RBB Bancorp (RBB) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call shows mixed results: positive on nonperforming loans, asset quality, and net interest income, but concerns over noninterest income decline and unclear management responses. The Q&A highlights optimism in NIM expansion and credit resolution but lacks precise guidance. Overall, the stock price is likely to remain stable, reflecting a neutral sentiment.
Key Financial Performance
Net Income Fourth quarter net income totaled $10.2 million or $0.59 per share, which was stable from the third quarter but more than double our earnings for the same quarter a year ago. The increase was attributed to strong loan growth and improving performance ratios.
Loan Growth For the year, loans grew at a solid 8.6%, demonstrating progress in returning to historical growth rates. Loan originations for the year were 32% higher than in 2024, with $145 million in originations during the fourth quarter.
Loan Yield Despite the Fed rate cuts of 75 basis points in 2025, the fourth quarter yield on loans increased by 4 basis points to 6.7% compared to the same quarter a year ago. This was due to pricing and structuring discipline.
Deposits Fourth quarter total deposits increased 6.6% compared to the fourth quarter a year ago. The rate on average interest-bearing deposits declined by 55 basis points from the fourth quarter of 2024, reflecting efforts to reduce funding costs.
Nonperforming Loans and Assets Nonperforming loans decreased 45% and nonperforming assets decreased 34% since the end of last year, with ongoing improvement during the fourth quarter. Criticized and classified assets also improved, decreasing by 43% for the full year.
Net Interest Income Net interest income increased by 13% to $112 million for the year, driven by loan growth, relatively stable asset yields, and a 38 basis point decline in funding costs.
Noninterest Income Fourth quarter noninterest income declined by $486,000 from the third quarter due to the absence of a $0.5 million gain from an equity investment. However, compared to the fourth quarter of 2024, all categories of noninterest income increased except for other income.
Noninterest Expenses Fourth quarter noninterest expenses increased by $282,000 mostly due to year-end accruals but were in line with expectations. The operating expense ratio was stable at 1.80% of average total assets.
Effective Tax Rate The quarterly effective tax rate decreased by 330 basis points in the fourth quarter compared to the third quarter of 2025, due to a reduction in the multistate blended tax rate and benefits from state tax planning.
Tangible Book Value Per Share Tangible book value per share increased 7.8% during 2025 to $26.42, while returning over $25 million in capital to shareholders through dividends and share repurchases.
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Operating Highlights
Loan Growth: Loans grew at a solid 8.6% for the year, with strong originations of $145 million in Q4 and a 32% increase in loan originations compared to 2024. The pipeline remains healthy, indicating high single-digit growth in 2026.
Deposit Growth: Total deposits increased by 6.6% in Q4 compared to the same quarter in 2024, with strong growth in interest-bearing nonmaturing deposits. However, competition for deposits has intensified.
Nonperforming Assets: Nonperforming loans decreased by 45% and nonperforming assets decreased by 34% during 2025. Criticized and classified assets also improved, decreasing by 43% for the year.
Net Interest Income: Net interest income increased by 13% to $112 million for the year, driven by loan growth and a 38 basis point decline in funding costs.
Operating Expense Ratio: The operating expense ratio was stable at 1.80% of average total assets in Q4. Expenses are expected to stabilize in the $18 million to $19 million range in 2026.
Tax Strategy: The effective tax rate was reduced by 330 basis points in Q4 due to multistate tax planning and federal tax credits. The 2026 effective tax rate is expected to be between 27% and 28%.
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Risk or Challenges
Nonperforming Assets: The company is still working to resolve remaining nonperforming assets, which could impact financial performance if not addressed effectively.
Deposit Competition: Competition for deposits has been increasing, making it challenging to reduce funding costs further despite recent rate cuts.
Funding Costs: Recent rate cuts have not delivered the same pace of reductions in deposit costs, which could pressure margins.
Noninterest Income Volatility: Noninterest income declined in the fourth quarter due to the absence of a one-time gain from an equity investment, indicating potential volatility in this income stream.
Operating Expenses: First quarter expenses are expected to increase due to seasonal taxes and salary adjustments, which could impact profitability.
Credit Costs: While credit has stabilized, future annual credit costs could still pose a risk if economic conditions worsen.
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Guidance & Outlook
Loan Growth: Optimistic for another year of high single-digit growth in 2026, supported by a healthy pipeline and disciplined pricing and structuring.
Deposit Costs: Incremental improvement in deposit costs expected in the first quarter of 2026, though competition remains intense, making the impact difficult to quantify.
Noninterest Expenses: First quarter expenses expected to increase due to seasonal taxes and salary adjustments, then stabilize in the $18 million to $19 million range for the rest of 2026 as professional service fees moderate.
Effective Tax Rate: Expected to be between 27% and 28% in 2026.
Credit Costs: Future annual credit costs expected to be much lower now that credit has stabilized.
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Shareholder Return Plan
Dividends: RBB Bancorp returned over $25 million in capital to shareholders through dividends in 2025.
Share Repurchase: The company repurchased approximately 4% of its outstanding shares in 2025.
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Key Q&A
Q:How should we think about the deposit beta going forward?
A:The deposit beta for the linked quarters was 30%, and management expects it to increase as a large portion of the funding base and deposits mature over the next year.
Q:Any update on plans for the sub debt leases?
A:The company has $120 million of sub debt eligible for redemption, which will reprice effective April 1. Management is considering rightsizing it for the balance sheet and capital stack, as the market appears more attractive than the current rate of just under 7%.
Q:How should we think about the buyback this year?
A:Management plans to focus on rightsizing the sub debt first and then expects to be more active on a buyback program later in the year.
Q:Can you talk about the path of the margin as we move through '26?
A:Management sees opportunities for deposit costs to come down as 99.5% of $1.7 billion in CDs mature within 12 months. They expect some repricing into the current interest rate environment and have shifted funding to non-maturity interest-bearing products. They anticipate net interest margin (NIM) expansion, supported by resolving nonperforming assets.
Q:Where do you hope to see credit metrics by the end of 2026?
A:Management is focused on resolving classified and criticized credits. 90% of non-performing loans (NPLs) are represented by four relationships, with three making payments. They aim to resolve these issues, including a partially completed construction project, by the first half of 2026.
Q:Can you speak more to the loan growth pipeline and the reasons for the recent slowdown?
A:Loan growth slowed due to loan sales, strategic exits of classified credits, and some payoffs. However, the pipeline remains healthy, with commercial loans averaging $65 million per quarter and residential mortgages at $90 million per quarter. Management is optimistic about maintaining this pace.
Q:Is the current expense run rate a good indication for 2026?
A:The fourth-quarter expense run rate of $19 million is a good indication for 2026. Legal and professional costs are expected to decline as credit stabilizes, and management does not anticipate a significant step-up in expenses to achieve mid- to high single-digit loan growth.
Q:Do you see this year as an opportunity to lower the loan-to-deposit ratio?
A:Management believes there is some opportunity to lower the loan-to-deposit ratio to the mid-90s, but significant reduction would require deposit growth to outpace loan growth or opportunistic loan sales.
Q:What is the competition like for commercial real estate loans in your footprint?
A:Competition remains strong, with some peers offering 5-year fixed rates below 5.75%. However, the company focuses on relationship-driven banking and has maintained yields above 6%.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the exact timeline for resolving nonperforming loans and the partially completed construction project. Additionally, while they discussed opportunities for NIM expansion and expense management, their responses lacked precise numerical targets or timelines.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Bancorp Conference
Conference Instructions
Deposits spot
Lee day
NIM trend
RBB bank
RBB rate
ROA NIM
advance demand
analyst Maam
asset corner
asset end
bank work
client deposit
community outreach
competition deposit
corner credit
credit RBB
credit quarter
cut basis
cut pace
demand deposit
deposit interest
deposit progress
deposit rate
digit pricing
discipline origination
end improvement
end result
finish loan
host analyst
improvement asset
interest deposit
line digit
loan basis
loan reduction
origination basis
origination line
rate cut
RBB Transcript
RBB Bancorp (RBB) Q4 2025 Earnings Call Transcript
Unknown1-27
The earnings call shows mixed results: positive on nonperforming loans, asset quality, and net interest income, but concerns over noninterest income decline and unclear management responses. The Q&A highlights optimism in NIM expansion and credit resolution but lacks precise guidance. Overall, the stock price is likely to remain stable, reflecting a neutral sentiment.
RBB Bancorp (RBB) Q3 2025 Earnings Call Transcript
Positive10-21
The earnings call summary and Q&A highlight improved asset quality, loan growth, and a stable net interest margin. Decreases in nonperforming and substandard loans, along with increased deposits, indicate financial health. The Q&A revealed management's focus on credit resolution and strategic priorities, with no immediate plans for share repurchase renewal. Despite some management ambiguity, the overall sentiment is positive due to strong financial performance and optimistic guidance, suggesting a likely stock price increase.
RBB Bancorp (RBB) Q2 2025 Earnings Call Transcript
Positive7-23
The earnings call revealed strong financial performance, with reduced non-performing assets, solid loan growth, and increased deposits. The Q&A section highlighted management's confidence in managing asset quality and loan growth, with plans for loan sales and deposit program promotions. The buyback program and potential for reduced deposit costs further support a positive outlook. Despite some uncertainties in loan sales and deposit cost reductions, the overall sentiment leans positive, suggesting a likely stock price increase of 2% to 8% over the next two weeks.
Earnings call transcript: RBB Bancorp misses Q1 2025 EPS forecast
Unknown4-29
The earnings call reveals mixed signals: strong loan growth and improving net interest margin contrast with challenges like decreased net income and non-interest income. The company's efforts to address non-performing loans and potential share repurchase plans are positives, but uncertainties around tariffs and regulatory scrutiny present risks. The Q&A section did not alleviate these concerns, with management providing vague responses. Overall, the mixed financial performance and cautious outlook suggest a neutral sentiment, with no strong catalysts for significant stock price movement in the next two weeks.
RBB Slides
RBB Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
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Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
