RBB Bancorp (RBB) stock intrinsic value fair value estimate & owner earnings analysis

RBB Bancorp is a Los Angeles-headquartered bank holding company. It operates 24 branches in Los Angeles, Orange and Ventura Counties in California, in Las Vegas, and in the New York area, and serves mainly Asian-American communities. Its filings say it was founded by and markets primarily to Chinese-Americans and has broadened to other Asian-American communities. It is a US-operated bank. Its earnings come from the gap between what it charges on loans and pays on deposits, plus some gains from selling loans. How we measured earnings. We started from cash generated by operations, took out the swings from buying and selling loans held for sale and from other asset and liability changes, and deducted stock compensation and capital spending (tiny, under $5 million in every year). Deposit interest is already deducted, so no debt is subtracted from the value. On this basis, earnings per share were: 2016 $1.37; 2017 $1.69; 2018 $2.28; 2019 $2.24; 2020 $2.13; 2021 $3.33; 2022 $3.60; 2023 $2.34; 2024 $1.75; 2025 $2.41. We treat 2021 and 2022 as unusually strong and left them out; in 2021 gains on loan sales were about $10 million. We used the median of 2019, 2020, 2023, 2024 and 2025, which is $2.24 per share. The 2024 year is included on purpose, because it is the weak year (provision for credit losses of about $9.9 million) that a lasting estimate should absorb. Share count fell from about 19.9 million diluted shares in 2020 to about 17.5 million in 2025, which helps per-share figures, but we did not credit buybacks in the base case. Growth. Owner earnings per share rose about 38% in 2025, from $1.75 to $2.41, a rebound from the weak 2024 year. Our base case starts at $2.24, below the 2025 figure, and assumes no growth. We found no contracted or steadily repeated growth mechanism in the filings that we could count on, so none is credited. Base case (about $31 per share). Earnings hold at $2.24 for 30 years and then stop. The support is a 24-branch deposit and lending franchise that stayed profitable through 2020 and through the 2024 credit-cost year. Bear case (about $17 per share). The disclosed risk is credit quality. At year-end 2025, nonperforming assets were $53.5 million (1.27% of assets), down from $81.0 million a year earlier. Nonaccrual construction and development loans were $28.0 million, and the allowance for credit losses covered 98.3% of nonperforming loans. Provisions were about $10 million in each of 2024 and 2025. This case assumes earnings stay at the 2024 low of $1.75 for 15 years and then stop. Bull case (about $38 per share). Earnings start from the 2025 level of $2.41 and grow 2% a year for ten years, less than the roughly 3% annual reduction in share count since 2020, then hold flat to year 30. We did not credit the 2021-2022 earnings peak or any loan growth. What would make this wrong. Losses on the construction, commercial real estate or commercial loans beyond current reserves would push results toward or below the bear case. Earnings above the base case would need the 2025 improvement to persist. Because this is a leveraged bank, the range between cases is wide. Owner earnings for a bank are an approximation, since loan sales and purchases are mixed into operating cash flow, and we separated them using the cash flow statement's own lines. The margin-of-safety price of about $18 sits near the bear case because credit-cycle risk is the main uncertainty.