLB%20Borrowings) This section details the company's Federal Home Loan Bank borrowings, outstanding advances, and remaining borrowing capacity - FHLB advances decreased to **$180.0 million** at **June 30, 2025**, from **$200.0 million** at December 31, 2024, consisting entirely of putable term advances with a weighted average interest rate of **3.51%**[297](index=297&type=chunk)[298](index=298&type=chunk) - The Company had **$918.4 million** of remaining secured borrowing capacity with the FHLB as of **June 30, 2025**[310](index=310&type=chunk) [Long-term Debt](index=86&type=section&id=Long-term%20Debt) This section describes the company's long-term debt obligations, including subordinated notes and their terms - Long-term debt, consisting of **4.00%** fixed-to-floating rate subordinated notes due **April 1, 2031**, was **$119.7 million** outstanding at **June 30, 2025**[299](index=299&type=chunk) [Subordinated Debentures](index=86&type=section&id=Subordinated%20Debentures) This section provides details on the company's subordinated debentures, their interest rates, and regulatory capital treatment - Subordinated debentures totaled **$15.3 million** at **June 30, 2025**, comprising TFC Trust, FAIC Trust, and PGBH Trust, all with variable interest rates tied to three-month CME Term SOFR[300](index=300&type=chunk)[302](index=302&type=chunk)[303](index=303&type=chunk)[304](index=304&type=chunk) - The Company was in compliance with all covenants under its long-term debt agreements and subordinated debt at **June 30, 2025**[301](index=301&type=chunk) [Capital Resources and Liquidity Management](index=88&type=section&id=Capital%20Resources%20and%20Liquidity%20Management) This section discusses the company's strategies for maintaining adequate capital and managing liquidity through various funding sources - Shareholders' equity increased by **$9.8 million (1.9%)** to **$517.7 million** at **June 30, 2025**, driven by net income, lower unrealized losses on AFS securities, and equity compensation, offset by dividends and repurchases[306](index=306&type=chunk) - Book value per share increased to **$29.25** and tangible book value per share increased to **$25.11** at **June 30, 2025**[306](index=306&type=chunk) - The Company maintains liquidity through liquid assets, liabilities, and access to alternative funding sources, with a wholesale funding ratio of **10.8%** at **June 30, 2025**[307](index=307&type=chunk)[308](index=308&type=chunk) - RBB Bancorp's main source of funding is dividends from the Bank, which paid **$45.0 million** in dividends to Bancorp during the six months ended **June 30, 2025**[311](index=311&type=chunk) [Regulatory Capital Requirements](index=89&type=section&id=Regulatory%20Capital%20Requirements) This section summarizes the company's compliance with all applicable regulatory capital requirements and its 'well-capitalized' status - The Company and the Bank exceeded all regulatory capital requirements under Basel III and were considered 'well-capitalized' at **June 30, 2025**, and December 31, 2024[313](index=313&type=chunk) | Capital Ratio | Consolidated June 30, 2025 | Bank June 30, 2025 | Minimum Requirement for "Well Capitalized" Depository Institution | | :------------------------------------ | :------------------------- | :----------------- | :---------------------------------------------------- | | Tier 1 Leverage Ratio | 12.04% | 13.20% | 5.00% | | Common Equity Tier 1 Risk-Based Capital Ratio | 17.61% | 19.96% | 6.50% | | Tier 1 Risk-Based Capital Ratio | 18.17% | 19.96% | 8.00% | | Total Risk-Based Capital Ratio | 24.00% | 21.21% | 10.00% | [Contractual Obligations](index=90&type=section&id=Contractual%20Obligations) This section details the company's future contractual payment obligations across various categories | Obligation Type | Within One Year (in thousands) | One to Three Years (in thousands) | Over Three to Five Years (in thousands) | After Five Years (in thousands) | Total (in thousands) | | :-------------------------------- | :----------------------------- | :-------------------------------- | :------------------------------------ | :------------------------------ | :------------------- | | Deposits without a stated maturity | $1,235,564 | — | — | — | $1,235,564 | | Time deposits | $1,944,764 | $7,429 | $474 | — | $1,952,667 | | FHLB advances | $180,000 | — | — | — | $180,000 | | Long-term debt | — | — | — | $119,720 | $119,720 | | Subordinated debentures | — | — | — | $15,265 | $15,265 | | Leases | $5,411 | $11,367 | $6,068 | $7,046 | $29,892 | | Total contractual obligations | $3,365,739 | $18,796 | $6,542 | $142,031 | $3,533,108 | [Off-Balance Sheet Arrangements](index=90&type=section&id=Off-Balance%20Sheet%20Arrangements) This section discloses the company's significant off-balance sheet financial commitments and arrangements - Off-balance sheet financial commitments, including commitments to extend credit, unused lines of credit, and letters of credit, totaled **$154.2 million** at **June 30, 2025**, down from **$175.5 million** at December 31, 2024[318](index=318&type=chunk) - Unfunded commitments for affordable housing partnerships and Small Business Investment Company funds totaled **$10.7 million** at **June 30, 2025**[321](index=321&type=chunk) [Non-GAAP Financial Measures](index=92&type=section&id=Non-GAAP%20Financial%20Measures) This section explains and reconciles the non-GAAP financial measures used by management to evaluate performance and capital adequacy - The Company uses non-GAAP financial measures such as 'tangible common equity to tangible assets ratio,' 'tangible book value per share,' and 'return on average tangible common equity' to evaluate capital adequacy and performance[322](index=322&type=chunk)[323](index=323&type=chunk)[324](index=324&type=chunk) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Tangible common equity (in thousands) | $444,488 | $434,368 | | Tangible assets (in thousands) | $4,016,875 | $3,918,968 | | Tangible common equity to tangible assets ratio | 11.07% | 11.08% | | Tangible book value per share | $25.11 | $24.51 | | Metric | Q2 2025 | Q1 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------ | :------ | :------ | :------ | :------- | :------- | | Return on average tangible common equity, annualized | 8.50% | 2.12% | 6.65% | 5.33% | 7.01% | [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=57&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section outlines the Company's exposure to market risk, primarily focusing on interest rate risk, price risk, and basis risk. It describes how the Asset Liability Committee (ALCO) establishes and monitors policy limits to manage these risks. The Company uses income simulation (Net Interest Income at Risk) and economic value analysis (Economic Value of Equity) to measure interest rate risk, indicating a liability-sensitive NII at Risk profile and a generally decreasing EVE position in both down and up rate scenarios, all within board policy limits [Market Risk](index=94&type=section&id=Market%20Risk) This section describes the company's exposure to market risks, particularly interest rate risk, and its management strategies - The Company's primary sources of market risk are interest rate risk (repricing, option, yield curve, basis risk), price risk (AFS securities), and basis risk (SFR, multifamily, and securities portfolios)[326](index=326&type=chunk)[327](index=327&type=chunk)[328](index=328&type=chunk)[329](index=329&type=chunk) - The Asset Liability Committee (ALCO) establishes and monitors policy limits for interest rate risk, aiming to minimize the impact of changing interest rates on net interest income and economic values[330](index=330&type=chunk) - At **June 30, 2025**, the Net Interest Income (NII) at Risk profile is liability sensitive, with a projected dollar change of **$(2,100) thousand** for a +100 basis point rate change and **$3,455 thousand** for a -100 basis point rate change[335](index=335&type=chunk)[336](index=336&type=chunk) - The Economic Value of Equity (EVE) position at **June 30, 2025**, is projected to generally decrease in both down and up rate scenarios, with a dollar change of **$(20,896) thousand** for a +100 basis point rate change and **$13,712 thousand** for a -100 basis point rate change[337](index=337&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=58&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section confirms the effectiveness of the Company's disclosure controls and procedures and reports no material changes in internal controls over financial reporting during the quarter [Evaluation of Disclosure Controls and Procedures](index=95&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as of the reporting date - Management, including the principal executive officer and principal financial officer, concluded that the Company's disclosure controls and procedures were effective as of **June 30, 2025**[338](index=338&type=chunk) [Changes in Internal Controls Over Financial Reporting](index=95&type=section&id=Changes%20in%20Internal%20Controls%20Over%20Financial%20Reporting) This section reports on any material changes in the company's internal controls over financial reporting during the period - There have been no material changes in the Company's internal control over financial reporting during the fiscal quarter ended **June 30, 2025**[339](index=339&type=chunk) [PART II - OTHER INFORMATION](index=59&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section covers additional required disclosures not included in the financial statements, such as legal proceedings and risk factors [ITEM 1. LEGAL PROCEEDINGS](index=59&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section states that there are no material pending legal proceedings beyond ordinary routine litigation incidental to the Company's business, and management believes such proceedings will not materially affect financial statements - There are no material pending legal proceedings, and management believes existing litigation will not have a material adverse impact on the Company's financial condition or results of operations[342](index=342&type=chunk) [ITEM 1A. RISK FACTORS](index=59&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section confirms that there have been no material changes to the risk factors previously disclosed in the Company's 2024 Annual Report, reiterating that unforeseen risks could significantly impact financial performance - No material changes to the risk factors previously disclosed in the 2024 Annual Report have occurred[343](index=343&type=chunk) - Unforeseen risks or uncertainties could still result in significant adverse effects on the Company's financial condition, results of operations, and cash flows[343](index=343&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=59&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section details the Company's stock repurchase program, including the authorization of a new program and the shares repurchased during the second quarter of 2025 - On **May 29, 2025**, the Board authorized a new stock repurchase program for up to **$18.0 million** of common stock through **June 30, 2026**[344](index=344&type=chunk) - During Q2 2025, the Company repurchased **87,731 shares** of common stock at an average price of **$17.04** per share[345](index=345&type=chunk)[346](index=346&type=chunk) - As of **June 30, 2025**, **912,269 shares** remained available for repurchase under the program[346](index=346&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=59&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This section confirms whether there were any defaults on senior securities during the reporting period - There were no defaults upon senior securities[347](index=347&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=59&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This section states the applicability of mine safety disclosures to the company's operations - Mine safety disclosures are not applicable to the Company[348](index=348&type=chunk) [ITEM 5. OTHER INFORMATION](index=59&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section reports on any other material information not otherwise disclosed, such as Rule 10b5-1 trading plans - No officer or director adopted or terminated any Rule 10b5-1 trading plans for the purchase or sale of common stock during the quarter ended **June 30, 2025**[349](index=349&type=chunk) [ITEM 6. EXHIBITS](index=60&type=section&id=ITEM%206.%20EXHIBITS) This section lists all documents filed as exhibits to the Form 10-Q, including corporate governance and certification documents - The exhibits include corporate governance documents (Articles of Incorporation, Bylaws), specimen common stock certificate, RBB Bancorp Award Agreement for Employees, CEO and CFO certifications (Sections 302 and 906 of Sarbanes-Oxley Act), and Inline XBRL documents[350](index=350&type=chunk) [SIGNATURES](index=61&type=section&id=SIGNATURES) This section contains the official certifications and signatures of the company's principal executive and financial officers - The report is duly signed by Johnny Lee, President and Chief Executive Officer, and Lynn Hopkins, Executive Vice President and Chief Financial Officer, on **August 8, 2025**[353](index=353&type=chunk)

Financial Data and Key Metrics Changes - Net income for the second quarter totaled $9.3 million or $0.52 per share, including a $2.9 million after-tax employee retention tax credit refund [3][7] - Net interest income increased by $1.2 million, supported by solid loan growth and stable earning asset yields, with net interest margin (NIM) rising to 2.92% [3][4] - Adjusted net income, excluding the ERC refund, would have been $6.5 million or $0.36 per diluted share [8] Business Line Data and Key Metrics Changes - Loan held for investment grew by $92 million or 12% on an annualized basis, with strong results from the mortgage origination business, which originated $120 million in the second quarter [3][4] - Total second quarter loan originations reached $183 million at a blended yield of 6.76% [4] - Noninterest expenses increased by $2 million to $20.5 million, with $1.2 million related to the ERC refund [9][10] Market Data and Key Metrics Changes - Total deposits increased at a 6% annualized rate to $3.2 billion, with growth in non-interest bearing deposits and CDs offsetting a decline in money market accounts [12] - The loan-to-deposit ratio exceeded 100%, indicating a need for careful management of loan growth and deposit acquisition [36][40] Company Strategy and Development Direction - The company is focused on resolving nonperforming loans while continuing to grow its loan portfolio, indicating a dual-path strategy [28][31] - Management is optimistic about maintaining loan growth despite credit quality challenges, with a healthy pipeline of loans [31][40] - The company is enhancing credit quality control, particularly in bridge and gap financing, to mitigate risks [22][56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of funding costs and potential increases in yields on earning assets, which could support margin improvements [5][9] - The company anticipates continued loan growth, albeit at a more moderate pace, and is actively managing its nonperforming assets [4][28] - Management acknowledged the competitive landscape for deposits and the need to balance loan growth with deposit acquisition strategies [40][42] Other Important Information - The tangible book value per share increased to $25.11, with all capital ratios remaining above regulatory well-capitalized levels [13] - The company expects noninterest expenses to normalize to an annualized run rate of about $18 million in future quarters [10][47] Q&A Session Summary Question: Discussion on capital and buyback program - Management views the stock as attractive at current trading prices and has sufficient liquidity to support both the buyback program and credit workouts [20][21] Question: Asset quality and loan downgrades - Management provided details on loans downgraded to substandard and special mention, emphasizing a conservative approach to credit quality control [22][25] Question: Sustainability of dual path strategy - Management believes it can continue to grow loans while addressing asset quality issues, with a healthy pipeline and ongoing focus on resolving nonperforming loans [28][31] Question: Loan and deposit growth outlook - Management is actively managing the loan-to-deposit ratio and expects to see organic deposit growth, with potential loan sales to alleviate pressure [40][42] Question: Deposit cost expectations - Management anticipates stabilization of deposit costs, with a focus on maintaining competitive rates to attract deposits [43][44] Question: Tax rate outlook - The tax rate for the quarter was around 28%, and management expects this to be a reasonable run rate going forward, with minor impacts from changes in California tax law [69][70]

Financial Data and Key Metrics Changes - Net income for the second quarter totaled $9.3 million or $0.52 per share, including a $2.9 million after-tax employee retention tax credit refund [3][7] - Net interest income increased by $1.2 million, supported by solid loan growth and stable earning asset yields, with net interest margin (NIM) rising to 2.92% [3][4] - Adjusted for the employee retention credit refund, net income would have been $6.5 million or $0.36 per diluted share [8] Business Line Data and Key Metrics Changes - Loan held for investment grew by $92 million or 12% on an annualized basis, with strong results from the in-house mortgage origination business, which originated $120 million in mortgages [3][4] - Total second quarter loan originations reached $183 million at a blended yield of 6.76% [4] - Noninterest expenses increased by $2 million to $20.5 million, with $1.2 million related to the employee retention credit refund [9][10] Market Data and Key Metrics Changes - Total deposits increased at a 6% annualized rate to $3.2 billion, with growth in non-interest bearing deposits and CDs offsetting a decline in money market accounts [12] - The loan-to-deposit ratio exceeded 100%, indicating a need for careful management of loan growth relative to deposit growth [34][40] Company Strategy and Development Direction - The company is focused on resolving nonperforming loans while continuing to grow its loan portfolio, indicating a dual-path strategy [26][29] - Management expressed confidence in maintaining loan growth while addressing asset quality issues, with a healthy pipeline for future loan originations [29][30] Management's Comments on Operating Environment and Future Outlook - Management noted that absent rate cuts, funding costs are stabilizing, and there may be increases in yields on earning assets, supporting incremental margin increases [5][9] - The company expects to continue seeing loan growth, albeit at a more moderate pace than in the first half of the year [4][30] Other Important Information - The tangible book value per share increased to $25.11, with all capital ratios remaining above regulatory well-capitalized levels [13] - The company is actively managing its credit quality control processes, tightening oversight on certain loan categories [20][51] Q&A Session Summary Question: Discussion on capital and buyback program - Management views the stock as attractive at current trading prices and has sufficient liquidity to support the buyback program while managing nonperforming loans [18][19] Question: Asset quality and loan downgrades - The increase in special mention loans is due to enhanced credit quality control, with a focus on bridge and gate loans experiencing delays in stabilizing income [21][22] Question: Sustainability of dual path strategy - Management believes it can continue to grow loans while resolving nonperforming loans, maintaining a healthy pipeline for future growth [26][29] Question: Loan and deposit growth outlook - Management is focused on quality in loan origination and is implementing promotional programs to attract new deposits [38][60] Question: Deposit cost expectations - Management anticipates some stabilization in deposit costs, with a potential lag in response to Fed rate cuts [41][42] Question: Tax rate outlook - The tax rate for the quarter was around 28%, which is expected to be a reasonable run rate going forward, with minor benefits from changes in California tax law [63][64]

Financial Performance - Net income for Q2 2025 was $93 million[8] - Diluted earnings per share (EPS) reached $052[8] - Net interest margin (NIM) expanded to 292%[8] - Return on average tangible common equity was 850%[8] Balance Sheet & Loan Portfolio - Gross loans held for investment (HFI) increased to $323 billion[8] - Total deposits amounted to $319 billion[8] - Annualized loan growth was 12%[9, 13] - Loans HFI increased by $916 million[13] Asset Quality - Nonperforming loans (NPLs) decreased by $36 million or 6%[9] - NPLs/Total Loans ratio was 176%[8] - Nonperforming assets (NPAs) decreased to $610 million[8] Capital & Efficiency - Common Equity Tier 1 (CET1) Ratio was 1761%[8] - Tangible common equity (TCE) ratio was 1107%[8] - Efficiency ratio improved to 5722%[8] Deposits - Deposits increased by $456 million or 6% annualized[13] - Uninsured deposits totaled $15 billion, representing 478% of total deposits[50]