CONTENTS
LETTER TO SHAREHOLDERS-ENGLISH
LETTER TO SHAREHOLDERS-CHINESE
BOARD OF DIRECTORS
INDEPENDENT AUDITOR’S REPORT
ON THE CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statements of Financial Condition
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Shareholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Notes
1-2
3
4-5
6
7
9
10
11
12
13-41
42-43
RBB BANCORP AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
WITH
INDEPENDENT AUDITOR'S REPORT
DECEMBER 31, 2013 AND 2012
This statement has not been reviewed or confirmed for accuracy or relevance by the Federal Deposit
Insurance Corporation.
Vavrinek, Trine, Day & Co., LLP
Certified Public Accountants
INDEPENDENT AUDITOR'S REPORT
V A L U E T H E D I F F E R E N C E
Board of Directors and Shareholders of
RBB Bancorp and Subsidiaries
We have audited the accompanying consolidated financial statements of RBB Bancorp and Subsidiaries, which
are comprised of the consolidated statements of financial condition as of December 31, 2013 and 2012, and the
related consolidated statements of income, comprehensive income, changes in shareholders' equity and cash flows
for the years then ended, and the related notes to the consolidated financial statements.
Management's Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance
with accounting principles generally accepted in the United States of America; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our
audits in accordance with auditing standards generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no
such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of RBB Bancorp and Subsidiaries as of December 31, 2013 and 2012, and the results of its
operations and its cash flows for the years then ended in accordance with accounting principles generally accepted
in the United States of America.
Laguna Hills, California
February 19, 2014
25231 Paseo De Alicia, Suite 100 Laguna Hills, CA 92653 Tel: 949.768.0833 Fax: 949.768.8408 www.vtdcpa.com
F R E S N O • L A G U N A H I L L S • P A L O A L T O • P L E A S A N T O N • R A N C H O C U C A M O N G A • S A C R A M E N T O • R I V E R S I D E
RBB BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 2013 AND 2012
ASSETS
Cash and Due from Banks
Federal Funds Sold and Other Cash Equivalents
TOTAL CASH AND CASH EQUIVALENTS
2013
2012
$
23,773,709
12,000,000
35,773,709
$
32,507,552
29,500,000
62,007,552
Interest-Bearing Deposits in Other Financial Institutions
100,000
-
Securities:
Available for Sale
Held to Maturity (Fair Value 2013 - $7,047,221; 2012 - $7,854,687)
61,547,620
6,742,037
169,839,256
7,125,086
Loans:
Real Estate
Commercial
Unaccreted Discount on Acquired Loans
Deferred Loan Fees, Net of Costs
Allowance for Loan Losses
Cash Surrender Value of Life Insurance
Premises and Equipment
FHLB Stock
Net Deferred Tax Assets
Income Tax Receivable
Other Real Estate Owned
Goodwill
Core Deposit Intangible
Accrued Interest and Other Assets
TOTAL LOANS
NET LOANS
443,538,614
139,133,779
582,672,393
(5,283,190)
(760,295)
576,628,908
(7,549,320)
569,079,588
20,210,933
7,145,674
3,696,000
8,660,000
795,434
1,510,852
4,000,767
713,738
3,433,203
230,757,185
100,158,284
330,915,469
(2,901,649)
(697,458)
327,316,362
(7,121,878)
320,194,484
-
2,792,126
2,096,500
6,004,000
1,354,070
1,424,765
788,890
-
2,857,652
$
723,409,555
$
576,484,381
The accompanying notes are an integral part of these consolidated financial statements.
RBB BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 2013 AND 2012
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-Bearing Demand
Savings, NOW and Money Market Accounts
Time Deposits Under $100,000
Time Deposits $100,000 and Over
TOTAL DEPOSITS
FHLB Advances
Reserve for Unfunded Commitments
Capital Subscriptions
Accrued Interest and Other Liabilities
TOTAL LIABILITIES
Commitments and Contingencies - Notes E and I
Shareholders' Equity:
Preferred Stock - 100,000,000 Shares Authorized, No Par Value;
None Outstanding
Common Stock - 100,000,000 Shares Authorized, No Par Value;
11,658,259 and 9,714,411 Shares Issued and Outstanding
for 2013 and 2012, Respectively
Additional Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive Income (Loss) - Net Unrealized
Gain (Loss) on Securities Available for Sale, Net of Tax of
$201,716 in 2013 and $1,084,768 in 2012
TOTAL SHAREHOLDERS' EQUITY
2013
2012
$
89,129,152
190,786,116
29,085,370
265,077,985
574,078,623
$
56,502,217
145,996,014
19,540,398
220,639,754
442,678,383
7,000,000
721,561
-
3,617,272
585,417,456
-
1,156,019
22,010,550
2,526,253
468,371,205
-
-
-
-
125,707,421
5,200,636
7,374,317
102,365,035
3,816,537
370,597
(290,275)
137,992,099
1,561,007
108,113,176
$
723,409,555
$
576,484,381
The accompanying notes are an integral part of these consolidated financial statements.
RBB BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
INTEREST INCOME
Interest and Fees on Loans
Interest on Interest-Bearing Deposits
Interest on Investment Securities
Interest on Federal Funds Sold and Other
TOTAL INTEREST INCOME
INTEREST EXPENSE
Interest on Savings Deposits, NOW and Money Market Accounts
Interest on Time Deposits
Interest on Other Borrowed Funds
Provision for Loan Losses
TOTAL INTEREST EXPENSE
NET INTEREST INCOME
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES
NONINTEREST INCOME
Service Charges, Fees and Other
Gain on Sale of Loans
Recoveries on Loans Acquired in Business Combinations
Increase in Cash Surrender of Life Insurance
Gain on Sale of Securities
Gain on Sale of OREO
Bank Enterprise Award ("BEA") Grant
NONINTEREST EXPENSE
Salaries and Employee Benefits
Occupancy and Equipment Expenses
Data Processing
Legal and Professional
Office Expenses
Marketing and Business Promotion
Insurance and Regulatory Assessments
OREO Expenses
Other Expenses
Income Tax Expense
INCOME BEFORE INCOME TAXES
NET INCOME
NET INCOME PER SHARE - BASIC
NET INCOME PER SHARE - DILUTED
2013
2012
$
29,653,433
49,078
2,166,929
201,943
32,071,383
$
20,966,694
128,189
3,111,930
238,409
24,445,222
1,011,063
2,350,485
5,687
3,367,235
28,704,148
1,612,540
1,218,512
3,191,784
6
4,410,302
20,034,920
2,057,920
27,091,608
17,977,000
1,258,548
139,782
713,741
210,933
179,249
459,782
415,000
3,377,035
9,344,683
2,343,703
1,812,494
1,800,762
302,988
261,666
745,085
138,897
1,404,151
18,154,429
12,314,214
5,310,494
7,003,720
0.65
0.63
$
$
$
804,346
403,015
193,000
-
161,513
761,472
-
2,323,346
6,979,627
2,112,818
768,844
836,630
223,547
232,167
657,073
411,431
1,037,007
13,259,144
7,041,202
2,994,992
4,046,210
0.49
0.48
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
RBB BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
Net Income
OTHER COMPREHENSIVE INCOME (LOSS):
Unrealized Gains (Losses) on Securities Available for Sale:
Change in Unrealized Gains (Losses)
Reclassification of Gains Recognized in Net Income
Related Income Tax Effect:
Change in Unrealized Gains (Losses)
Reclassification of Gains Recognized in Net Income
2013
2012
$
7,003,720
$
4,046,210
(2,958,517)
(179,249)
(3,137,766)
1,212,992
73,492
1,286,484
2,161,749
(161,513)
2,000,236
(886,317)
66,220
(820,097)
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)
(1,851,282)
1,180,139
TOTAL COMPREHENSIVE INCOME
$
5,152,438
$
5,226,349
The accompanying notes are an integral part of these consolidated financial statements.
RBB BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
Common Stock
Shares
7,123,259
Amount
71,273,557
$
Additional
Paid-in
Capital
3,574,037
$
Retained
Earnings
(Deficit)
(3,675,613)
$
Accumulated
Other
Comprehensive
Income (Loss)
$
380,868
4,046,210
Balance at December 31, 2011
Net Income
Exercise of Stock Options
17,000
221,000
(51,000)
293,500
Total
$
71,552,849
4,046,210
170,000
293,500
Stock-Based Compensation
Issuance of Common Stock
Through Private Placement,
Net of Expenses of $19,346
Change in Other Comprehensive
Income, Net of Taxes
2,574,152
30,870,478
30,870,478
1,180,139
1,180,139
Balance at December 31, 2012
9,714,411
102,365,035
3,816,537
370,597
1,561,007
108,113,176
Net Income
7,003,720
Exercise of Stock Options
18,000
232,210
(52,210)
Stock-Based Compensation
Issuance of Common Stock
Through Private Placement
1,925,848
23,110,176
1,436,309
7,003,720
180,000
1,436,309
23,110,176
Change in Other Comprehensive
Income, Net of Taxes
(1,851,282)
(1,851,282)
Balance at December 31, 2013
11,658,259
$
125,707,421
$
5,200,636
$
7,374,317
$
(290,275)
$
137,992,099
The accompanying notes are an integral part of these consolidated financial statements.
RBB BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
OPERATING ACTIVITIES
Net Income
Adjustments to Reconcile Net Income to Net Cash From
Operating Activities:
Depreciation, Accretion and Amortization
Provision for Loan Losses
Stock-Based Compensation
Deferred Tax Expense
Gain on Sale of Securities
Gain on Sale of Loans
Gain on Sale of Other Real Estate Owned
Increase in Cash Surrender Value of Life Insurance
Loss on Sale of Fixed Assets
Other Items
NET CASH FROM OPERATING ACTIVITIES
INVESTING ACTIVITIES
Decrease in Interest-Bearing Deposits
Securities Available for Sale:
Purchases
Maturities, Prepayments and Calls
Sales
Securities Held to Maturity:
Purchases
Maturities, Prepayments and Calls
Purchase of FHLB Stock and Other Equity Securities
Purchase of Life Insurance
Net Increase in Loans
Proceeds from Sales of Other Real Estate Owned
Net Cash Acquired in Connection with Acquisitions
Purchases of Premises and Equipment
NET CASH FROM INVESTING ACTIVITIES
FINANCING ACTIVITIES
Net Increase in Demand Deposits and Savings Accounts
Net Decrease in Time Deposits
Proceeds from FHLB Advances
(Decrease) Increase in Capital Subscriptions
Issuance of Common Stock
NET CASH FROM FINANCING ACTIVITIES
DECREASE IN CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents at Beginning of Period
CASH AND CASH EQUIVALENTS AT END OF YEAR
Supplemental Disclosures of Cash Flow Information:
Interest Paid
Taxes Paid
Transfer from Loans to Other Real Estate Owned
2013
7,003,720
$
2012
4,046,210
$
(1,056,187)
1,612,540
1,436,309
1,281,000
(179,249)
(139,782)
(459,782)
(210,933)
-
3,306,997
12,594,633
1,133,054
2,057,920
293,500
1,417,000
(161,513)
(403,015)
(761,472)
-
77,098
(1,876,122)
5,822,660
1,619,000
733,000
(3,098,933)
34,272,904
72,730,731
(143,864,442)
39,315,691
23,531,598
-
350,000
(1,601,015)
(20,000,000)
(132,616,504)
1,016,195
30,900,534
(203,521)
(16,630,609)
10,772,935
(41,250,428)
7,000,000
(22,010,550)
23,290,176
(22,197,867)
(26,233,843)
62,007,552
35,773,709
$
(1,020,433)
-
(415,100)
-
(20,882,743)
2,394,461
-
(201,619)
(100,409,587)
39,062,811
(23,921,914)
-
22,010,550
31,040,478
68,191,925
(26,395,002)
88,402,554
62,007,552
$
$
$
$
3,496,405
2,332,000
292,500
$
$
$
4,621,870
2,995,000
791,004
The accompanying notes are an integral part of these consolidated financial statements.
RBB BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Nature of Operations
The accompanying consolidated financial statements include the accounts of RBB Bancorp and its wholly-owned
subsidiaries Royal Business Bank (“Bank") and RBB Asset Management Company (“RAM”), collectively
referred to herein as "the Company". All significant intercompany transactions have been eliminated.
RBB Bancorp was formed in January 2011 as a bank holding company. RAM was formed in 2012 to hold and
manage problem assets acquired in business combinations.
RBB Bancorp has no significant business activity other than its investments in Royal Business Bank and RAM.
Accordingly, no separate financial information on RBB Bancorp is provided.
The Company operates full-service banking offices in Los Angeles, San Gabriel, Torrance, Rowland Heights,
Westlake Village, Oxnard, Buena Park, Monterey Park, and Silverlake, California and Las Vegas, Nevada and
loan production offices in Industry and Rowland Heights, California. The Company's primary source of revenue
is providing loans to customers, who are predominately small and middle-market businesses and individuals.
Subsequent Events
The Company has evaluated subsequent events for recognition and disclosure through February 19, 2014, which
is the date the financial statements were available to be issued.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.
Cash and Cash Equivalents
Cash and cash equivalents include cash and due from banks and term federal funds sold and interest-bearing
deposits in other financial institutions with original maturities of less than 90 days. Net cash flows are reported
for customer loan and deposit transactions and interest-bearing deposits in other financial institutions.
Cash and Due from Banks
Banking regulations require that banks maintain a percentage of their deposits as reserves in cash or on deposit
with the Federal Reserve Bank. The reserves required to be held as of December 31, 2013 and 2012 were
$5,415,000 and $4,948,000, respectively. The Company maintains amounts in due from bank accounts, which
may exceed federally insured limits. The Company has not experienced any losses in such accounts.
RBB BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Interest-Bearing Deposits in Other Financial Institutions
Interest-bearing deposits in other financial institutions not included in cash and cash equivalents are carried at
cost.
Investment Securities
Debt securities are classified as held to maturity and carried at amortized cost when management has the positive
intent and ability to hold them to maturity. Debt securities not classified as held to maturity are classified as
available for sale. Equity securities with readily determinable fair values are classified as available for sale.
Securities available for sale are carried at fair value, with unrealized holding gains and losses reported in other
comprehensive income, net of tax.
Interest income includes amortization of purchase premiums or discounts. Premiums and discounts on securities
are amortized on the level-yield method without anticipating prepayments. Gains and losses on sales are recorded
on the trade date and determined using the specific identification method.
Management evaluates securities for other-than-temporary impairment ("OTTI") on at least a quarterly basis, and
more frequently when economic or market conditions warrant such an evaluation. For securities in an unrealized
loss position, management considers the extent and duration of the unrealized loss, and the financial condition and
near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than
not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost
basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between
amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet
the aforementioned criteria, the amount of impairment is split into two components as follows; OTTI related to
credit loss, which must be recognized in the income statement and; OTTI related to other factors, which is
recognized in other comprehensive income. The credit loss is defined as the difference between the present value
of the cash flows expected to be collected and the amortized cost basis. For equity securities, the entire amount of
impairment is recognized through earnings.
Loans
Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or
payoff are reported at their outstanding unpaid principal balances reduced by any charge-offs or specific valuation
accounts and net of any deferred fees or costs on originated loans, or unamortized premiums or discounts on
purchased loans.
Loan origination fees and certain direct origination costs are deferred and recognized in interest income using the
level-yield method without anticipating prepayments.
RBB BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Loans - Continued
Premiums and discounts on loans purchased are grouped by type and certain common risk characteristics and
amortized or accreted as an adjustment of yield over the weighted-average remaining contractual lives of each
group of loans, adjusted for prepayments when applicable, using methodologies which approximate the interest
method.
Loans on which the accrual of interest has been discontinued are designated as nonaccrual loans. The accrual of
interest on loans is discontinued when principal or interest is past due 90 days or when, in the opinion of
management, there is reasonable doubt as to collectibility based on contractual terms of the loan. When loans are
placed on nonaccrual status, all interest previously accrued but not collected is reversed against current period
interest income. Income on nonaccrual loans is subsequently recognized only to the extent that cash is received
and the loan's principal balance is deemed collectible. Interest accruals are resumed on such loans only when they
are brought current with respect to interest and principal and when, in the judgment of management, the loans are
estimated to be fully collectible as to all principal and interest.
Allowance for Loan Losses
The allowance for loan losses is a valuation allowance for probable incurred credit losses. Loan losses are
charged against the allowance when management believes the uncollectibility of a loan balance is confirmed.
Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance
required using past loan loss experience, the nature and volume of the portfolio, information about specific
borrower situations and estimated collateral values, economic conditions, and other factors. Allocations of the
allowance may be made for specific loans, but the entire allowance is available for any loan that, in management's
judgment, should be charged-off. Amounts are charged-off when available information confirms that specific
loans or portions thereof, are uncollectible. This methodology for determining charge-offs is consistently applied
to each segment.
The Company determines a separate allowance for each portfolio segment. The allowance consists of specific
and general reserves. Specific reserves relate to loans that are individually classified as impaired. A loan is
impaired when, based on current information and events, it is probable that the Company will be unable to collect
all amounts due according to the contractual terms of the loan agreement. Factors considered in determining
impairment include payment status, collateral value and the probability of collecting all amounts when due.
Measurement of impairment is based on the expected future cash flows of an impaired loan, which are to be
discounted at the loan's effective interest rate, or measured by reference to an observable market value, if one
exists, or the fair value of the collateral for a collateral-dependent loan. The Company selects the measurement
method on a loan-by-loan basis except that collateral-dependent loans for which foreclosure is probable are
measured at the fair value of the collateral.
RBB BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Allowance for Loan Losses - Continued
The Company recognizes interest income on impaired loans based on its existing methods of recognizing interest
income on nonaccrual loans. Loans, for which the terms have been modified resulting in a concession, and for
which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified
as impaired with measurement of impairment as described above.
If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of
estimated future cash flows using the loan's existing rate or at the fair value of collateral if repayment is expected
solely from the collateral.
General reserves cover non-impaired loans and are based on historical loss rates of peer institutions for each
portfolio segment, adjusted for the effects of qualitative or environmental factors that are likely to cause estimated
credit losses as of the evaluation date to differ from the portfolio segment's historical loss experience. Qualitative
factors include consideration of the following: changes in lending policies and procedures; changes in economic
conditions, changes in the nature and volume of the portfolio; changes in the experience, ability and depth of
lending management and other relevant staff; changes in the volume and severity of past due, nonaccrual and
other adversely graded loans; changes in the loan review system; changes in the value of the underlying collateral
for collateral-dependent loans; concentrations of credit and the effect of other external factors such as competition
and legal and regulatory requirements.
Portfolio segments identified by the Company include real estate and commercial loans. Relevant risk
characteristics for these portfolio segments generally include debt service coverage, loan-to-value ratios, and
financial performance.
Certain Acquired Loans
As part of business acquisitions, the Company acquires certain loans that have shown evidence of credit
deterioration since origination. These acquired loans are recorded at the allocated fair value, such that there is no
carryover of the seller's allowance for loan losses. Such acquired loans are accounted for individually. The
Company estimates the amount and timing of expected cash flows for each purchased loan, and the expected cash
flows in excess of the allocated fair value is recorded as interest income over the remaining life of the loan
(accretable yield). The excess of the loan's contractual principal and interest over expected cash flows is not
recorded (non-accretable difference). Over the life of the loan, expected cash flows continue to be estimated. If
the present value of expected cash flows is less than the carrying amount, a loss is recorded through the allowance
for loan losses. If the present value of expected cash flows is greater than the carrying amount, it is recognized as
part of future interest income.
RBB BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Premises and Equipment
Land is carried at cost. Premises, leasehold improvements and equipment are carried at cost less accumulated
depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful
lives, which is twenty-five years for premises and ranges from three to ten years for leasehold improvements and
equipment. Leasehold improvements are amortized using the straight-line method over the estimated useful lives
of the improvements or the remaining lease term, whichever is shorter. Expenditures for betterments or major
repairs are capitalized and those for ordinary repairs and maintenance are charged to operations as incurred.
Other Real Estate Owned
Real estate acquired by foreclosure or deed in lieu of foreclosure is recorded at fair value at the date of
foreclosure, establishing a new cost basis by a charge to the allowance for loan losses, if necessary. Other real
estate owned is carried at the lower of the Company's carrying value of the property or its fair value, less
estimated carrying costs and costs of disposition. Fair value is based on current appraisals less estimated selling
costs. Any subsequent write-downs are charged against operating expenses and recognized as a valuation
allowance. Operating expenses and related income of such properties and gains and losses on their disposition are
included in other operating income and expenses.
Goodwill and Other Intangible Assets
Goodwill is generally determined as the excess of the fair value of the consideration transferred, plus the fair
value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities
assumed as of the acquisition date. Goodwill resulting from whole bank acquisitions is not amortized, but tested
for impairment at least annually. The Company has selected November 30 as the date to perform the annual
impairment test. Goodwill amounted to $4,000,767 and $788,890 as of December 31, 2013 and 2012,
respectively, and is the only intangible asset with an indefinite life on the balance sheet. No impairment was
recognized on goodwill during 2013 and 2012.
Other intangible assets consist of core deposit intangible (“CDI”) assets arising from whole bank acquisitions.
CDI assets are amortized on an accelerated method over their estimated useful life of 8 years. CDI was
recognized in the 2013 acquisition of Los Angeles National Bank. The unamortized balance as of December 31,
2013 was $713,738. CDI amortization expense was $88,000 in 2013.
Estimated CDI amortization expense for the next 5 years is as follows:
2014
2015
2016
2017
2018
$
131,000
117,000
106,000
88,000
87,000
RBB BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Company Owned Life Insurance
The Company has purchased life insurance policies on certain key executives. Company owned life insurance is
recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the
cash surrender value adjusted for other charges or other amounts due that are probable at settlement.
Federal Home Loan Bank ("FHLB") Stock
The Company is a member of the FHLB system. Members are required to own a certain amount of stock based
on the level of borrowings and other factors, and may invest in additional amounts. FHLB stock is carried at cost,
classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par
value. Both cash and stock dividends are reported as income.
Stock-Based Compensation
Compensation cost is recognized for stock options issued to employees, based on the fair value of these awards at
the date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options. This cost is
recognized over the period which an employee is required to provide services in exchange for the award,
generally defined as the vesting period.
Income Taxes
Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax
assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary
differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A
valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. Tax effects
from an uncertain tax position are recognized in the financial statements only if, based on its merits, the position
is more likely than not to be sustained on audit by the taxing authorities. Interest and penalties related to
uncertain tax positions are recorded as part of income tax expense.
Retirement Plans
The Company established a 401(k) plan in 2010. The Company contributed $46,000 and $41,000 in 2013 and
2012, respectively.
Comprehensive Income
The change in unrealized gains and losses on securities available for sale is the only component of accumulated
other comprehensive income for the Company. The amount reclassified out of other accumulated comprehensive
income relating to realized gains on securities available for sale was $179,249 and $161,513 for 2013 and 2012,
with the related tax effect of $73,492 and $66,220, respectively.
RBB BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Financial Instruments
In the ordinary course of business, the Company has entered into off-balance sheet financial instruments
consisting of commitments to extend credit, commercial letters of credit, and standby letters of credit as described
in Note I. Such financial instruments are recorded in the financial statements when they are funded.
Earnings Per Share ("EPS")
Basic EPS excludes dilution and is computed by dividing income available to common shareholders by the
weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common stock were exercised or converted into
common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.
Fair Value Measurement
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the
principal or most advantageous market for the asset or liability in an orderly transaction between market
participants on the measurement date. Current accounting guidance establishes a fair value hierarchy, which
requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when
measuring fair value. There are three levels of inputs that may be used to measure fair values:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has
the ability to access as of the measurement date.
Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar
assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can
be corroborated by observable market data.
Level 3: Significant unobservable inputs that reflect the Company's own assumptions about the
assumptions that market participants would use in pricing an asset or liability.
See Note M for more information and disclosures relating to the Company's fair value measurements.
Reclassifications
Certain reclassifications have been made in the 2012 financial statements to conform to the presentation used in
2013. These reclassifications had no impact of the Company's previously reported financial statements.
RBB BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Adoption of New Accounting Standards
In February 2013, the Financial Accounting Standards Board issued Accounting Standards Update 2013-02,
Comprehensive Income ("Topic 220") - Reporting of Amounts Reclassified Out of Accumulated Other
Comprehensive Income ("ASU 2013-02"). This ASU requires an entity to provide information about the amounts
reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to
present, either on the face of the statement where net income is presented or in the notes, significant amounts
reclassified out of accumulated other comprehensive income by the respective line items of net income but only if
the amount reclassified is required under Generally Accepted Accounting Principles (“GAAP”) to be reclassified
to net income in its entirety in the same reporting period. For other amounts that are not required under GAAP to
be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required
under GAAP that provide additional detail about those amounts. ASU 2013-02 is effective prospectively for
annual and interim periods beginning after December 15, 2012 for public entities and annual periods beginning
after December 15, 2013 for nonpublic entities. The adoption of this ASU did not have a material impact on the
Company's financial position, results of operations, or cash flows.
RBB BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
NOTE B - ACQUISITIONS
Los Angeles National Bank Acquisition:
On May 17, 2013, the Company acquired all the assets and assumed all the liabilities of Los Angeles National
Bank ("LANB") in exchange for cash of $31.3 million. LANB operated four branches in the Los Angeles
metropolitan area. The Company acquired LANB to strategically increase its existing presence in the Los Angeles
area. Goodwill in the amount of $3.2 million was recognized in this acquisition. Goodwill represents the future
economic benefits arising from net assets acquired that are not individually identified and separately recognized
and is attributable to synergies expected to be derived from the combination of the two entities. Goodwill is not
deductible for income tax purposes.
The following table represents the assets acquired and liabilities assumed of LANB as of May 17, 2013 and the
fair value adjustments and amounts recorded by the Company in 2013 under the acquisition method of
accounting:
LANB
Book Value
Fair Value
Adjustments
Fair
Value
ASSETS ACQUIRED
Cash and Cash Equivalents
Interest-Bearing Deposits in Other Financial Institutions
Loans, gross
Allowance for Loan Losses
Other Real Estate Owned
Bank Premises and Equipment
Deferred Tax Assets
Other Assets
Total Assets Acquired
LIABILITIES ASSUMED
Deposits
Other Liabilities
Total Liabilities Assumed
Excess of Assets Acquired Over Liabilities Assumed
Cash Paid
Goodwill Recognized
$
62,176,338
1,719,000
119,946,508
(3,621,870)
350,000
1,285,527
2,269,327
3,485,268
187,610,098
$
$
161,860,440
549,180
162,409,620
25,200,478
187,610,098
$
-
$
-
(5,240,599)
3,621,870
-
3,498,169
385,651
802,000
3,067,091
$
$
150,642
53,000
203,642
2,863,449
3,067,091
$
$
62,176,338
1,719,000
114,705,909
-
350,000
4,783,696
2,654,978
4,287,268
190,677,189
$
$
162,011,082
602,180
162,613,262
28,063,927
31,275,804
3,211,877
$
The Company accounted for the transaction under the acquisition method of accounting which requires purchased
assets and liabilities assumed to be recorded at their respective fair values at the date of acquisition. The
Company determined the fair value of loans, leases, core deposit intangible and deposits with the assistance of a
third party valuation. The fair value of bank premises and other real estate owned was based on recent appraisals
of the properties.
RBB BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
NOTE B - ACQUISITIONS - Continued
The estimated fair values are subject to refinement as additional information relative to the closing date fair values
become available through the measurement period. While additional significant changes to the closing date fair
values are not expected, any information relative to the changes in these fair values will be evaluated to determine
if such changes are due to events and circumstances that existed as of the acquisition date. During the
measurement period, any such changes will be recorded as part of the closing date fair value.
In many cases, the fair values of assets acquired and liabilities assumed were determined by estimating the cash
flows expected to result from those assets and liabilities and discounting them at appropriate market rates. The
most significant category of assets for which this procedure was used was that of acquired loans. The excess of
expected cash flows above the fair value of the majority of loans will be accreted to interest income over the
remaining lives of the loans in accordance with Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”) 310-20 (formerly SFAS 91).
Certain loans, for which specific credit-related deterioration, since origination, was identified, are recorded at fair
value, reflecting the present value of the amounts expected to be collected. Income recognition on these
“purchased credit-impaired” loans is based on a reasonable expectation about the timing and amount of cash flows
to be collected. Acquired loans deemed impaired and considered collateral dependent, with the timing of the sale
of loan collateral indeterminate, remain on non-accrual status and have no accretable yield.
For loans acquired, the contractual amounts due, expected cash flows to be collected, interest component and fair
value as of the respective acquisition dates were as follows:
Contractual Amounts Due
Cash Flows not Expected to be Collected
Expected Cash Flows
Interest Component of Expected Cash Flows
Fair Value of Acquired Loans
$
Acquired Loans
133,655,634
-
133,655,634
18,949,725
114,705,909
$
None of the loans acquired had evidence of deterioration of credit quality since origination for which it was
probable, at acquisition, that the Company would be unable to collect all contractually required payments
receivable.
In accordance with generally accepted accounting principles there was no carryover of the allowance for loan
losses that had been previously recorded by LANB.
RBB BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
NOTE C - INVESTMENT SECURITIES
The following table summarizes the amortized cost and fair value of securities available for sale and held to
maturity at December 31, 2013 and 2012, and the corresponding amounts of gross unrealized gains and losses
recognized in accumulated other comprehensive income:
December 31, 2013
Available for Sale
Mortgage-Backed Securities-
Government Sponsored Agencies
Corporate Debt Securities
Held to Maturity
Municipal Taxable Securities
Municipal Securities
December 31, 2012
Available for Sale
U.S. Government Agency
Mortgage-Backed Securities-
Government Sponsored Agencies
Corporate Debt Securities
Held to Maturity
Municipal Taxable Securities
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
$
$
46,955,691
15,083,919
62,039,610
$
$
5,759,907
982,130
6,742,037
$
98,314
282,011
380,325
$
$
$
331,972
-
331,972
$
$
(872,315)
-
(872,315)
$
$
46,181,690
15,365,930
61,547,620
$
-
(26,788)
(26,788)
$
$
$
6,091,879
955,342
7,047,221
$
5,251,764
$
113,424
$
-
$
5,365,188
129,822,453
32,119,263
167,193,480
$
1,805,199
802,342
2,720,965
$
(74,534)
(655)
(75,189)
$
131,553,118
32,920,950
169,839,256
$
$
7,125,086
$
729,601
$
-
$
7,854,687
During 2013 and 2012 the Company sold $72.7 million and $23.5 million of securities available for sale,
recognizing gross gains of $179,249 and $161,513, respectively.
There were no securities pledged as of December 31, 2013.
RBB BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
NOTE C - INVESTMENT SECURITIES - Continued
The amortized cost and fair value of the investment securities portfolio as of December 31, 2013 are shown by
expected maturity below. Expected maturities may differ from contractual maturities if borrowers have the right
to call or prepay obligations with or without call or prepayment penalties.
Within One Year
Due From One through Five Years
Due from Five to Ten Years
Due after Ten Years
Available for Sale
Held to Maturity
Amortized
Cost
$
6,035,599
36,359,433
16,374,221
3,270,357
$
Fair
Value
6,083,050
36,199,368
15,994,845
3,270,357
Amortized
Cost
$
-
1,448,726
3,303,184
1,990,127
Fair
Value
$
-
1,552,820
3,450,999
2,043,402
$
62,039,610
$
61,547,620
$
6,742,037
$
7,047,221
Substantially all unrealized losses had been in a continuous loss position for less than 12 months as of December
31, 2013 and 2012. Unrealized losses on mortgage-backed and municipal bonds have not been recognized into
income because the issuer bonds are of high credit quality, management does not intend to sell, it is not more
likely than not that management would be required to sell the securities prior to their anticipated recovery and the
decline in fair value is largely due to changes in interest rates. The fair value is expected to recover as the bonds
approach maturity.
NOTE D - LOANS
The Company's loan portfolio consists primarily of loans to borrowers within Los Angeles and Orange County,
California. Although the Company seeks to avoid concentrations of loans to a single industry or based upon a
single class of collateral, real estate and real estate associated businesses are among the principal industries in the
Company's market area and, as a result, the Company's loan and collateral portfolios are, to some degree,
concentrated in those industries.
A summary of the changes in the allowance for loan losses as of December 31 follows:
Beginning Balance
Additions to the Allowance Charged to Expense
Recoveries on Loans Charged-Off
Less Loans Charged-Off
Ending Balance
2013
7,121,878
1,612,540
9,763
8,744,181
1,194,861)
$
(
$
2012
5,059,929
2,057,920
4,029
7,121,878
-
$
7,549,320
$
7,121,878
RBB BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
NOTE D - LOANS - Continued
The following table presents the recorded investment in loans and impairment method as of December 31, 2013
and 2012 and the activity in the allowance for loan losses for the years then ended, by portfolio segment:
December 31, 2013
Allowance for Loan Losses:
Beginning of Year
Provisions
Charge-offs
Recoveries
Reserves:
Specific
General
Loans Acquired with Deteriorated
Credit Quality
Loans Evaluated for Impairment:
Individually
Collectively
Loans Acquired with Deteriorated
Credit Quality
December 31, 2012
Allowance for Loan Losses:
Beginning of Year
Provisions
Charge-offs
Recoveries
Reserves:
Specific
General
Loans Acquired with Deteriorated
Credit Quality
Loans Evaluated for Impairment:
Individually
Collectively
Loans Acquired with Deteriorated
Credit Quality
Real Estate
Commercial
Total
$
$
$
4,688,187
1,603,025
(1,183,678)
-
5,107,534
2,433,691
9,515
(11,183)
9,763
2,441,786
7,121,878
1,612,540
(1,194,861)
9,763
7,549,320
$
$
$
$
-
5,107,534
-
5,107,534
$
$
-
2,441,786
-
2,441,786
$
$
-
7,549,320
-
7,549,320
$
$
4,718,487
430,651,335
1,875,428
437,245,250
$
$
415,296
138,847,473
120,889
139,383,658
$
$
5,133,783
569,498,808
1,996,317
576,628,908
$
$
$
$
3,304,182
1,384,005
-
-
4,688,187
1,755,747
673,915
-
4,029
2,433,691
5,059,929
2,057,920
-
4,029
7,121,878
$
$
$
$
-
4,688,187
-
4,688,187
$
$
-
2,433,691
-
2,433,691
$
$
-
7,121,878
-
7,121,878
$
$
7,201,393
216,074,836
3,718,651
226,994,880
$
$
1,166,548
98,966,576
188,358
100,321,482
$
$
8,367,941
315,041,412
3,907,009
327,316,362
$
RBB BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
NOTE D - LOANS - Continued
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers
to service their debt such as current financial information, historical payment experience, collateral adequacy,
credit documentation, and current economic trends, among other factors. The Company analyzes loans
individually by classifying the loans as to credit risk. This analysis typically includes larger, non-homogeneous
loans such as commercial real estate and commercial and industrial loans. This analysis is performed on an
ongoing basis as new information is obtained. The Company uses the following definitions for risk ratings:
Pass - Loans classified as pass include loans not meeting the risk ratings defined below.
Special Mention - Loans classified as special mention have a potential weakness that deserves management's
close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment
prospects for the loan or of the institution's credit position at some future date.
Substandard - Loans classified as substandard are inadequately protected by the current net worth and
paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined
weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct
possibility that the institution will sustain some loss if the deficiencies are not corrected.
Impaired - A loan is considered impaired, when, based on current information and events, it is probable that
the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement.
Additionally, all loans classified as troubled debt restructurings are considered impaired. Purchased credit-
impaired loans are not subject to the impairment rules under ASC 310-10 and are therefore excluded from the
impaired risk category and are instead included in the substandard risk category.
The risk category of loans by class of loans was as follows as of December 31, 2013 and 2012:
December 31, 2013
Pass
Special
Mention
Substandard
Impaired
Total
Real Estate:
Construction and Land
Development
Residential Real Estate
Commercial Real Estate
Commercial
December 31, 2012
Real Estate:
Construction and Land
Development
Residential Real Estate
Commercial Real Estate
Commercial
$
61,097,852
162,715,639
192,242,911
131,652,901
547,709,303
$
$
-
-
5,767,231
4,314,931
10,082,162
$
$
-
1,094,241
9,608,889
3,000,530
13,703,660
$
$
$
2,066,237
-
2,652,250
415,296
5,133,783
$
50,281,636
55,123,749
100,005,618
88,829,004
294,240,007
$
$
2,881,418
-
5,093,597
8,167,964
16,142,979
$
$
$
1,693,477
2,241,803
2,472,189
2,157,966
8,565,435
1,744,391
-
5,457,002
1,166,548
8,367,941
$
$
$
63,164,089
163,809,880
210,271,281
139,383,658
576,628,908
$
$
56,600,922
57,365,552
113,028,406
100,321,482
327,316,362
$
RBB BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
NOTE D - LOANS - Continued
Past due and nonaccrual loans presented by loan class were as follows as of December 31, 2013 and 2012:
December 31, 2013
Commercial Real Estate
Commercial
December 31, 2012
Construction and Land
Development
Commercial Real Estate
Commercial
Still Accruing
30-89 Days
Past Due
$
-
662,338
662,338
$
Over 90 Days
Past Due
-
$
91,089
91,089
$
-
$
-
122,393
122,393
$
-
$
-
-
$
-
$
Nonaccrual
156,595
311,212
467,807
$
$
$
1,460,887
3,400,348
1,123,281
5,984,516
Information relating to individually impaired loans presented by class of loans was as follows as of December 31,
2013 and 2012:
December 31, 2013
Construction and Land
Development
Commercial Real Estate
Commercial
December 31, 2012
Construction and Land
Development
Commercial Real Estate
Commercial
With no Allowance Recorded
Unpaid
Principal
Balance
Recorded
Investment
Average
Balance
Interest
Income
$
$
$
$
2,475,401
2,652,249
415,296
5,542,946
2,066,237
2,652,250
415,296
5,133,783
2,082,901
3,877,039
790,922
6,750,862
$
$
$
$
$
$
$
$
2,134,973
6,941,292
1,208,548
10,284,813
$
1,744,391
5,457,002
1,166,548
8,367,941
1,687,487
5,490,162
1,211,474
8,389,123
$
$
$
362,524
209,473
6,109
578,106
223,720
3,290
-
227,010
There were no allowances recorded on individually impaired loans as of December 31, 2013 and 2012 and no
interest income was recognized on a cash basis in the years then ended.
RBB BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
NOTE D - LOANS - Continued
The Company had eight and nine loans identified as troubled debt restructurings ("TDR's") at December 31, 2013
and 2012, respectively, and no specific reserves have been allocated thereon. There are no commitments to lend
additional amounts as of December 31, 2013 and 2012, respectively, to customers with outstanding loans that are
classified as TDR's.
During the year ended December 31, 2012, the terms of certain loans were modified as TDR's. The modification
of the terms generally included loans where an extension of the maturity date was granted at a stated rate of
interest lower than the current market rate for new debt with similar risk. Such extensions ranged from two to
five years on the loans restructured in 2012. There was also a restructuring of a participation purchase loan by
the lead bank into an A note and a B note with differing repayments terms for both. No charge-off was recorded
in conjunction with this A/B note restructure in 2012.
The following table presents loans by class modified as TDR's that occurred during the year ended December 31,
2012:
December 31, 2012
Construction and Land
Development
Commercial Real Estate
Commercial
Pre-
Modification
Recorded
Investment
Post-
Modification
Recorded
Investment
Number of
Loans
1
4
4
9
$
1,630,523
2,986,819
1,331,222
$
1,630,523
3,013,648
1,331,222
$
5,948,564
$
5,975,393
There were no loans modified as TDR’s during the year ended December 31, 2013.
The determination of the allowance for loan losses related to TDR's depends on the collectability of principal and
interest, according to the repayment terms. The TDR's that occurred in 2012 did not materially change the
estimated collectability and therefore did not materially change the related allowance for loan loss amounts.
There were no defaults of TDR's in 2013 or 2012 where the loan was modified within the prior twelve months.
Default for this purpose is defined as the loan being 90 days or more past due under the modified terms.
RBB BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
NOTE D - LOANS - Continued
The Company has purchased loans as part of its whole bank acquisitions, for which there was at acquisition,
evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all
contractually required payments would not be collected.
The outstanding balance and carrying amount of purchased credit-impaired loans as of December 31 were as
follows:
Outstanding Balance
Carrying Amount
2013
3,086,000
1,996,000
$
$
2012
5,060,000
3,907,000
$
$
For these purchased credit-impaired loans, the Company did not increase the allowance for loan losses during
2013 or 2012 as there were no significant reductions in the expected cash flows.
Below is a summary of activity in the accretable yield on purchased credit-impaired loans for 2013 and 2012:
Balance, Beginning of Year
New Loans Purchased
Disposals
Restructuring as TDR
Reclassification to Nonaccretable
Accretion of Income
$
2013
1,681,966
-
(301,618)
-
(437,253)
(172,027)
$
2012
3,382,348
-
(385,147)
(906,730)
-
(408,505)
Balance, End of Year
$
771,068
$
1,681,966
Income is not recognized on certain purchased loans if the Company cannot reasonably estimate cash flows
expected to be collected. The carrying amount of such loans was $0 and $1,544,056 at December 31, 2013 and
2012, respectively.
RBB BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
NOTE E - PREMISES AND EQUIPMENT
A summary of premises and equipment as of December 31 follows:
Land and Buildings
Leasehold Improvements
Furniture, Fixtures, and Equipment
Less Accumulated Depreciation and Amortization
$
2013
5,186,514
2,712,708
2,017,772
9,916,994
(2,771,320)
2012
$
450,928
2,638,292
1,844,846
4,934,066
(2,141,940)
$
7,145,674
$
2,792,126
Depreciation expense was $653,899 and $669,353 for 2013 and 2012, respectively.
The Company leases several of its operating facilities under various noncancellable operating leases expiring at
various dates through 2021. The Company is also responsible for common area maintenance, taxes and insurance
at the various branch locations.
Future minimum rent payments on the Company's leases were as follows as of December 31, 2013:
2014
2015
2016
2017
2018
Thereafter
$
1,370,137
1,265,521
1,259,292
1,087,973
775,710
598,041
6,356,674
$
The minimum rent payments shown above are given for the existing lease obligation and are not a forecast of
future rental expense. Total rental expense, recognized on a straight-line basis, was approximately $1,234,490
and $1,106,000 for 2013 and 2012, respectively.
NOTE F - DEPOSITS
At December 31, 2013 the scheduled maturities of time deposits are as follows:
One year
Two to three years
$
$
291,296,490
2,866,865
294,163,355
RBB BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
NOTE G - BORROWING ARRANGEMENTS
The Company has established secured lines of credit. The Company may borrow funds from time to time on a
term or overnight basis from the Federal Home Loan Bank of San Francisco ("FHLB"), the Federal Reserve Bank
of San Francisco ("FRB") and other financial institutions as indicated below.
Federal Funds Arrangements with Commercial Banks. As of December 31, 2013 the Company may
borrow on an unsecured basis, up to $15 million, $10 million, $12 million and $5 million overnight from
Union Bank, Wells Fargo Bank, First Tennessee National Bank, and Pacific Coast Bankers' Bank,
respectively.
Letter of Credit Arrangements. As of December 31, 2013 the Company had an unsecured commercial
letter of credit line with Wells Fargo Bank for $2 million.
FRB Secured Line of Credit. The secured borrowing capacity of $101.1 million at December 31, 2013 is
collateralized by loans pledged with a carrying value of $152.0 million.
FHLB Secured Line of Credit. The secured borrowing capacity of $87.5 million at December 31, 2013 is
collateralized by loans pledged with a carrying value of $112.4 million.
There was $7 million outstanding with the FHLB as of December 31, 2013, which matures on January 6, 2014
and carries an interest rate of 0.16%. There were no amounts outstanding under any of the arrangements above as
of December 31, 2012.
NOTE H - INCOME TAXES
The asset and liability method is used in accounting for income taxes. Under this method, deferred tax assets and
liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to
reverse.
Income tax expense consists of the following:
Current:
Federal
State
Deferred
2013
2012
$
3,081,182
948,312
4,029,494
1,281,000
$
1,351,268
226,724
1,577,992
1,417,000
$
5,310,494
$
2,994,992
RBB BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
NOTE H - INCOME TAXES - Continued
A comparison of the federal statutory income tax rates to the Company's effective income tax rates at December
31 follows:
Statutory Federal Tax
State Franchise Tax, Net of Federal Benefit
Other Items, Net
2013
2012
$
Amount
4,187,000
907,000
216,494
Rate
34.0%
7.4%
1.8%
$
Amount
2,394,000
521,000
79,992
Rate
34.0%
7.4%
1.1%
Actual Tax Expense
$
5,310,494
43.1%
$
2,994,992
42.5%
Deferred taxes are a result of differences between income tax accounting and generally accepted accounting
principles with respect to income and expense recognition. The following is a summary of the components of the
net deferred tax asset accounts recognized in the accompanying statements of financial condition at December 31:
Deferred Tax Assets:
Pre-Opening Expenses
Allowance For Loan Losses
Stock-Based Compensation
Off Balance Sheet Reserve
Operating Loss Carryforwards
Other Real Estate Owned
Acquisition Accounting Fair Value Adjustments
Unrealized Loss on AFS Securities
Other
Deferred Tax Liabilities:
Depreciation
Unrealized Gain on AFS Securities
Other
Net Deferred Tax Assets
2013
2012
$
349,000
2,173,000
1,482,000
297,000
1,493,000
1,320,000
1,804,000
202,000
1,324,000
10,444,000
$
603,000
1,751,000
1,096,000
476,000
18,000
1,759,000
1,190,000
-
624,000
7,517,000
(1,124,000)
-
(660,000)
(1,784,000)
8,660,000
$
-
(1,085,000)
(428,000)
(1,513,000)
6,004,000
$
RBB BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
NOTE H - INCOME TAXES - Continued
The Company has net operating loss carryforwards of approximately $3.2 million for federal income and
approximately $5.5 million for California franchise tax purposes. Net operating loss carry forwards, to the extent
not used will begin to expire in 2027. Net operating loss carryforwards available from acquisitions are
substantially limited by Section 382 of the Internal Revenue Code and benefits not expected to be realized due to
the limitation have been excluded from the deferred tax asset and net operating loss carryforward amounts noted
above.
The Company is subject to federal income tax and franchise tax of the state of California. Income tax returns for
the years ending after December 31, 2009 are open to audit by the federal authorities and for the years ending
after December 31, 2008 are open to audit by California state authorities.
NOTE I - COMMITMENTS
In the ordinary course of business, the Company enters into financial commitments to meet the financing needs of
its customers. These financial commitments include commitments to extend credit, unused lines of credit,
commercial and similar letters of credit and standby letters of credit. Those instruments involve to varying
degrees, elements of credit and interest rate risk not recognized in the Company's financial statements.
The Company's exposure to loan loss in the event of nonperformance on these financial commitments is
represented by the contractual amount of those instruments. The Company uses the same credit policies in
making commitments as it does for loans reflected in the financial statements.
As of December 31, 2013 and 2012, the Company had the following financial commitments whose contractual
amount represents credit risk:
Commitments to Make Loans
Unused Lines of Credit
Commercial and Similar Letters of Credit
Standby Letters of Credit
2013
2012
$
49,186,312
75,736,453
28,260,791
3,340,000
$
46,408,020
56,925,753
43,420,144
2,139,481
$
156,523,556
$
148,893,398
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any
condition established in the contract. Since many of the commitments are expected to expire without being drawn
upon, the total amounts do not necessarily represent future cash requirements. The Company evaluates each
client's credit worthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by the
Company is based on management's credit evaluation of the customer.
RBB BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
NOTE J - RELATED PARTY TRANSACTIONS
Loans granted to executive officers, directors and their related interests with which they are associated totaled
approximately $7,600,000 and $5,700,000 as of December 31, 2013 and 2012, respectively.
Loan commitments outstanding to executive officers, directors and their related interests with which they are
associated totaled approximately $3,400,000 and $9,500,000 as of December 31, 2013 and 2012, respectively.
Deposits from executive officers, directors and their related interests with which they are associated held by the
Company at December 31, 2013 and 2012 amounted to approximately $39,672,000 and $43,748,000,
respectively.
NOTE K - STOCK OPTION PLAN
Under the terms of the Company's 2010 Stock Option Plan, officers and key employees may be granted both
nonqualified and incentive stock options and directors and organizers, who are not also an officer or employee,
may only be granted nonqualified stock options. The Plan provides for options to purchase up to 30 percent of the
outstanding common stock at a price not less than 100 percent of the fair market value of the stock on the date of
the grant. Stock options expire no later than ten years from the date of the grant and generally vest over three
years. The Company recognized stock-based compensation expense of $1,436,309 and $293,500 in 2013 and
2012 and recognized income tax benefits on that expense of $446,595 and $45,551, respectively.
The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing
model with the following weighted-average assumptions presented below:
Expected Volatility
Expected Term
Expected Dividends
Risk Free Rate
Grant Date Fair Value
2013
35.0%
5.6 Years
None
1.06%
4.23
$
2012
35.0%
6.2 Years
None
1.16%
3.79
$
Since the Company has a limited amount of historical stock activity the expected volatility is based on the
historical volatility of similar banks that have a longer trading history. The expected term represents the
estimated average period of time that the options remain outstanding. Since the Company does not have
sufficient historical data on the exercise of stock options, the expected term is based on the "simplified" method
that measures the expected term as the average of the vesting period and the contractual term. The risk free rate
of return reflects the grant date interest rate offered for zero coupon U.S. Treasury bonds over the expected term
of the options.
RBB BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
NOTE K - STOCK OPTION PLAN - Continued
A summary of the status of the Company's stock option plan as of December 31, 2013 and changes during the
year then ended is presented below:
Weighted-
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
Weighted-
Average
Exercise
Price
$
$
$
$
10.10
12.00
10.00
10.89
Shares
1,537,242
769,500
(16,000)
(40,500)
Outstanding at Beginning of Year
Granted
Exercised
Forfeited or Expired
Outstanding at End of Year
2,250,242
$
10.84
6.7 Years
$
7,610,253
Options Exercisable
1,314,076
$
10.11
5.2 Years
$
5,398,900
As of December 31, 2013 there was approximately $2,630,000 of total unrecognized compensation cost related to
outstanding stock options that will be recognized over a weighted-average period of 1.5 years. The intrinsic value
of options exercised was $36,000 and $34,000 in 2013 and 2012, respectively.
NOTE L - REGULATORY MATTERS
Holding companies (with assets over $500 million at the beginning of the year) and banks are subject to various
regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory - and possibly additional discretionary - actions by regulators that, if
undertaken, could have a direct material effect on the Company's financial statements.
Under capital adequacy guidelines and the regulatory framework for prompt corrective action, RBB Bancorp and
the Bank must meet specific capital guidelines that involve quantitative measures of RBB Bancorp's and the
Bank's assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices.
Capital amounts and classification are also subject to qualitative judgments by the regulators about components,
risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy
require RBB Bancorp and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total
and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as
defined) to average assets (as defined). Management believes, as of December 31, 2013 and 2012, that RBB
Bancorp and the Bank meet all capital adequacy requirements to which it is subject.
As of December 31, 2013, the most recent notification from the FDIC categorized the Bank as well-capitalized
under the regulatory framework for prompt corrective action (there are no conditions or events since that
notification that management believes have changed the Bank's category). To be categorized as well-capitalized,
the Bank must maintain minimum ratios as set forth in the table below.
RBB BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
NOTE L - REGULATORY MATTERS - Continued
The following table sets forth the RBB Bancorp's and Bank's actual capital amounts and ratios and related
regulatory requirements as of December 31, 2013 and 2012 (dollar amounts in thousands):
Amount of Capital Required
Actual
For Capital
Adequacy
Purposes
To Be Well-
Capitalized
Under Prompt
Corrective
Provisions
Amount
Ratio
Amount
Ratio
Amount
Ratio
$
$
141,079
116,717
23.5%
19.6%
$
$
48,094
47,620
8.0%
8.0%
NA
59,525
$
NA
10.0%
$
$
133,555
109,266
22.2%
18.4%
$
$
24,047
23,810
4.0%
4.0%
NA
35,715
$
$
$
133,555
109,266
18.5%
15.3%
$
$
28,841
28,600
4.0%
4.0%
NA
35,750
$
NA
6.0%
NA
5.0%
$
$
108,667
97,652
26.8%
24.1%
$
$
32,444
32,442
8.0%
8.0%
NA
40,552
$
NA
10.0%
$
$
103,558
92,543
25.5%
22.8%
$
$
16,222
16,221
4.0%
4.0%
NA
24,331
$
$
$
103,558
92,543
17.5%
15.6%
$
$
23,670
23,691
4.0%
4.0%
NA
29,614
$
NA
6.0%
NA
5.0%
As of December 31, 2013:
Total Capital (to Risk-Weighted Assets)
Consolidated
Bank
Tier 1 Capital (to Risk-Weighted Assets)
Consolidated
Bank
Tier 1 Capital (to Average Assets)
Consolidated
Bank
As of December 31, 2012:
Total Capital (to Risk-Weighted Assets)
Consolidated
Bank
Tier 1 Capital (to Risk-Weighted Assets)
Consolidated
Bank
Tier 1 Capital (to Average Assets)
Consolidated
Bank
The California Financial Code generally acts to prohibit banks from making a cash distribution to its shareholders
in excess of the lesser of the bank's undivided profits or the bank's net income for its last three fiscal years less the
amount of any distribution made by the bank's shareholders during the same period.
RBB BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
NOTE L - REGULATORY MATTERS - Continued
The California general corporation law generally acts to prohibit companies from paying dividends on common
stock unless its retained earnings, immediately prior to the dividend payment, equals or exceeds the amount of the
dividend. If a company fails this test, then it may still pay dividends if after giving effect to the dividend the
company's assets are at least 125% of its liabilities.
Additionally, the Federal Reserve Bank has issued guidance which requires that they be consulted before payment
of a dividend if a bank holding company does not have earnings over the prior four quarters of at least equal to the
dividend to be paid, plus other holding company obligations.
NOTE M - FAIR VALUE MEASUREMENTS
The following is a description of valuation methodologies used for assets and liabilities recorded at fair value:
Securities: The fair values of securities available for sale are determined by obtaining quoted prices on nationally
recognized securities exchanges (Level 1) or matrix pricing, which is a mathematical technique used widely in the
industry to value debt securities without relying exclusively on quoted prices for specific securities but rather by
relying on the securities' relationship to other benchmark quoted securities (Level 2).
Other Real Estate Owned: Nonrecurring adjustments to certain commercial and residential real estate properties
classified as other real estate owned are measured at the lower of carrying amount or fair value, less costs to sell.
In cases where the carrying amount exceeds the fair value, less costs to sell, an impairment loss is recognized.
Fair values are generally based on third party appraisals of the property which are commonly adjusted by
management to reflect an expectation of the amount to be ultimately collected and selling costs (Level 3).
Appraisals for other real estate owned are performed by state licensed appraisers (for commercial properties) or
state certified appraisers (for residential properties) whose qualifications and licenses have been reviewed and
verified by the Company. When a Notice of Default is recorded, an appraisal report is ordered. Once received, a
member of the credit administration department reviews the assumptions and approaches utilized in the appraisal
as well as the overall resulting fair value in comparison to independent data sources such as recent market data or
industry wide-statistics for residential appraisals. Commercial appraisals are sent to an independent third party to
review. The Company also compares the actual selling price of collateral that has been sold to the most recent
appraised value to determine what additional adjustments, if any, should be made to the appraisal values on any
remaining other real estate owned to arrive at fair value. If the existing appraisal is older than twelve months a
new appraisal report is ordered. No significant adjustments to appraised values have been made as a result of this
comparison process as of December 31, 2013.
RBB BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
NOTE M - FAIR VALUE MEASUREMENTS - Continued
The following table provides the hierarchy and fair value for each major category of assets and liabilities
measured at fair value at December 31, 2013 and 2012:
December 31, 2013
Assets Measured at Fair Value:
On a Recurring Basis:
Securities Available for Sale
On a Non-Recurring Basis:
Other Real Estate Owned
December 31, 2012
Assets Measured at Fair Value:
On a Recurring Basis:
Securities Available for Sale
On a Non-Recurring Basis:
Other Real Estate Owned
Fair Value Measurements Using:
Level 2
Level 1
Level 3
Total
$
-
$
61,547,620
$
-
$
61,547,620
$
-
$
-
$
1,510,852
$
1,510,852
$
-
$
169,839,256
$
-
$
169,839,256
$
-
$
-
$
1,424,765
$
1,424,765
No write-downs from the original value of OREO have been recorded in 2013 or 2012.
Quantitative information about the Company's non-recurring Level 3 fair value measurements as of December 31,
2013 and 2012 is as follows:
December 31, 2013
Other Real Estate Owned
Fair Value
Amount
1,510,852
$
December 31, 2012
Other Real Estate Owned
$
1,424,765
Unobservable
Input
Valuation
Technique
Third Party Management Adjustments
Appraisals
to Reflect Current
Conditions and Selling
Costs
Adjustment
Range
0 - 69%
Weighted-
Average
Adjustment
30%
Third Party Management Adjustments
Appraisals
to Reflect Current
Conditions and Selling
Costs
0 - 58%
31%
RBB BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
NOTE N - FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of a financial instrument is the amount at which the asset or obligation could be exchanged in a
current transaction between willing parties, other than in a forced or liquidation sale. Fair value estimates are
made at a specific point in time based on relevant market information and information about the financial
instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one
time the entire holdings of a particular financial instrument. Because no market value exists for a significant
portion of the financial instruments, fair value estimates are based on judgments regarding future expected loss
experience, current economic conditions, risk characteristics of various financial instruments, and other factors.
These estimates are subjective in nature, involve uncertainties and matters of judgment and, therefore, cannot be
determined with precision. Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on financial instruments both on and off the balance sheet without attempting to
estimate the value of anticipated future business and the value of assets and liabilities that are not considered
financial instruments. Additionally, tax consequences related to the realization of the unrealized gains and losses
can have a potential effect on fair value estimates and have not been considered in many of the estimates.
The following methods and assumptions were used to estimate the fair value of significant financial instruments
not previously presented:
Cash and Cash Equivalents
The carrying amounts of cash and short-term instruments approximate fair values.
Time Deposits in Other Banks
Fair values for time deposits with other banks are estimated using discounted cash flow analyses, using interest
rates currently being offered with similar terms.
Loans
For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based
on carrying amounts. The fair values for all other loans are estimated using discounted cash flow analyses, using
interest rates currently being offered for loans with similar terms to borrowers with similar credit quality. The
methods utilized to estimate the fair value of loans do not necessarily represent an exit price.
Federal Home Loan Bank Stock and Other Bank Stock
The fair value of Federal Home Loan Bank Stock and other Bank stock is not readily determinable due to
the lack of its transferability.
RBB BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
NOTE N - FAIR VALUE OF FINANCIAL INSTRUMENTS - Continued
Deposits
The fair values disclosed for demand deposits, including interest and non-interest demand accounts, savings, and
certain types of money market accounts are, by definition based on carrying value. Fair value for fixed-rate
certificates of deposit is estimated using a discounted cash flow calculation that applies interest rates currently
being offered on certificates to a schedule of aggregate expected monthly maturities on time deposits. Early
withdrawal of fixed-rate certificates of deposit is not expected to be significant
FHLB Advances
The carrying amounts of short-term debt with maturities of less than ninety days, such as FHLB Advances,
approximate their fair values.
Off-Balance Sheet Financial Instruments
The fair value of commitments to extend credit and standby letters of credit is estimated using the fees currently
charged to enter into similar agreements. The fair value of these financial instruments is not material.
The fair value hierarchy level and estimated fair value of significant financial instruments at December 31, 2013
and 2012 are summarized as follows (dollar amounts in thousands):
Financial Assets:
Cash and Due From Banks
Federal Funds Sold and Other
Cash Equivalents
Interest-Bearing Deposits in Other
Financial Institutions
Investment Securities - AFS
Investment Securities - HTM
Loans, Net
Financial Liabilities:
Deposits
FHLB Advances
2013
2012
Fair Value
Hierarchy
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
Level 1
$
23,774
$
23,774
$
32,508
$
32,508
Level 1
12,000
12,000
29,500
29,500
Level 1
Level 2
Level 2
Level 3
100
61,547
6,742
569,080
100
61,547
7,047
570,498
-
169,839
7,125
320,194
-
169,839
7,855
322,633
Level 2
Level 2
574,079
7,000
574,071
7,000
442,678
-
444,128
-
RBB BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
NOTE O - EARNINGS PER SHARE ("EPS")
The following is a reconciliation of net income and shares outstanding to the income and number of shares used to
compute EPS:
2013
2012
Income
Shares
Income
Shares
$
7,003,720
$
4,046,210
Net Income as Reported
Shares Outstanding at Year End
Impact of Weighting Shares
Purchased During the Year
Used in Basic EPS
7,003,720
Dilutive Effect of Outstanding
Stock Options
11,658,259
871,577)
(
10,786,682
246,822
4,046,210
9,714,411
(
1,420,494)
8,293,917
60,690
Used in Dilutive EPS
$
7,003,720
11,033,504
$
4,046,210
8,354,607
Stock options for 417,750 and 71,250 shares of common stock were not considered in computing diluted earnings
per common share for 2013 and 2012 because they were anti-dilutive.
Administrative Office
Alan Thian
President and Chief Executive Officer
(626) 307-7588; (213) 533-7928
Branch Administration
Tsu-Te Huang
Senior Vice President and Branch Administrator
(626) 307-7508
Vincent Liu
Executive Vice President and Chief Operations Officer
(626) 307-7505
Simon Pang
Executive Vice President and Chief Strategic Officer /
Regional Offices Coordinator
(626) 307-7555
Finance Department
David Morris
Executive Vice President / Chief Financial Officer
(213) 533-7918
Karen Comer, CPA
Senior Vice President / Controller
(213) 533-7910
Credit Administration
Jeffrey Yeh
Senior Vice President / Acting Chief Credit Officer
(626) 307-7556
Keith Thomas
Senior Vice President / Special Assets Manager
(702) 405-2525
Eddie Chow
First Vice President / Credit Administrator
(626) 307-7525
Risk Management Department
Sophy Chu
Vice President / Compliance Officer
(213) 533-7906
Jun No
Vice President / BSA Officer
(213) 533-7911
Operations Administration
Esther Chu
First Vice President and Operations Administrator
(213) 533-7926
Legal Counsel
Alberto G. Alvarado
Senior Advisor and Counsel
(626) 307-7562
Information Technology Department
William Sanchez
First Vice President / Chief Information Officer
(714) 228-5860
Commercial Lending Division (38)
Derek (Wai-Hung) Lee
First Vice President / Sr. Lending Officer
(626) 307-7545
Commercial Lending Division (39)
Cary Niu
Senior Vice President / Head-Commercial Lending
(626) 322-1218
Commercial Real Estate Lending /
Construction Lending Department
Nonie Cheung
Senior Vice President and Manager
(626) 307-7566
Residential Mortgage Loan Division
Larsen Lee
Senior Vice President / Director of Mortgage Lending
(213) 533-7919
SBA Lending Division
John Liu
First Vice President / Relationship Manager
(714) 670-2400 x 212
Franchise Finance Department
Richard Combs
First Vice President / Director of Franchise Finance
(714) 670-2400 x 223
International Trade Operations
Jay (Justo) Gonzalez
Vice President and Central Operations Manager
(213) 533-7902
Catherine Wang
First Vice President / International Banking Manager
(626) 307-7551
Branches
San Gabriel Branch
Ashley Chang
Vice President and Branch Manager
123 East Valley Boulevard, Suite 101
San Gabriel, CA 91776
(626) 307-7503
Torrance Branch
Grace Lin
Assistant Vice President and Service Manager
23740 Hawthorne Boulevard, Suite 103
Torrance, CA 90505
(310) 602-4519
Rowland Heights Branch
Fanny Fan
Assistant Vice President and Branch Manager
1015 South Nogales Street, Unit 121 & 122A
Rowland Heights, CA 91748
(626) 322-1208
Monterey Park Branch
Janet Tsai
Senior Vice President and Branch Manager
700 West Garvey Avenue
Monterey Park, CA 91754
(626) 570-4807
L.A. Silver Lake Branch
Juan Sandoval
Assistant Vice President and Branch Manager
1912 Sunset Boulevard
Los Angeles, CA 90026
(213) 989-1004
Office Addresses
Corporate Headquarters
660 South Figueroa Street, Suite 1888
Los Angeles, CA 90017
(213) 627-9888
Loan Production Office
18605 East Gale Avenue, Suite 238
City of Industry, CA 91748
(626) 322-1220
Spring Mountain Branch
Nikki Guo
Vice President and Branch Manager
3919 Spring Mountain Road
Las Vegas, NV 89102
(702) 405-2519
Buena Park Branch
Annie Chuang
Operations Officer
7025 Orangethorpe Avenue
Buena Park, CA 90621
(714) 670-2495
Westlake Village Branch
Thushara Liyanage
Vice President and Business Development Officer
600 Hampshire Road, Suite 100
Westlake Village, CA 91361
(805) 288-4140
Oxnard Branch
Thushara Liyanage
Vice President and Business Development Officer
366 West Esplanade Drive
Oxnard, CA 93036
(805) 288-4140
San Gabriel Offices
123 East Valley Boulevard, Suite 201
San Gabriel, CA 91776
(626) 307-7500