RBB Bancorp

What they do

RBB Bancorp serves as the holding company for Royal Business Bank and RBB Asset Management Company, with RAM holding no problem assets and no activity in 2025 or 2024. The Bank provides commercial and investor real estate loans, business loans and lines of credit, SBA 7A and 504 loans, mortgage loans, trade finance, and depository accounts including remote deposit, E-banking, mobile banking and treasury management. It operates 24 full-service branches across California, Nevada, New York, Illinois, New Jersey and Hawaii, plus a loan production office in the San Francisco Bay area, targeting predominantly small and middle-market businesses and individuals. Primary revenue comes from interest on loans, with lesser amounts from investment securities and noninterest fees such as lending and deposit services, loan servicing and wealth management.

Revenue drivers

• Net interest income from loans — The largest revenue source; net interest income was $30.1 million in Q2 2026, with gross loans held for investment of $3.3 billion at June 30, 2026.
• Commercial and investor real estate lending — A core product line alongside business loans and lines of credit, SBA 7A and 504 loans, mortgage loans and trade finance; loans held for investment were 84.4% of earning assets at December 31, 2025.
• Deposit and fee-based services — Noninterest income from lending and deposit services, loan servicing, gain on sales of loans and wealth management, though it was lower in Q2 2026 than the prior quarter and prior year.
• Investment securities and other interest income — A smaller contributor than loans; interest income rose $356,000 quarter over quarter partly on higher loan interest, offset by lower FHLB dividend income after a $430,000 special dividend in Q1 2026.

Recent performance

For the quarter ended June 30, 2026, RBB reported net income of $10.1 million, or $0.59 diluted EPS, compared to $11.3 million, or $0.66, in Q1 2026 and $9.3 million, or $0.52, in Q2 2025. Net interest margin fell 9 basis points to 3.06% from 3.15%, as the cost of subordinated notes rose after repricing from 4.00% to 6.98% effective April 1, 2026, partly offset by a 5 basis point decline in deposit costs to 2.81%. There was no provision for credit losses in Q2 2026 versus a $200,000 reversal in Q1 2026, and nonperforming assets declined $5.3 million, or 10.8%, to $43.6 million. Return on average assets was 0.97% versus 1.09% in the prior quarter, while book value per share rose to $31.51 and tangible book value to $27.23.

Strategy

Management said Q2 2026 results reflected stable loan yields, strong loan originations and continued growth in retail deposits, with a focus on disciplined loan growth, relationship banking and resolving problem assets. The company announced a new common stock repurchase plan for up to 1 million shares through June 30, 2028, and completed a $40 million partial redemption of subordinated notes on July 1, 2026. RBB intends to maintain its minority depository institution designation, expecting at least 51% of issued and outstanding shares to remain owned by minority individuals or a majority of the board to be minority. The company states it will continue to consider opportunistic acquisitions beneficial to long-term growth and accretive to shareholders, having completed six whole-bank acquisitions and one branch acquisition between 2011 and 2022. It also stresses controlling noninterest expense, which declined 2% year over year in the first half of 2026 while net interest income grew 13%.

Risks

• Interest rate and margin pressure — Net interest income is the principal earnings component, and NIM fell 9 basis points to 3.06% in Q2 2026 as subordinated note costs rose after repricing to 6.98%.
• Credit quality and problem assets — Nonperforming assets were $43.6 million at June 30, 2026, and management's sensitivity analysis as of December 31, 2025 showed a 25% increase in prepayment speeds would reduce the ACL by $891,000.
• Concentration in Asian-centric communities and commercial real estate — The Bank's business is predominantly oriented to Asian-centric communities, and commercial and investor real estate loans are core products, exposing results to localized economic conditions.
• Allowance estimate uncertainty — The ACL relies on forward-looking forecasts including projected unemployment; at December 31, 2025, a one percentage point increase in the forecasted unemployment rate would raise the ACL by $1.0 million, or 2.4%.

Outlook

The financial results for the three and six months ended June 30, 2026 are not necessarily indicative of results expected for the year ending December 31, 2026, according to the 10-Q. Management highlighted continued retail deposit growth, a lower cost of deposits, declining nonperforming assets, and a focus on disciplined loan growth and relationship banking for long-term shareholder value. The company also completed a $40 million partial redemption of subordinated notes on July 1, 2026, and authorized repurchases of up to 1 million shares through June 30, 2028.