RBB reported stronger earnings as net interest margin expanded and credit quality improved. However, a $2.7 million property sale gain and a $320,000 FHLB special dividend contributed to the improvement, making recurring profitability less impressive than headline EPS growth suggests. 8-K.
RBB Bancorp · Q3 2026 · Reported 19 Oct 2026 · US
Corrected key figures
USD million, except per-share amounts and percentages.
Q3 2026 | Q3 2025 | change | |
|---|---|---|---|
Net interest income | 31.76 | 29.28 | +8.5% |
Noninterest income | 5.11 | 3.29 | +55.0% |
Pre-tax pre-provision income | 17.32 | 13.89 | +24.7% |
Net income | 12.64 | 10.15 | +24.5% |
Diluted EPS (USD) | 0.74 | 0.59 | +25.4% |
Net interest margin | 3.16% | 2.98% | +18 bps |
Nonperforming assets | 38.66 | 54.31 | −28.8% |
Nonperforming loans | 18.84 | 45.48 | −58.6% |
Loans held for investment | 3,399.21 | 3,302.58 | +2.9% |
Changes are calculated using the underlying reported figures. Balance-sheet and credit-quality figures are period-end values.
Core earnings improved, but not all of the revenue lift is repeatable
Net income rose to $12.6 million, or $0.74 diluted EPS, from $10.1 million, or $0.59, in the prior quarter, while return on average assets improved to 1.17% from 0.97% 8-K. The more important operating change was net interest income rising to $31.8 million from $30.1 million as net interest margin expanded to 3.16% from 3.06% 8-K.
That margin improvement was helped by factors the release itself flags as partly episodic: higher nonaccrual interest recoveries, one additional day in the quarter, and a $320,000 FHLB special dividend 8-K. Noninterest income also benefited from a $2.7 million gain on the sale of the Brooklyn office building, which more than offset lower gain on sale of loans from lower sale volume 8-K.
Funding mix is getting better, even as deposit pricing still rises
Management tied the quarter’s improvement to the July 1 partial redemption of $40.0 million of subordinated notes and stronger retail deposit growth 8-K. Average total cost of funds fell to 2.97% from 3.00%, due mostly to lower borrowing costs after that redemption, and average noninterest-bearing deposits rose to approximately 17% of average total deposits from 16% 8-K.
The deposit story is mixed rather than cleanly lower cost. Total deposits increased by $4.6 million from June 30, with a $63.3 million increase in retail deposits offset by a $58.7 million decrease in wholesale deposits, which supports management’s claim that reliance on wholesale funding is falling 8-K. But the period-end weighted average interest rate for total deposits still increased to 2.82% from 2.75%, partly reflecting the recent 25 basis point increase in the federal funds rate 8-K.
Credit quality improved again, though some early-stage migration remains
Nonperforming assets fell to $38.7 million from $43.6 million in the prior quarter and from $54.3 million a year earlier, driven by a $4.9 million decline in nonperforming loans that was due mostly to payoffs and paydowns 8-K. Substandard loans also declined to $57.3 million from $61.5 million, and net charge-offs remained just 0.01% of average loans on an annualized basis in both the third and second quarters 8-K.
The weaker point inside credit was special mention loans, which increased to $24.3 million from $20.3 million because additions outpaced paydowns and upgrades 8-K. Even so, reserve coverage of nonperforming loans improved to 234% from 184% as nonperformers came down faster than the allowance for loan losses, while the provision was only $500,000 and was attributed mainly to net loan growth, partly offset by better credit trends and economic forecasts 8-K.
What to watch next
Whether net interest margin holds once the quarter’s higher nonaccrual recoveries and the $320,000 FHLB special dividend are absent 8-K.
Whether double-digit annualized loan growth can continue without pushing up provision expense or reviving criticized loan migration, especially after the increase in special mention loans 8-K.
Sources
Produced by Clarifo Research with the Clarifo financial research engine from the company's public filings. AI was used in parts of the analysis and drafting. Figures are checked automatically against the filings they come from. This is not investment advice.