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| PART I |
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| Item 1. | Business | 4 |
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| Item 1A. | Risk Factors | 26 |
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| Item 1B. | Unresolved Staff Comments | 37 |
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| Item 1C. | Cybersecurity | 37 |
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| Item 2. | Properties | 37 |
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| Item 3. | Legal Proceedings | 38 |
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| Item 4. | Mine Safety Disclosures | 38 |
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| PART II |
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| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 39 |
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| Item 6. | Reserved | |
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| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 41 |
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| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 69 |
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| Item 8. | Financial Statements and Supplementary Data | 72 |
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| Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | 116 |
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| Item 9A. | Controls and Procedures | 116 |
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| Item 9B. | Other Information | 117 |
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| Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 117 |
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| PART III |
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| Item 10. | Directors, Executive Officers and Corporate Governance | 118 |
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| Item 11. | Executive Compensation | 118 |
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| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 118 |
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| Item 13. | Certain Relationships and Related Transactions, and Director Independence | 118 |
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| Item 14. | Principal Accountant Fees and Services | 118 |
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| PART IV |
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| Item 15. | Exhibits, Financial Statement Schedules | 119 |
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FORWARD-LOOKING STATEMENTS
In this Annual Report on Form 10-K (this “Annual Report”), the term “Bancorp” refers to RBB Bancorp and the term “Bank” refers to Royal Business Bank. The terms “Company,” “we,” “us,” and “our” refer to Bancorp and the Bank collectively. The statements in this report include forward-looking statements within the meaning of the applicable provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), regarding management’s beliefs, projections, and assumptions concerning future results and events. We intend such forward-looking statements to be covered by the safe harbor provision for forward-looking statements in these provisions. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including statements about anticipated future operating and financial performance, financial position and liquidity, growth opportunities and growth rates, growth plans, acquisition and divestiture opportunities, business prospects, strategic alternatives, business strategies, financial expectations, regulatory and competitive outlook, investment and expenditure plans, financing needs and availability, and other similar forecasts and statements of expectation and statements of assumptions underlying any of the foregoing. Words such as “aims,” “anticipates,” “believes,” “can,” “could,” “estimates,” “expects,” “hopes,” “intends,” “may,” “plans,” “projects,” “seeks,” “shall,” “should,” “will,” “predicts,” “potential,” “continue,” “possible,” “optimistic,” and variations of these words and similar expressions are intended to identify these forward-looking statements. Forward-looking statements by us are based on estimates, beliefs, projections, and assumptions of management and are not guarantees of future performance. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. Such risks and uncertainties and other factors include, but are not limited to, adverse developments or conditions related to or arising from:
| ● | the effectiveness of our internal control over financial reporting and disclosure controls and procedures; |
| ● | the potential for material weaknesses in our internal controls over financial reporting or other potential control deficiencies of which we are not currently aware or which have not been detected; |
| ● | business and economic conditions generally and in the financial services industry, nationally and within our current and future geographic markets, including the tight labor market, ineffective management of the United States (“U.S.”) federal budget or debt or turbulence or uncertainly in domestic or foreign financial markets; |
| ● | the strength of the U.S. economy in general and the strength of the local economies in which we conduct operations; |
| ● | adverse developments in the banking industry highlighted by high-profile bank failures and the potential impact of such developments on customer confidence, liquidity and regulatory responses to these developments; |
| ● | possible additional provisions for credit losses and charge-offs; |
| ● | credit risks of lending activities and deterioration in asset or credit quality; |
| ● | extensive laws and regulations and supervision that we are subject to, including potential supervisory action by bank supervisory authorities; |
| ● | compliance with the Bank Secrecy Act and other money laundering statutes and regulations; |
| ● | potential goodwill impairment; |
| ● | fluctuations in interest rates; |
| ● | failure to comply with debt covenants; |
| ● | risks associated with acquisitions and the expansion of our business into new markets; |
| ● | inflation and deflation; |
| ● | real estate market conditions and the value of real estate collateral; |
| ● | the effects of having concentrations in our loan portfolio, including commercial real estate and the risks of geographic and industry concentrations; |
| ● | environmental liabilities; |
| ● | our ability to compete with larger competitors; |
| ● | our ability to retain key personnel; |
| ● | successful management of reputational risk; |
| ● | severe weather, natural disasters, earthquakes, fires, including direct and indirect costs and impacts on clients, the Company and its employees from the January 2025 Los Angeles county wildfires; |
| ● | geopolitical conditions, including acts or threats of terrorism, actions taken by the U.S. or other governments in response to acts or threats of terrorism and/or military conflicts, including the war between Russia and Ukraine, conflict in the Middle East, and increasing tensions between China and Taiwan, which could impact business and economic conditions in the U.S. and abroad; |
| ● | public health crises and pandemics, and their effects on the economic and business environments in which we operate, including our credit quality and business operations, as well as the impact on general economic and financial market conditions; |
| ● | general economic, business conditions or impact of potential tariffs in Asia, and other regions where the Bank has operations; |
| ● | failures, interruptions, or security breaches of our information systems; |
| ● | climate change, including any enhanced regulatory, compliance, credit and reputational risks and costs; |
| ● | cybersecurity threats and the cost of defending against them; |
| ● | our ability to adapt our systems to the expanding use of technology in banking; |
| ● | risk management processes and strategies; |
| ● | the impact of regulatory enforcement actions, if any; |
| ● | certain provisions in our charter and bylaws that may affect acquisition of the Company; |
| ● | changes in tax laws and regulations; |
| ● | the impact of governmental efforts to restructure the U.S. financial regulatory system such as increased costs of compliance and other risks associated with changes in regulation, including any amendments to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"); |
| ● | the impact of changes in the FDIC insurance assessment rate and the rules and regulations related to the calculation of the FDIC insurance assessments; |
| ● | the effect of changes in accounting policies and practices or accounting standards, as may be adopted from time-to-time by bank regulatory agencies, the U.S. Securities and Exchange Commission (“SEC”), the Public Company Accounting Oversight Board, the Financial Accounting Standards Board (“FASB”) or other accounting standards setters, including Accounting Standards Update (“ASU” or “Update”) 2016-13 (ASC 326, “Measurement of Current Losses on Financial Instruments, commonly referenced as the Current Expected Credit Losses Model (“CECL”) model, which changed how we estimate credit losses and may further increase the required level of our allowance for credit losses in future periods; |
| ● | fluctuations in our stock price; |
| ● | restrictions on dividends and other distributions by laws and regulations and by our regulators and our capital structure; |
| ● | our ability to raise additional capital, if needed, and the potential resulting dilution of interests of holders of our common stock; |
| ● | the soundness of other financial institutions and our ongoing relations with our various federal and state regulators, including the SEC, FDIC, FRB and DFPI; and |
| ● | our success at managing the risks involved in the foregoing items. |
These and other factors are further described in this Annual Report (at Item 1A. Risk Factors in particular), our other reports filed with the SEC and other filings we make with the SEC from time to time. Actual results in any future period may also vary from the past results discussed in this report. Given these risks and uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements, which speak to the date of this report. We have no intention and undertake no obligation to update any forward-looking statement or to publicly announce any revision of any forward-looking statement to reflect future developments or events, except as required by law.
PART I
