Oakland, CA – January 27, 2022 – California BanCorp (NASDAQ: CALB), whose subsidiary is California Bank of Commerce, announced today its financial results for the fourth quarter and twelve months ended December 31, 2021.
The Company reported net income of $3.2 million for the fourth quarter of 2021, which was consistent with the third quarter of 2021 and represented an increase of $1.4 million, or 78%, compared to $1.8 million for the fourth quarter of 2020. For the twelve months ended December 31, 2021, net income was $13.4 million which represented an increase of $9.1 million, or 211%, compared to $4.3 million for the same period in 2020.
Diluted earnings per share of $0.38 for the fourth quarter of 2021 compared to $0.39 for the third quarter of 2021 and $0.22 for the fourth quarter of 2020. For the twelve months ended December 31, 2021, diluted earnings per share of $1.61 compared to $0.53 for the same period in 2020.
“Our fourth quarter performance completed a year in which we delivered on all of the goals we set to continue enhancing the value of our franchise,” Steven Shelton, President and CEO of California BanCorp. “Our successful new business development efforts enabled us to surpass $2 billion in total assets during 2021 despite the runoff of PPP loans. Our balance sheet growth produced a strong increase in revenue that enabled us to continue realizing more operating leverage, improve our level of profitability, and grow our book value per share by 10% in 2021. During the fourth quarter, we had 33% annualized loan growth, excluding PPP loans, which was our highest level of growth in 2021 and reflects our continued success in taking market share in our targeted industries and asset classes. We believe we are very well positioned to deliver another strong performance in 2022. Our markets are healthy and showing increasing loan demand, our business development efforts continue to generate consistent growth in loans and low-cost deposits, and the composition of our balance sheet with a high percentage of noninterest-bearing deposits, variable rate loans, and cash and cash equivalents positions us well to benefit from higher interest rates. We believe that the combination of our continued balance sheet growth, asset sensitivity, and improving operating efficiencies should result in further improvement in our core earnings power and profitability in 2022.”
“We continue to strike an effective balance between new business development and prudent risk management, as we are generating strong balance sheet growth while maintaining outstanding asset quality and our targeted level of interest rate sensitivity,” said Thomas A. Sa, Senior Executive Vice President, Chief Financial Officer and Chief Operating Officer of California BanCorp. “As we start 2022, we continue to have strong capital and liquidity positions to support the profitable growth of the Company.”
Financial Highlights:
Profitability – three months ended December 31, 2021 compared to September 30, 2021
• Net income of $3.2 million and $0.38 per diluted share, compared to $3.2 million and $0.39 per diluted share, respectively.
• Revenue of $15.0 million decreased $182,000, or 1%, compared to $15.1 million for the third quarter of 2021.
• Net fees from Paycheck Protection Program (“PPP”) loans contributed $708,000 to net interest income compared to $1.6 million for the third quarter of 2021.
• Provision for loan losses of $504,000 increased $204,000, or 68%, primarily as a result of growth in the loan portfolio.
• Non-interest expense, excluding capitalized loan origination costs, of $11.6 million decreased $100,000, or 1%, compared to $11.7 million for the third quarter of 2021 primarily due to lower headcount during the quarter resulting from the impact of the current competitive labor market.
Profitability – twelve months ended December 31, 2021 compared to December 31, 2020
• Net income of $13.4 million and $1.61 per diluted share, compared to $4.3 million and $0.53 per diluted share, respectively.
• Revenue of $58.9 million increased $10.0 million, or 20%, compared to $48.9 million in the prior year.
• Net fees from PPP loans contributed $5.5 million to net interest income compared to $3.3 million in the prior year.
• Provision for loan losses decreased $4.9 million primarily due to a charge-off recognized in the second quarter of 2020 related to a legacy problem loan as well as our continued assessment of qualitative reserves regarding the general macroeconomic changes related to COVID-19 as it pertains to our overall loan portfolio.
• Non-interest expense, excluding capitalized loan origination costs, of $46.0 million compared to $45.7 million for the same period in the prior year.
Financial Position – December 31, 2021 compared to September 30, 2021
• Total assets decreased by $34.1 million, or 2%, to $2.02 billion.
• Total gross loans increased by $74.7 million, or 6% to $1.38 billion. Excluding the impact of PPP loans forgiven by the SBA, total gross loans increased during the fourth quarter by $99.6 million, or 8%, to $1.30 billion.
• Total deposits decreased by $61.9 million, or 4%, to $1.68 billion. Average deposits increased $41.1 million, or 2%, to $1.76 billion.
• Borrowing arrangements increased by $21.9 million, or 16%, to $160.4 million.
• Capital ratios remained strong with a Tier 1 leverage ratio of 7.23%, Tier 1 capital ratio of 8.62% and total risk-based capital ratio of 12.75%.
Net Interest Income and Margin:
Net interest income for the quarter ended December 31, 2021 was $14.0 million, an increase of $126,000, or 1%, over $13.8 million for the three months ended September 30, 2021, and an increase of $1.2 million, or 9%, over $12.8 million for the quarter ended December 31, 2020. The increase in net interest income compared to the fourth quarter of 2020 was primarily attributable to a higher yield on loans as a result of new loan originations replacing the PPP loans that were forgiven during the current quarter, combined with growth in other earning assets due to excess liquidity.
Net interest income for the twelve months ended December 31, 2021 was $54.7 million, an increase of $9.8 million, or 22% over $44.9 million for the twelve months ended December 31, 2020. The increase in net interest income was primarily attributable to an increase in interest income as the result of growth in earning assets and amortization of fees received on PPP loans offset, in part, by a decline in short-term interest rates and higher liquidity.
The Company’s net interest margin for the fourth quarter of 2021 was 2.81% compared to 2.87% for the third quarter of 2021 and 2.66% for the fourth quarter of 2020. The decrease in margin compared to the prior quarter was primarily due to excess liquidity and a decline in accelerated deferred fees on PPP loans granted forgiveness by the SBA. The increase in margin compared to the fourth quarter one year ago was primarily due to higher recognition of accelerated deferred fees on PPP loans granted forgiveness by the SBA, offset in part by a decrease in short-term interest rates.
The Company’s net interest margin for the twelve months ended December 31, 2021 was 2.89% compared to 2.76% for the same period in 2020. The increase in margin compared to the prior year was primarily due to an increase in fees recognized on PPP loans, partially offset by a decrease in short-term interest rates and higher liquidity.
Non-Interest Income:
The Company’s non-interest income for the quarters ended December 31, 2021, September 30, 2021, and December 31, 2020 was $994,000, $1.3 million and $916,000, respectively. The decrease in noninterest income from the prior quarter was primarily due to prepayment penalties on loans recognized during the third quarter of 2021, partially offset by an increase in service charges and other fees.
For the twelve months ended December 31, 2021, non-interest income was $4.2 million compared to $4.0 million for the same period of 2020. The increase in non-interest income from the prior year was primarily the result of an increase in service charges and loan related fees.
Net interest income and non-interest income comprised total revenue of $15.0 million, $15.1 million, and $13.7 million for the quarters ended December 31, 2021, September 30, 2021, and December 31, 2020, respectively. Total revenue for the twelve months ended December 31, 2021 and 2020 was $58.9 million and $48.9 million, respectively.
Non-Interest Expense:
The Company’s non-interest expense for the quarters ended December 31, 2021, September 30, 2021, and December 31, 2020 was $10.0 million, $10.5 million, and $10.4 million, respectively. The decrease in non-interest expense during the fourth quarter of 2021 was primarily a result of increased deferred loan origination costs associated with the growth in the loan portfolio. Excluding capitalized loan origination costs, non-interest expenses for the fourth and third quarters of 2021 and the fourth quarter of 2020 were $11.6 million, $11.7 million, and $11.6 million, respectively.
Non-interest expense of $40.4 million for the twelve months ended December 31, 2021 compared to $37.8 million for the same period of 2020. Excluding capitalized loan origination costs, non-interest expense was $46.0 million for the twelve months ended December 31, 2021 and $45.7 million for the same period in 2020 which reflects the Company’s continued focus on managing expenses and leveraging the recent investment in infrastructure to support the continued growth of the Company.
The Company’s efficiency ratio, the ratio of non-interest expense to revenues, was 66.90%, 69.42%, and 76.15% for the quarters ended December 31, 2021, September 30, 2021, and December 31, 2020, respectively. For the twelve months ended December 31, 2021 and 2020, the Company’s efficiency ratio was 68.65% and 77.27%, respectively.
Balance Sheet:
Total assets of $2.02 billion as of December 31, 2021, represented a decrease of $34.1 million, or 2%, compared to $2.05 billion at September 30, 2021 and an increase of $109.2 million, or 6%, compared to $1.91 billion at
December 31, 2020. The decrease in total assets from the third quarter of 2021 was primarily due to a reduction in liquidity resulting from the seasonal outflow of deposits related to tax planning distributions made by certain commercial clients, partially offset by growth in the loan and investment portfolios. The year-over-year increase in total assets was primarily due to excess liquidity generated from growth in the deposit portfolio as the result of funding additional PPP loans combined with organic growth.
Total gross loans increased by $74.7 million, or 6%, to $1.38 billion at December 31, 2021 compared to $1.30 billion at September 30, 2021 and increased by $7.6 million, or 1%, compared to $1.37 billion at December 31, 2020.
During the fourth quarter of 2021, commercial and real estate other loans increased by $46.1 million and $33.0 million, respectively, due to organic growth. Additionally, during the fourth quarter of 2021 the Company purchased, net of discount, $22.7 million of residential solar loans. Partially offsetting these increases within the total loan portfolio, SBA loans decreased by $25.7 million primarily due to PPP loan forgiveness.
Year-over-year, commercial and real estate other loans increased by $59.7 million and $146.5 million, respectively, due to organic growth. The Company also purchased two portfolios of residential solar loans totaling approximately $42.7 million, net of discount. Partially offsetting these increases within the total loan portfolio, SBA loans decreased by $236.2 million primarily due to PPP loan forgiveness.
As a result of the CARES Act PPP, which was launched in April 2020 and re-launched in January 2021, the Company funded approximately $491.3 million in loans. Approximately $418.8 million of those balances have been granted forgiveness by the SBA as of December 31, 2021.
Total deposits decreased by $61.9 million, or 4%, to $1.68 billion at December 31, 2021, from $1.74 billion at September 30, 2021 and increased by $147.9 million, or 10%, over $1.53 billion at December 31, 2020. The decrease in total deposits from the end of the third quarter of 2021 was primarily due to a reduction in noninterest- bearing demand deposits of $19.4 million and a reduction in money market and savings deposits of $32.6 million.
Compared to the same period last year, deposit growth was primarily concentrated in noninterest-bearing demand and money market deposits as the result of funding PPP loans combined with organic growth. Noninterest-bearing deposits, consisting primarily of commercial business operating accounts, represented 46% of total deposits at December 31, 2021, compared to 45% at September 30, 2021 and 44% at December 31, 2020.
As of December 31, 2021, the Company had borrowing arrangements, excluding junior subordinated debt securities, of $106.4 million compared to $79.5 million at September 30, 2021 and $189.0 million as of December 31, 2020. The increase in borrowings during the fourth quarter of 2021 was comprised primarily of a $50.0 million short-term FHLB advance, partially offset by a $23.1 million reduction in PPPLF activity.
Asset Quality:
The provision for loan losses increased to $504,000 for the fourth quarter of 2021 compared to $300,000 for the third quarter of 2021 and decreased from $700,000 for the fourth quarter of 2020. Net loan recoveries in the fourth quarter of 2021 were $6,000, or 0.00% of gross loans, compared to net recoveries of $31,000, or 0.00% of gross loans, in the third quarter of 2021 and net recoveries of $26,000, or 0.00% of gross loans, in the fourth quarter 2020.
Non-performing assets (“NPAs”) to total assets of 0.01% at December 31, 2021 compared to 0.06% at September 30, 2021 and 0.01% at December 31, 2020, with non-performing loans of $232,000, $1.2 million, and $234,000 respectively, on those dates. The decrease in NPAs at December 31, 2021 compared to the September 30, 2021 primarily related to one commercial real estate loan that was paid off in full by the borrower.
The allowance for loan losses increased by $510,000 to $14.1 million, or 1.02% of total loans, at December 31, 2021, compared to $13.6 million, or 1.04% of total loans, at September 30, 2021 and decreased by $30,000
compared to $14.1 million, or 1.03% of total loans, at December 31, 2020. The increase in the allowance for loan losses in the quarter ended December 31, 2021 compared to the quarter ended September 30, 2021 was primarily the result of growth in the loan portfolio throughout the core segments of our business. The allowance as a percentage of total loans in the quarters ended December 31, 2021, September 30, 2021, and December 31, 2020 remained consistent and reflects the Company’s continued assessment of the qualitative reserves in response to general macroeconomic impacts related to COVID-19 combined with continued strong credit quality.
Capital Adequacy:
At December 31, 2021, shareholders’ equity totaled $150.8 million compared to $147.2 million at September 30, 2021 and $136.4 million one year ago. As a result, the Company’s total risk-based capital ratio, Tier 1 capital ratio and Tier 1 leverage ratio of 12.75%, 8.62%, and 7.23%, respectively, were all substantially above the regulatory standards for “well-capitalized” institutions of 10.00%, 8.00% and 5.00% respectively.
About California BanCorp:
California BanCorp, the parent company for California Bank of Commerce, offers a broad range of commercial banking services to closely held businesses and professionals located throughout Northern California. The Company’s common stock trades on the Nasdaq Global Select marketplace under the symbol CALB. For more information on California BanCorp, call us at (510) 457-3751, or visit us at www.californiabankofcommerce.com.
Contacts:
Steven E. Shelton, (510) 457-3751 President and Chief Executive Officer seshelton@bankcbc.com
Thomas A. Sa, (510) 457-3775
Senior Executive Vice President Chief Financial Officer and Chief Operating Officer
tsa@bankcbc.com
Use of Non-GAAP Financial Information:
This press release contains both financial measures based on GAAP and non-GAAP. Non-GAAP financial measures are used where management believes them to be helpful in understanding the Company’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
Forward-Looking Information:
Statements in this news release regarding expectations and beliefs about future financial performance and financial condition, as well as trends in the Company’s business and markets are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “project,” “outlook,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” The forward-looking statements in this news release are based on current information and on assumptions that the Company makes about future events and circumstances that are subject to a number of risks and uncertainties that are often difficult to predict and beyond the Company’s control. As a result of those risks and uncertainties, the Company’s actual financial results in the future could differ, possibly materially, from those expressed in or implied by the forward-looking statements contained in this news release and could cause the Company to make changes to future plans. Those risks and uncertainties include, but are not limited to, the risk of incurring loan losses, which is an inherent risk of the banking business; the risk that the Company will not be able to continue its internal growth rate; the risk that the United States economy will experience slowed growth or recession or will be adversely affected by domestic or international economic conditions and risks associated with the Federal Reserve Board taking actions with respect to interest rates, any of which could adversely affect, among other things, the values of real estate collateral supporting many of the Company’s loans, interest income and interest rate margins and, therefore, the Company’s future operating results; risks associated with changes in income tax laws and regulations; and risks associated with seeking new client relationships and maintaining existing client relationships. Readers of this news release are encouraged to review the additional information regarding these and other risks and uncertainties to which our business is subject that are contained in our Annual Report on Form 10-K for the year ended December 31, 2020 which is on file with the Securities and Exchange Commission (the “SEC”). Additional information will be set forth in our Annual Report on Form 10-K for the year ended December 31, 2021, which we expect to file with the SEC during the first quarter of 2022, and readers of this release are urged to review the additional information that will be contained in that report.
The COVID-19 pandemic has created economic and financial disruptions that have adversely affected, and may continue to adversely affect, our business, operations, financial performance and prospects. Even after the COVID-19 pandemic subsides, it is possible that the U.S. and other major economies experience or continue to experience a prolonged recession, which could materially and adversely affect our business, operations, financial performance and prospects. Statements about the effects of the COVID-19 pandemic on our business, operations, financial performance and prospects may constitute forward-looking statements and are subject to the risk that the actual impacts may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control, including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on our customers, third parties and us.
Due to these and other possible uncertainties and risks, readers are cautioned not to place undue reliance on the forward-looking statements contained in this news release, which speak only as of today’s date, or to make predictions based solely on historical financial performance. The Company disclaims any obligation to update forward-looking statements contained in this news release, whether as a result of new information, future events or otherwise, except as may be required by law.
FINANCIAL TABLES FOLLOW
QUARTERLY HIGHLIGHTS:Q4 2021Q3 2021$%Q4 2020$%Interest income15,543$ 15,539$ 4$ 0%14,748$ 795$ 5%Interest expense1,576 1,698 (122) -7%1,985 (409) -21% Net interest income13,967 13,841 126 1%12,763 1,204 9%Provision for loan losses504 300 204 68%700 (196) -28% Net interest income after provision for loan losses13,463 13,541 (78) -1%12,063 1,400 12%Non-interest income994 1,302 (308) -24%916 78 9%Non-interest expense10,009 10,513 (504) -5%10,416 (407) -4% Income before income taxes4,448 4,330 118 3%2,563 1,885 74%Income tax expense1,267 1,114 153 14%778 489 63% Net income3,181$ 3,216$ (35)$ -1%1,785$ 1,396$ 78%Diluted earnings per share0.38$ 0.39$ (0.01)$ -3%0.22$ 0.16$ 73%Net interest margin2.81%2.87%2.66%Efficiency ratio66.90%69.42%76.15%YEAR-TO-DATE HIGHLIGHTS:20212020$%Interest income61,293$ 53,019$ 8,274$ 16%Interest expense6,563 8,102 (1,539) -19% Net interest income54,730 44,917 9,813 22%Provision for loan losses4 4,880 (4,876) -100% Net interest income after provision for loan losses54,726 40,037 14,689 37%Non-interest income4,173 4,012 161 4%Non-interest expense40,437 37,809 2,628 7% Income before income taxes18,462 6,240 12,222 196%Income tax expense5,094 1,937 3,157 163% Net income13,368$ 4,303$ 9,065$ 211%Diluted earnings per share1.61$ 0.53$ 1.08$ 204%Net interest margin2.89%2.76%Efficiency ratio68.65%77.27%CALIFORNIA BANCORP AND SUBSIDIARYSELECTED FINANCIAL INFORMATION (UNAUDITED) – PROFITABILITY(Dollars in Thousands, Except Per Share Data)ChangeChange-6 Basis Points+13 Basis Points-862 Basis Points-252 Basis Points+15 Basis Points-925 Basis PointsChange
PERIOD-END HIGHLIGHTS:Q4 2021Q3 2021$%Q4 2020$%Total assets2,014,996$ 2,049,079$ (34,083)$ -2%1,905,779$ 109,217$ 6%Gross loans1,376,649 1,301,972 74,677 6%1,369,070 7,579 1%Deposits1,680,138 1,742,054 (61,916) -4%1,532,206 147,932 10%Tangible equity143,241 139,715 3,526 3%128,856 14,385 11%Tangible book value per share17.37$ 16.93$ 0.44$ 3%15.77$ 1.60$ 10%Tangible equity / total assets7.11%6.82%6.76%Gross loans / total deposits81.94%74.74%89.35%Noninterest-bearing deposits / total deposits45.90%45.39%43.93%QUARTERLY AVERAGEHIGHLIGHTS:Q4 2021Q3 2021$%Q4 2020$%Total assets2,054,490$ 1,985,894$ 68,596$ 3%1,993,661$ 60,829$ 3%Total earning assets1,971,558 1,912,697 58,861 3%1,910,656 60,902 3%Gross loans1,330,044 1,316,080 13,964 1%1,375,664 (45,620) -3%Deposits1,759,592 1,718,525 41,067 2%1,516,441 243,151 16%Tangible equity142,118 138,833 3,285 2%127,981 14,137 11%Tangible equity / total assets6.92%6.99%6.42%Gross loans / total deposits75.59%76.58%90.72%Noninterest-bearing deposits / total deposits45.24%45.17%44.68%YEAR-TO-DATE AVERAGEHIGHLIGHTS:20212020$%Total assets1,968,884$ 1,713,416$ 255,468$ 15%Total earning assets1,891,234 1,629,615 261,619 16%Gross loans1,368,960 1,219,324 149,636 12%Deposits1,664,352 1,308,564 355,788 27%Tangible equity136,623 126,343 10,280 8%Tangible equity / total assets6.94%7.37%Gross loans / total deposits82.25%93.18%Noninterest-bearing deposits / total deposits44.93%43.31%+162 Basis Points+56 Basis Points-1,093 Basis Points+197 Basis Points-43 Basis Points-7 Basis Points+7 Basis Points+50 Basis Points-99 Basis Points-1,513 Basis Points+29 Basis Points+35 Basis Points+51 Basis Points+720 Basis Points-741 Basis PointsChangeChangeChangeCALIFORNIA BANCORP AND SUBSIDIARYSELECTED FINANCIAL INFORMATION (UNAUDITED) – FINANCIAL POSITION(Dollars in Thousands, Except Per Share Data)ChangeChange
ALLOWANCE FOR LOAN LOSSES:12/31/2109/30/2106/30/2103/31/2112/31/20Balance, beginning of period13,571$ 13,240$ 14,577$ 14,111$ 13,385$ Provision for loan losses, quarterly504 300 (1,100) 300 700 Charge-offs, quarterly- – (278) – – Recoveries, quarterly6 31 41 166 26 Balance, end of period14,081$ 13,571$ 13,240$ 14,577$ 14,111$ NONPERFORMING ASSETS:12/31/2109/30/2106/30/2103/31/2112/31/20Loans accounted for on a non-accrual basis232$ 1,233$ 1,234$ 234$ 234$ Loans with principal or interest contractually past due 90 days or more and still accruing interest- – – – – Nonperforming loans232$ 1,233$ 1,234$ 234$ 234$ Other real estate owned- – – – – Nonperforming assets232$ 1,233$ 1,234$ 234$ 234$ Loans restructured and in compliance with modified terms- – – – – Nonperforming assets and restructured loans232$ 1,233$ 1,234$ 234$ 234$ Nonperforming loans by asset type: Commercial-$ -$ -$ -$ -$ Real estate other- 1,000 1,000 – – Real estate construction and land- – – – – SBA232 233 234 234 234 Other- – – – – Nonperforming loans232$ 1,233$ 1,234$ 234$ 234$ ASSET QUALITY:12/31/2109/30/2106/30/2103/31/2112/31/20Allowance for loan losses / gross loans1.02%1.04%0.98%0.99%1.03%Allowance for loan losses / nonperforming loans6069.40%1100.65%1072.93%6229.49%6030.34%Nonperforming assets / total assets0.01%0.06%0.07%0.01%0.01%Nonperforming loans / gross loans0.02%0.09%0.09%0.02%0.02%Net quarterly charge-offs / gross loans0.00%0.00%0.02%-0.01%0.00%CALIFORNIA BANCORP AND SUBSIDIARYSELECTED INTERIM FINANCIAL INFORMATION (UNAUDITED) – ASSET QUALITY(Dollars in Thousands)
Three months endedTwelve months ended12/31/2109/30/2112/31/2012/31/2112/31/20INTEREST INCOMELoans14,520$ 14,870$ 14,305$ 58,677$ 51,401$ Federal funds sold216 199 131 587 685 Investment securities807 470 312 2,029 933 Total interest income15,543 15,539 14,748 61,293 53,019 INTEREST EXPENSEDeposits937 1,152 1,359 4,418 6,341 Other639 546 626 2,145 1,761 Total interest expense1,576 1,698 1,985 6,563 8,102 Net interest income13,967 13,841 12,763 54,730 44,917 Provision for loan losses504 300 700 4 4,880 Net interest income after provision for loan losses13,463 13,541 12,063 54,726 40,037 NON-INTEREST INCOMEService charges and other fees1,038 905 662 3,222 2,949 Other non-interest income (44) 397 254 951 1,063 Total non-interest income994 1,302 916 4,173 4,012 NON-INTEREST EXPENSESalaries and benefits6,370 6,920 7,072 26,031 22,122 Premises and equipment1,320 1,372 1,125 5,098 4,755 Other2,319 2,221 2,219 9,308 10,932 Total non-interest expense10,009 10,513 10,416 40,437 37,809 Income before income taxes4,448 4,330 2,563 18,462 6,240 Income taxes1,267 1,114 778 5,094 1,937 NET INCOME3,181$ 3,216$ 1,785$ 13,368$ 4,303$ EARNINGS PER SHAREBasic earnings per share0.39$ 0.39$ 0.22$ 1.63$ 0.53$ Diluted earnings per share0.38$ 0.39$ 0.22$ 1.61$ 0.53$ Average common shares outstanding8,255,340 8,244,154 8,152,052 8,222,749 8,131,325 Average common and equivalent shares outstanding8,342,032 8,310,799 8,203,931 8,292,942 8,169,082 PERFORMANCE MEASURESReturn on average assets0.61%0.64%0.36%0.68%0.25%Return on average equity8.43%8.72%5.25%9.27%3.22%Return on average tangible equity8.88%9.19%5.55%9.78%3.41%Efficiency ratio66.90%69.42%76.15%68.65%77.27%CALIFORNIA BANCORP AND SUBSIDIARYINTERIM CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)(Dollars in Thousands, Except Per Share Data)
12/31/2109/30/2106/30/2103/31/2112/31/20ASSETSCash and due from banks4,539$ 22,424$ 26,159$ 18,475$ 22,485$ Federal funds sold465,917 578,626 366,347 342,305 396,032 Investment securities103,278 82,108 61,142 58,105 55,093 Loans: Commercial474,281 428,169 425,643 439,044 414,548 Real estate other697,212 664,202 616,451 573,520 550,690 Real estate construction and land43,194 41,312 41,558 45,550 37,193 SBA81,403 107,096 204,734 364,273 317,564 Other80,559 61,193 64,253 47,926 49,075 Loans, gross1,376,649 1,301,972 1,352,639 1,470,313 1,369,070 Unearned fee income1,688 760 (629) (1,569) 523 Allowance for loan losses(14,081) (13,571) (13,240) (14,577) (14,111) Loans, net1,364,256 1,289,161 1,338,770 1,454,167 1,355,482 Premises and equipment, net4,405 4,227 5,089 5,452 5,778 Bank owned life insurance24,412 24,247 24,085 23,920 23,718 Goodwill and core deposit intangible7,513 7,524 7,534 7,544 7,554 Accrued interest receivable and other assets40,676 40,762 39,937 37,620 39,637 Total assets2,014,996$ 2,049,079$ 1,869,063$ 1,947,588$ 1,905,779$ LIABILITIES Deposits: Demand noninterest-bearing771,205$ 790,646$ 791,580$ 742,574$ 673,100$ Demand interest-bearing37,250 39,679 36,268 33,022 34,869 Money market and savings717,480 750,112 674,390 670,517 623,603 Time154,203 161,617 177,534 183,602 200,634 Total deposits1,680,138 1,742,054 1,679,772 1,629,715 1,532,206 Junior subordinated debt securities54,028 59,009 24,745 24,729 24,994 Other borrowings106,387 79,536 – 134,819 189,043 Accrued interest payable and other liabilities23,689 21,241 20,805 19,147 23,126 Total liabilities1,864,242 1,901,840 1,725,322 1,808,410 1,769,369 SHAREHOLDERS’ EQUITYCommon stock109,473 109,009 108,417 108,430 107,948 Retained earnings41,189 38,008 34,792 30,630 27,821 Accumulated other comprehensive (loss)92 222 532 118 641 Total shareholders’ equity150,754 147,239 143,741 139,178 136,410 Total liabilities and shareholders’ equity2,014,996$ 2,049,079$ 1,869,063$ 1,947,588$ 1,905,779$ – – – – – CAPITAL ADEQUACYTier I leverage ratio7.23%7.29%7.53%7.46%7.49%Tier I risk-based capital ratio8.62%9.17%9.35%9.47%10.11%Total risk-based capital ratio12.75%13.92%11.93%12.34%13.22%Total equity/ total assets7.48%7.19%7.69%7.15%7.16%Book value per share18.28$ 17.85$ 17.47$ 16.99$ 16.69$ Common shares outstanding8,246,300 8,250,109 8,229,116 8,189,598 8,171,734 CALIFORNIA BANCORP AND SUBSIDIARYINTERIM CONSOLIDATED BALANCE SHEETS (UNAUDITED)(Dollars in Thousands)
Three months ended December 31,Three months ended September 30, YieldsInterestYieldsInterest AverageorIncome/AverageorIncome/ BalanceRatesExpenseBalanceRatesExpenseASSETSInterest earning assets: Loans (1) 1,330,044$ 4.33%14,520$ 1,316,080$ 4.48%14,870$ Federal funds sold536,503 0.16%216 530,806 0.15%199 Investment securities105,011 3.05%807 65,811 2.83%470 Total interest earning assets1,971,558 3.13%15,543 1,912,697 3.22%15,539 Noninterest-earning assets: Cash and due from banks18,886 18,627 All other assets (2)64,046 54,570 TOTAL 2,054,490$ 1,985,894$ LIABILITIES AND SHAREHOLDERS’ EQUITYInterest-bearing liabilities: Deposits: Demand 37,379$ 0.10%9$ 36,696$ 0.09%8$ Money market and savings 766,826 0.40%769 735,785 0.52%961 Time159,420 0.40%159 169,849 0.43%183 Other122,722 2.07%639 102,287 2.12%546 Total interest-bearing liabilities1,086,347 0.58%1,576 1,044,617 0.64%1,698 Noninterest-bearing liabilities: Demand deposits795,967 776,195 Accrued expenses and other liabilities22,539 18,719 Shareholders’ equity149,637 146,363 TOTAL2,054,490$ 1,985,894$ Net interest income and margin (3)2.81%13,967$ 2.87%13,841$ (1) Nonperforming loans are included in average loan balances. No adjustment has been made for these loans in the calculation of yields. Interest income on loans includes amortization of net deferred loan fees of $125,000 and $1.0 million, respectively.(2) Other noninterest-earning assets includes the allowance for loan losses of $13.6 million and $13.3 million, respectively.(3) Net interest margin is net interest income divided by total interest-earning assets.CALIFORNIA BANCORP AND SUBSIDIARYINTERIM CONSOLIDATED AVERAGE BALANCE SHEET AND YIELD DATA (UNAUDITED)(Dollars in Thousands)20212021
Three months ended December 31, YieldsInterestYieldsInterest AverageorIncome/AverageorIncome/ BalanceRatesExpenseBalanceRatesExpenseASSETSInterest earning assets: Loans (1) 1,330,044$ 4.33%14,520$ 1,375,664$ 4.14%14,305$ Federal funds sold536,503 0.16%216 480,790 0.11%131 Investment securities105,011 3.05%807 54,202 2.29%312 Total interest earning assets1,971,558 3.13%15,543 1,910,656 3.07%14,748 Noninterest-earning assets: Cash and due from banks18,886 20,616 All other assets (2)64,046 62,389 TOTAL 2,054,490$ 1,993,661$ LIABILITIES AND SHAREHOLDERS’ EQUITYInterest-bearing liabilities: Deposits: Demand 37,379$ 0.10%9$ 33,674$ 0.13%11$ Money market and savings 766,826 0.40%769 604,578 0.74%1,118 Time159,420 0.40%159 200,606 0.46%230 Other122,722 2.07%639 318,570 0.78%626 Total interest-bearing liabilities1,086,347 0.58%1,576 1,157,428 0.68%1,985 Noninterest-bearing liabilities: Demand deposits795,967 677,583 Accrued expenses and other liabilities22,539 23,466 Shareholders’ equity149,637 135,184 TOTAL2,054,490$ 1,993,661$ Net interest income and margin (3)2.81%13,967$ 2.66%12,763$ (1) Nonperforming loans are included in average loan balances. No adjustment has been made for these loans in the calculation of yields. Interest income on loans includes amortization of net deferred loan fees of $125,000 and $494,000, respectively.(2) Other noninterest-earning assets includes the allowance for loan losses of 13.6 million and $13.4 million, respectively.(3) Net interest margin is net interest income divided by total interest-earning assets.CALIFORNIA BANCORP AND SUBSIDIARYINTERIM CONSOLIDATED AVERAGE BALANCE SHEET AND YIELD DATA (UNAUDITED)(Dollars in Thousands)20212020
Twelve months ended December 31, YieldsInterestYieldsInterest AverageorIncome/AverageorIncome/ BalanceRatesExpenseBalanceRatesExpenseASSETSInterest earning assets: Loans (1) 1,368,960$ 4.29%58,677$ 1,219,324$ 4.22%51,401$ Federal funds sold450,898 0.13%587 371,476 0.18%685 Investment securities71,376 2.84%2,029 38,815 2.40%933 Total interest earning assets1,891,234 3.24%61,293 1,629,615 3.25%53,019 Noninterest-earning assets: Cash and due from banks17,642 20,810 All other assets (2)60,008 62,991 TOTAL 1,968,884$ 1,713,416$ LIABILITIES AND SHAREHOLDERS’ EQUITYInterest-bearing liabilities: Deposits: Demand 35,623$ 0.11%38$ 28,559$ 0.13%36$ Money market and savings 705,621 0.51%3,627 547,592 0.88%4,795 Time175,240 0.43%753 165,630 0.91%1,510 Other139,011 1.54%2,145 249,474 0.71%1,761 Total interest-bearing liabilities1,055,495 0.62%6,563 991,255 0.82%8,102 Noninterest-bearing liabilities: Demand deposits747,868 566,783 Accrued expenses and other liabilities21,363 21,843 Shareholders’ equity144,158 133,535 TOTAL1,968,884$ 1,713,416$ Net interest income and margin (3)2.89%54,730$ 2.76%44,917$ (1) Nonperforming loans are included in average loan balances. No adjustment has been made for these loans in the calculation of yields. Interest income on loans includes amortization of net deferred loan fees of $3.4 million and $1.6 million, respectively.(2) Other noninterest-earning assets includes the allowance for loan losses of $13.9 million and $12.3 million, respectively.(3) Net interest margin is net interest income divided by total interest-earning assets.CALIFORNIA BANCORP AND SUBSIDIARYINTERIM CONSOLIDATED AVERAGE BALANCE SHEET AND YIELD DATA (UNAUDITED)(Dollars in Thousands)20212020
REVENUE:Q4 2021Q3 2021Q2 2021Q1 2021Q4 2020Net interest income13,967$ 13,841$ 13,586$ 13,336$ 12,763$ Non-interest income994 1,302 956 921 916 Total revenue14,961$ 15,143$ 14,542$ 14,257$ 13,679$ PPP RELATED DEFERRED FEESAmortizationDeferred AND COSTS:of DeferredBalance2021 Program2020 ProgramTotalBalanceRemainingPPP fees4,479$ 9,086$ 13,565$ 11,429$ 2,136$ PPP capitalized loan origination costs540 2,451 2,991 2,650 341$ Net PPP fees3,939$ 6,635$ 10,574$ 8,779$ 1,795$ IMPACT OF PPP ACTIVITY REFLECTED IN NET INTEREST INCOME:Q4 2021Q3 2021Q2 2021Q1 2021Q4 2020PPP fees817$ 1,909$ 2,185$ 2,222$ 2,083$ PPP capitalized loan origination costs109 348 514 633 527 Net PPP fees708$ 1,561$ 1,671$ 1,589$ 1,556$ NON-INTEREST EXPENSE:Q4 2021Q3 2021Q2 2021Q1 2021Q4 2020Total non-interest expense10,009$ 10,513$ 9,835$ 10,080$ 10,416$ Total capitalized loan origination costs1,601 1,197 1,217 1,513 1,198 Total operating expenses, before capitalization of loan origination costs11,610$ 11,710$ 11,052$ 11,593$ 11,614$ GROSS LOANS:12/31/2109/30/2106/30/2103/31/2112/31/20Gross loans1,376,649$ 1,301,972$ 1,352,639$ 1,470,313$ 1,369,070$ PPP loans72,527 97,451 194,472 353,426 306,373 Gross loans, excluding PPP loans1,304,122$ 1,204,521$ 1,158,167$ 1,116,887$ 1,062,697$ CALIFORNIA BANCORP AND SUBSIDIARYINTERIM CONSOLIDATED NON GAAP DATA (UNAUDITED)(Dollars in Thousands)Deferred Balance at OriginationAmortization of Deferred Balance