Executive Summary

GAAP diluted EPS was $0.52 on net income of $9.3M, aided by a one-time $5.2M Employee Retention Credit and offset by ~$1.2M related advisory costs; adjusted EPS would have been ~$0.36, implying results were essentially in line on a normalized basis .
Net interest margin expanded 4 bps sequentially to 2.92% as loan growth and stable asset yields offset modestly higher funding costs; ROA improved to 0.93% from 0.24% in Q1 .
Credit quality mixed: nonperforming assets fell to 1.49% of assets, but special mention and substandard loans increased as management tightened credit surveillance; allowance coverage of NPLs rose to ~90% .
Deposits grew at a ~6% annualized rate; loan-to-deposit moved to 101.5% with plans to moderate loan growth and pursue loan sales in H2 to manage balance sheet and funding .
Board declared a $0.16 dividend; new $18M buyback program authorized in May provides capital deployment flexibility while asset resolution continues .

What Went Well and What Went Wrong

What Went Well

Net interest income rose to $27.3M (+$1.2M QoQ) and NIM expanded to 2.92%, supported by $182.8M in new loan production at a 6.76% blended yield and lower average deposit costs; “another quarter of strong loan growth and stable loan yields drove increasing net interest income and margin expansion” (CEO) .
Nonperforming assets declined to $61.0M (1.49% of assets), driven by charge-offs and paydowns; allowance coverage of NPLs increased to ~90% .
Management emphasized strong mortgage origination: “originated $120 million of mortgages… total second quarter loan originations of $183 million at a blended yield of 6.76%” (CEO) .

What Went Wrong

Criticized assets rose: special mention loans increased to $91.3M (2.82% of loans) and substandard loans to $91.0M, reflecting downgrades as surveillance tightened .
30–89 day delinquencies rose to $18.0M (0.56% of loans), largely due to new delinquencies including an $8.5M CRE loan (later brought current) .
Operating expenses increased to $20.5M (+$2.0M QoQ), including $1.2M ERC advisory costs and ~$0.33M executive transition costs; efficiency ratio improved but remains above 57% .

Financial Results

Metric	Q2 2024	Q1 2025	Q2 2025
Net Interest Income ($M)	$24.0	$26.2	$27.3
Noninterest Income ($M)	$3.5	$2.3	$8.5 (incl. $5.2M ERC)
Noninterest Expense ($M)	$17.1	$18.5	$20.5
Provision for Credit Losses ($M)	$0.6	$6.7	$2.4
Net Income ($M)	$7.2	$2.3	$9.3
Diluted EPS ($)	$0.39	$0.13	$0.52
NIM (%)	2.67%	2.88%	2.92%
ROA (%)	0.76%	0.24%	0.93%

Loan portfolio breakdown:

Loans ($M)	Q2 2024	Q1 2025	Q2 2025
C&I	$126.6	$135.5	$138.3
SBA	$50.3	$50.7	$56.0
Construction & Land	$202.5	$158.9	$158.0
CRE	$1,190.2	$1,245.4	$1,273.4
SFR Mortgages	$1,467.8	$1,545.8	$1,603.1
Other	$10.3	$6.8	$5.9
Total Loans	$3,047.7	$3,143.1	$3,234.7

KPIs and credit metrics:

KPI	Q2 2024	Q1 2025	Q2 2025
Loan-to-Deposit Ratio (%)	100.9%	98.4%	101.5%
Noninterest-Bearing Deposits (% of total)	18.0%	16.8%	17.1%
Wholesale Deposits ($M; % of total)	$120.7; 4.0%	$158.5; 5.0%	$183.8; 5.8%
NPLs ($M; % of loans)	$54.6; 1.79%	$60.4; 1.92%	$56.8; 1.76%
NPAs ($M; % of assets)	$54.6; 1.41%	$64.6; 1.61%	$61.0; 1.49%
Special Mention ($M; % of loans)	$19.5; 0.64%	$64.3; 2.05%	$91.3; 2.82%
Substandard ($M; % of loans)	$63.1; 2.07%	$76.4; 2.43%	$91.0; 2.81%
Allowance / Loans (%)	1.37%	1.65%	1.58%
Allowance / NPLs (%)	76.46%	86.01%	89.79%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Noninterest expense run-rate ($M)	H2 2025	N/A	~$18 per quarter (normalize post ERC advisory and transition costs)	New/clarified
Deposit spot rate (%)	As of 6/30/25	3.06% at 3/31/25	2.95%; expect stabilization absent Fed cuts	Improved
CDs repricing	Q3 2025	N/A	~1/3 of CDs mature; current maturing rates ~4.15–4.20%; opportunity to reprice down somewhat	New detail
Loan growth & sales	H2 2025	Expect continued growth (Q1 commentary)	Pipelines full; growth to moderate; pursue loan sales (SFR/SBA) to manage L/D and generate gains	Updated approach
NIM outlook	Next few quarters	NIM expanding (prior trend)	Potential incremental NIM increases as asset yields tick up; funding costs stabilizing	Maintained/positive
Dividend	Q3 2025 payable	$0.16 declared previously	$0.16 per share payable Aug 12, 2025	Maintained
Share repurchase	Through 6/30/26	N/A	Up to $18M program authorized (≈5% of shares at current prices); pacing modest so far	New

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24 and Q1’25)	Current Period (Q2’25)	Trend
Asset quality/NPL resolution	Q4: NPLs increased on one construction credit; coverage 68% . Q1: Took $6.7M provision; NPA down to 1.61% .	NPLs declined to 1.76% of loans; criticized loans (special mention/substandard) increased on tightened surveillance; coverage ~90% .	Improving NPLs; heightened monitoring increases criticized buckets.
Loan growth & pipelines	Q4: expected to resume growth . Q1: 12% annualized net loan growth .	$182.8M originations; pipelines “remain full”; plan to moderate growth and add loan sales H2 .	Growth durable, paced more deliberately.
NIM/funding costs	Q4: NIM +8bps; deposit costs declining . Q1: NIM +12bps; deposit spot 3.06% .	NIM 2.92%; deposit spot 2.95%; expect stabilization and some ability to reprice CDs lower .	Gradual NIM improvement; funding costs stabilizing.
Capital & buyback	Q4: TBV $24.51 . Q1: TBV $24.63 .	TBV rose to $25.11; $18M buyback authorized; “able to do both” workouts and repurchases .	Strong capital; optionality for buybacks.
ERC/non-GAAP adjustments	Prior periods had no ERC .	One-time $5.2M ERC recognized; $1.2M related advisory costs; adjusted EPS ~$0.36 .	Non-recurring boost; cleaned up in adjusted view.
Deposits/mix	Q4: Noninterest-bearing 18.3% . Q1: 16.8% .	Noninterest-bearing rose to 17.1%; promotions to bundle MM + DDA; organic growth plus wholesale capacity .	Mix improving; tactical promotions.
Taxes	Q4: low tax rate on credits . Q1: 28.2% .	~28%; CA law change small benefit .	Stable/slightly favorable.

Management Commentary

“Another quarter of strong loan growth and stable loan yields drove increasing net interest income and margin expansion in the second quarter. We also benefited from the receipt of a $5.2 million ERC.” — Johnny Lee, President & CEO .
“Net interest margin increased to 2.92% and has increased by 25 basis points over the last four quarters… our funding costs are likely close to stabilizing at this level.” — Johnny Lee .
“Adjusted for the ERC refund and associated fees, net income would have been $6.5 million, or $0.36 per diluted share.” — Lynn Hopkins, CFO .
“Special mentions are expected to be a temporary holding platform… these credits are current and accruing.” — Lynn Hopkins; Jeffrey Yeh, CCO on enhanced credit controls for bridge/gap loans .
“We have been very successful in growing organic deposits… and have plenty of capacity for wholesale funding.” — Lynn Hopkins .

Q&A Highlights

Capital deployment: With $18M buyback authorized, management sees sufficient liquidity to repurchase shares while resolving elevated NPLs; program ~5% of shares at current prices .
Asset quality detail: Special mention increase tied to enhanced surveillance of bridge/gap loans; substandard driven by downgrades of two accrual-status credits; one $8.5M CRE delinquency since brought current .
Loan/deposit balancing: Expect more measured loan growth and potential loan sales (SFR/SBA guaranteed portions) in H2 to manage loan-to-deposit ratio .
Deposit costs/outlook: Spot deposit rate 2.95%; ~one-third of CDs maturing in Q3 at ~4.15–4.20% with some repricing opportunity; expect stair-step reductions if/when Fed cuts .
Expense trajectory: Normalize to ~$18M quarterly run-rate as ERC-related and transition costs roll off .

Estimates Context

Consensus vs actual (S&P Global):

Metric	Q4 2024	Q1 2025	Q2 2025
Primary EPS Consensus Mean ($)	0.356 (Est.)* vs 0.25 (Actual)*	0.38 (Est.)* vs 0.13 (Actual)*	0.364 (Est.)* vs 0.362 (Actual)*
Revenue Consensus Mean ($)	28.12M (Est.)* vs 22.71M (Actual)*	28.93M (Est.)* vs 21.71M (Actual)*	29.62M (Est.)* vs 28.23M (Actual)*

Values retrieved from S&P Global.*
Interpretation: Normalized EPS was essentially in line in Q2 (rounded $0.36 vs $0.36), while “Revenue” (S&P definition) modestly missed. GAAP diluted EPS of $0.52 benefited from the ERC; on an adjusted basis management indicated ~$0.36, closely matching S&P actual for Primary EPS .

Key Takeaways for Investors

NIM expansion and strong loan production continue to underpin core earnings; expect incremental margin tailwinds as deposit costs stabilize and asset yields firm .
Asset quality repair is progressing (lower NPLs, higher coverage), but elevated criticized balances warrant ongoing vigilance; watch downgrades vs resolutions in H2 .
Balance sheet management is central: loan-to-deposit above 100% with planned loan sales and active deposit promotions to optimize funding and liquidity .
Earnings quality: GAAP EPS was boosted by ERC; focus on normalized EPS/PPNR trajectory as expense run-rate returns to ~$18M and one-time items roll off .
Capital returns optionality: $0.16 dividend maintained and $18M buyback authorized; deployment likely paced alongside credit workout progress .
Estimate revisions: Expect limited changes to normalized EPS near term; any acceleration in loan sales or deposit repricing could improve NIM/PPNR; conversely, additional downgrades could pressure provision and earnings .
Near-term trading: Watch headlines on credit resolutions and buyback activity; incremental NIM improvement vs. credit noise likely drives sentiment and multiple.

RBB Bancorp (RBB)·Q2 2025 Earnings Summary