RBB(US:RBB)2023-11-14 20:05Financial Position - As of September 30, 2023, the company had total consolidated assets of $4.1 billion, gross consolidated loans of $3.1 billion, total consolidated deposits of $3.2 billion, and total consolidated shareholders' equity of $502.5 million[229]. - The company pledged loans of $1.5 billion with the Federal Home Loan Bank (FHLB) and had an additional borrowing capacity of $1.1 billion based on the values of loans[225]. - The company received a $5.0 million grant from the Community Development Financial Institutions (CDFI) Equitable Recovery Program, with income recognition deferred until performance goals are met[226]. - The company exceeded all regulatory capital requirements under Basel III and was considered "well-capitalized" as of September 30, 2023[225]. - Total assets increased by $150.3 million, or 3.8%, to $4.1 billion as of September 30, 2023, driven by a $247.2 million increase in cash and cash equivalents[237]. - Shareholders' equity rose by $17.9 million, or 3.7%, to $502.5 million, supported by $30.4 million of net income[245]. - The company's Tier 1 leverage capital ratio was 11.68% and the total risk-based capital ratio was 26.24% as of September 30, 2023, indicating a well-capitalized status[246]. - The company reported a total of $504,432 thousand in shareholders' equity as of September 30, 2023, an increase from $474,106 thousand in the previous year[252]. - Total liabilities increased by $128.9 million to $3.6 billion as of September 30, 2023, from $3.4 billion at December 31, 2022[343]. - Total deposits increased by $176.4 million to $3.2 billion as of September 30, 2023, compared to $3.0 billion at December 31, 2022[348]. Earnings Performance - For Q3 2023, the company reported net earnings of $8.5 million, a decrease of $8.2 million from $16.7 million in Q3 2022, primarily due to a $11.4 million decrease in net interest income[236]. - Net income after tax for the third quarter of 2023 was $8.5 million, a decrease of 49.1% from $16.7 million in the third quarter of 2022[277]. - Net income after tax fell to $30.4 million for the first nine months of 2023, a decrease of $16.4 million, or 35.0%, from $46.7 million in the same period of 2022, primarily due to a $16.9 million decrease in net interest income[295]. - Noninterest income increased by $235,000, or 9.3%, to $2.8 million in Q3 2023 compared to $2.5 million in Q3 2022, driven by a $190,000 increase in gains on the sale of other real estate owned[264]. - Noninterest income decreased by $1.3 million, or 14.3%, to $7.6 million for the first nine months of 2023, mainly due to a $1.5 million decrease in gain on sale of loans attributed to rising market interest rates[284]. Loan and Deposit Activity - Total loans held for investment decreased by $215.5 million, or 6.5%, to $3.1 billion, primarily due to declines in commercial real estate loans of $147.9 million and commercial and industrial loans of $73.6 million[239]. - The average yield on loans held for investment increased to 5.99% in Q3 2023, compared to 5.53% in Q3 2022, reflecting a positive trend in loan profitability[252]. - The company is proactively offering alternatives to clients with deposit balances exceeding $250,000 to reduce uninsured deposits[224]. - Noninterest-bearing deposits decreased by $226.3 million, or 28.3%, to $572.4 million, while interest-bearing deposits increased by $402.7 million, or 18.5%, to $2.6 billion[241]. - The average balance of real estate loans held for investment was $2,968,246 thousand in Q3 2023, with an interest income of $43,583 thousand, yielding a rate of 5.83%[252]. - The company experienced $2.2 million in net loan charge-offs in Q3 2023, compared to $127,000 in net loan recoveries in Q3 2022[263]. - The company reported a $31.8 million increase in average gross loans, indicating organic loan growth[259]. Interest Income and Expense - Net interest income for Q3 2023 was $27.6 million, down from $39.0 million in Q3 2022, reflecting the impact of rising interest rates[249]. - The efficiency ratio for Q3 2023 was 55.59%, compared to 40.22% in Q3 2022, indicating increased operational costs relative to income[249]. - Interest expense on deposits rose to $25.0 million in Q3 2023, a significant increase of $21.0 million, or 525.6%, from $4.0 million in Q3 2022[261]. - The average interest rate on total interest-bearing deposits increased to 3.83% for the three months ended September 30, 2023, from 0.93% for the year ended December 31, 2022[344]. - The average rate paid on interest-bearing deposits increased by 279 basis points during the period, contributing to the decrease in net interest income[279]. Credit Quality and Allowance for Credit Losses - The allowance for credit losses (ACL) increased to $42.4 million, or 1.36% of total loans, compared to $41.1 million, or 1.23%, at the end of 2022[244]. - Nonperforming loans increased by $16.6 million to $40.1 million at September 30, 2023, from $23.5 million at December 31, 2022, driven by increases in nonperforming residential mortgage loans and commercial real estate loans[331]. - The provision for credit losses rose by $745,000 to $3.8 million in the first nine months of 2023, reflecting increases in classified loans that impacted the qualitative factors in the Company's CECL model[283]. - The total charge-offs for the nine months ended September 30, 2023, were $2.99 million, compared to $0.15 million for the same period in 2022[327]. - The allowance for credit losses to total loans was 1.36% as of September 30, 2023, compared to 1.19% at December 31, 2022[327]. Market and Economic Conditions - A sensitivity analysis indicated that a 1% increase in the unemployment rate would result in a $773,000, or 1.8%, increase to the allowance for credit losses (ACL)[210]. - The Federal Reserve raised interest rates by 2.25% during the 12-month period from September 30, 2022, to September 30, 2023, impacting the company's interest income[259]. - The net interest margin is sensitive to changes in interest rates, inflation, and economic conditions, impacting overall performance significantly[250]. - The asset liability committee (ALCO) meets monthly to monitor interest rate risk sensitivity and ensure compliance with approved risk limits[380].