RBB earnings rose 25% both sequentially and year over year in the third quarter of 2026, with net income reaching $12.6 million, or $0.74 per diluted share. Higher net interest income and renewed loan growth supported the improvement, although a building sale contributed $2.0 million of after-tax profit.
Key Takeaways
- A building sale added $0.12 to diluted earnings per share, making it a material contributor to the profit increase.
- Loans held for investment increased about $90 million, while deposits remained broadly stable.
- Nonperforming assets fell 11% from the previous quarter, but some benefits to interest income may not recur.
Table of Contents
- RBB earnings benefit from lending income and property gain
- Interest margin widens, with some temporary support
- Loan growth brings funding needs into focus
- Problem assets decline as capital remains ample
- Conclusion
RBB earnings benefit from lending income and property gain
RBB Bancorp’s third-quarter 2026 earnings presentation showed net income of $12.637 million, compared with $10.140 million in the second quarter and $10.148 million a year earlier. Diluted earnings per share increased from $0.59 in both comparison periods.
The $2.7 million pretax gain on the sale of an office building added $0.12 per diluted share. Noninterest income reached $5.1 million, up $2.1 million sequentially, with the sale accounting for more than the increase. Excluding that gain, noninterest income declined by about $600,000 as gains on loan sales fell.
Noninterest expense increased by $526,000 to $19.5 million. Chief Financial Officer Lynn Hopkins projected an expense run rate of roughly $19 million per quarter, plus or minus $100,000 to $200,000.
| Item | Details |
|---|---|
| Tangible book value per share | $27.44 at September 30, 2026; up 6% year over year |
| Common equity Tier 1 ratio | 17.87% at quarter-end |
| Tangible common equity to tangible assets | 11.05% at quarter-end; a non-GAAP measure |
| Allowance for loan losses | $44.0 million, or 1.30% of loans held for investment |
| Subordinated debt redemption | $40 million partially redeemed during the third quarter |
Interest margin widens, with some temporary support
Net interest income increased 6% from the previous quarter and 8% year over year to $31.8 million. Net interest margin reached 3.16%, up 10 basis points sequentially and 18 basis points from a year earlier.
The average loan yield rose to 6.23%, while the cost of funds declined three basis points to 2.97%. However, nonaccrual interest recoveries and a Federal Home Loan Bank special dividend also supported the margin, limiting how much of the improvement can be treated as recurring.
Hopkins said an approximately $700,000 interest recovery came from the payoff of a nonperforming loan. She saw an opportunity for the margin to remain above 3%, but did not provide a precise forecast and expected near-term funding-cost pressure.
Loan growth brings funding needs into focus
Loans held for investment reached $3.399 billion at September 30, increasing about $90 million during the quarter, equivalent to 11% annualized growth. New originations totaled $154 million at an average yield of 6.30%, with residential mortgages accounting for most of the balance-sheet expansion.
Deposits increased only $4.6 million to $3.395 billion. The loan-to-deposit ratio consequently rose to 100.1% from 97.6% at June 30, making deposit gathering and loan sales important considerations for further lending growth.
Hopkins said management was comfortable keeping the ratio around 100% or in the high 90s and expected fourth-quarter loan sales to exceed third-quarter levels.
Problem assets decline as capital remains ample
Nonperforming assets declined to $38.7 million, down 11% sequentially and 29% year over year. Nonperforming loans fell to $18.8 million, or 0.55% of total loans, from $23.8 million in the preceding quarter.
Other real estate owned remained unchanged at $19.8 million and consisted of one partially completed mixed-use property in Los Angeles. The provision for credit losses was $500,000, while net charge-offs totaled $122,000.
Conclusion
The fourth-quarter follow-through will center on whether loan growth and repricing can offset higher funding costs without the same property-sale benefit. Management’s stated plans for increased loan sales and an approximately $19 million quarterly expense run rate provide the next benchmarks.
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