FFB Bancorp Announces Fourth Quarter and Year Ended December 31, 2024 Earnings

FRESNO, Calif., Jan. 22, 2025 (GLOBE NEWSWIRE) — FFB Bancorp (the “Company”) FFBB, the parent company of FFB Bank (the “Bank”), today reported net income of $9.72 million, or $3.05 per diluted share, for the fourth quarter of 2024, an increase of 13% from the $8.56 million, or $2.69 per diluted share, reported for the third quarter of 2024. The Bank reported $7.57 million, or $2.39 per diluted share, for the fourth quarter of 2023. For the year ended December 31, 2024, net income was $34.15 million, or $10.72 per diluted share, compared to $33.56 million, or $10.57 per diluted share, for the same period in 2023. All results are unaudited.

Fourth Quarter 2024 Highlights: As of, or for the quarter ended December 31, 2024, compared to the quarter ended December 31, 2023:

• Pre-tax, pre-provision income increased 33% to $14.98 million.
• Net income increased 28% to $9.72 million.
• Return on average equity (“ROAE”) was 23.11%.
• Return on average assets (“ROAA”) was 2.53%.
• Net interest margin expanded 5 basis points to 5.24% from 5.19% a year earlier.
• Gross revenue (net interest income, before the provision for credit losses, plus non-interest income) increased 27% to $28.25 million.
• Total assets increased 10% to $1.51 billion.
• Total portfolio of loans increased 15% to $1.07 billion.
• Total deposits increased 12% to $1.28 billion.
• Shareholder equity increased 29% to $168.39 million.
• Book value per common share increased 29% to $53.02.
• The Company’s tangible common equity ratio was 11.18%, while the Bank’s regulatory leverage capital ratio was 14.33%, and the total risk-based capital ratio was 20.84% at December 31, 2024.

Entry into Consent Order FDIC-24-0112b:

On January 7, 2025, the Company’s wholly owned subsidiary, FFB Bank (“Bank”) stipulated to the entry of a Consent Order (“Order”) by the Federal Deposit Insurance Corporation (“FDIC”) and the California Department of Financial Protection and Innovation (“CDFPI”) addressing various matters relating principally to Bank Secrecy Act and Anti-Money Laundering / Countering Financing of Terrorism (“AML/CFT”) program issues at the Bank and in connection with its Merchant Payment Business and its relationships with Independent Sales Organizations (“ISO”). The Order was dated January 10, 2025. While the Bank believes that its efforts are well underway, and it will be able to correct the matters required by the Order, compliance with the Order will be determined solely by the FDIC and the CDFPI, based upon subsequent visitations and examinations.

Among other things the Order requires the Bank to:

1. Develop a written action plan, acceptable to the FDIC and CDFPI, to address and correct deficiencies in its AML/CFT program and satisfy the requirements of the Order.
2. Increase Board oversight of compliance with its AML/CFT program, particularly as it relates to the Bank’s Merchant Services Program and ISO/sub-ISO business.
3. Correct all BSA violations of law outlined in the most recent report of examination and ensure future compliance.
4. Develop and implement an enhanced AML/CFT program and thereafter maintain compliance with it; particularly focused on the Merchant Services Program and Bank’s ISOs and Sub-ISOs.
5. Establish internal controls to ensure compliance with the BSA particularly focused on the Merchant Services Program, including an enhanced customer due diligence program and a risk assessment of ISOs and merchants serviced by the Bank and its ISOs.
6. Provide independent testing of compliance with the AML/CFT program, BSA and the reporting of suspicious transactions.
7. Ensure that the AML/CFT program is managed by a qualified officer with requisite authority, responsibility, training, resources and management reporting. The Bank shall hire an outside consultant to assess and evaluate this. The Bank may not change its AML/CFT Officer without regulatory approval.
8. Provide training of all Bank personnel in all aspects of regulatory compliance with the AML/CFT program and BSA with specific concentration on Bank’s Merchant Services Program.
9. Conduct a lookback review of all high-risk accounts and transactions from January 1, 2024, and as needed make any required regulatory filings based on the results of the review.
10. Enhance the Bank’s oversight of its ISOs and Sub-ISOs, including a review of all existing ISOs and Sub-ISOs to ensure their respective AML/CFT policies and procedures allow the Bank to comply with its enhanced AML/CFT program.
11. Enhance certain contractual provisions with its ISOs and Sub-ISOs to strengthen, among other things, requirements for ISOs and Sub-ISOs to have independent audits of their respective AML/CFT policies and procedures.
12. Not add or onboard any new ISOs until the Bank has fully implemented its review plan, addressed all deficiencies and is in material compliance with BSA, as determined by FDIC and CDFPI.
13. The Bank must file quarterly reports with the regulators to show compliance with the terms of the Order. The Order will remain in place until modified or terminated by the regulators.

While revisiting its practices, policies, and procedures to comply with the Order, the Bank intends to enhance its consumer compliance management system to improve, among other things, consumer complaint monitoring related to merchants and ISOs responsible for managing such merchants, in its Merchant Processing Program. The thrust of these efforts will be to assist the Bank in reporting and eliminating higher risk merchants with significant customer complaints.

The Bank’s efforts to comply with the Order are underway, and it believes it will be able to obtain full compliance with the Order. However, compliance with the Order will be determined solely by the FDIC and the CDFPI, based upon subsequent visitations and examinations.

Anticipated Impact to 2025:

As a result of the actions required for Order remediation, enhancement of the Bank’s consumer compliance management system, and additional oversight over third party relationships, the Company is forecasting the following impacts to 2025 results:

• Due to the enhanced AML/CFT requirements for ISOs and Sub-ISOs, the Company anticipates exiting a number of ISO and Sub-ISO relationships during Q2 2025. Non-interest bearing deposits related to those relationships totaled $156 million at December 31, 2024. Net revenue related to those relationships for 2024 was $3.6 million.
• The loss of a significant level of non-interest bearing deposits due to certain ISO partner exits will change the Company’s deposit mix and result in higher funding costs to support forecasted loan portfolio growth. 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.
• Salaries & employee benefits expense will increase from hiring additional Compliance and Risk personnel in 2025 and include the full year impact of individuals hired in the second half of 2024.
• Legal, consulting, audit, and compliance costs will increase to implement and maintain an enhanced AML/CFT and consumer compliance management program, engage independent audits of ISOs and Sub-ISOs, and other expenses related to Order remediation.
• Software license expenses will increase with the implementation of CFT/AML/Fraud real-time monitoring systems.

As a result of the impacts detailed above, along with forecasted core balance sheet growth, the Company projects a reduction in net income for 2025, compared to 2024.

“The Board of Directors has full confidence in our team’s ability to efficiently address the actions outlined by this order,” said Mark Saleh, Chairman of the Board of Directors. “Their expertise and commitment will ensure these matters are resolved promptly, positioning the Company to continue its position as a top-performer.”

“Resolving the order is our top priority and our team is committed to addressing the concerns outlined as quickly as possible. As part of this effort, we are focused on building a best-in-class AML/CFT and compliance program that not only meets regulatory expectations but is capable of supporting our continued growth. We remain committed to the payments space and our long-term strategy of maximizing technology to support our high touch customer experience,” said Steve Miller, President and Chief Executive Officer.

FFB Bancorp Announces Stock Repurchase Program:

The Company has authorized a plan to utilize up to $15.0 million of capital to repurchase shares of the Company’s common stock, which represents approximately 8.9% of total shareholders’ equity at December 31, 2024, which will commence on or about January 27, 2025, provided that the Company is not then in possession of material non-public information.

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.

The Company’s management believes the repurchase plan, depending upon market and business conditions, may, among other things, provide capital management opportunities for the Company. The Company is not obligated to repurchase any such shares under the repurchase plan. Through December 31, 2025, the repurchase plan may be discontinued, suspended or restarted at any time.

Results of Operations

Quarter ended December 31, 2024:

Operating revenue, consisting of net interest income before the provision for credit losses and non-interest income, increased 27% to $28.25 million for the fourth quarter of 2024, compared to $22.31 million for the fourth quarter a year ago, and increased 11% from $25.40 million from the third quarter of 2024.

Net interest income, before the provision for credit losses, increased 15% to $18.81 million for the fourth quarter of 2024, compared to $16.38 million for the same quarter a year ago, and increased 6% from $17.79 million from last quarter. “The increase in net interest income during the fourth quarter was driven by loan portfolio growth,” said Bhavneet Gill, Chief Financial Officer. “We also saw some relief in funding costs as a result of decreases in the overnight rate during the last four months of 2024.”

The Company’s net interest margin (“NIM”) increased by 5 basis points to 5.24% for the fourth quarter of 2024, compared to 5.19% for the fourth quarter of 2023, and increased 13 basis points from 5.11% for the preceding quarter. “Our yield on earning assets increased 9 basis points in the fourth quarter primarily from loan portfolio growth. Additionally, the expansion of NIM was buoyed by a 4 basis point decrease in the cost to fund earning assets. In addition, average non-interest bearing deposits increased $16.55 million quarter over quarter,” noted Gill.

The yield on earning assets was 6.24% for the fourth quarter of 2024, compared to 6.13% for the fourth quarter a year ago, and 6.15% for the previous quarter. The cost to fund earning assets decreased to 1.00% for the fourth quarter of 2024 compared to 1.04% for the preceding quarter, and increased from 0.93% for the same quarter a year earlier.

Total non-interest income was $9.44 million for the fourth quarter of 2024, compared to $5.92 million for the fourth quarter of 2023, and $7.62 million for the preceding quarter. The increase in non-interest income, from the fourth quarter of 2023, was driven by an increase in merchant services revenue, higher gain on the sale of loan revenue, and a reduction in loss on sale of investments.

Merchant services revenue increased 57% to $7.56 million for the fourth quarter of 2024, compared to $4.83 million from the fourth quarter of 2023. The increase was primarily due to higher volume across all merchant business lines and higher gross revenue related to FFB Payments. Merchant services revenue increased from $5.57 million when compared to the third quarter of 2024 as a result of an increase in processing volume during the fourth quarter. Processing volume is seasonal in nature.

Merchant ISO Processing Volumes (in thousands)
Source	Q4 2024		Q3 2024		Q2 2024		Q1 2024		Q4 2023
ISO Partner Sponsorship	$	4,891,643	$	4,556,868	$	4,391,365	$	3,763,289	$	3,812,386
FFB Payments- Sub-ISO Merchants		22,950		24,661		24,414		19,370		20,992
FFB Payments – Direct Merchants		91,133		64,512		76,059		77,349		93,443
Total volume	$	5,005,726	$	4,646,041	$	4,491,838	$	3,860,008	$	3,926,821

Merchant ISO Processing Revenues (in thousands)
Source of Revenue	Q4 2024		Q3 2024		Q2 2024		Q1 2024		Q4 2023
Net Revenue*:
ISO Partner Sponsorship	$	2,535	$	2,284	$	2,156	$	2,183	$	1,916
Gross Revenue:
FFB Payments- Sub-ISO Merchants		764		810		795		672		539
FFB Payments – Direct Merchants		4,262		2,476		3,117		3,213		2,693
		5,026		3,286		3,912		3,885		3,232
Gross Expense:
FFB Payments- Sub-ISO Merchants		638		723		675		518		455
FFB Payments – Direct Merchants		2,511		1,766		1,989		1,842		1,720
		3,149		2,489		2,664		2,360		2,175
Net Revenue:
FFB Payments- Sub-ISO Merchants		126		87		120		154		84
FFB Payments – Direct Merchants		1,751		710		1,128		1,371		973
FFB Payments Net Revenue		1,877		797		1,248		1,525		1,057
Net Merchant Services Income:	$	4,412	$	3,081	$	3,404	$	3,708	$	2,973

*ISO Partnership Sponsorship is recognized net of expense in Merchant Services Income. FFB Payments revenues are recognized gross in Merchant Services Income and Merchant Services expenses are recognized in Non-Interest Expense.

Total deposit fee income increased 9% to $856,000 for the fourth quarter of 2024, compared to $783,000 for the fourth quarter of 2023, and increased 2% from $837,000 for the preceding quarter.

There was a $929,000 gain on sale of loans during the fourth quarter of 2024, compared to a gain on sale of loans of $464,000 during the fourth quarter 2023, and a gain on sale of loans of $636,000 in the previous quarter. There was a loss on sale of investments of $482,000 during the fourth quarter of 2024, compared to a $1.11 million loss during the fourth quarter 2023, and a $16,000 gain in the previous quarter. “We monitor the sale of loans and investment securities and manage concentrations accordingly. During the fourth quarter, we sold $7.67 million in SBA loans for a $475,000 gain on sale and $16.12 million in multi-family loans for a $363,000 gain on sale. Fourth quarter 2024 results include a loss on sale of investments from the sale of $12.91 million in lower yielding investment securities. Sale proceeds were reinvested in higher yielding securities with an anticipated earnback of approximately one year,” added Gill.

Non-interest expense increased 20% to $13.27 million for the fourth quarter of 2024, compared to $11.05 million for the fourth quarter 2023, and increased 4% from $12.74 million from the previous quarter.

“During 2024 we 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 risk management initiatives. During the third quarter, we hired a General Counsel and Chief Compliance Officer with an extensive background in both bank operations and bank regulatory framework. During the fourth quarter, we made key hires in our compliance, risk, and merchant teams mostly related to addressing the Order,” said Miller.

Full-time employees increased to 168 at December 31, 2024, compared to 139 full-time employees a year earlier, and 163 full-time employees from the previous quarter.

Salaries and employee benefits decreased 8% to $5.18 million for the fourth quarter of 2024, compared to $5.60 million for the fourth quarter 2023. Total salaries and employee benefits decreased 20% from $6.47 million in the previous quarter. These decreases were primarily the result of non-recurring reductions of $1.47 million and $832,000 in performance bonus and ESOP accruals, respectively.

Occupancy and equipment expenses increased 31% from a year ago, representing 3% of non-interest expense, and increased 9% from the preceding quarter. Other operating expense increased 38% to $4.53 million from a year earlier and increased 33% from the previous quarter. Increases in data processing expense, software licenses and subscriptions, professional fees, and marketing expense were all primary drivers of the year-over-year increase. Professional fees, which include legal, audit, and consulting fees, increased $520,000 or 79% from the prior quarter primarily due to actions taken to enhance the Company’s AML/CFT, compliance, and merchant services programs. Merchant operating expense totaled $3.15 million for the fourth quarter of 2024, compared to $1.85 million for the fourth quarter of 2023 and $2.49 million for the preceding 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.

The efficiency ratio was 46.19% for the fourth quarter of 2024, compared to 47.17% for the same quarter a year ago, and 50.16% 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 39.57% for the fourth quarter of 2024, compared to 42.63% for the same quarter a year ago, and 44.75% for the previous quarter.

Year ended December 31, 2024:

For the year ended December 31, 2024, operating revenue increased 15% to $101.99 million, compared to $88.58 million for the same period in 2023. For the year ended December 31, 2024, net interest income before the provision for credit losses increased 10% to $70.04 million, compared to $63.53 million for the same period in 2023. The increase in revenue is attributed to growth in the loan portfolio and higher asset yields, partially offset by an increase in interest bearing liabilities and cost of funds. For the year ended December 31, 2024, the yield on earning assets was 6.26% compared to 5.86% for the same period in 2023, while the cost to fund earning assets was 1.04% for the year ended December 31, 2024, compared to 0.74% for the same period in 2023.

For the year ended December 31, 2024, non-interest income increased 28% to $31.95 million compared to $25.05 million for the same period in 2023. Deposit fee income increased 14% to $3.34 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 and an increase in merchant services revenue.

For the year ended December 31, 2024, operating expenses increased by 28% to $51.99 million from $40.61 million for the same period in 2023. Salaries and employee benefits expense increased 24% to $24.95 million as a result of the increase in FTE, partially offset by the non-recurring reductions in bonus and ESOP expense recognized during the fourth quarter 2024. Other operating expenses increased 36% to $14.77 million due to higher marketing, professional fees, and technology related expenses. There was a 33% increase in merchant services operating expenses, to $10.66 million, which represents 21% of total operating expenses for year ended December 31, 2024.

For the year ended December 31, 2024, the efficiency ratio was 50.34%, compared to 44.27% for the same period ended December 31, 2023. The adjusted efficiency ratio was 44.62%, compared to 38.95% for the same period ended December 31, 2023.

Balance Sheet Review

Total assets increased 10% to $1.51 billion at December 31, 2024, compared to $1.36 billion at December 31, 2023, and remained the same compared to September 30, 2024.

The total portfolio of loans increased 15%, or $142.74 million, to $1.07 billion, compared to $928.34 million at December 31, 2023, and increased $72.86 million, from $998.22 million at September 30, 2024.

Commercial real estate loans increased 20% year-over-year to $669.29 million, representing 62% of total loans at December 31, 2024. The CRE portfolio includes approximately $277.99 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 $94.55 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. Approximately 24.7% of the current bridge loan portfolio will mature during the first quarter of 2025 to roll off or get refinanced and sold. 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 65% from a year ago to $26.52 million, representing 2% of total loans, while residential RE 1-4 family loans totaled $16.85 million, or 2% of loans, at December 31, 2024.

The commercial and industrial (C&I) portfolio increased 22% to $267.95 million, at December 31, 2024, compared to $218.75 million a year earlier, and increased 12% from $238.63 million at September 30, 2024. C&I loans represented 25% of total loans at December 31, 2024. Agriculture loans represented 8% of the loan portfolio at December 31, 2024. At December 31, 2024, the SBA, USDA, and other government agencies guaranteed loans totaled $59.06 million, or 5.5% of the loan portfolio.

Investment securities totaled $322.19 million at December 31, 2024, compared to $326.01 million a year earlier, and decreased $23.24 million from $345.43 million at September 30, 2024. The investment portfolio consists of mortgage-backed and municipal securities, both tax exempt and taxable, treasury securities as well as other domestic debt. At December 31, 2024, the Company had a net unrealized loss position on its investment securities portfolio of $25.89 million, compared to a net unrealized loss of $18.11 million at September 30, 2024. The Company’s investment securities portfolio had an effective duration of 5.32 years at December 31, 2024, compared to 5.19 years at September 30, 2024.

Total deposits increased 12%, or $139.21 million, to $1.284 billion at December 31, 2024, compared to $1.15 billion from a year earlier, and decreased $2.57 million from $1.287 billion at September 30, 2024. The quarter over quarter decrease in deposit balances is primarily attributed to a decrease in interest bearing checking accounts. Non-interest bearing demand deposits increased 7% to $828.51 million at December 31, 2024, compared to $775.51 million at December 31, 2023, and increased $1.80 million from $826.71 million at September 30, 2024. Non-interest bearing demand deposits represented 65% of total deposits at December 31, 2024. Included in non-interest bearing deposits are $85.7 million from ISO partners for merchant reserves, $134.4 million from ISO partners for settlement, and $8.3 million in ISO partner operating accounts. These deposits represent 27.2% of non-interest bearing deposits and 17.5% of total deposits.

There were no short-term borrowings at December 31, 2024 or September 30, 2024, compared to $34.00 million in borrowings at December 31, 2023. 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 December 31, 2024:

Liquidity Source (in thousands)	December 31, 2024		September 30, 2024
Cash and cash equivalents	$	63,415	$	116,875
Unpledged investment securities, fair value		118,957		116,784
FHLB advance capacity		304,077		288,943
Federal Reserve discount window capacity		166,475		166,482
Correspondent bank unsecured lines of credit		91,500		91,500
	$	744,424	$	780,584

The total primary and secondary liquidity of $744.42 million at December 31, 2024 represents a decrease of $36.2 million in primary and secondary liquidity quarter over quarter. On-balance sheet cash and cash equivalents decreased as cash was utilized to fund loan growth during the quarter.

Shareholders’ equity increased 29% to $168.39 million at December 31, 2024, compared to $130.70 million from a year ago, and grew 3% from $163.64 million at September 30, 2024. Book value per common share increased 29% to $53.02, at December 31, 2024, compared to $41.21 at December 31, 2023, and increased 3% from $51.52 at September 30, 2024.

The tangible common equity ratio was 11.18% at December 31, 2024, compared to 9.58% a year earlier, and 10.82% at September 30, 2024. Tangible common equity and book value increased during the quarter as a result of quarterly net income partially offset by an increase in accumulated other comprehensive loss (“AOCI”) related to the investment portfolio.

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 $220.99 million at quarter end excluding the unrealized loss. The regulatory leverage capital ratio was 14.33% for the current quarter, while the total risk-based capital ratio was 20.84%, exceeding regulatory minimums to be considered well-capitalized.

Asset Quality

Nonperforming assets decreased to $9.89 million, or 0.66% of total assets, at December 31, 2024, compared to $12.82 million, or 0.85% of total assets, from the preceding quarter. Of the $9.89 million nonperforming loans, $8.04 million are covered by SBA guarantees. Total delinquent loans increased to $8.32 million at December 31, 2024, compared to $3.37 million at September 30, 2024.

Past due loans 30-60 days were $4.89 million at December 31, 2024, compared to $1.65 million at September 30, 2024, and $1.08 million at December 31, 2023. There were $2.45 million past due loans from 60-90 days at December 31, 2024, compared to $1.39 million at September 30, 2024 and $199,000 in past due loans from 60-90 days a year earlier. Past due loans 90+ days at quarter end totaled $987,000 at December 31, 2024, compared to $1.35 million, at December 31, 2023. Of the $8.32 million in past due loans at December 31, 2024, $2.79 million were purchased government guaranteed loans, which are guaranteed by the SBA for the full payment of the principal plus interest.

Delinquent Loan Summary	Organic		Purchased Govt. Guaranteed		Total
(in thousands)
Delinquent accruing loans 30-59 days	$	2,184	$	2,702	$	4,886
Delinquent accruing loans 60-89 days		2,449		—		2,449
Delinquent accruing loans 90+ days		897		90		987
Total delinquent accruing loans	$	5,530	$	2,792	$	8,322
Non-Accrual Loan Summary	Organic		Purchased Govt. Guaranteed		Total
(in thousands)
Loans on non-accrual	$	9,894	$	—	$	9,894
Non-accrual loans with SBA guarantees		8,036		—		8,036
Net Bank exposure to non-accrual loans	$	1,858	$	—	$	1,858

There was a $1,671,000 provision for credit losses in the fourth quarter of 2024, compared to $769,000 provision for credit losses in the fourth quarter a year ago, and a $762,000 provision for credit losses booked in the third quarter of 2024. The provision recorded during the fourth quarter of 2024 is the result of loan portfolio growth and charge-off activity.

“We watch the SBA portfolio very closely since 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 resulting from the 50bps reduction in WSJ Prime during the fourth quarter,” added Miller. “A portion of the portfolio consists of fully guaranteed loans the Company has purchased, as well as organic SBA and USDA loans the Bank has originated. When the effect of these guarantees is considered relative to the loan portfolio, the ratio of allowance for credit losses to the total, non-guaranteed, loan portfolio was 1.17%, as of December 31, 2024, and our total non-guaranteed exposure on these SBA loans is $41.19 million spread over 220 loans.”

“We incurred net charge offs of $1,287,000 during the current quarter, compared to $766,000 in net charge offs in the fourth quarter a year ago, and $4,000 in net recoveries in the preceding quarter,” said Miller. “Our loan portfolio increased 15% from a year ago with commercial real estate (“CRE”) loans representing 62% of the total loan portfolio. Within the CRE portfolio, there are $52.18 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.”

(in thousands)	CRE Office Exposure of December 31, 2024
Region	Owner-Occupied		Non-Owner Occupied		Total
Central Valley	$	26,188	$	14,307	$	40,495
Southern California		2,281		353		2,634
Other California		4,527		3,995		8,522
Total California		32,996		18,655		51,651
Out of California		—		530		530
Total CRE Office	$	32,996	$	19,185	$	52,181

As of this release, the Company is not aware of any material impact on its loan portfolio or collateral due to the Southern California wildfires occurring in January 2025. The situation is still evolving, and the Company will continue to monitor for potential exposure and impact.

The ratio of allowance for credit losses to total loans was 1.10% at December 31, 2024, compared to 1.08% a year earlier and 1.15% at September 30, 2024.

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. For 2022, the Bank was also ranked by S&P Global as the #18 best performing 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 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; 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.

Member FDIC

Select Financial Information and Ratios	For the Quarter Ended:												Year to Date as of:
	December 31, 2024				September 30, 2024				December 31, 2023				December 31, 2024				December 31, 2023
BALANCE SHEET- ENDING BALANCES:
Total assets	$	1,506,606			$	1,512,241			$	1,364,312
Total portfolio loans		1,071,079				998,222				928,344
Investment securities		322,186				345,428				326,006
Total deposits		1,284,377				1,286,949				1,145,170
Shareholders equity, net		168,392				163,635				130,700
INCOME STATEMENT DATA
Gross revenue		28,247				25,403				22,305				101,990				88,577
Operating expense		13,270				12,735				11,047				51,992				40,606
Pre-tax, pre-provision income		14,977				12,668				11,258				49,998				47,971
Net income after tax		9,718				8,563				7,565				34,147				33,558
SHARE DATA
Basic earnings per share	$	3.06			$	2.70			$	2.39			$	10.75			$	10.58
Fully diluted EPS	$	3.05			$	2.69			$	2.39			$	10.72			$	10.57
Book value per common share	$	53.02			$	51.52			$	41.21
Common shares outstanding		3,175,817				3,175,975				3,171,690
Fully diluted shares		3,189,942				3,188,068				3,174,174				3,186,507				3,174,963
FFBB – Stock price	$	97.97			$	90.50			$	75.98
RATIOS
Return on average assets		2.53	%			2.31	%			2.24	%			2.38	%			2.55	%
Return on average equity		23.11	%			21.11	%			25.75	%			22.78	%			31.33	%
Efficiency ratio		46.19	%			50.16	%			47.17	%			50.34	%			44.27	%
Adjusted efficiency ratio		39.57	%			44.75	%			42.63	%			44.62	%			38.95	%
Yield on earning assets		6.24	%			6.15	%			6.13	%			6.26	%			5.86	%
Yield on investment securities		4.34	%			4.48	%			4.61	%			4.47	%			4.42	%
Yield on portfolio loans		6.95	%			6.87	%			6.58	%			6.86	%			6.37	%
Cost to fund earning assets		1.00	%			1.04	%			0.93	%			1.04	%			0.74	%
Cost of interest-bearing deposits		2.69	%			2.83	%			2.40	%			2.70	%			1.88	%
Net Interest Margin		5.24	%			5.11	%			5.19	%			5.22	%			5.12	%
Equity to assets		11.18	%			10.82	%			9.58	%
Net loan to deposit ratio		83.39	%			77.57	%			81.07	%
Full time equivalent employees		168				163				139
BALANCE SHEET- AVERAGES
Total assets		1,529,439				1,477,259				1,341,435				1,434,232				1,315,351
Total portfolio loans		1,038,215				982,152				917,620				974,498				880,374
Investment securities		333,135				343,096				294,060				331,842				313,601
Total deposits		1,299,069				1,254,343				1,150,441				1,220,197				1,138,190
Shareholders equity, net		167,268				161,363				116,545				149,919				107,128

Consolidated Balance Sheet (unaudited)	December 31, 2024				September 30, 2024				December 31, 2023
(in thousands)
ASSETS
Cash and due from banks	$	43,905			$	78,404			$	30,147
Interest bearing deposits in banks		19,510				38,471				32,456
CDs in other banks		1,723				1,730				1,673
Investment securities		322,186				345,428				326,006
Loans held for sale		—				—				—
Construction & land development		26,522				34,090				75,773
Residential RE 1-4 family		16,846				18,036				17,355
Commercial real estate		669,285				613,735				556,239
Agriculture		90,017				92,378				59,961
Commercial and industrial		267,948				238,628				218,745
Consumer and other		461				1,355				120
Portfolio loans		1,071,079				998,222				928,344
Deferred fees & discounts		(4,200	)			(4,564	)			(3,631	)
Allowance for credit losses		(11,834	)			(11,491	)			(9,980	)
Loans, net		1,055,045				982,167				914,733
Non-marketable equity investments		8,891				8,890				7,125
Cash value of life insurance		12,402				12,305				12,029
Accrued interest and other assets		42,944				44,846				40,143
Total assets	$	1,506,606			$	1,512,241			$	1,364,312
LIABILITIES AND EQUITY
Non-interest bearing deposits	$	828,508			$	826,708			$	775,507
Interest checking		62,034				84,931				52,203
Savings		55,219				52,860				51,880
Money market		212,322				195,366				160,205
Certificates of deposits		126,294				127,084				105,375
Total deposits		1,284,377				1,286,949				1,145,170
Short-term borrowings		—				—				34,000
Long-term debt		38,007				37,967				39,599
Other liabilities		15,830				23,690				14,843
Total liabilities		1,338,214				1,348,606				1,233,612
Common stock		38,436				37,931				36,178
Retained earnings		148,138				138,419				113,991
Accumulated other comprehensive loss		(18,182	)			(12,715	)			(19,469	)
Shareholders’ equity		168,392				163,635				130,700
Total liabilities and shareholders’ equity	$	1,506,606			$	1,512,241			$	1,364,312

Consolidated Income Statement	Quarter ended:												Year ended:
(unaudited) (in thousands)	December 31, 2024				September 30, 2024				December 31, 2023				December 31, 2024				December 31, 2023
INTEREST INCOME:
Loan interest income	$	18,131			$	16,971			$	15,208			$	66,828			$	56,102
Investment income		3,631				3,862				3,418				14,828				13,859
Int. on fed funds & CDs in other banks		504				384				583				1,460				2,327
Dividends from non-marketable equity		137				187				118				847				367
Total interest income		22,403				21,404				19,327				83,963				72,655
INTEREST EXPENSE:
Int. on deposits		3,115				3,077				2,359				11,717				6,750
Int. on short-term borrowings		12				76				123				346				515
Int. on long-term debt		464				464				464				1,858				1,858
Total interest expense		3,591				3,617				2,946				13,921				9,123
Net interest income		18,812				17,787				16,381				70,042				63,532
PROVISION FOR CREDIT LOSSES		1,671				762				769				3,103				1,750
Net interest income after provision		17,141				17,025				15,612				66,939				61,782
NON-INTEREST INCOME:
Total deposit fee income		856				837				783				3,337				2,933
Debit / credit card interchange income		196				183				161				732				613
Merchant services income		7,562				5,570				4,825				25,268				20,931
Gain on sale of loans		929				636				464				2,526				1,906
Loss (gain) on sale of investments		(482	)			16				(1,114	)			(1,299	)			(3,142	)
Other operating income		374				374				805				1,384				1,804
Total non-interest income		9,435				7,616				5,924				31,948				25,045
NON-INTEREST EXPENSE:
Salaries & employee benefits		5,177				6,469				5,598				24,952				20,162
Occupancy expense		411				376				313				1,606				1,554
Merchant services operating expense		3,149				2,489				1,852				10,661				7,997
Other operating expense		4,533				3,401				3,284				14,773				10,893
Total non-interest expense		13,270				12,735				11,047				51,992				40,606
Income before provision for income tax		13,306				11,906				10,489				46,895				46,221
PROVISION FOR INCOME TAXES		3,588				3,343				2,924				12,748				12,663
Net income	$	9,718			$	8,563			$	7,565			$	34,147			$	33,558

        

ASSET QUALITY	December 31, 2024				September 30, 2024				December 31, 2023
(in thousands)
Delinquent accruing loans 30-60 days	$	4,886			$	1,654			$	1,076
Delinquent accruing loans 60-90 days		2,449				1,390				199
Delinquent accruing loans 90+ days		987				322				1,345
Total delinquent accruing loans	$	8,322			$	3,366			$	2,620
Loans on non-accrual	$	9,894			$	12,821			$	6,006
Other real estate owned		—				—				—
Nonperforming assets	$	9,894			$	12,821			$	6,006
Delinquent 30-60 / Total Loans		0.46	%			0.17	%			0.12	%
Delinquent 60-90 / Total Loans		0.23	%			0.14	%			0.02	%
Delinquent 90+ / Total Loans		0.09	%			0.03	%			0.14	%
Delinquent Loans / Total Loans		0.78	%			0.34	%			0.28	%
Non-accrual / Total Loans		0.92	%			1.28	%			0.65	%
Nonperforming assets to total assets		0.66	%			0.85	%			0.44	%
Year-to-date charge-off activity
Charge-offs	$	1,287			$	—			$	1,445
Recoveries		35				35				73
Net (recoveries) charge-offs	$	1,252			$	(35	)		$	1,372
Annualized net loan losses to average loans		0.12	%			—	%			0.15	%
CREDIT LOSS RESERVE RATIOS:
Allowance for credit losses	$	11,834			$	11,491			$	9,980
Total loans	$	1,071,079			$	998,222			$	928,344
Purchased govt. guaranteed loans	$	16,323			$	17,072			$	20,276
Originated govt. guaranteed loans	$	42,737			$	41,918			$	36,371
ACL / Total loans		1.10	%			1.15	%			1.08	%
ACL / Loans less 100% govt. gte. loans (Purchased)		1.12	%			1.17	%			1.10	%
ACL / Loans less all govt. guaranteed loans		1.17	%			1.22	%			1.14	%
ACL / Total assets		0.79	%			0.76	%			0.73	%

SELECT FINANCIAL TREND INFORMATION	For the Quarter Ended:
	December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023
BALANCE SHEET- PERIOD END
Total assets	$	1,506,606		$	1,512,241		$	1,443,723		$	1,395,095		$	1,364,326
Loans held for sale		—			—			—			—			—
Loans held for investment		1,071,079			998,222			969,764			926,781			928,344
Investment securities		322,186			345,428			345,491			328,906			326,006
Non-interest bearing deposits		828,508			826,708			731,030			751,636			775,507
Interest bearing deposits		455,869			460,241			437,927			448,893			369,663
Total deposits		1,284,377			1,286,949			1,168,957			1,200,529			1,145,170
Short-term borrowings		—			—			68,000			—			34,000
Long-term debt		38,007			37,967			39,678			39,638			39,599
Total equity		186,574			176,350			167,286			158,690			150,169
Accumulated other comprehensive loss		(18,182	)		(12,715	)		(18,646	)		(19,974	)		(19,469	)
Shareholders’ equity		168,392			163,635			148,640			138,716			130,700
QUARTERLY INCOME STATEMENT
Interest income	$	22,403		$	21,404		$	20,887		$	19,268		$	19,327
Interest expense		3,591			3,617			3,581			3,131			2,946
Net interest income		18,812			17,787			17,306			16,137			16,381
Non-interest income		9,435			7,616			7,423			7,373			5,924
Gross revenue		28,247			25,403			24,729			23,510			22,305
Provision for credit losses		1,671			762			291			378			769
Non-interest expense		13,270			12,735			13,285			12,701			11,047
Net income before tax		13,306			11,906			11,153			10,431			10,489
Tax provision		3,588			3,343			3,077			2,741			2,924
Net income after tax		9,718			8,563			8,076			7,690			7,565
BALANCE SHEET- AVERAGE BALANCE
Total assets	$	1,529,439		$	1,477,259		$	1,704,255		$	1,347,604		$	1,341,435
Loans held for sale		—			—			—			—			—
Loans held for investment		1,038,215			982,152			954,871			925,561			917,620
Investment securities		333,135			343,096			334,416			315,820			294,060
Non-interest bearing deposits		838,748			822,200			758,977			755,603			760,153
Interest bearing deposits		460,321			432,143			440,147			393,514			390,288
Total deposits		1,299,069			1,254,343			1,199,124			1,149,117			1,150,441
Short-term borrowings		951			—			10,053			9,562			9,805
Long-term debt		37,989			39,479			39,660			39,620			39,580
Shareholders’ equity		167,268			161,363			141,881			134,621			116,545

Contact:
Steve Miller – President & CEO
Bhavneet Gill – EVP & CFO
(559) 439-0200