RBB(US:RBB)2021-07-27 21:19Financial Data and Key Metrics Changes - Net income grew 7.4% from the previous quarter and more than doubled year-over-year to a record $13.4 million, or $0.67 per diluted share [12] - Net interest margin decreased to 3.33%, down 40 basis points from the first quarter and down 9 basis points from a year prior [14] - Non-performing assets decreased by $700,000 to $19.5 million, representing 0.5% of total assets [19] Business Line Data and Key Metrics Changes - Loans held for investment totaled $2.7 billion, stable from the previous quarter [14] - Commercial real estate loans grew at a 15% annualized rate, while construction loans grew at a 52% annualized rate [15] - Non-QM mortgage production decreased by $57 million, indicating challenges in the mortgage sector [15] Market Data and Key Metrics Changes - Total deposits increased by $249 million, with non-interest-bearing deposits rising by $153 million [17] - Average cost of interest-bearing deposits was 0.59%, down 14 basis points from the prior quarter [18] Company Strategy and Development Direction - The company is entering the Hawaiian market to serve Asian-American communities, indicating a strategic expansion [10] - Management is focused on increasing loan production and revitalizing the non-QM origination channel [28] - The company sees opportunities for mergers and acquisitions, particularly with smaller banks seeking partnerships post-pandemic [37][39] Management's Comments on Operating Environment and Future Outlook - Management expects loan growth to target 9% to 10% for the remainder of the year, with a strong loan origination pipeline [23] - There is optimism regarding the SBA business, with expectations for continued strong performance in the third and fourth quarters [30][32] - Management anticipates that excess liquidity in the market will decrease over time, impacting their investment strategy [27] Other Important Information - The company was awarded $1.8 million under the U.S. Treasury CDFI Rapid Response Program, highlighting its community-focused lending reputation [20] - The average yield on earning assets was 3.99%, down 50 basis points from the prior quarter [16] Q&A Session Summary Question: Expectations for net loan growth for the remainder of the year - Management targets 9% to 10% loan growth, with expectations of slowing prepayments [23][24] Question: Driving robust non-interest-bearing deposit growth - Growth attributed to existing customers, new customers, and excess market liquidity [25][26] Question: Outlook for SBA sales - Expectation for SBA business to remain strong in the third and fourth quarters [30][32] Question: Update on M&A opportunities - Management sees increased interest in partnerships among smaller banks post-pandemic [37][39] Question: Non-QM mortgage production normalization - Anticipated to take at least two quarters to return to normal levels [41] Question: Expense run rate for the back half of the year - Expected quarterly expenses to be between $14.7 million and $15 million [42] Question: Share repurchases in the quarter - The company repurchased 222,000 shares and plans to continue repurchases in the third quarter [51] Question: CDs repricing in the back half of the year - $415 million maturing in Q3 at 87 bps, with ongoing rates around 50 bps [54] Question: Loan yields and competition - Management believes they can maintain current yield levels despite competitive pressures [56]