RBB(US:RBB)2025-10-21 19:02Financial Data and Key Metrics Changes - Net income for the third quarter totaled $10.1 million or $0.59 per share, representing a 9% increase from the previous quarter and a 45% increase year-over-year [3][5] - Net interest income increased for the fifth consecutive quarter, rising by $1.9 million to $29.3 million, driven by higher interest income of $3.2 million [6][8] - Net interest margin expanded by six basis points to 2.98%, marking a 30 basis point increase over the last four quarters [3][7] Business Line Data and Key Metrics Changes - Loans held for investment grew by $68 million or 8% on an annualized basis, primarily from the in-house mortgage origination business [4] - Third quarter loan originations totaled $188 million at a blended yield of 6.70%, which is 67 basis points above the prior quarter's blended loan portfolio yield [4][9] - Non-performing loans decreased by $11.3 million or 20% to $44.5 million, attributed to charge-offs and upgrades [9][10] Market Data and Key Metrics Changes - Total deposits increased by $178 million from the end of the second quarter to $3.4 billion, with growth across all deposit categories [11] - The allowance for loan losses to total loans held for investment ratio stood at 1.36% as of September 30, indicating appropriate risk coverage [11] Company Strategy and Development Direction - The company is focused on addressing remaining credit issues and improving asset quality, with a goal of resolving significant non-accrual loans [20][21] - There is an ongoing effort to shift the loan portfolio mix towards commercial and industrial (C&I) loans while maintaining strong growth in residential mortgages [34][36] - The company is considering opportunities for share buybacks and refinancing sub-debt, while also investing in business growth and technology [55] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about core earnings growth and lower credit costs, viewing these as positive signs for the future [3] - The competitive landscape for liquidity remains challenging, impacting the ability to reduce funding costs significantly [7][30] - The company anticipates continued loan growth, although Q4 may see some seasonal moderation [34] Other Important Information - The tangible book value per share increased to $25.89, reflecting a 12% annualized increase [11] - The company repurchased 660,000 shares, or 4% of shares outstanding, during the third quarter [11] Q&A Session Summary Question: Asset quality improvement metrics - Management acknowledged progress in asset quality but indicated that more work is needed, particularly in resolving non-accrual loans [18][19] Question: Capital and share repurchase authorization - Approximately $4 million remains in the current share repurchase program, with management open to future buybacks depending on stock price and market conditions [22][23] Question: Deposit beta and interest rates - Management noted that deposit beta has slowed due to fierce competition for liquidity, and they expect to capitalize on upcoming maturing time deposits [28][30] Question: Loan growth and portfolio mix - The pipeline remains healthy, with a focus on residential mortgages and a gradual shift towards C&I loans, although government shutdowns may impact SBA loan funding [35][36] Question: Interest recovery and FHLB advances - No significant interest recovery was noted in Q3, and FHLB advances were replaced with brokered deposits at higher rates [42][43]