RBB(RBB) - 2025 Q3 - Quarterly Results

Executive Summary & Highlights Third Quarter 2025 Highlights 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] - 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] Financial Performance Analysis Net Interest Income and Net Interest Margin 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] - 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] Provision for Credit Losses 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] - 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] Noninterest Income 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] Noninterest Expense 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] Income Taxes 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] Balance Sheet Analysis Overall Balance Sheet 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 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] - 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] 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] - Wholesale time deposits were raised to repay $50.0 million in maturing FHLB advances[17] Credit Quality 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 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] Nonperforming Loans 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 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] Substandard Loans 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 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 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 Shareholders' Equity 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] Dividend Announcement 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] - The dividend is payable on November 12, 2025, to shareholders of record on October 31, 2025[28] Corporate Information & Disclosures Corporate Overview 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] - 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] - 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] Conference Call Details 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] - 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][32] - 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][32] 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] - 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] Safe Harbor Statement 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] - Key risks include business and economic conditions, regulatory supervision, credit risks, interest rate fluctuations, real estate market conditions, cybersecurity threats, and geopolitical events[34] - The Company explicitly disclaims any obligation to update forward-looking statements to reflect future occurrences or unanticipated events, except as required by law[34] Financial Statements Condensed Consolidated Balance Sheets 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 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) 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) 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) 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) 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 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 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 Tangible Book Value Reconciliations 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 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]