RBB Bancorp

Good day and welcome to the RBB Bancorp second quarter 2024 earnings conference call. At this time, all participants are on a listen-only mode. After management's prepared remarks, there will be a question and answer session. I would now like to turn the call over to your host, Catherine Way. Please go ahead.

Thank you. Good day, everyone, and thank you for joining us to discuss RBB Bancorp's results for the second quarter of 2024. With me today are Chief Executive Officer David Morris, President Johnny Lee, Chief Financial Officer Lynn Hopkins, Chief Credit Officer Jeffrey Yeh, Chief Administrative Officer Gary Phan, and Chief Risk Officer Vincent Liu. David and Lynn will briefly summarize the results, which can be found in the earnings press release and investor presentation that are available on the Relations website. And then we'll open up the call to your questions. I would ask that everyone please refer to the disclaimer regarding investor presentation and the company's SEC filing. Now I'd like to turn the call over to RBB's Chief Executive Officer, David Morris. David?

Thank you, Catherine. Good day, everyone, and thank you for joining us today. RBB reported second quarter net income of $7.2 million, or $0.39 per share, as we saw further signs of stabilization with modest loan growth and no change in funding costs. Net interest margin declined two basis points, but as Lynn will explain, we are cautiously optimistic that it will begin to expand in the third and fourth quarters. What really is going to drive our results is deposit-funded loan growth. Loans increased by $20 million in the second quarter, supported by approximately $115 million of loan production at a weighted average rate of 7.4%. However, and more importantly, we are seeing increased loan activity and our loan pipeline is expanding, which we expect will support further net loan growth going forward. Interest expenses declined from the first quarter as we continued to reduce our reliance on wholesale funding to 4% of total deposits. This is down from about 16% of deposits a year ago and 7% at the end of last quarter. We did see an increase in non-performing loans in the second quarter, primarily due to three loans migrating to non-accrual but we believe we are appropriately reserved based on updated appraisals we have obtained during the second quarter. These three loans total $22 million and consist of a $10 million C&D loan, a $7.3 million CRE loan, and a $4.7 million C&I loan secured by a personal residence. We are very focused on reducing the levels of MPLs and by Way of example, we expect to settle through trustee sales, two SFR non-accrual loans totaling $8.1 million with loan-to-values less than 50% in the third quarter. While we recognize that in this environment, or any environment for that matter, a 48% increase in non-performing assets could be a cause for concern. We are comfortable with the underlying collateral of our troubled loans and expect we will be able to resolve them without material loss. With that, I'll hand it over to Lynn, who can go into some more details about the quarter. Lynn?