RBB Bancorp
For the period ended Jun 30, 2026. Filed Aug 7, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 7, 2026
Extracted filing text, with the paragraph anchors used by the comparison.
See the whole filing, with its images and exhibitsContents
ANALYSIS OF RESULTS OF OPERATIONS
Financial Performance
| Three Months Ended · Six Months Ended | |||||
|---|---|---|---|---|---|
| June 30, 2026 | March 31, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 | |
| (dollars in thousands, except per share data) | |||||
| Interest and dividend income | $57,159 | $56,803 | $54,205 | $113,962 | $106,541 |
| Interest expense | 27,073 | 26,300 | 26,871 | 53,373 | 53,044 |
| Net interest income | 30,086 | 30,503 | 27,334 | 60,589 | 53,497 |
| (Reversal of)/provision for credit losses | — | (200) | 2,387 | (200) | 9,133 |
| Net interest income after (reversal of)/provision for credit losses | 30,086 | 30,703 | 24,947 | 60,789 | 44,364 |
| Noninterest income | 3,018 | 4,251 | 8,478 | 7,269 | 10,773 |
| Noninterest expense | 19,022 | 19,258 | 20,493 | 38,280 | 39,015 |
| Income before income taxes | 14,082 | 15,696 | 12,932 | 29,778 | 16,122 |
| Income tax expense | 3,942 | 4,396 | 3,599 | 8,338 | 4,499 |
| Net income | $10,140 | $11,300 | $9,333 | $21,440 | $11,623 |
| Pre-tax pre-provision income (1) | $14,082 | $15,496 | $15,319 | $29,578 | $25,255 |
| Share Data | |||||
| Earnings per common share (2): | |||||
| Basic | $0.60 | $0.66 | $0.53 | $1.26 | $0.66 |
| Diluted | 0.59 | 0.66 | 0.52 | 1.25 | 0.65 |
| Performance Metrics | |||||
| Return on average assets, annualized | 0.97% | 1.09% | 0.93% | 1.03% | 0.59% |
| Return on average shareholders’ equity, annualized | 7.64% | 8.66% | 7.29% | 8.14% | 4.57% |
| Return on average tangible common equity, annualized (1) | 8.85% | 10.04% | 8.50% | 9.44% | 5.33% |
| Efficiency ratio (3) | 57.46% | 55.41% | 57.22% | 56.41% | 60.70% |
| Tangible common equity to tangible assets (1) | 11.01% | 11.12% | 11.07% | 11.01% | 11.07% |
| Tangible book value per share (1) | $27.23 | $26.84 | $25.11 | $27.23 | $25.11 |
| (1) | Non-GAAP financial measure. See "Non-GAAP Financial Measures" for a reconciliation of this measure to their most comparable GAAP measure. |
| (2) | Basic earnings per share is calculated by dividing net income to common shareholders by the weighted average number of common shares outstanding. Diluted earnings per share is calculated by dividing net income by the weighted average number of shares adjusted for the dilutive effect of outstanding stock options and restricted stock units using the treasury stock method. |
| (3) | Ratio calculated by dividing noninterest expense by the sum of net interest income before (reversal of)/provision for credit losses and noninterest income. |
Average Balance Sheet, Interest and Yield/Rate Analysis
The principal component of our earnings is net interest income, which is the difference between the interest and fees earned on loans, cash and investments (interest-earning assets) and the interest paid on deposits and borrowed funds (interest-bearing liabilities). Net interest margin is net interest income as a percentage of average interest-earning assets for the period. The level of interest rates and the volume and mix of interest-earning assets and interest-bearing liabilities impact net interest income and net interest margin. The net interest spread is the yield on average interest-earning assets minus the cost of average interest-bearing liabilities. Our net interest income, interest spread, and net interest margin are sensitive to general business and economic conditions. These conditions include short-term and long-term interest rates, inflation, monetary supply, and the strength of the international, national and state economies, in general, and more specifically, the local economies in which we conduct business. Our ability to manage net interest income during changing interest rate environments will have a significant impact on our overall performance. We manage net interest income through affecting changes in the mix of interest-earning assets as well as the mix of interest-bearing liabilities, changes in the level of interest-bearing liabilities in proportion to interest-earning assets, and in the growth and maturity of earning assets. For additional information see “Capital Resources and Liquidity Management” and Part I,Item 3. "Quantitative and Qualitative Disclosures about Market Risk" included in this Report.
The following tables present average balance sheet information, interest income, interest expense and the corresponding average yields earned and rates paid for the periods presented. The average balances are daily averages and, for loans, include both performing and nonperforming balances. Interest and fees on securities, net interest margin and net interest spread are included on a tax equivalent (“TE”) basis by adjusting interest income utilizing the federal statutory tax rate of 21% for 2026 and 2025.
| Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| June 30, 2026 | March 31, 2026 | June 30, 2025 | |||||||
| Average | Interest | Yield / | Average | Interest | Yield / | Average | Interest | Yield / | |
| Balance | & Fees | Rate | Balance | & Fees | Rate | Balance | & Fees | Rate | |
| (dollars in thousands) | |||||||||
| Interest-earning assets: | |||||||||
| Cash and cash equivalents (1) | $194,256 | $2,015 | 4.16% | $215,930 | $2,136 | 4.01% | $163,838 | $1,980 | 4.85% |
| FHLB Stock | 15,000 | 222 | 5.94% | 15,000 | 760 | 20.55% | 15,000 | 324 | 8.66% |
| Securities (2) | |||||||||
| Available for sale | 419,191 | 4,245 | 4.06% | 404,610 | 3,955 | 3.96% | 399,414 | 4,189 | 4.21% |
| Held to maturity | 4,182 | 38 | 3.64% | 4,183 | 38 | 3.68% | 5,028 | 48 | 3.83% |
| Total loans (3) | 3,315,864 | 50,663 | 6.13% | 3,296,165 | 49,938 | 6.14% | 3,171,570 | 47,687 | 6.03% |
| Total interest-earning assets | 3,948,493 | $57,183 | 5.81% | 3,935,888 | $56,827 | 5.86% | 3,754,850 | $54,228 | 5.79% |
| Noninterest-earning assets | 262,546 | 268,010 | 254,029 | ||||||
| Total average assets | $4,211,039 | $4,203,898 | $4,008,879 | ||||||
| Interest-bearing liabilities: | |||||||||
| NOW | $83,681 | $478 | 2.29% | $73,637 | $398 | 2.19% | $66,755 | $368 | 2.21% |
| Money market | 556,084 | 4,189 | 3.02% | 529,013 | 3,795 | 2.91% | 482,669 | 3,774 | 3.14% |
| Savings deposits | 589,187 | 4,529 | 3.08% | 441,123 | 3,154 | 2.90% | 141,411 | 425 | 1.21% |
| Time deposits, $250,000 and under | 837,026 | 7,322 | 3.51% | 926,226 | 8,313 | 3.64% | 996,249 | 9,768 | 3.93% |
| Time deposits, greater than $250,000 | 768,027 | 7,076 | 3.70% | 845,786 | 7,908 | 3.79% | 922,540 | 9,482 | 4.12% |
| Total interest-bearing deposits | 2,834,005 | 23,594 | 3.34% | 2,815,785 | 23,568 | 3.39% | 2,609,624 | 23,817 | 3.66% |
| FHLB advances | 116,813 | 1,051 | 3.61% | 130,000 | 1,133 | 3.53% | 159,286 | 1,420 | 3.58% |
| Long-term debt | 120,000 | 2,118 | 7.08% | 119,945 | 1,289 | 4.36% | 119,657 | 1,296 | 4.34% |
| Subordinated debentures | 15,448 | 310 | 8.05% | 15,394 | 310 | 8.17% | 15,230 | 338 | 8.90% |
| Total borrowings | 252,261 | 3,479 | 5.53% | 265,339 | 2,732 | 4.18% | 294,173 | 3,054 | 4.16% |
| Total interest-bearing liabilities | 3,086,266 | 27,073 | 3.52% | 3,081,124 | 26,300 | 3.46% | 2,903,797 | 26,871 | 3.71% |
| Noninterest-bearing liabilities | |||||||||
| Noninterest-bearing deposits | 535,756 | 526,151 | 526,113 | ||||||
| Other noninterest-bearing liabilities | 56,608 | 67,241 | 65,278 | ||||||
| Total noninterest-bearing liabilities | 592,364 | 593,392 | 591,391 | ||||||
| Shareholders' equity | 532,409 | 529,382 | 513,691 | ||||||
| Total liabilities and shareholders' equity | $4,211,039 | $4,203,898 | $4,008,879 | ||||||
| Net interest income/interest rate spreads | $30,110 | 2.29% | $30,527 | 2.40% | $27,357 | 2.08% | |||
| Net interest margin | 3.06% | 3.15% | 2.92% | ||||||
| Total cost of deposits | $3,369,761 | $23,594 | 2.81% | $3,341,936 | $23,568 | 2.86% | $3,135,737 | $23,817 | 3.05% |
| Total cost of funds | $3,622,022 | $27,073 | 3.00% | $3,607,275 | $26,300 | 2.96% | $3,429,910 | $26,871 | 3.14% |
| (1) | Includes income and average balances for interest-earning time deposits and other miscellaneous interest-earning assets. |
| (2) | Interest income and average rates for tax-exempt securities are presented on a tax-equivalent basis. |
| (3) | Average loan balances include nonaccrual loans. Interest income on loans includes the effects of discount accretion and net deferred loan origination fees and costs accounted for as yield adjustments. |
| Six Months Ended June 30, | ||||||
|---|---|---|---|---|---|---|
| 2026 | 2025 | |||||
| Average | Interest | Yield / | Average | Interest | Yield / | |
| Balance | & Fees | Rate | Balance | & Fees | Rate | |
| (dollars in thousands) | ||||||
| Interest-earning assets: | ||||||
| Cash and cash equivalents (1) | $205,033 | $4,151 | 4.08% | $178,953 | $4,230 | 4.77% |
| FHLB Stock | 15,000 | 982 | 13.20% | 15,000 | 654 | 8.79% |
| Securities: (2) | ||||||
| Available for sale | 411,941 | 8,200 | 4.01% | 394,822 | 8,302 | 4.24% |
| Held to maturity | 4,182 | 76 | 3.66% | 5,108 | 97 | 3.83% |
| Total loans (3) | 3,306,069 | 100,601 | 6.14% | 3,125,652 | 93,308 | 6.02% |
| Total interest-earning assets (2) | 3,942,225 | $114,010 | 5.83% | 3,719,535 | $106,591 | 5.78% |
| Total noninterest-earning assets | 265,263 | 257,250 | ||||
| Total average assets | $4,207,488 | $3,976,785 | ||||
| Interest-bearing liabilities: | ||||||
| NOW | $78,687 | $877 | 2.25% | $64,004 | $689 | 2.17% |
| Money market | 542,623 | 7,983 | 2.97% | 473,109 | 7,399 | 3.15% |
| Savings deposits | 515,564 | 7,684 | 3.01% | 148,225 | 947 | 1.29% |
| Time deposits, $250,000 and under | 881,380 | 15,634 | 3.58% | 992,954 | 19,815 | 4.02% |
| Time deposits, greater than $250,000 | 806,692 | 14,984 | 3.75% | 893,832 | 18,519 | 4.18% |
| Total interest-bearing deposits | 2,824,946 | 47,162 | 3.37% | 2,572,124 | 47,369 | 3.71% |
| FHLB advances | 123,370 | 2,184 | 3.57% | 168,011 | 2,409 | 2.89% |
| Long-term debt | 119,973 | 3,407 | 5.73% | 119,610 | 2,591 | 4.37% |
| Subordinated debentures | 15,421 | 620 | 8.11% | 15,203 | 675 | 8.95% |
| Total Borrowings | 258,764 | 6,211 | 4.84% | 302,824 | 5,675 | 3.78% |
| Total interest-bearing liabilities | 3,083,710 | 53,373 | 3.49% | 2,874,948 | 53,044 | 3.72% |
| Noninterest-bearing liabilities | ||||||
| Noninterest-bearing deposits | 530,980 | 523,145 | ||||
| Other noninterest-bearing liabilities | 61,895 | 65,711 | ||||
| Total noninterest-bearing liabilities | 592,875 | 588,856 | ||||
| Shareholders' equity | 530,903 | 512,981 | ||||
| Total liabilities and shareholders' equity | $4,207,488 | $3,976,785 | ||||
| Net interest income/interest rate spreads(2) | $60,637 | 2.34% | $53,547 | 2.06% | ||
| Net interest margin | 3.10% | 2.90% | ||||
| Total cost of deposits | $3,355,926 | $47,162 | 2.83% | $3,095,269 | $47,369 | 3.09% |
| Total cost of funds | $3,614,690 | $53,373 | 2.98% | $3,398,093 | $53,044 | 3.15% |
| (1) | Includes income and average balances for interest-earning time deposits and other miscellaneous interest-earning assets. |
| (2) | Interest income and average rates for tax-exempt securities are presented on a tax-equivalent basis. |
| (3) | Average loan balances include nonaccrual loans. Interest income on loans includes the effects of discount accretion and net deferred loan origination fees and costs accounted for as yield adjustments. |
The following table summarizes the extent to which changes in (1) interest rates and (2) volume of average interest-earning assets and average interest-bearing liabilities affected our net interest income for the periods presented. The total change for each category of interest-earning assets and interest-bearing liabilities is segmented into changes attributable to variations in volume and yield/rate. Changes that are not solely due to either volume or yield/rate are allocated proportionally based on the absolute value of the change related to average volume and average yield/rate.
| Three Months Ended June 30, 2026 compared with Three Months Ended March 31, 2026 · Three Months Ended June 30, 2026 compared with Three Months Ended June 30, 2025 · Six Months Ended June 30, 2026 compared with Six Months Ended June 30, 2025 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Change due to: | Change due to: | Change due to: | |||||||
| Volume | Yield/Rate | Interest Variance | Volume | Yield/Rate | Interest Variance | Volume | Yield/Rate | Interest Variance | |
| Interest-earning assets: · (dollars in thousands) | |||||||||
| Cash and cash equivalents (1) | $(560) | $439 | $(121) | $1,299 | $(1,264) | $35 | $1,287 | $(1,366) | $(79) |
| FHLB Stock | — | (538) | (538) | — | (102) | (102) | — | 328 | 328 |
| Securities: (2) | |||||||||
| Available for sale | 170 | 120 | 290 | 729 | (673) | 56 | 778 | (880) | (102) |
| Held to maturity | — | — | — | (8) | (2) | (10) | (18) | (3) | (21) |
| Total loans (3) | 1,090 | (365) | 725 | 2,181 | 795 | 2,976 | 5,342 | 1,951 | 7,293 |
| Total interest-earning assets (2) | $700 | $(344) | $356 | $4,201 | $(1,246) | $2,955 | $7,389 | $30 | $7,419 |
| Interest-bearing liabilities: | |||||||||
| NOW | $60 | $20 | $80 | $96 | $14 | $110 | $157 | $31 | $188 |
| Money market | 227 | 167 | 394 | 1,257 | (842) | 415 | 1,755 | (1,171) | 584 |
| Savings deposits | 1,160 | 215 | 1,375 | 2,758 | 1,346 | 4,104 | 2,346 | 4,391 | 6,737 |
| Time deposits, less than $250,000 | (723) | (268) | (991) | (1,466) | (980) | (2,446) | (2,242) | (1,939) | (4,181) |
| Time deposits, $250,000 and over | (661) | (171) | (832) | (1,496) | (910) | (2,406) | (1,811) | (1,724) | (3,535) |
| Total interest-bearing deposits | 63 | (37) | 26 | 1,149 | (1,372) | (223) | 205 | (412) | (207) |
| FHLB advances | (237) | 155 | (82) | (451) | 82 | (369) | (1,153) | 928 | (225) |
| Long-term debt | 1 | 828 | 829 | 4 | 818 | 822 | 8 | 808 | 816 |
| Subordinated debentures | 7 | (7) | — | 30 | (58) | (28) | 27 | (82) | (55) |
| Total interest-bearing liabilities | (166) | 939 | 773 | 732 | (530) | 202 | (913) | 1,242 | 329 |
| Changes in net interest income | $866 | $(1,283) | $(417) | $3,469 | $(716) | $2,753 | $8,302 | $(1,212) | $7,090 |
| (1) | Includes income and average balances for interest-earning time deposits and other miscellaneous interest-earning assets. |
| (2) | Interest income and average rates for tax-exempt securities are presented on a tax-equivalent basis. |
| (3) | Average loan balances include nonaccrual loans. Interest income on loans includes the effects of discount accretion and net deferred loan origination fees and costs accounted for as yield adjustments. |
Net Interest Income/Average Balance Sheet
Net interest income decreased $417,000 to $30.1 million for the second quarter of 2026, compared to $30.5 million for the first quarter of 2026. The $417,000 decrease was due to a $773,000 increase in interest expense, offset by a $356,000 increase in interest income. The increase in interest expense was due mainly to an $829,000 increase in interest on subordinated notes as a result of these notes repricing from 4.00% to 6.98% effective April 1, 2026 and one additional day in the quarter. The increase in interest income was due to the combination of a $725,000 increase in loan interest income as average loans increased and one additional day in the quarter, partially offset by lower FHLB dividend income as the first quarter of 2026 included a special dividend of $430,000. There was no special dividend from the FHLB in the second quarter of 2026.
The net interest margin ("NIM") was 3.06% for the second quarter of 2026, a decrease of 9 basis points from 3.15% for the first quarter of 2026. The NIM decrease included a 5 basis point decrease in the yield on average total interest-earning assets, combined with a 4 basis point increase in the overall cost of funds. The yield on average interest-earning assets decreased to 5.81% for the second quarter of 2026 from 5.86% for the first quarter of 2026 due mostly to the impact of a 4 basis point decrease from lower FHLB dividends and a 1 basis point decrease in the yield on average total loans.
The average cost of funds increased to 3.00% for the second quarter of 2026 from 2.96% for the first quarter of 2026, due mostly to an increase in the cost of $120.0 million in subordinated notes due to their repricing on April 1, 2026, partially offset by a 5 basis point decrease in the cost of average total deposits to 2.81%. The average cost of interest-bearing deposits decreased to 3.34% for the second quarter of 2026 from 3.39% for the first quarter of 2026. The overall funding mix for the second quarter of 2026 remained relatively unchanged from the first quarter of 2026 with average interest-bearing deposits representing 92% of average interest-bearing liabilities and average noninterest-bearing deposits representing 16% of average total deposits. The period end weighted average interest rate for total deposits was 2.75% at June 30, 2026 compared to 2.79% at March 31, 2026.
Net interest income increased $2.8 million to $30.1 million for the second quarter of 2026, compared to $27.3 million for the second quarter of 2025. The increase in net interest income was due to an increase in interest income of $3.0 million, partially offset by a $202,000 increase in interest expense. The increase in interest income was primarily due to average interest-earning asset growth of $193.6 million, or 5.2%, as compared to the same quarter in 2025. The growth in average interest-earning assets included higher average total loans, securities available for sale, and cash and cash equivalents. The impact of higher average interest-earning assets on income was partially offset by lower market interest rates as compared to the same period in 2025. The increase in interest expense was driven largely by an increase in the cost of subordinated notes due to their repricing on April 1, 2026, from 4.00% to 6.98%.
The $3.0 million increase in interest income was due mainly to a $3.0 million increase in interest income from average total loans, of which $2.2 million was attributed to higher average balances, and $795,000 attributed to higher rates. Average total loans were $3.3 billion for the quarter ended June 30, 2026, an increase of $144.3 million, or 4.5%, compared to the second quarter of 2025. The yield on average total loans increased 10 basis points to 6.13% for the quarter ended June 30, 2026 compared to 6.03% for the quarter ended June 30, 2025.
The $202,000 increase in interest expense was due mainly to higher interest expense on borrowings of $425,000, partially offset by a $223,000 decrease in interest expense on deposits. Interest expense on borrowings increased mainly due to the repricing of the subordinated notes from 4.00% to 6.98% on April 1, 2026.The decrease in interest expense on deposits was primarily due to a 32 basis point decrease in the rates paid on average interest-bearing deposits, partially offset by the impact of a $224.4 million increase in the average balance of interest-bearing deposits.
The NIM was 3.06% for the second quarter of 2026, an increase of 14 basis points from 2.92% for the second quarter of 2025. The increase was primarily due to a 14 basis point decrease in the total cost of funds to 3.00%, and a 2 basis point increase in the yield on average interest-earning assets to 5.81% for the second quarter of 2026 from 5.79% for the second quarter of 2025. The decrease in funding costs was due to the lower average cost of interest-bearing deposits in response to lower market rates, offset by the higher average cost for borrowings. Average noninterest-bearing deposits totaled $535.8 million, or 16% of total average deposits, for the second quarter of 2026 compared to $526.1 million, or 17% of total average deposits, for the second quarter of 2025. The increase in the yield on average interest-earning assets was due mainly to a 10 basis point increase in the yield on average total loans.
Net interest income increased $7.1 million to $60.6 million for the six months ended June 30, 2026, compared to $53.5 million for the six months ended June 30, 2025. The increase in net interest income was due to an increase in interest income of $7.4 million partially offset by an increase in interest expense of $329,000. The increase in interest income was due primarily to higher income on loans due to a higher average balance and higher yield. The increase in interest expense was primarily due to higher average rates paid on borrowings.
Interest and fees on total loans increased $7.3 million for the six months ended June 30, 2026 primarily due to a $180.4 million increase in the average balance of total loans from loan growth since the end of the second quarter of 2025. The yield on loans increased 12 basis points to 6.14% for the six months ended June 30, 2026 from 6.02% for the same period in 2025.
Interest expense on deposits decreased $207,000 to $47.2 million for the six months ended June 30, 2026 compared to $47.4 million for the six months ended June 30, 2025. The decrease in interest expense on deposits was primarily due to a decrease in the average rates paid on interest-bearing deposits to 3.37% for the six months ended June 30, 2026 compared to 3.71% for the six months ended June 30, 2025. The effect of the decrease in the average rate paid on deposits was partially offset by an increase in average interest-bearing deposit balances of $252.8 million to $2.8 billion for the six months ended June 30, 2026. Average noninterest-bearing deposits totaled $531.0 million, or 15.8% of total average deposits, for the first six months of 2026, compared to 16.9% for the first six months of 2025.
Partially offsetting the decrease in interest expense on deposits was an increase in interest expense on borrowings of $536,000 for the first six months of 2026. The increase is mainly due to the repricing of the subordinated notes from 4.00% to 6.98% on April 1, 2026.
The NIM was 3.10% for the six months ended June 30, 2026, an increase of 20 basis points from 2.90% for the six months ended June 30, 2025. The increase was primarily due to a 17 basis point decrease in the average cost of funds, including a 26 basis point decrease in the cost of average deposits, and a 5 basis point increase in the yield on average interest-earning assets, including a 12 basis point increase in the yield on average loans.
Provision for Credit Losses
The provision for credit losses was $0 for the second quarter of 2026 compared to a reversal of $200,000 for the first quarter of 2026. The second quarter of 2026 provision for credit losses reflected a provision for loan losses of $77,000 due mainly to net charge-offs and a reversal of provision for unfunded commitments of $77,000 due to a lower volume of unfunded commitments. The second quarter provision also took into consideration that portfolio credit quality trends, underlying economic forecast indicators, and changes in loan portfolio composition remained relatively stable. Net charge-offs on an annualized basis represented 0.01% of average loans for the second quarter of 2026 compared to 0.00% for the first quarter of 2026.
The provision for credit losses was $0 for the second quarter of 2026 compared to a $2.4 million provision for the second quarter of 2025. The second quarter of 2025 provision for credit losses included net charge-offs of $3.3 million, an increase in general reserves due mainly to loan growth offset partially by a net decrease in specific reserves. Net loan charge-offs of $83,000 for the second quarter of 2026 were lower than $3.3 million for the same quarter last year.
The provision for credit losses was a reversal of $200,000 for the six months ended June 30, 2026 compared to a $9.1 million provision for the six months ended June 30, 2025. This $9.3 million decrease was primarily due to lower net charge-offs, combined with the impact of declines in nonperforming, classified, and criticized loans as of June 30, 2026. There were $105,000 in net loan charge-offs for the six months ended June 30, 2026, as compared to $5.9 million in net loan charge-offs for the six months ended June 30, 2025.
Noninterest Income
The following table presents the major components of our noninterest income for the periods presented:
| Three Months Ended · Six Months Ended | |||||
|---|---|---|---|---|---|
| June 30, 2026 | March 31, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 | |
| Noninterest income: · (dollars in thousands) | |||||
| Service charges and fees | $1,104 | $1,032 | $1,060 | $2,136 | $2,077 |
| Gain on sale of loans | 964 | 324 | 358 | 1,288 | 439 |
| Loan servicing income, net of amortization | 533 | 504 | 541 | 1,037 | 1,129 |
| Increase in cash surrender value of BOLI | 438 | 431 | 411 | 869 | 814 |
| (Loss)/gain on OREO | (221) | 890 | — | 669 | — |
| Other income | 200 | 1,070 | 6,108 | 1,270 | 6,314 |
| Total noninterest income | $3,018 | $4,251 | $8,478 | $7,269 | $10,773 |
Noninterest income for the second quarter of 2026 was $3.0 million, a decrease of $1.2 million from $4.3 million for the first quarter of 2026. The decrease in noninterest income was mainly due to lower gains from OREO of $1.1 million, and lower other income of $870,000, offset partially by higher gain on sale of loans of $640,000. The net loss on OREO was $221,000 in the second quarter compared to the net gain on OREO of $890,000 in the first quarter. The decrease in other income was due to the first quarter including a $484,000 recovery of a fully charged-off acquired loan and $360,000 of interest income on the tax refunds related to purchased federal tax credits; there were no similar items in the second quarter of 2026. The sale of $42.1 million of mortgage loans and $8.1 million of Small Business Administration (“SBA”) loans resulted in gains of $1.0 million for the second quarter of 2026 compared to the sale of mortgage loans of $4.9 million and SBA loans of $4.0 million for gains of $324,000 for the first quarter of 2026.
Noninterest income decreased $5.5 million to $3.0 million for the second quarter of 2026 from $8.5 million for the same quarter in the prior year. The decrease in noninterest income primarily relates to the second quarter of 2025 including other income of $5.2 million for the receipt of Employee Retention Credit ("ERC") funds from the Internal Revenue Service. The ERC was a grant program established under the Coronavirus Aid, Relief, and Economic Security Act in response to the COVID-19 pandemic and these funds related to qualifying amended payroll tax returns the Company filed for the first and second quarters of 2021. There were no such ERC amounts received or associated costs recognized during 2026.
Noninterest income decreased $3.5 million to $7.3 million for the six months ended June 30, 2026, compared to $10.8 million for the same period in the prior year. The decrease was mainly due to the second quarter of 2025 including other income of $5.2 million for the receipt of the previously mentioned ERC grant. This was partially offset by a higher gain on sale of loans of $849,000 and gain on OREO of $669,000 for the six months ended June 30, 2026 compared to the same period in 2025.
The following table presents information on loans sold and the related net gain (loss) on the sale of such loans for the periods indicated:
| Three Months Ended · Six Months Ended | |||||
|---|---|---|---|---|---|
| June 30, 2026 | March 31, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 | |
| Loans sold: · (dollars in thousands) | |||||
| Single-family residential mortgage (1) | $42,108 | $4,875 | $12,080 | $46,983 | $23,262 |
| SBA | 8,101 | 3,989 | 2,281 | 12,090 | 6,023 |
| Other (2) | — | — | — | — | 4,579 |
| $50,209 | $8,864 | $14,361 | $59,073 | $33,864 | |
| Gain (loss) on sale of loans: | |||||
| Single-family residential mortgage (1) | $663 | $92 | $260 | $731 | $268 |
| SBA | 301 | 232 | 98 | 533 | 254 |
| Other (2) | — | — | — | 24 | (83) |
| $964 | $324 | $358 | $1,288 | $439 | |
| (1) | SFR mortgage loans sold with servicing rights retained were $12.8 million, $3.3 million, and $1.8 million for the three months ended June 30, 2026, March 31, 2026, and June 30, 2025. SFR mortgage loans sold with servicing rights retained were $16.1 million and $2.2 million for the six months ended June 30, 2026 and 2025. |
| (2) | Other loans sold in the six months ended June 30, 2025 related to loans sold in the first quarter of 2025, which represented nonperforming loans HFS at December 31, 2024. |
The following table presents information on loan servicing income for the periods indicated:
| Three Months Ended · Six Months Ended | |||||
|---|---|---|---|---|---|
| June 30, 2026 | March 31, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 | |
| Loan servicing income, net of amortization: · (dollars in thousands) | |||||
| Single-family residential loans | $350 | $345 | $379 | $696 | $794 |
| SBA loans | 183 | 159 | 162 | 341 | 335 |
| Total | $533 | $504 | $541 | $1,037 | $1,129 |
As of June 30, 2026, we were servicing SFR mortgage loans for other financial institutions, the Federal Home Loan Mortgage Corporation ("FHLMC"), the Federal National Mortgage Association ("FNMA"), and SBA loans. The following table presents loans serviced for others as of the dates indicated:
| As of · June 30, 2026 Compared to | |||||
|---|---|---|---|---|---|
| June 30, 2026 | March 31, 2026 | June 30, 2025 | March 31, 2026 | June 30, 2025 | |
| Loans serviced: · (dollars in thousands) | |||||
| Single-family residential loans | $803,175 | $788,514 | $877,300 | $14,661 | $(74,125) |
| SBA loans | 96,652 | 91,164 | 91,866 | 5,488 | 4,786 |
| Construction loans | 9,505 | 9,325 | 8,276 | 180 | 1,229 |
| Commercial real estate loans | 2,401 | 2,410 | 2,438 | (9) | (37) |
| Total | $911,733 | $891,413 | $979,880 | $20,320 | $(68,147) |
Noninterest Expense
The following table presents major components of our noninterest expense for the periods presented:
| Three Months Ended · Six Months Ended | |||||
|---|---|---|---|---|---|
| June 30, 2026 | March 31, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 | |
| Noninterest expense: · (dollars in thousands) | |||||
| Salaries and employee benefits | $11,045 | $11,261 | $11,080 | $22,306 | $21,723 |
| Occupancy and equipment expenses | 2,449 | 2,511 | 2,377 | 4,960 | 4,784 |
| Data processing | 1,690 | 1,708 | 1,713 | 3,398 | 3,315 |
| Legal and professional | 1,311 | 1,503 | 2,904 | 2,814 | 4,419 |
| Office expenses | 377 | 359 | 405 | 736 | 813 |
| Marketing and business promotion | 178 | 215 | 212 | 393 | 409 |
| Insurance and regulatory assessments | 746 | 749 | 709 | 1,495 | 1,439 |
| Core deposit intangible amortization | 127 | 134 | 172 | 261 | 344 |
| Other expenses | 1,099 | 818 | 921 | 1,917 | 1,769 |
| Total noninterest expense | $19,022 | $19,258 | $20,493 | $38,280 | $39,015 |
Noninterest expense for the second quarter of 2026 was $19.0 million, a decrease of $236,000 from $19.3 million for the first quarter of 2026. The decrease was mainly due to lower salaries and employee benefits of $216,000 due mostly to lower payroll taxes. The efficiency ratio was 57.46% for the second quarter of 2026, compared to 55.41% for the first quarter of 2026.
Noninterest expense for the second quarter of 2026 was $19.0 million, a decrease of $1.5 million compared to $20.5 million for the second quarter of 2025, mainly due to a decrease in legal and professional expense. The decrease in legal and professional expense of $1.6 million was due mostly to $1.2 million of professional and advisory costs related to the previously mentioned ERC grant in the second quarter of 2025, along with higher legal costs related to credit, operations, and other corporate governance in the second quarter of 2025. The efficiency ratio was 57.46% for the second quarter of 2026 and 57.22% for the second quarter of 2025.
Noninterest expense for the six months ended June 30, 2026 was $38.3 million, a decrease of $735,000 from $39.0 million for the six months ended June 30, 2025. The decrease in noninterest expense was primarily due to a decrease in legal and professional expense of $1.6 million, partially offset by an increase in salaries and employee benefits of $583,000. The decrease in legal and professional expense was due mainly to $1.2 million of ERC advisory costs incurred in the second quarter of 2025 along with higher legal costs related to credit, operations, and other corporate governance. The increase in salaries and employee benefits was due mainly to the impact of annual pay increases. The efficiency ratio was 56.41% for the six months ended June 30, 2026, down from 60.70% for the six months ended June 30, 2025 due to the combination of $3.9 million in revenue growth and the decrease in noninterest expense.
Income Tax Expense
We recorded an income tax provision of $3.9 million, $4.4 million, and $3.6 million, reflecting an effective tax rate of 28.0%, 28.0%, and 27.8% for the three months ended June 30, 2026, March 31, 2026, and June 30, 2025. We recorded an income tax provision of $8.3 million and $4.5 million, reflecting an effective tax rate of 28.0% and 27.9%, for the six months ended June 30, 2026 and 2025.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.