RBB Bancorp

Good day, everyone, and welcome to the RBB Bancorp Third Quarter 2023 Earnings Call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Catherine Way. Ma'am, the floor is yours.

Thank you. Good day, everyone, and thank you for joining us to discuss RBB Bancorp's results for the third quarter of 2023. With me today is Chief Executive Officer David Morris, President Johnny Lee, Chief Financial Officer Alex Coe, Chief Credit Officer Jeffrey Yeh, Chief Administrative Officer Gary Phan, and Chief Risk Officer Vincent Liu. David and Alex will briefly summarize the results, which can be found in the earnings press release and investor presentation that are available on our investor relations website. And then we'll open up the call to your questions. During this conference call, statements made by management may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based upon specific assumptions that may or may not prove correct. Forward-looking statements are also subject to known and unknown risks and uncertainties and other factors relating to RBB Bancorp's operations and business environment, all of which are difficult to predict and many of which are beyond the control of the company. For a detailed discussion of these risks and uncertainties, please refer to the documents the company has filed with the SEC. If any of these uncertainties materialize or any of these assumptions prove incorrect, RBB Bancorp's results could differ materially from its expectations as set forth in these statements. The company assumes no obligation to update such forward-looking statements unless required by the law. Now, I'd like to turn the call over to RBB's Chief Executive Officer, David Morris.

Thank you, Catherine. Good day, everyone, and thank you for joining us today. We are pleased to be awarded a $5 million CDFI ERP award by the U.S. Treasury in the third quarter. We believe it's a real testament to our ongoing efforts to support the communities in which we operate, and we intend to use the funds to help low- and moderate-income communities recover from the COVID-19 pandemic by investing in their long-term prosperity. We were also pleased to reach our target 95% loan-to-deposit ratio in the third quarter. As we mentioned, this has been one of our strategic priorities, and now that we have achieved it, we expect to resume deposit-supported loan growth, which will enhance our profitability and margins. Johnny, who joined us as president in the second quarter, has done an excellent job developing a pipeline of high-quality commercial loans that we expect to originate beginning in the fourth quarter. As part of the deleveraging process, we have also taken steps to de-risk our loan portfolio by reducing our exposure to certain loan categories that we believe could be at risk in a higher for longer interest rate environment. While we believe these proactive approaches to managing our balance sheet will help protect us against potential credit losses, it also impacted our margin and interest income as the exited loans tended to carry higher interest rates. The decline in yield on loans held for investment during the quarter was a direct result of the reduction in high-yielding loans as we sought to de-risk our balance sheet. These actions, when combined with the additional pressure of deposit costs, negatively impacted net interest income and net interest margin, which declined to 2.87 percent in the third quarter. We expect NIM to decline in the fourth quarter due to continued pressure on deposit costs and loan yields, but we expect the redemption of the $55 million of sub-debt will benefit NIM in the future. Credit remained broadly stable in the third quarter, but we did take a $2.2 million charge against a specific loan that we hoped to have off our books in the fourth quarter. We are optimistic that our proactive loan de-risking combined with the third quarter charge-off and provisions have positioned us for improving credit over the coming quarters. With that, I'll hand it over to Alex, who will discuss the financial results. Alex?