RBB Bancorp IPO Preview

Company: RBB Bancorp
Symbol: RBB
Description:RBB Bancorp adopted a strategic plan focused on providing commercial banking services to first generation immigrants, initially concentrating on Chinese immigrants, and now including Koreans and other Asian ethnicities.
Shares: 3 million
Price Range: $22.00-$24.00
Trade Date: 7/26
Underwriter(s): Sandler O’Neill & Partners, Keefe Bruyette & Woods, Stephens Inc.
Co-Manager: FIG Partners, LLC

Link to S-1/A Prospectus

Investor Access: This deal can be accessed via the three main underwriters and the co-manager.

Business: The bank was founded to capitalize on the general dissatisfaction that many customers had with the nature and level of services that were being provided by existing Asian-American and Chinese-American banks, with first generation Chinese immigrants not being well-served by existing banks. Their directors and their families, as well as various business leaders in the local community, initially capitalized the Bank at over $70 million. These investors have also assisted their management team in establishing and growing strong connections with businesses located in China and Asia, as well as at high levels of government in China and Taiwan. They believe that these connections have enhanced the Bank’s reputation and name recognition well beyond what would be typical for a bank of their size. Although the Bank serves all ethnicities, their board and management team are comprised of mostly Chinese-Americans, and as a result, their marketing focus was initially on first generation Chinese-Americans who prefer to conduct business in their native language(s). Their size and infrastructure allow them to serve customers that require higher lending limits than normally associated with other smaller, local banking institutions that serve the Chinese-American communities in which they operate.

Financials: Their net interest income was $20.4 million, $28.7 million, $33.6 million, $35.6 million, and $56.5 million and their net income was $4.5 million, $7.0 million, $10.4 million, $13.0 million, and $19.1 million in 2012, 2013, 2014, 2015 and 2016, respectively. In the first quarter of 2017, their net interest income increased 12.3% to $13.5 million, while their net income increased 93.4%, compared to the same period in 2016, primarily due to the growth in earning assets as a result of the TomatoBank merger, increased gain on sales of SBA loans and reduced legal and professional expenses and other expenses.

Dividend: Their estimated quarterly dividend of $0.08 ($0.32 annually) represents an approximately 1.4% yield, based on the midpoint of the offering range.

Similar Bank Performance: In addition to these Chinese-American banks, they also compete with other banks in the region, particularly with Korean-American banks in their SFR and SBA lending areas. Although they were founded by and market primarily to Chinese Americans, they are broadening their marketing efforts to include all categories of Asian Americans. In certain geographic markets where they currently operate, there is overlap between Chinese-American, Korean-American and other Asian-American banks for loan and deposit business. They aim to grow both organically and potentially through acquisitions in these markets.

Sector Performance YTD:

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