FFB Bancorp Announces Second Quarter 2025 Results

FRESNO, Calif., July 23, 2025 (GLOBE NEWSWIRE) — FFB Bancorp (the “Company”) (OTCQX: FFBB), the parent company of FFB Bank (the “Bank”), today reported net income of $6.04 million, or $1.94 per diluted share, for the second quarter of 2025, compared to $8.08 million, or $2.54 per diluted share, for the second quarter of 2024, and $8.10 million, or $2.55 per diluted share, for the first quarter of 2025.

For the six months ended June 30, 2025, net income was $14.13 million, or $4.50 per diluted share, compared to $15.87 million, or $4.99 per diluted share, for the same period in 2024. All results are unaudited.

Second Quarter 2025 Summary: As of, or for the quarter ended June 30, 2025, compared to the quarter ended June 30, 2024:

• Operating revenue (net interest income, before the provision for credit losses, plus non-interest income) increased 11% to $27.35 million.
• Pre-tax, pre-provision income increased 1% to $11.58 million.
• Net income decreased 25% to $6.04 million.
• Return on average equity (“ROAE”) was 13.75%.
• Return on average assets (“ROAA”) was 1.59%.
• Net interest margin contracted 22 basis points to 5.09% from 5.31%.
• Total assets increased 2% to $1.47 billion.
• Total portfolio of loans increased 13% to $1.09 billion.
• Total deposits increased 6% to $1.23 billion.
• Shareholder equity increased 17% to $173.91 million.
• Book value per common share increased 22% to $56.87.
• The Company’s tangible common equity ratio was 11.80%, while the Bank’s regulatory leverage capital ratio was 14.41%, and the total risk-based capital ratio was 20.61% at June 30, 2025.

“During the quarter FFB Bank was recognized as #1 in American Banker’s top-performing public banks with under $2B in assets and #34 in S&P Global’s 100 best-performing US community banks of 2024, for bank’s under $3B in assets,” said Steve Miller, President & CEO. “This recognition is a testament to the consistent success we’ve enjoyed, and a reminder of the results we expect and continue to strive toward. As we navigate the challenges this year has brought, we’re proud to build upon our history of success.”

“During the quarter we have made continued and timely progress on the matters outlined in our consent order, although ultimate compliance will be determined by our regulators. We are confident we can continue to address these items going forward. Although the added resource allocation to properly address the order will have near-term impacts to our performance, we feel that building a best in-class compliance and risk frame-work will enable the bank to drive results over the long-term.”

Update on Stock Repurchase Program:

On January 22, 2025, the Company announced that it had authorized a plan to utilize up to $15.0 million of capital to repurchase shares of the Company’s common stock. As of June 30, 2025, the Company has repurchased 133,021 shares, at an average price of $76.79, totaling $10.22 million. This represents approximately 5.33% of total shareholders’ equity at June 30, 2025. During the second quarter of 2025 the Company repurchased 91,106 shares, at an average price of $74.58, totaling $6.79 million. These purchases represent approximately 3.54% of total shareholders’ equity at June 30, 2025.

Under the terms of the repurchase plan, the Company may repurchase shares of the Company’s common stock from time to time, through December 31, 2025, in open market purchases or privately negotiated transactions. Repurchases under the plan may also be made pursuant to a trading plan under Securities and Exchange Commission Rule 10b5-1 under the Securities Exchange Act of 1934, which would permit shares to be repurchased by the Company when the Company might otherwise be precluded from doing so because of self-imposed trading blackout periods or other regulatory restrictions. The timing, manner, price and exact amount of any repurchases by the Company will be determined at the Company’s discretion and depend on various factors including the performance of the Company’s stock price, general market and economic conditions, applicable legal and regulatory requirements, availability of funds, and other relevant factors. Through December 31, 2025, the repurchase plan may be discontinued, suspended or restarted at any time.

Results of Operations

Quarter ended June 30, 2025:

Operating revenue, consisting of net interest income before the provision for credit losses and non-interest income, increased 11% to $27.35 million for the second quarter of 2025, compared to $24.73 million for the second quarter a year ago, and decreased 4% from $28.48 million for the first quarter of 2025.

Net interest income, before the provision for credit losses, increased 5% to $18.11 million for the second quarter of 2025, compared to $17.31 million for the same quarter a year ago, and decreased 4% to $18.90 million from last quarter. “Net interest income has benefited from strong loan portfolio growth, partially offset by higher funding costs,” said Bhavneet Gill, Chief Financial Officer. “We have been able to capitalize on a higher yielding loan portfolio, but that yield was impacted by a $261,000 interest reversal as loans, totaling $11.86 million, were placed on non-accrual during the quarter.”

The Company’s net interest margin (“NIM”) decreased by 22 basis points to 5.09% for the second quarter of 2025, compared to 5.31% for the second quarter of 2024, and decreased 26 basis points from 5.35% for the preceding quarter. “The decrease in NIM is primarily the result of an increase in deposit and borrowing interest expense, and the decrease in investment interest income. During the quarter, average non-interest bearing deposits decreased $37.67 million. The resulting shift in the deposit portfolio saw the cost of deposits increase 13 basis points,” noted Gill. “During the second quarter of 2025 we sold $48.05 million in investment securities to generate liquidity ahead of anticipated deposit outflows due to ISO partner exits. That transaction was the driver of the decrease in investment interest income in the current quarter and will result in lower investment income in future quarters.”

The yield on earning assets was 6.18% for the second quarter of 2025, compared to 6.40% for the second quarter a year ago, and 6.31% for the previous quarter. The cost to fund earning assets increased to 1.09% for the second quarter of 2025 compared to 0.96% for the previous quarter, and 1.10% for the same quarter a year earlier. This increase is the result of an increase in brokered deposits and overnight borrowings during the quarter due to ISO deposit outflow that occurred in early June.

Total non-interest income was $9.24 million for the second quarter of 2025, compared to $7.42 million for the second quarter of 2024, and $9.58 million for the previous quarter. The increase in non-interest income, from the second quarter of 2024, was driven by more gain on the sale of loans, higher merchant services revenue, and a reduction in loss on sale of investments. The quarter-over-quarter decrease in non-interest income was attributed to a decrease in merchant services revenue, partially offset by more gain on the sale of loans.

Merchant services revenue increased 9% to $6.61 million for the second quarter of 2025, compared to $6.07 million from the second quarter of 2024. The increase over prior year was primarily related to higher volume across ISO partner sponsorship lines and higher gross revenue related to FFB Payments. Merchant services revenue decreased from $7.86 million when compared to the first quarter of 2025 as a result of seasonality and the loss of a significant FFB Payments direct merchant.

During the first and second quarters of 2025, ISO Partner Sponsorship volumes included $2.78 billion and $2.56 billion in volume, respectively, for the ISO partners that were exited in the second quarter of 2025. Additionally, the first and second quarters of 2025 included ISO Partner Sponsorship revenues of $990,000 and $1.09 million, respectively, from the ISO partners that were exited in the second quarter of 2025. “These ISO exits were driven by our efforts to comply with the Consent Order and designed to ensure best in class oversight. We anticipate replacing this volume and revenue through growth in FFB Payments and with our remaining ISO partners as we move forward,” said Miller.

Total deposit fee income increased 1% to $854,000 for the second quarter of 2025, compared to $847,000 for the second quarter of 2024, and increased 1% from $849,000 for the previous quarter.

There was a $1.45 million gain on the sale of loans during the second quarter of 2025, compared to a gain on the sale of loans of $509,000 during the second quarter 2024, and a gain on the sale of loans of $261,000 in the previous quarter. There was a $243,000 loss on the sale of investments during the second quarter of 2025, compared to a $459,000 loss recorded during the second quarter of 2024, and no loss recorded in the previous quarter. The gain on the sale of loans was the result of $16.95 million in SBA loans sold and a $31.77 million RE-multifamily loan sale package that was completed during the quarter. These sales contributed $968,000 and $482,000 in gain respectively.

Non-interest expense increased 19% to $15.77 million for the second quarter of 2025, compared to $13.29 million for the second quarter 2024, and decreased 4% from $16.47 million from the previous quarter. The increase on a year-over-year comparison was driven by increases in salaries and employee benefits expense, and increases in other operating expense, primarily data and software related expenses and professional fees. Compared to the first quarter of 2025 the decrease in non-interest expense was attributed to a decrease in merchant services operating expenses, marketing expense, director fess, and operational losses.

Salaries and employee benefits increased 19% to $8.00 million for the second quarter of 2025, compared to $6.72 million for the second quarter 2024. The increase year-over-year was primarily the result of expense associated with the increase in full-time employees. Full-time employees increased to 181 at June 30, 2025, compared to 147 full-time employees a year earlier, and 175 full-time employees from the previous quarter. Total salaries and employee benefits decreased 1% from $8.06 million in the previous quarter. The decrease when compared to the first quarter of 2025 is the result of a decrease in payroll tax expense and increased loan originations, partially offset by higher salary expense from additional full-time employees. Compensation related direct costs associated with loan originations offset salary and employee benefits expense upon loan origination.

Occupancy and equipment expenses decreased 19% from a year ago, representing 2% of non-interest expense, and remained consistent with the preceding quarter. Merchant operating expense totaled $2.89 million for the second quarter of 2025, compared to $2.66 million for the second quarter of 2024 and $3.17 million for the previous quarter. The change in merchant operating expense is attributed to fluctuations in volume and revenue for the FFB Payments lines of business. Merchant operating expenses include interchange fees, chargebacks, partnership fees, and other card brand fees.

Other operating expense increased 31% or $1.07 million to $4.53 million from a year earlier and decreased 7% or $357,000 from the previous quarter. The year-over-year increase was driven by increases of $458,000 in data and software related expense, $327,000 in professional fees, $136,000 in regulatory assessment expense, and $127,000 in marketing expense. The increase in data and software expense and professional fees, which include legal, audit, and consulting fees, are primarily due to actions taken to enhance the Company’s AML/CFT, compliance, and merchant services programs.

The efficiency ratio was 57.15% for the second quarter of 2025, compared to 52.74% for the same quarter a year ago, and 57.83% for the preceding quarter. The efficiency ratio can fluctuate period-over-period based on changes in merchant services’ gross revenues and associated expenses. The Company also calculates an adjusted efficiency ratio where the merchant services’ gross expense, which is included in non-interest expense, is netted against merchant services’ revenue in non-interest income. The adjusted efficiency ratio was 52.14% for the second quarter of 2025, compared to 47.15% for the same quarter a year ago, and 52.54% for the previous quarter.

“Over the last few quarters, we’ve made intentional investments in people and technology to ensure that the bank can efficiently scale moving forward, and specifically to support our payment ecosystem, product development, regional expansion, and compliance/risk management initiatives. We saw elevated legal, audit, and technology related expenses in the first half of the year mostly related to addressing the Consent Order,” said Miller.

Six months ended June 30, 2025:

For the six months ended June 30, 2025, operating revenue increased 15% to $55.83 million, compared to $48.34 million for the same period in 2024. For the six months ended June 30, 2025, net interest income before the provision for credit losses increased 11% to $37.01 million, compared to $33.44 million for the same period in 2024. The increase in revenue is attributed to growth in the loan portfolio, partially offset by a decrease in investment interest income, an increase in interest bearing liabilities, and the cost of funds. For the six months ended June 30, 2025, the yield on earning assets was 6.24% compared to 6.27% for the same period in 2024, while the cost to fund earning assets was 1.02% for the six months ended June 30, 2025, compared to 1.05% for the same period in 2024.

For the six months ended June 30, 2025, non-interest income increased 26% to $18.82 million compared to $14.90 million for the same period in 2024. Deposit fee income increased 4% to $1.70 million resulting from growth in business demand deposit accounts. The year-over-year growth in non-interest income was also largely attributable to the decrease in loss on sale of investments, an increase in the gain on sale of loans, and an increase in merchant services revenue.

For the six months ended June 30, 2025, operating expenses increased by 24% to $32.24 million from $25.99 million for the same period in 2024. Salaries and employee benefits expense increased 21% to $16.06 million as a result of the increase in FTE. There was a 21% increase in merchant services operating expenses, to $6.06 million, which represents 19% of total operating expenses for six months ended June 30, 2025. Other operating expenses increased 38% to $9.41 million due to a $711,000 increase in technology related expenses, increases of $683,000 in professional fees, and increase of $389,000 in marketing expense, and a $293,000 increase in operational losses.

For the six months ended June 30, 2025, the efficiency ratio was 57.49%, compared to 52.85% for the same period ended June 30, 2024. The adjusted efficiency ratio was 52.34%, compared to 47.48% for the same period ended June 30, 2024.

Balance Sheet Review

Total assets increased 2% to $1.47 billion at June 30, 2025, compared to $1.44 billion at June 30, 2024, and decreased 6% compared to March 31, 2025.

The total portfolio of loans increased 13%, or $122.20 million, to $1.09 billion, compared to $969.76 million at June 30, 2024, and remained consistent with the $1.09 billion reported at March 31, 2025.

Commercial real estate loans increased 22% year-over-year to $683.74 million, representing 63% of total loans at June 30, 2025. The CRE portfolio includes approximately $254.16 million in multi-family loans originated by the Southern California team that the Company may consider selling at some point in the future for liquidity and concentration management. The multi-family portfolio includes $74.32 million in short-term bridge loans for transitional projects of multi-family properties. The short-term bridge loans are conservatively underwritten with minimum DSCR and liquidity requirements. The bank continues to market our bridge loan product in a more measured approach, keeping to our conservative underwriting standards. The real estate construction and land development loan portfolio decreased 84% from a year ago to $12.78 million, representing 1% of total loans, while residential RE 1-4 family loans totaled $17.07 million, or 2% of loans, at June 30, 2025, compared to $17.44 million one year ago.

The commercial and industrial (C&I) portfolio increased 15% to $266.81 million, at June 30, 2025, compared to $232.79 million a year earlier, and increased 3% from $260.06 million at March 31, 2025. C&I loans represented 24% of total loans at June 30, 2025. Agriculture loans represented 10% of the loan portfolio at June 30, 2025. At June 30, 2025, the SBA, USDA, and other government agencies guaranteed loans totaled $53.36 million, or 4.9% of the loan portfolio.

Investment securities totaled $254.18 million at June 30, 2025, compared to $345.49 million a year earlier, and decreased $59.65 million from $313.83 million at March 31, 2025. Investment securities were sold during the quarter to generate liquidity ahead of anticipated deposit outflows due to ISO partner exits. The investment portfolio consists of mortgage-backed and municipal securities, both tax exempt and taxable, treasury securities as well as other domestic debt. At June 30, 2025, the Company had a net unrealized loss position on its investment securities portfolio of $25.41 million, compared to a net unrealized loss of $24.50 million at March 31, 2025. The Company’s investment securities portfolio had an effective duration of 6.26 years at June 30, 2025, compared to 5.61 years at March 31, 2025.

Total deposits increased 6%, or $65.69 million, to $1.23 billion at June 30, 2025, compared to $1.17 billion from a year earlier, and decreased $85.73 million from $1.32 billion at March 31, 2025. Non-interest bearing demand deposits increased 4% to $759.30 million at June 30, 2025, compared to $731.03 million at June 30, 2024, and decreased $66.10 million from $825.40 million at March 31, 2025. Non-interest bearing demand deposits represented 61% of total deposits at June 30, 2025. During the second quarter of 2025 non-interest bearing demand deposits were reduced by $111.20 million due to ISO partner exits completed in early June 2025. Certificates of deposits increased 49%, or $55.01 million, during the quarter primarily due to the addition of $51.00 million in brokered deposits that mature over the next 12 months.

Included in non-interest bearing deposits at June 30, 2025 are $75.83 million from ISO partners for merchant reserves, $45.24 million from ISO partners for settlement, and $11.61 million in ISO partner operating accounts, totaling $132.68 million. These deposits represent 17.5% of non-interest bearing deposits and 10.7% of total deposits.

Within the $132.68 million in ISO partner deposits retained as of June 30, 2025 are $29.56 million in deposits for ISO partners being exited in the second half of 2025. The Bank plans to replace these non-interest bearing deposits with growth from new Bank customers in its markets and from the existing ISO partners it will continue to support. In the short-term, the new deposit growth will likely be made up of a higher percentage of interest bearing deposits.

There was $16.00 million in short-term borrowings at June 30, 2025, compared to $68.00 million at June 30, 2024, and $10.00 million at March 31, 2025. The Company primarily utilizes FHLB advances and the Federal Reserve discount window for short-term borrowings. The following table summarizes the Company’s primary and secondary sources of liquidity which were available at June 30, 2025:

The total primary and secondary liquidity of $672.65 million at June 30, 2025 represents a decrease of $75.28 million in primary and secondary liquidity quarter-over-quarter. The decreases in unpledged investment securities and the FHLB advance capacity are the result of investment and loan sales that occurred during the quarter.

Shareholders’ equity increased 17% to $173.91 million at June 30, 2025, compared to $148.64 million from a year ago, and decreased slightly from the $174.71 million reported at March 31, 2025. Book value per common share increased 22% to $56.87, at June 30, 2025, compared to $46.79 at June 30, 2024, and increased 2% from $55.52 at March 31, 2025. The tangible common equity ratio was 11.80% at June 30, 2025, compared to 10.30% a year earlier, and 11.20% at March 31, 2025. Book value improved as a result of quarterly net income and a reduction in shares outstanding through the bank’s strategic share repurchase program.

At the Bank level, unrealized losses and gains reflected in AOCI are not included in regulatory capital. As a result, Tier-1 capital at the Bank for regulatory purposes was $222.14 million at quarter end excluding the unrealized loss. The regulatory leverage capital ratio was 14.41% for the current quarter, while the total risk-based capital ratio was 20.61%, exceeding regulatory minimums to be considered well-capitalized.

Asset Quality

Nonperforming assets, which consists of nonperforming loans and other real estate owned, increased to $27.23 million, or 1.85% of total assets, at June 30, 2025, compared to $15.37 million, or 0.98% of total assets, from the previous quarter. Of the $26.29 million in nonperforming loans, $10.98 million are covered by SBA guarantees. Total delinquent loans decreased to $2.86 million at June 30, 2025, compared to $19.12 million at March 31, 2025. The increase in nonperforming loans is primarily the result of two multi-family loans, which are real estate secured, totaling $10.00 million to a related group of borrowers. These loans were included in the delinquent balances for the quarter ended March 31, 2025. As a result of their non-accrual status, the balance of the loans exceeding the real estate collateral value is reserved for in the allowance for credit loss, resulting in $1.62 million of additional reserve. The Bank is working closely with the borrowers as they work through stabilization and sale of the properties.

Past due loans 30-60 days were $1.80 million at June 30, 2025, compared to $17.53 million at March 31, 2025, and $1.05 million at June 30, 2024. There were $1.02 million past due loans from 60-90 days at June 30, 2025, compared to $1.54 million at March 31, 2025 and $175,000 in past due loans from 60-90 days a year earlier. Past due loans 90+ days at quarter end totaled $46,000 at June 30, 2025, compared to $1.05 million, at June 30, 2024. Of the $2.86 million in past due loans at June 30, 2025, $965,000 were purchased government guaranteed loans, which are guaranteed by the SBA for the full payment of the principal plus interest.

There was a $3.16 million provision for credit losses in the second quarter of 2025, compared to $291,000 provision for credit losses in the second quarter a year ago, and a $1.16 million provision for credit losses booked in the first quarter of 2025. The provision recorded during the second quarter of 2025 is the result of changes in loan portfolio concentrations, net charge-offs recognized, and a $10.92 million increase in total non-accrual loans which were individually evaluated in the allowance for credit losses.

The ratio of allowance for credit losses to total loans was 1.40% at June 30, 2025, compared to 1.11% a year earlier and 1.18% at March 31, 2025. The Company individually evaluates non-accrual loans in the allowance for credit losses which has resulted in carrying a higher level of reserve.

During the second quarter of 2025 the Bank recorded $949,000 in other real estate owned (“OREO”). This OREO was the result of a loan foreclosure completed during the quarter where the bank acquired a single-family-residence property as payment through collateral. The property is in good condition and is anticipated to sell during the second half of 2025.

“As SBA loans have historically been the primary driver of nonperforming loans, the portfolio is watched very closely. Rates have increased so rapidly over the last two years putting pressure on borrowers. A majority of the loans within the portfolio are floating rate loans tied to WSJ Prime and reset quarterly. Borrowers saw a 50bps reduction in their rates on January 1, 2025 and additional rate relief may occur during the second half of 2025,” added Miller. “The ratio of allowance for credit losses to the total, non-guaranteed, loan portfolio was 1.48%, as of June 30, 2025, and our total non-guaranteed exposure on these SBA loans is $44.61 million spread over 222 loans.”

“We incurred net charge offs of $605,000 during the current quarter, compared to $27,000 in net recoveries in the second quarter a year ago, and $167,000 in net charge offs in the previous quarter,” said Miller. “Our loan portfolio increased 13% from a year ago with commercial real estate (“CRE”) loans representing 63% of the total loan portfolio. Within the CRE portfolio, there are $49.90 million in loans for CRE office as shown in the table below. Since the majority of our CRE office exposure is concentrated in the Central Valley, we are experiencing less volatility than city center CRE markets. Our credit metrics remain strong as we continue to maintain conservative underwriting standards.”

About FFB Bancorp

FFB Bancorp, formerly Communities First Financial Corporation, a bank holding company established in 2014, is the parent company of FFB Bank, founded in 2005 in Fresno, California. As a leading SBA Lender in California’s Central Valley and one of the few direct acquiring banks in the United States, FFB Bank offers clients a range of personal and business checking accounts, payment processes, and loan programs. Among the Bank’s awards and accomplishments, it was ranked #1 on American Banker’s list of the Top 20 Publicly Traded Banks under $2 Billion in Assets for 2024. The Bank was also ranked by S&P Global as the #34 best performing US community bank under $3 billion in assets. The Company has also received recognition as part of the OTCQX Best 50 Companies for 2019, 2023, and 2024. For additional information, you can visit the Company’s website at www.ffb.bank or by contacting a representative at 559-439-0200.

Forward Looking Statements

This earnings release may contain forward-looking statements. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. The forward-looking statements are based on managements’ expectations and are subject to a number of risks and uncertainties. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include, without limitation, the Company’s ability to effectively execute its business plans; the impact of the Consent Order on our financial condition and results of operations; changes in general economic and financial market conditions; changes in interest rates, and in particular, actions taken by the Federal Reserve to try and control inflation; changes in the competitive environment; continuing consolidation in the financial services industry; new litigation or changes in existing litigation; losses, customer bankruptcy, claims and assessments; changes in banking regulations or other regulatory or legislative requirements affecting the Company’s business; international developments; the tariff strategy of the Trump administration, and its related effects on the agriculture industry and connected businesses in the Central Valley; and changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies. The Company undertakes no obligation to release publicly the results of any revisions to the forward-looking statements included herein to reflect events or circumstances after today, or to reflect the occurrence of unanticipated events. The Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

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