RBB Bancorp (NASDAQ:RBB) reported fourth-quarter 2025 net income of $10.2 million, or $0.59 per diluted share, matching the prior quarter and more than doubling results from the year-ago period, management said on the company’s earnings call. President and CEO Johnny Lee described the quarter as a “strong finish” to 2025, citing solid loan growth, improving performance ratios, and “normalizing credit,” while acknowledging that work remains to resolve the bank’s remaining non-performing assets.
Quarterly profitability and margin trends
Chief Financial Officer Lynn Hopkins said fourth-quarter pre-tax, pre-provision income was $2.3 million, up 21% from the fourth quarter of 2024. Net interest income rose slightly, marking the sixth consecutive quarterly increase, and the net interest margin improved by one basis point to 2.99%.
For the full year, Hopkins said net interest income increased 13% to $112 million, supported by loan growth, relatively stable asset yields, and a 38-basis-point decline in funding costs. She added that the bank’s spot rate on deposits was 2.90% at year-end, six basis points below the fourth-quarter average deposit cost, and management expects “some incremental improvement in deposit costs in the first quarter,” though competition makes the magnitude difficult to quantify.
Loan growth, originations, and pricing discipline
Lee said loans grew 8.6% in 2025 and that the bank generated $145 million in loan originations during the fourth quarter. For the year, originations totaled $713 million, which Hopkins said was 32% higher than in 2024. Lee said the company’s loan pipeline is “healthy and in line with this same time last year,” and management is optimistic about another year of high single-digit growth in 2026.
Management emphasized continued pricing and structuring discipline. Lee said fourth-quarter originations yielded 31 basis points above the current loan portfolio yield. Despite 75 basis points of Federal Reserve rate cuts during 2025, Lee said the bank increased its fourth-quarter loan yield by four basis points year over year to 6.07%.
During the Q&A, Lee and Hopkins discussed why fourth-quarter loan growth appeared lighter than in prior quarters. They pointed to higher loan sales and “strategic exits” from certain classified credits. Lee said the pipeline remains healthy across both commercial and residential mortgage lending, and provided quarterly funding pace estimates of about $65 million for commercial and $90 million for mortgage production. Hopkins added that payoffs and paydowns were slightly lower than the third quarter, and management believes production should translate into net loan growth going forward.
Deposits, funding costs, and rate competition
Lee said deposits were a “bright spot” in 2025, citing community outreach and expanding business relationships. Fourth-quarter total deposits increased 8.6% compared to the same quarter a year earlier, with strong growth in interest-bearing non-maturity deposits. Lee said the deposit growth helped support loan growth and a reduction in Federal Home Loan Bank advances.
Average demand deposits were stable for 2025 and represented 16% of total deposits, Lee said. He added that the rate on average interest-bearing deposits declined 55 basis points from the fourth quarter of 2024, representing about 73% of the rate cuts during the year. However, management said deposit competition has been increasing and recent rate cuts have not reduced deposit costs as quickly.
Hopkins noted that total deposits declined in the fourth quarter of 2025 due to a $42 million decrease in brokered deposits, partially offset by a $26 million increase in retail deposits.
On deposit beta, management told analysts that a linked-quarter beta of about 30% may rise as more deposits mature and reprice. Hopkins also highlighted upcoming repricing opportunities: 99.5% of the bank’s $1.7 billion in CDs mature within 12 months, and about 40% mature in the first quarter. She said the average CD pricing is in the “high threes,” and management expects some repricing into the current rate environment.
Credit quality and non-performing assets
Management said asset quality improved meaningfully during 2025. Lee reported non-performing loans declined 45% and non-performing assets fell 34% from the end of the prior year. Criticized and classified assets decreased 43% for the full year and 25% since the end of the third quarter, he said.
Hopkins said the fourth-quarter provision for credit losses was $600,000, driven mainly by charge-offs and loan growth, partially offset by positive changes in economic forecasts and credit quality metrics. She said management expects future annual credit costs to be “much lower now that credit has stabilized.”
During the Q&A, management said non-performing loans are concentrated, with 90% tied to four relationships. Hopkins said three of those relationships are continuing to make payments under agreements, which is reducing balances ahead of resolution. She said management is optimistic it can work through the larger problem credits during 2026, potentially with progress in the first half of the year, although a partially completed construction project representing roughly half of the non-performing loan balance may take longer.
Expenses, capital actions, and balance sheet priorities
Hopkins said fourth-quarter non-interest income declined $486,000 sequentially because the third quarter included a $500,000 gain tied to an equity investment. In the fourth quarter, the bank sold $22 million of mortgages in addition to SBA loans, boosting gain-on-sale revenue. Compared with the year-ago quarter, all categories of non-interest income increased except “other income,” she said.
Non-interest expenses rose $282,000 from the third quarter, largely due to year-end accruals, and the operating expense ratio was stable at 1.80% of average total assets. Hopkins said first-quarter expenses are expected to rise due to seasonal taxes and salary adjustments, then stabilize in an $18 million to $19 million quarterly range, with professional service fees expected to moderate in 2026 compared to 2025.
Hopkins also said the quarterly effective tax rate fell 330 basis points versus the third quarter, aided by a lower multi-state blended tax rate and ongoing state tax planning. For 2026, the company expects an effective tax rate between 27% and 28%.
On capital, Hopkins said tangible book value per share increased 7.8% in 2025 to $26.42. She added that the company returned more than $25 million to shareholders during the year through dividends and share repurchases of about 4% of outstanding shares, and that capital ratios remained above regulatory “well-capitalized” levels.
Management also discussed potential changes to its capital stack. The company has $120 million of subordinated debt eligible for redemption that will reprice effective April 1, and management said it is evaluating a broader approach that could include “rightsizing” the debt. Lee said the company may become more active on share repurchases after addressing the subordinated debt structure.
About RBB Bancorp (NASDAQ:RBB)
RBB Bancorp is a bank holding company headquartered in Los Angeles, California, and the parent of Royal Business Bank. Established in 2008, the company focuses on providing a full range of commercial banking services tailored to small- and medium-sized businesses, professionals and real estate investors. Through its subsidiary, RBB Bancorp delivers deposit products, loan facilities and cash management solutions designed to support operations and growth strategies.
The company’s core offerings include commercial real estate lending, construction and land development loans, Small Business Administration (SBA) lending and trade finance.
