RBB Bancorp

The following discussion provides information about the results of operations, financial condition, liquidity, and capital resources of RBB and its wholly owned subsidiaries. This information is intended to facilitate an understanding and assessment of significant changes and trends related to our financial condition and results of operations. This discussion and analysis should be read in conjunction with our audited consolidated financial statements included in our 2025 Annual Report, and the unaudited consolidated financial statements and accompanying notes presented elsewhere in this Report. The financial results for the three months ended March 31, 2026, are not necessarily indicative of the results expected for the year ending December 31, 2026.

We reported net income of $11.3 million, or $0.66 diluted earnings per share, for the quarter ended March 31, 2026, compared to net income of $10.2 million, or $0.59 diluted earnings per share, for the quarter ended December 31, 2025, and $2.3 million, or $0.13 diluted earnings per share, for the quarter ended March 31, 2025. Net income for the first quarter of 2026 reflected higher net interest income, lower credit costs, and higher noninterest income as compared to the prior quarter and the same quarter last year.

The provision for credit losses was a reversal of $200,000 for the first quarter of 2026 compared to a provision of $600,000 and $6.8 million for the quarters ended December 31, 2025, and March 31, 2025. The first quarter of 2026 reversal of provision for credit losses was supported by paydowns on loans with specific reserves, the impact of stabilized credit quality trends, and positive underlying economic forecast indicators, which offset the need for provisions related to new loan originations. Net charge-offs in the first quarter of 2026 represented 0.00% of average loans on an annualized basis, compared to 0.20% for the fourth quarter of 2025 and 0.35% for the first quarter of 2025.

At March 31, 2026, total assets were $4.2 billion, a decrease of $14.0 million from December 31, 2025. The decrease in total assets was primarily the result of a decrease of $15.4 million in cash and cash equivalents and a decrease of $10.5 million in income tax receivable. The decrease in cash supported an increase of $10.9 million in gross loans HFI to $3.3 billion at March 31, 2026, and an increase of $8.6 million in securities available for sale ("AFS") to $415.8 million at March 31, 2026. The decrease in income tax receivable of $10.5 million was the result of refunds of taxes previously paid that were received from taxing authorities in the first quarter of 2026. Total deposits decreased by $10.5 million to $3.3 billion as of March 31, 2026. The decrease in total deposits during the first quarter of 2026 was due to a $61.9 million decrease in wholesale deposits offset by a $51.4 million increase in retail deposits. The increase in retail deposits included a $219.4 million increase in non-maturity interest-bearing deposits and a $168.4 million decrease in time deposits as a portion of the maturing time deposits moved into a high-yield savings product. Noninterest-bearing demand deposits totaled $526.9 million, or 15.8% of total deposits, at March 31, 2026, which is similar to the balances at December 31, 2025. The gross loan to deposit ratio was 99.6% at March 31, 2026, compared to 99.0% at December 31, 2025.

Nonperforming assets decreased $4.6 million to $48.8 million, or 1.16% of total assets, at March 31, 2026, from $53.5 million, or 1.27% of total assets, at December 31, 2025. The $4.6 million decrease in nonperforming assets was primarily attributable to a $4.6 million decrease in OREO to $4.3 million at March 31, 2026, compared to $8.8 million at December 31, 2025. The decrease in OREO was due to the sale of one property and a $350,000 valuation provision on a remaining OREO property. The sale resulted in a $1.2 million gain.

Loans classified as substandard decreased by $2.7 million during the first quarter of 2026 due to payoffs and paydowns totaling $3.0 million and upgrades to pass-rated status of $1.1 million, partially offset by downgrades to substandard totaling $1.5 million. Loans classified as special mention increased $5.5 million due to downgrades of $5.8 million, partially offset by paydowns of $303,000.

As of March 31, 2026, the allowance for credit losses totaled $44.2 million, down from $44.4 million at December 31, 2025. The $222,000 decrease in the allowance for credit losses for the first quarter of 2026 was due to a $200,000 reversal of provision for credit losses and net charge-offs of $22,000. The allowance for loan losses ("ALL") as a percentage of loans HFI totaled 1.31% at March 31, 2026, compared to 1.32% at December 31, 2025. The ALL as a percentage of nonperforming loans HFI was 97.98% at March 31, 2026, and 98.33% at December 31, 2025.

Total shareholders' equity was $531.1 million, or $31.10 book value per share, at March 31, 2026, compared to $523.4 million, or $30.69 book value per share, at December 31, 2025. The increase in shareholders' equity for the first quarter of 2026 compared to the prior quarter was due mostly to net income of $11.3 million, offset by common stock cash dividends paid of $2.8 million and higher net unrealized losses on AFS securities of $962,000. Tangible book value per share increased to $26.84 at March 31, 2026, up from $26.42 at December 31, 2025. For additional information on tangible book value per share, see "Non-GAAP Financial Measures."