RBB(US:RBB)2025-07-22 19:00Financial 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]