Executive Summary

RBB delivered a clean quarter: EPS $0.59, up 12% QoQ and 51% YoY, driven by NIM expansion to 2.98%, lower credit costs, and a lower effective tax rate; net income rose to $10.1M as NII increased for a fifth straight quarter .
Credit normalization accelerated: nonperforming assets fell 11% QoQ to 1.29% of assets, criticized/classified loans declined 31% to $126.2M, and allowance coverage of NPLs rose to 98.7% despite a single resolved construction credit driving $6.9M in charge-offs (largely reserved previously) .
Balance sheet momentum: loans HFI +$67.9M QoQ (8.3% annualized) on $187.8M of originations at 6.70% blended yield; deposits +$178M QoQ with mix including $84M wholesale CDs used to retire $50M of FHLB advances; LDR improved to 98.1% .
Capital return and guideposts: repurchased $12.5M in Q3 (≈660k shares, ~4% of shares) with ~$4M authorization remaining; quarterly opex guided to $18–$19M; FY25 effective tax rate guided to 26–27% .
Estimates context: Q3 EPS beat by ~$0.18 vs S&P consensus ($0.59 vs $0.41*); revenue slightly above consensus ($31.95M* vs $31.72M*). Expect estimate revisions to trend higher on sustained NIM expansion and improved credit metrics .

Values marked with * retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well
- Margin and core income: NIM rose 6 bps to 2.98% (fifth straight quarterly increase) on higher loan yields (loan yield +9 bps QoQ to 6.12%) and slightly lower funding costs; NII rose +$1.9M QoQ to $29.3M .
- Credit progress: NPA ratio improved to 1.29% (from 1.49%), NPLs down $11.3M QoQ, criticized/classified loans -30.8% QoQ, and past dues fell to 0.20% of loans .
- Capital return and TBV growth: TBVPS increased to $25.89; buybacks totaled $12.5M and 660k shares (~4%) in Q3, highlighting confidence in intrinsic value .
What Went Wrong
- One-off credit resolution: $6.9M net charge-offs (annualized 0.84%) tied almost entirely to a single construction borrower bankruptcy; though largely reserved, it pressed ACL/loan to 1.36% from 1.58% .
- Deposit mix remained rate-sensitive: interest-bearing deposits increased $172M QoQ, with wholesale time deposits +$84M used to repay $50M FHLB, reflecting ongoing competition for liquidity and modest liability sensitivity .
- Noninterest income normalization: fell $5.2M QoQ as Q2 included a $5.2M ERC; underscores a less diversified fee profile near term .

Financial Results

Headline vs Consensus (S&P Global)

Metric	Q1 2025	Q2 2025	Q3 2025
EPS (Company diluted)	$0.13	$0.52	$0.59
EPS Consensus Mean*	$0.38*	$0.364*	$0.41*
Revenue (S&P actual)*	$21.71M*	$28.23M*	$31.95M*
Revenue Consensus Mean*	$28.93M*	$29.62M*	$31.72M*

Values retrieved from S&P Global. Note: S&P “Primary EPS” actuals may differ from company diluted EPS due to normalization (e.g., Q2 ERC); company-reported diluted EPS shown separately .

Core P&L and Margin Trajectory

Metric	Q1 2025	Q2 2025	Q3 2025
Net Interest Income	$26.16M	$27.33M	$29.28M
Noninterest Income	$2.30M	$8.48M	$3.29M
Provision for Credit Losses	$6.75M	$2.39M	$0.63M
Noninterest Expense	$18.52M	$20.49M	$18.68M
Effective Tax Rate	28.2%	27.8%	23.5%
Net Interest Margin	2.88%	2.92%	2.98%
Efficiency Ratio	65.09%	57.22%	57.36%
ROAA (annualized)	0.24%	0.93%	0.97%

Balance Sheet & Credit KPIs

Metric	Q1 2025	Q2 2025	Q3 2025
Loans HFI (period-end)	$3.143B	$3.235B	$3.303B
Deposits (period-end)	$3.143B	$3.188B	$3.366B
Loan/Deposit Ratio	98.4%	101.5%	98.1%
NPA / Assets	1.61%	1.49%	1.29%
NPL / Loans	1.92%	1.76%	1.38%
ALLL / Loans	1.65%	1.58%	1.36%
CET1 Ratio	17.87%	17.61%	17.28%

Segment/Mix Snapshots

Loan mix (Q3 2025): SFR 50.0%, CRE 39.0%, Construction 4.8%, C&I 4.4%, SBA 1.6% .
Deposit mix (Q3 2025): Noninterest-bearing 16.4%; savings/NOW/MM 21.4%; retail time ≤$250k 25.9%; time >$250k 28.3%; wholesale 8.0% .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Effective Tax Rate	FY 2025	n/a	26%–27%	New
Noninterest Expense (quarterly)	Q4 2025 onward	n/a	$18–$19M per quarter	New
Dividend per Share	Quarterly	$0.16 (Q2)	$0.16 (Q3 payable Nov 12, 2025)	Maintained
Capital Return	Authorization	n/a	~$4M remaining on buyback program	Update
Funding/Deposits	Near term	n/a	Spot deposit rate 2.97% at 9/30; competition remains elevated	Qualitative

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
NIM trajectory	Expanded to 2.88% (Q1) and 2.92% (Q2) on loan yields and lower deposit costs	2.98%, fifth straight increase; modest liability sensitivity; expect further expansion aided by originations	Improving
Deposit beta & funding	Cost of funds ticked lower; spot deposit rate 2.95% at 6/30; competition for liquidity remains	Spot 2.97% at 9/30; cost of funds -2 bps QoQ; wholesale CDs raised to repay FHLB	Stabilizing/slight tailwind
Asset quality	Q1/Q2 provisioning elevated; NPA improved from 2.03% (YE) to 1.61% (Q1) to 1.49% (Q2)	NPA 1.29%; NPL -$11.3M QoQ; charge-off on one construction loan largely reserved	Improving with residual churn
Loan growth & mix	Q1/Q2 net growth 12% annualized each; originations ~6.76% blended yields	Q3 originations $188M at 6.70%; SFR/CRE led; building C&I; SBA impacted by gov’t shutdown timing	Healthy pipeline; mix shift gradual
Capital actions	Q2: buybacks resumed ($1.5M); TBVPS rising	Q3: $12.5M repurchases; 660k shares (~4%); ~$4M authorization left	More assertive
Tax rate	Q1: 28.2%; Q2: 27.8% actual	CA SB132 reduced ETR to 23.5% in Q3; FY25 26–27% guide	Structural tailwind

Management Commentary

“Third quarter net income increased to $10.1 million, or $0.59 per share, and was driven by core earnings growth and lower credit costs.” — Johnny Lee, President & CEO .
“Our net interest margin continued to expand…reaching 2.98%…we increased overall loan yield and achieved a two basis point decline in funding costs. Our spot rate on deposits…was 2.97%.” — CFO Lynn Hopkins .
“Non-performing loans decreased $11.3 million…due mostly to a $6.9 million charge-off and $5 million in upgraded loans…Special mention loans decreased 46% to $49 million.” — CFO Lynn Hopkins .
“Pipeline is still relatively healthy…majority still SFR/CRE…building C&I; SBA funding impacted by the government shutdown.” — CEO Johnny Lee .
“We have about $4 million left on the current [buyback] program.” — CFO Lynn Hopkins .

Q&A Highlights

Deposit beta and NIM sensitivity: liability-sensitive but modest; further NIM expansion expected as earning-asset yields from originations outpace funding-cost relief amid competition; September NIM close to quarterly average .
Loan mix shift: pipeline healthy; SFR/CRE remain majority near term while C&I opportunities build; SBA timing affected by government shutdown .
Capital return: ~$4M buyback capacity remains; management balancing potential 2026 sub-debt refinancing and ongoing investment/technology needs .
Funding actions: $50M FHLB matured at 3.40% on last day of quarter; replaced with brokered near 4% .

Estimates Context

Q3 2025: EPS $0.59 vs $0.41 consensus (beat by ~$0.18); revenue $31.95M* vs $31.72M* (slight beat). Drivers: higher NII on NIM expansion and loan growth, lower provision, and lower ETR (CA SB132) .
Trend: Q2 “Primary EPS” in S&P appears normalized (0.3622*) versus company diluted EPS of $0.52 due to Q2 ERC; revenue also normalized. Expect models to lift margin/NII assumptions and dial back credit costs given faster NPA/NPL improvement .

Values retrieved from S&P Global.

Key Takeaways for Investors

Core earnings momentum: five consecutive quarters of NII and NIM improvement with asset yield tailwinds and stable-to-lower funding costs; expect modest further NIM expansion near term .
Credit normalization progressing faster than expected: broad-based improvement across NPA/NPL/criticized, with one large, previously reserved construction charge-off clearing risk; ACL adequacy remains solid at 1.36% of loans and ~99% of NPLs .
Balance sheet capacity restored: deposits outpaced loans, lowering LDR to 98.1% and providing funding flexibility; watch wholesale CD usage as rates drift lower .
Operating leverage line-of-sight: opex guided to $18–$19M/quarter and efficiency ratio near 57% creates earnings torque if NIM and loan growth continue .
Tax rate tailwind: CA apportionment change reduces ETR (Q3 23.5%; FY25 guide 26–27%), a measurable EPS lift vs prior quarters .
Capital returns supportive: aggressive buybacks (4% share count in Q3) and stable dividend ($0.16) suggest confidence; ~$4M buyback capacity remains .
Watch items: deposit competition and betas, pace of C&I mix shift, SBA funding cadence, and any residual classified loan churn; none currently derail the improving trajectory .

Appendix: Additional Q3 Details

Originations: $187.8M at 6.70% blended yield; average loans 83.3% of earning assets .
Deposit spot rate: 2.97% at quarter end; cost of funds 3.12% (-2 bps QoQ) .
Dividend: $0.16 per share, payable Nov 12, 2025 (record Oct 31, 2025) .
Book value/TBVPS: $30.18 / $25.89; TCE/TA 10.67% .

RBB Bancorp (RBB)·Q3 2025 Earnings Summary