RBB Bancorp (NASDAQ:RBB) Q1 2023 Earnings Call Transcript

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Alex Ko: An just let me add a little bit more color on that. We intentionally increased the CD proportion. We did see the non-interest bearing deposit decreased, given what happened — the reduced — the concentration. But I think that it really benefits to increase the CDs to secure those funding sources for certain periods. We are not offering two years or three years of CD. It’s more nine months or at the most one year, so that we can actually secure our funding sources for that regard. So I don’t really view this increase on the CD side as a negative, it is more secure. Even though cost was relatively higher than others, I think it was worth for us to increase those CD deposits. Those are — there is a broker deposit, but there is a quite success on the retail deposit from the CD side as well.

David Morris: Okay. Are there any –

Ben Gerlinger: Yes. No, I got it. Thanks. Appreciate the color.

David Morris: Sure.

Operator: Thank you. Your next question is coming from Andrew Terrell from Stephens Inc. Your line is live.

David Morris: Hi, Andrew.

Andrew Terrell: Hey, thanks for the follow-up. I was hoping to get maybe a better sense of the non-interest bearing deposit flows in the quarter. Can you help us think about the cadence throughout the quarter on a monthly basis, just how the non-interest bearing balances progressed? And then, so far quarter to date in April, have you seen any kind of stabilization in non-interest bearing deposit balances?

Alex Ko: Yes. I will attempt to answer that. I don’t have that monthly breakdown in front of me. But as I said earlier, those decrease of the noninterest bearing deposit was due to one large relationship, strategically starting last year. So that has continued into Q1. So that’s the reason why we have a decrease. And also given the interest rate market, those non-interest bearing, they migrated to CD or higher earning method. So that will continue, but not to the level that we have experienced, given the market expectation for the interest rate for May is a minimum, let’s say, 25 days or even the decreases, I would expect that run off of the noninterest bearing deposit will slow down going forward. But I think, again, I don’t have the monthly breakdown, but it got stabilized since the March 31 or liquidity crisis. I didn’t see much acceleration of those non-interest bearing run off.

Andrew Terrell: Yes. Okay. Do you have how much of the decline in the quarter was related to that one relationship?

Alex Ko: One relationship was $26 million. Okay. We already reduced it significantly throughout 2022.

Andrew Terrell: Yes. Okay. And one last for me just on buyback. I didn’t see any this quarter. Just updated thoughts, I mean, with a slower level of balance sheet growth, you guys sit in a really strong capital position right now. Just love to hear your thoughts on whether buyback is of interest?

David Morris: The Board is still discussing it at this time.

Andrew Terrell: Okay. Thanks for taking the follow ups.

Operator: Thank you. Your next question is coming from Joseph (ph) from Finance Investment Society. Your line is live.

Unidentified Participant: Hi. First, I want to thank you guys for handling the liquidity crisis very well as a shareholder. And just thank you for being pretty good management over this last quarter. I wanted to ask more questions about the buyback that we’re just asking about. I understand that you guys have to create a good liquidity level to navigate throughout this crisis. But there is lots of opportunities to repurchase shares at what you may seem like to be an accretive value going forward. And due to your high liquidity position in the market, would potential of mergers of acquisition activity be something that you would consider above the buyback or just overall when you’re redeploying your earnings?

David Morris: Hi. Right now I think doing any merger and acquisition in addition to what has already been announced would be — it’s too early for us to be comfortable in doing that. We don’t know — I personally believe that the banking system is very sound and we’re very sound. But if we could have what happened in March 10th happen again overnight with a number of these larger banks. So I don’t think M&A is wise right at the moment for us. I do prefer — the Board is more interested in giving back capital through the dividend process right now. So that’s I think number one. And I think number two is, they are very — they are looking at reinstituting the buyback, but that will be probably a month or two or so down the road.

Unidentified Participant: All right. Thank you for clarifying that.

Operator: Thank you. There are no further questions in the queue.

David Morris: Once again, I really want to thank our customer base who has stuck with us during March where everything was going crazy and appreciate them very much. And just so that you know, most of our customer base that has multiple millions of dollars with us are also investors in this bank. So, we want to thank them and so forth. I also want to thank you for who have joined us today. We look forward to speaking to many of you in the coming days and weeks. Have a great day. Thank you.

Operator: Thank you everyone. This concludes today’s event. You may disconnect at this time and have a wonderful day. Thank you for your participation.

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