RBB(US:RBB)2023-08-08 20:37Financial Position - As of June 30, 2023, the company had total consolidated assets of $4.1 billion, gross consolidated loans of $3.2 billion, total consolidated deposits of $3.2 billion, and total consolidated shareholders' equity of $500.3 million[233]. - The company pledged loans of $1.5 billion with the Federal Home Loan Bank and had an additional borrowing capacity of $1.1 billion as of June 30, 2023[212]. - The company had $92.0 million of unsecured federal funds lines and $40.8 million from the Federal Reserve Discount Window as of June 30, 2023[212]. - The company did not have any borrowings outstanding with federal fund lines or the Federal Reserve Discount Window as of June 30, 2023[212]. - Total assets increased by $156.6 million, or 4.0%, to $4.1 billion as of June 30, 2023, primarily due to a $162.8 million increase in cash and cash equivalents[241]. - Total liabilities rose by $140.8 million to $3.6 billion at June 30, 2023, primarily due to a $197.7 million increase in deposits[347]. - Total deposits increased by $197.7 million to $3.2 billion at June 30, 2023, compared to $3.0 billion at December 31, 2022, driven by higher yielding time deposits[352]. - The company reported a total shareholders' equity of $500,062 thousand as of June 30, 2023, compared to $466,603 thousand in the previous year, indicating a year-over-year increase of 7.15%[255]. Loan Portfolio - The company expects to reduce the size of the loan portfolio in the next few quarters by slowing the pace of loan originations and focusing on supporting core relationships[230]. - Total loans held for investment decreased by $140.5 million, or 4.2%, to $3.2 billion at June 30, 2023, driven by declines in commercial real estate and commercial and industrial loans[243]. - Total loans held for investment rose to $3,272,126 thousand in Q2 2023, a 9.47% increase from $2,989,614 thousand in Q2 2022[255]. - Commercial real estate (CRE) loans decreased by $128.7 million, or 9.8%, to $1.2 billion as of June 30, 2023, compared to $1.3 billion at December 31, 2022[318]. - Single-family residential (SFR) mortgage loans increased by $90.6 million, or 6.2%, to $1.6 billion as of June 30, 2023, compared to $1.5 billion at December 31, 2022[324]. - Commercial and industrial (C&I) loans decreased by $69.8 million, or 34.7%, to $131.5 million as of June 30, 2023, compared to $201.2 million at December 31, 2022[317]. - Construction and land development (C&D) loans decreased by $20.0 million, or 7.2%, to $256.9 million as of June 30, 2023, compared to $276.9 million at December 31, 2022[319]. Earnings Performance - For Q2 2023, the company reported net earnings of $10.9 million, a decrease of $4.5 million from $15.5 million in Q2 2022, with diluted earnings per share at $0.58 compared to $0.80 in the same period last year[240]. - The net interest income for Q2 2023 was $31.9 million, down from $37.1 million in Q2 2022, with a net interest margin impacted by changes in interest rates[252]. - The company reported a decrease in noninterest income to $2.5 million for Q2 2023, down from $3.4 million in Q2 2022[252]. - The net interest margin for Q2 2023 was 3.37%, down from 4.08% in Q2 2022, primarily due to increases in market interest rates[264]. - Net interest income for the first half of 2023 was $66,076 thousand, with a net interest margin of 3.53%, compared to $71,629 thousand and 3.77% in the same period of 2022[257]. - Noninterest income decreased by $1.5 million, or 23.7%, to $4.9 million for the first half of 2023, primarily due to a decline in loan sale gains and corporate real estate sales[288]. Capital Adequacy - The company exceeded all regulatory capital requirements under Basel III and was considered "well-capitalized" as of June 30, 2023[212]. - The company's Tier 1 leverage capital ratio was 11.60% and the total risk-based capital ratio was 25.27% as of June 30, 2023, indicating a well-capitalized status under Basel III[249]. - The consolidated Tier 1 leverage ratio was 11.60% at June 30, 2023, compared to 11.67% at December 31, 2022[372]. - The consolidated total risk-based capital ratio was 25.27% at June 30, 2023, up from 24.27% at December 31, 2022[372]. - The tangible common equity to tangible assets ratio is a key non-GAAP measure used to evaluate capital adequacy[380]. Interest Rate Impact - The Federal Reserve raised interest rates by 3.5% from June 30, 2022, to June 30, 2023, impacting the company's interest income and expenses[263]. - The average interest rate on total interest-bearing deposits was 3.47% for the three months ended June 30, 2023, compared to 0.93% for the year ended December 31, 2022[348]. - The average yield on interest-earning assets was 6.01% in Q2 2023, up from 4.66% in Q2 2022, indicating a significant increase in interest rates[255]. - Interest expense on deposits surged to $21.9 million in Q2 2023, up from $2.4 million in Q2 2022, marking a $19.6 million, or 833.9%, increase[266]. - Interest expense on deposits increased to $37.6 million for the first half of 2023, a 711.1% increase from $4.6 million in the first half of 2022, driven by a 267 basis point rise in average rates and a $404.3 million increase in average interest-bearing deposits[286]. Credit Quality - The allowance for credit losses (ACL) increased by $2.0 million to $43.1 million, with the ACL to total loans outstanding at 1.35% as of June 30, 2023, compared to 1.23% at December 31, 2022[247]. - Non-performing loans rose by $18.3 million to $41.9 million at June 30, 2023, from $23.5 million at December 31, 2022, driven by increases in non-performing residential mortgage loans and commercial real estate loans[336]. - The ratio of non-performing loans to total loans increased to 1.31% as of June 30, 2023, compared to 0.71% at December 31, 2022[336]. - The provision for credit losses for the three months ended June 30, 2023, was $601,000, compared to $915,000 for the same period in 2022[332]. - The provision for credit losses rose by $1.1 million to $2.4 million in the first half of 2023, reflecting increases in classified loans, with net loan charge-offs of $737,000 compared to $39,000 in the same period of 2022[287].