RBB (RBB) Q4 2025 Earnings Call Transcript

RBB’s setup is less about near-term earnings momentum than about optionality embedded in balance-sheet cleanup. The market is likely underestimating how much of the next 12 months’ earnings leverage comes from mechanical funding repricing and credit resolution rather than loan growth alone; with a large CD wall rolling off in the first half of 2026, even modest deposit retention could produce a meaningful step-down in funding costs before loan yields fully reprice. That creates a fairly clean path to NIM expansion without requiring aggressive balance-sheet shrinkage.

The bigger second-order effect is capital deployment. If management executes a subordinated debt refi at materially below the current effective cost, then buybacks become the real upside catalyst because repurchases at a ~1x tangible book valuation can immediately accrete book value while also offsetting the dilution from lower-yielding assets being resolved. In other words, credit cleanup is not just a defensive story; it is the gating item that can convert excess capital into a much higher ROE profile over the next 2-4 quarters.

The main risk is that deposit competition remains the rate-sensitive swing factor and may keep the beta rising faster than management expects, especially as the bank approaches a still-tight loan-to-deposit structure. That means the stock is vulnerable if margin expansion disappoints in Q1/Q2 even while credit improves, because the market may have already priced in a cleaner NPL story. The contrarian angle is that the worst-case narrative here is probably behind us, but the upside case requires patience: earnings acceleration should come in waves as CDs reprice and nonperformers roll off, not in a straight line.