RBB Bancorp (RBB) Earnings Call Transcript & Summary

I'm Alan Thian, Chairman of the Board and President and CEO of RBB Bancorp. I would like to welcome you and express thanks on behalf of the Board of Directors for your attendance today. Will the meeting please come to order. Before moving to our formal agenda, I would like to introduce those of our Board members who are present here on the forum today. Peter Chang, Wendell Chen, James Kao, Christina Kao, Christopher Koo, Alfonso Lau, Christopher Lin, Richard Lin, Ko-Yen Lin, Paul Lin, Catherine Thian and Raymond Yu. Mr. Peter Chang will act as Secretary of the meeting. Mr. David Morris has been appointed to act as Inspector of Election. Laurent Hansen, the company Counsel is present at the meeting. Karen Caboor and Erin Villafana partners from EB LLP are also present at the meeting. During the question-and-answer period at the end of the meeting, they will be available to answer questions concerning the company's financial statements. At this time, Peter Chang, Secretary of the company, will present proof of the due calling of the meeting. Peter?

I present the following: a copy of the printed Notice of Annual Meeting of Shareholders stating the time, place and purpose of this meeting and a copy of the proxy statement, furnishing in connection with the solicitation of proxies for use at this meeting. A complete list of shareholders of the company of record as of March 22, 2021, each of whom is entitled to notice of and to vote at this meeting. This list, which will be available for inspection throughout the course of this meeting, shows that as of March 22, 2021, there were 19,528,248 common shares of the company issued and outstanding. My affidavit is showing that I caused to be mail on or about April 7, 2021, to each shareholder of record a copy of the notice of the annual meeting of shareholders, the proxy statement and the proxy.

Thank you. Please find a copy of the notice of Annual Meeting together with the affidavit of mailing in the minutes book as part of the minutes of this meeting. The minutes book is here and will be kept open for the inspection of shareholders throughout the course of the meeting. The Board of Directors of the company has appointed David Morris as the Inspector of Election for this meeting. The Board has also appointed Peter Chang and myself as management's proxy holders for this meeting. The Inspector of Election has duly taken his office. I direct that the oath be filed with the minutes of this meeting. At this time, to be certain, a quorum is present, I ask the Inspector of Election to now make a poll of the shareholders shares represented at the meeting in person or by proxy and to report the results. David?

Is there anybody submitting any proxies? I see none. They are present in person or by proxy at this meeting of shareholders that I have subscribed for an aggregate of 13,319,388 common shares or 68.5% of the issued and outstanding common shares of the company.

By reason of facts that shareholders owning a majorities of issued and outstanding shares of the company entitled to vote at this meeting are present in person or by proxy. A quorum is present for all purposes. The meeting is now legally convened and ready to transact business. After the meeting has been adjourned, we will present our report as to the condition and operation of the company. We ask that you hold all of your questions until we have completed this report, and you will then be provided with ample opportunity to ask questions. The first matter of business will be the election of 13 directors to the Board of Directors of the company to serve until the next Annual Meeting of Shareholders and until their successors are elected and qualified. On behalf of the Board of Directors, I hereby nominate the following individuals: Peter Chang, Wendell Chen, James Kao, Christina Kao, Christopher Koo, Alfonso Lau, Christopher Lin, Richard Lin, Ko-Yen Lin, Paul Lin, Catherine Thian, Yee Phong Thian, Raymond Yu. Is there a second for the proposal?

Okay.

So I have been second? Okay. Is there any shareholder present who wishes to revoke his or her proxy? Are there any shareholders present who did not submit proxies and wish to vote by written ballot? The 13 nominees receiving the highest number of votes will be elected, I hereby declare the polls closed. It appears that the inspector of election has finished counting the votes in connection with the election of directors. Will the inspector of election, please report the results of the election?

Mr. Thian, all of management's nominees has been elected.

Thank you. The report of the inspector of election shows that the shareholders of the company have voted for the election of Peter Chang, Wendell Chen, James Kao, Christina Kao, Christopher Koo, Alfonso Lau, Christopher Lin, Richard Lin, Ko-Yen Lin, Paul Lin, Catherine Thian, Alan Thian, Raymond Yu. They are hereby declared elected to serve as directors of the company until the next annual meeting of the shareholders and until their successors are elected and have qualified. The report of the inspector of election is approved. Proposal #2. Advisory vote on named Executive Officer compensation. The second matter of business will be to approve on an advisory and nonbinding basis the compensation paid to the company's named executive officers, as described in proposal 2 of the proxy statement dated April 7, 2021. On behalf of the Board of Directors, I hereby move that proposal 2 contained in the proxy statement dated April 7, 2021, be approved. Is there a second to the motion. Any second?

I second.

I second.

Each of you second. The proposal must receive at least a majority of the shares present in person or presented by proxy, and voting at this meeting is required to approve on a nonbinding advisory basis, the 2020 compensation of our named executive officers, as described in our April 7, 2021, proxy statement. Is there any shareholder present who wishes to revoke his or her proxy? Are there any shareholders present who did not submit proxies and wish to vote by written ballot? I hereby declare the voting close. Will the inspector of election, please report the results of the vote?

Mr. Thian, Proposal 2 has been approved by a majority of the shareholders present in person or represented by proxies and voting at this meeting.

The report of the inspector of election shows that the stockholders of the company approved, on a nonbinding advisory basis, the company's 2020 compensation of our named executive officers. The report of the inspector of election is approved. Proposal 3, ratification of appointment of independent auditors. The third matter of business will be to ratify the appointment of Eide Bailly LLP as the company's independent auditors for the fiscal year ended December 31, 2021, as described in proposal 3 of the proxy statement, dated April 7, 2021. On behalf of the Board of Directors, I hereby move the proposal 3 contained in the process statement dated April 7, 2021, be approved. Is there a second to the motion?

Hmm.

Okay, [ T.T. ] second, right? The proposal must receive at least a majority of the shares present in present or represented by proxy and voting at this meeting to ratify the appointment of Eide Bailly LLP as our independent auditors for the fiscal year ended December 31, 2021, as described in our April 7, 2021, proxy statement. Is there any shareholder present who wishes to revoke his or her proxy? Are there any shareholders present who did not submit proxies and wish to vote by written ballot? I declare -- I hereby declare the voting close. Will the inspector of elections, please report the results of the vote?

Mr. Thian, Proposal 3 has been approved by 99.99% of the shares present in person and represented the proxy and voting at this meeting.

The report of the inspector of election shows that the stockholders of the company have ratified the appointment of Eide Bailly LLP as our independent auditors for the fiscal year ended December 31, 2021, as described in our April 7, 2021, proxy statement. The report of the inspector of election is approved. Thank you for attending today's meeting. The meeting is adjourned. At this time, I would like David Morris to present a report as to the condition and operation of the company. After he has finished his report, there will be a question-and-answer session. [Operator Instructions] David?

Good morning, everybody. I would like to just give us a small presentation. So here today. The full presentation will be available on our website and on the SEC's website within 48 hours of this meeting. Okay. So starting here of today. So as of March 31, we have almost $3.7 billion in assets. Our gross loans including held for sale loans, is at $2.7 million. Our total deposits at $2.8 billion. Our common equity -- tangible common equity of $362 million and so forth. Our return on assets that's been 1.47% [indiscernible] -- our return on average tangible common equity is 14.05%. If you turn to the next page, you can see our net income for the first quarter of 2021 $12.5 million compared to all of last year of $33 million. We are at a record start of the year. We had a very first -- very good first quarter. Our earnings per share basic was at $0.64. If you can see here our, down the book below, our book value is $22.31, and our tangible book value is $18.51. Next page, please. As far as COVID-19 is concerned, as of April 15, we had 21 loans still on deferment plan, equaling $17.7 million. It started at $410.9 million, 564 loans. So we're very happy about that. The decrease in deferment and so forth. Last year, we acquired Pacific Global Bank in Chicago area. As you can see, this is now our footprint. We opened a branch in New Jersey. So we're now in New Jersey, New York, Illinois, Nevada and California. As you can see here, for the first quarter, our loans declined slightly from year-end. Our deposits are up almost by $200 million. Our net income, $12.5 million, if we just annualize that, that would be very close to $50 million. Our -- and our return on average common equity is $14.05. Next page, you can see that our yield on interest-bearing assets while has gone down, it hasn't gone down as big as our competitors. Our cost of interest-bearing liabilities is dropping very fast. Our deposits are down at 0.55%. And our cost of interest-bearing total is at $106 million, that includes the sub-debt that we have. Our net interest margin has gone up from the lows of last year to 3.73%. And we see our efficiency ratio is going back down, which is good news. Unlike a lot of our competitors, we are -- we have 4 main products. We have single-family residents, which is right now about 38%; CRE, which is about 47%; C&I, 11%; and SBA 4%. The chart below and how -- our call report [indiscernible]. The biggest difference is both independent family, single-family residents are separated into these other categories. Finally, I want to just talk about our loan culture. Right now, our loan quality is very good. We have had very little change in our loan quality, probably a little bit of tick up since COVID, but not a significant pickup at all. And finally, we consider our -- we consider 83% of our deposits to be core. As far as the future is concerned, we will continue to see our CD rates going lower. Our deposit rates will keep on going down as our competitors keep on lowering their rates, we will do that, too. If the yield curve increases, that will benefit us. We believe that we'll have high single-digit balance sheet growth this year that will further improve our profitability. We see expense levels being flat. It's a consolidation of offices in some of our regions and modest cost saves. We also projected loan losses. We have a couple of pre-COVID loans that we may have to take a little bit of loan losses on. Too early to tell with COVID because places are just opening up now, and there's still a lot of money in the system. Just want to make sure you realize that 88% of the loans with the firm are paying as agreed, 88% are paying as agreed to date. 94% are -- that are in deferments are paying interest. Future branch activity, Bensonhurst's New York in Brooklyn. We have purchased the building there, and we plan on open a branch there in late 2021. We will move our Manhattan branch to Canal Street and we're searching for branch locations in the Chicago area in Northern California. Are there any questions? As I said, the full presentation, that is our investor presentation that we give is -- will be available on our website within 48 hours. Questions?

So, Morris, if there's no question we adjourn the meeting.

I'd ask one more time, Alan. Maybe they didn't hear you.

So is there any other questions? For person who's present here on the phone. Well, if there's no question, we'll adjourn the meeting. Thank you.