SOUTHERN CALIFORNIA BANCORP REPORTS NET INCOME OF $4.9 MILLION FOR THE FIRST QUARTER OF 2024
Southern California Bancorp reported net income of $4.9 million for Q1 2024, a slight increase from the previous quarter, despite $547 thousand in after-tax merger expenses. The company is optimistic about the planned merger with California BanCorp, expecting increased efficiencies and cost savings. Loans decreased, emphasizing credit quality and expense management. Financial highlights include a net interest margin of 3.80%, $2.29 billion in total assets, and a tangible book value per common share of $13.69. While the efficiency ratio improved, non-performing assets increased to 0.84% of total assets, impacting the balance sheet. With capital exceeding regulatory minimums, the company is positioned for future growth.
Net income increased to $4.9 million in Q1 2024, a positive trend for the company.
The planned merger with California BanCorp is expected to enhance earnings and efficiency, creating potential for growth.
The company's capital exceeds regulatory minimums, indicating strong financial health.
Tangible book value per common share increased to $13.69, reflecting growth in shareholder value.
Non-performing assets increased to 0.84% of total assets, signaling potential credit quality concerns.
Net interest margin decreased to 3.80%, impacting the company's interest income.
Total assets decreased to $2.29 billion, potentially affecting the company's growth and lending capacity.
Expense management and staff reductions may lead to operational challenges or impact customer service.
The reported increase in net income to $4.9 million for Q1 of 2024 by Southern California Bancorp, when weighed against the previous quarter's results, underpins a steady quarter-over-quarter earnings growth. Yet, the quarter’s performance doesn't shine as brightly when pitted against last year’s considerably higher net income of $8.2 million for the same quarter. Investors should note the after-tax merger expenses embedded in this quarter’s figures, which reduced net income by $547 thousand. Adjusting for these expenses presents a more favorable earnings per share of $0.29.
The balance sheet contraction, signified by the decrease in total loans held for investment, suggests a de-risking strategy, potentially in response to a cautious economic outlook. Although the decrease in loans might alleviate the bank's reliance on wholesale funding, it could also signal a slower organic growth trajectory or a more conservative lending environment.
On the deposits front, the stability with a slight shift towards money market funds is noteworthy. As Southern California Bancorp strategically navigates the higher interest rate environment, cost of deposits and funds ticked up, which is a factor that can compress margins if not offset by higher yielding assets. This is evident in the net interest margin compressing to 3.80% from 4.05% in the prior quarter, a fact investors may weigh against future profitability.
In terms of asset quality, the rise in nonperforming assets ratio from 0.55% to 0.84% is a red flag that may raise concerns about credit risk. Particularly, the situation with a nonaccrual multifamily loan and its connection to an OREO property in Santa Monica might imply a specific issue within the real estate portfolio that stakeholders will want to monitor closely.
The bank's proactive management of expenses, illustrated by the reduction in full-time employee count and other cost-containing measures, is a prudent response to the economic headwinds anticipated ahead. The efficiency ratio excluding merger related expenses slightly improved from the previous quarter, reflecting potential operational effectiveness. This could position the bank favorably if these efficiencies translate into a competitive advantage in a challenging economic climate.
The oncoming merger with California BanCorp is poised to create economies of scale, which might contribute to accretive earnings over the longer horizon. However, mergers carry inherent integration risks and can lead to near-term volatility. Investors should consider how well Southern California Bancorp has historically managed acquisitions and their integration into existing operations to gauge the potential success of this merger.
Furthermore, the slight uptick in tangible book value per share suggests a modest strengthening of intrinsic value, albeit investors often look for a balance between solid book value growth and robust income generation.
The capital levels are above regulatory 'well-capitalized' minimums which is important for stakeholder confidence, particularly in uncertain economic times. However, the increase in the effective tax rate for the first quarter due to non-tax deductible portion of the merger expenses and other adjustments might indicate a higher tax burden going forward.
Moreover, investors should take note of the bank's strategic liquidation of available-for-sale debt securities in the fourth quarter of 2023 and its potential signaling of a shift in asset allocation towards higher-yielding assets. This could be indicative of broader industry trends as other financial institutions adjust to the evolving interest rate landscape.
Lastly, the decision to elect the three-year phase-in period under the regulatory capital rules to adjust for CECL transition adjustments exhibits the bank’s strategic approach to regulatory compliance and capital management, which could impact long-term capital planning.
San Diego, Calif., April 29, 2024 (GLOBE NEWSWIRE) -- Southern California Bancorp (“us,” “we,” “our,” or the “Company”) (NASDAQ: BCAL), the holding company for Bank of Southern California, N.A. (the “Bank”) announces its consolidated financial results for the first quarter of 2024.
Southern California Bancorp reported net income of
“I’m pleased to report a modest improvement in the Bank's quarter-over-quarter earnings and performance metrics, with net income increasing to
“Loans held for investment decreased by
“As interest rates may stay higher for longer, we continue to prioritize credit quality, growing low-cost deposits, and aggressively managing expenses. The latter of which includes reducing our full-time employee count as appropriate for our current needs."
First Quarter 2024 Highlights
- Net income of
$4.9 million , compared with$4.4 million in the prior quarter - Diluted earnings per share of
$0.26 , compared with$0.24 in the prior quarter - Net interest margin of
3.80% , compared with4.05% in the prior quarter; average loan yield of6.02% compared with6.08% in the prior quarter - Return on average assets of
0.86% , compared with0.75% in the prior quarter - Return on average common equity of
6.85% , compared with6.21% in the prior quarter - Efficiency ratio (non-GAAP1) of
68.4% ; efficiency ratio, excluding merger related expenses of65.9% , compared with68.3% in the prior quarter - Tangible book value per common share ("TBV") (non-GAAP1) of
$13.69 at March 31, 2024, up$0.13 from$13.56 at December 31, 2023 - Total assets of
$2.29 billion at March 31, 2024, compared with$2.36 billion at December 31, 2023 - Total loans, including loans held for sale of
$1.89 billion at March 31, 2024, compared with$1.96 billion at December 31, 2023 - Nonperforming assets to total assets ratio of
0.84% at March 31, 2024, compared with0.55% at December 31, 2023 - Total deposits of
$1.93 billion at March 31, 2024, decreased$13.0 million or0.7% , compared with$1.94 billion at December 31, 2023 - Noninterest-bearing demand deposits were
$652.0 million at March 31, 2024, representing33.8% of total deposits, compared with$675.1 million , or34.7% of total deposits at December 31, 2023 - Cost of deposits was
2.05% , compared with1.81% in the prior quarter - Cost of funds was
2.17% , compared with1.95% in the prior quarter - Bank's capital exceeds minimums to be “well-capitalized,” the highest regulatory capital category
First Quarter Operating Results
Net Income
Net income for the first quarter of 2024 was
Net Interest Income and Net Interest Margin
Net interest income for the first quarter of 2024 was
Net interest margin for the first quarter of 2024 was
Cost of funds for the first quarter of 2024 was 217 basis points, an increase of 22 basis points from 195 basis points in the prior quarter. The increase was primarily driven by a 26 basis point increase in the cost of average interest-bearing deposits, an increase in average interest-bearing deposits, and a decrease in average noninterest-bearing deposits. Average noninterest-bearing demand deposits decreased
Average total borrowings decreased
Provision for Credit Losses
The Company recorded a reversal of credit losses of
Noninterest Income (Loss)
The Company recorded noninterest income of
Noninterest Expense
Total noninterest expense for the first quarter of 2024 was
The
Efficiency ratio (non-GAAP1) for the first quarter of 2024 was
Income Tax
In the first quarter of 2024, the Company’s income tax expense was
Balance Sheet
Assets
Total assets at March 31, 2024 were
Loans
Total loans held for investment were
Deposits
Total deposits at March 31, 2024 were
Federal Home Loan Bank ("FHLB") and Liquidity
The Company was able to repay a portion of the high cost FHLB borrowings with the liquidity derived from loan prepayments and payoffs of loans during the first quarter of 2024. At March 31, 2024, the Company had overnight FHLB borrowings of
At March 31, 2024, the Company had available borrowing capacity from the FHLB secured line of credit of approximately
Asset Quality
Total non-performing assets increased to
Non-performing assets increased in the first quarter of 2024 with the addition of a
Total non-performing loans decreased to
Special mention loans increased by
The Company had no loans over 90 days past due that were accruing interest at March 31, 2024, and December 31, 2023.
There were no loan delinquencies (30-89 days past due, excluding nonaccrual loans) at March 31, 2024, compared to
The allowance for credit losses, which is comprised of the allowance for loan losses (ALL) and reserve for unfunded loan commitments, totaled
The allowance for loan losses was
Capital
Tangible book value (non-GAAP1) per common share at March 31, 2024, was
The Bank’s leverage capital ratio and total risk-based capital ratio were
ABOUT SOUTHERN CALIFORNIA BANCORP AND BANK OF SOUTHERN CALIFORNIA, N.A.
Southern California Bancorp (NASDAQ: BCAL) is a registered bank holding company headquartered in San Diego, California. Bank of Southern California, N.A., a national banking association chartered under the laws of the United States (the “Bank”) and regulated by the Office of Comptroller of the Currency, is a wholly owned subsidiary of Southern California Bancorp. Established in 2001 and headquartered in San Diego, California, the Bank offers a range of financial products and services to individuals, professionals, and small- to medium-sized businesses through its 13 branch offices serving Orange, Los Angeles, Riverside, San Diego, and Ventura counties, as well as the Inland Empire. The Bank's solutions-driven, relationship-based approach to banking provides accessibility to decision makers and enhances value through strong partnerships with its clients. Additional information is available at www.banksocal.com.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
In addition to historical information, this release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and other matters that are not historical facts. Examples of forward-looking statements include, among others, statements regarding expectations, plans or objectives for future operations, products or services, loan recoveries and the proposed merger (the “Merger”) of the Company and California BanCorp (“CBC”), as well as forecasts relating to financial and operating results or other measures of economic performance. Forward-looking statements reflect management’s current view about future events and involve risks and uncertainties that may cause actual results to differ from those expressed in the forward-looking statement or historical results. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and often include the words or phrases such as “aim,” “can,” “may,” “could,” “predict,” “should,” “will," “would,” “believe,” “anticipate,” “estimate,” “expect,” “hope,” “intend,” “plan,” “potential,” “project,” “will likely result,” “continue,” “seek,” “shall,” “possible,” “projection,” “optimistic,” and “outlook,” and variations of these words and similar expressions.
Some factors that could cause actual results to differ materially from historical or expected results include, among others: the risk factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (“SEC”); changes in real estate markets and general economic conditions, either nationally or locally in the areas in which the Company conducts business; the impact on financial markets from geopolitical conflicts; inflation, interest rate, market and monetary fluctuations; increases in competitive pressures among financial institutions and businesses offering similar products and services; higher than anticipated defaults in the Company’s loan portfolio; changes in management’s estimate of the adequacy of the allowance for credit losses; legislative or regulatory changes or changes in accounting principles, policies or guidelines; the impacts of recent bank failures; the occurrence of any event, change or other circumstances that could give rise to the right of the Company or CBC to terminate their agreement with respect to the Merger; the outcome of any legal proceedings that may be instituted against the Company or CBC; delays in completing the Merger; the failure to obtain necessary regulatory approvals (and the risk that such approvals impose conditions that could adversely affect the combined company or the expected benefits of the Merger); the failure to obtain shareholder approvals or to satisfy any of the other conditions to the Merger on a timely basis or at all; the ability to complete the Merger and integration of the Company and CBC successfully; costs being greater than anticipated; cost savings being less than anticipated; the risk that the Merger disrupts the business of the Company, CBC or both; difficulties in retaining senior management, employees or customers; and other factors that may affect the future results of the Company and CBC.
Additional information regarding these and other risks and uncertainties to which our business and future financial performance are subject is contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, and other documents the Company files with the SEC from time to time.
Any forward-looking statement made in this release is based only on information currently available to management and speaks only as of the date on which it is made. The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements or to conform such forward-looking statements to actual results or to changes in its opinions or expectations, except as required by law.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the Merger, the Company will file with the SEC a Registration Statement on Form S-4 that will include a joint proxy statement of the Company and CBC and a prospectus of the Company, as well as other relevant documents concerning the proposed transaction. Certain matters in respect of the Merger will be submitted to the Company’s and CBC’s shareholders for their consideration. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
INVESTORS AND SHAREHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER WHEN THEY BECOME AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE MERGER BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Investors will be able to obtain a free copy of the definitive joint proxy statement/prospectus, as well as other filings containing information about the Company and CBC, without charge, at the SEC’s website, www.sec.gov. Copies of the joint proxy statement/prospectus and the filings with the SEC that will be incorporated by reference in the joint proxy statement/prospectus can also be obtained, without charge, in the “Investor Relations” section of the Company’s website at www.banksocal.com (for the Company’s filings) and in the “Investor Relations” section of CBC’s website, www.californiabankofcommerce.com (for CBC’s filings).
PARTICIPANTS IN THE SOLICITATION
The Company, CBC and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of the Company and CBC in connection with the Merger. Information regarding the Company’s directors and executive officers and their ownership of Company common stock is available in the Company’s definitive proxy statement for its 2024 annual meeting of shareholders filed with the SEC on April 18, 2024 and other documents filed by the Company with the SEC. Information regarding CBC’s directors and executive officers and their ownership of CBC common stock is available in CBC’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 21, 2024 and other documents filed by CBC with the SEC. Other information regarding the participants in the proxy solicitation and their ownership of common stock will be contained in the joint proxy statement/prospectus relating to the Merger. Free copies of these documents may be obtained as described in the preceding paragraph.
1 Reconciliations of non–U.S. generally accepted accounting principles (“GAAP”) measures are set forth at the end of this press release.
Southern California Bancorp and Subsidiary
Financial Highlights (Unaudited)
| At or for the Three Months Ended | ||||||||||||
| March 31, 2024 | December 31, 2023 | March 31, 2023 | ||||||||||
| EARNINGS | ($ in thousands except share and per share data) | |||||||||||
| Net interest income | $ | 20,494 | $ | 22,559 | $ | 24,892 | ||||||
| (Reversal of) provision for credit losses | $ | (331 | ) | $ | 824 | $ | 202 | |||||
| Noninterest income (loss) | $ | 1,413 | $ | (102 | ) | $ | 1,570 | |||||
| Noninterest expense | $ | 14,981 | $ | 15,339 | $ | 15,019 | ||||||
| Income tax expense | $ | 2,322 | $ | 1,882 | $ | 3,017 | ||||||
| Net income | $ | 4,935 | $ | 4,412 | $ | 8,224 | ||||||
| Pre-tax pre-provision income (1) | $ | 6,926 | $ | 7,118 | $ | 11,443 | ||||||
| Adjusted pre-tax pre-provision income (1) | $ | 7,475 | $ | 7,118 | $ | 11,443 | ||||||
| Diluted earnings per share | $ | 0.26 | $ | 0.24 | $ | 0.44 | ||||||
| Shares outstanding at period end | 18,527,178 | 18,369,115 | 18,271,194 | |||||||||
| PERFORMANCE RATIOS | ||||||||||||
| Return on average assets | 0.86 | % | 0.75 | % | 1.46 | % | ||||||
| Adjusted return on average assets (1) | 0.95 | % | 0.75 | % | 1.46 | % | ||||||
| Return on average common equity | 6.85 | % | 6.21 | % | 12.72 | % | ||||||
| Adjusted return on average common equity (1) | 7.61 | % | 6.21 | % | 12.72 | % | ||||||
| Yield on total loans | 6.02 | % | 6.08 | % | 5.78 | % | ||||||
| Yield on interest earning assets | 5.79 | % | 5.85 | % | 5.53 | % | ||||||
| Cost of deposits | 2.05 | % | 1.81 | % | 0.80 | % | ||||||
| Cost of funds | 2.17 | % | 1.95 | % | 0.88 | % | ||||||
| Net interest margin | 3.80 | % | 4.05 | % | 4.71 | % | ||||||
| Efficiency ratio (1) | 68.38 | % | 68.30 | % | 56.76 | % | ||||||
| Adjusted efficiency ratio (1) | 65.88 | % | 68.30 | % | 56.76 | % | ||||||
| As of | ||||||||
| March 31, 2024 | December 31, 2023 | |||||||
| CAPITAL | ($ in thousands except share and per share data) | |||||||
| Tangible equity to tangible assets (1) | 11.27 | % | 10.73 | % | ||||
| Book value (BV) per common share | $ | 15.79 | $ | 15.69 | ||||
| Tangible BV per common share (1) | $ | 13.69 | $ | 13.56 | ||||
| ASSET QUALITY | ||||||||
| Allowance for loan losses (ALL) | $ | 22,254 | $ | 22,569 | ||||
| Reserve for unfunded loan commitments | $ | 916 | $ | 933 | ||||
| Allowance for credit losses (ACL) | $ | 23,170 | $ | 23,502 | ||||
| Allowance for loan losses to nonperforming loans | 3.62x | 1.74x | ||||||
| ALL to total loans held for investment | 1.18 | % | 1.15 | % | ||||
| ACL to total loans held for investment | 1.23 | % | 1.20 | % | ||||
| Special mention loans | $ | 39,593 | $ | 2,996 | ||||
| Special mention loans to total loans held for investment | 2.10 | % | 0.15 | % | ||||
| Substandard loans | $ | 11,299 | $ | 19,502 | ||||
| Substandard loans to total loans held for investment | 0.60 | % | 1.00 | % | ||||
| Nonperforming loans | $ | 6,153 | $ | 13,004 | ||||
| Nonperforming loans total loans held for investment | 0.33 | % | 0.66 | % | ||||
| Other real estate owned, net | $ | 13,114 | $ | — | ||||
| Nonperforming assets | $ | 19,267 | $ | 13,004 | ||||
| Nonperforming assets to total assets | 0.84 | % | 0.55 | % | ||||
| END OF PERIOD BALANCES | ||||||||
| Total loans, including loans held for sale | $ | 1,886,085 | $ | 1,964,791 | ||||
| Total assets | $ | 2,289,715 | $ | 2,360,252 | ||||
| Deposits | $ | 1,930,544 | $ | 1,943,556 | ||||
| Loans to deposits | 97.7 | % | 101.1 | % | ||||
| Shareholders' equity | $ | 292,499 | $ | 288,152 | ||||
(1) Non-GAAP measure. See – GAAP to Non-GAAP reconciliation.
| At or for the Three Months Ended | ||||||||||||
| ALLOWANCE for CREDIT LOSSES | March 31, 2024 | December 31, 2023 | March 31, 2023 | |||||||||
| ($ in thousands) | ||||||||||||
| Allowance for loan losses | ||||||||||||
| Balance at beginning of period | $ | 22,569 | $ | 22,705 | $ | 17,099 | ||||||
| Adoption of ASU 2016-13 (1) | — | — | 5,027 | |||||||||
| (Reversal of) provision for credit losses | (314 | ) | 1,131 | 278 | ||||||||
| Charge-offs | (1 | ) | (1,267 | ) | (27 | ) | ||||||
| Recoveries | — | — | 14 | |||||||||
| Net charge-offs | (1 | ) | (1,267 | ) | (13 | ) | ||||||
| Balance, end of period | $ | 22,254 | $ | 22,569 | $ | 22,391 | ||||||
| Reserve for unfunded loan commitments (2) | ||||||||||||
| Balance, beginning of period | $ | 933 | $ | 1,240 | $ | 1,310 | ||||||
| Adoption of ASU 2016-13 (1) | — | — | 439 | |||||||||
| Reversal of credit losses | (17 | ) | (307 | ) | (76 | ) | ||||||
| Balance, end of period | 916 | 933 | 1,673 | |||||||||
| Allowance for credit losses | $ | 23,170 | $ | 23,502 | $ | 24,064 | ||||||
| ALL to total loans held for investment | 1.18 | % | 1.15 | % | 1.18 | % | ||||||
| ACL to total loans held for investment | 1.23 | % | 1.20 | % | 1.27 | % | ||||||
| Net (charge-offs) recoveries to average loans held-for-investment | 0.00 | % | (0.26 | )% | 0.00 | % | ||||||
(1) Represents the impact of adopting ASU 2016-13, Financial Instruments - Credit Losses on January 1, 2023. As a result of adopting ASU 2016-13, our methodology to compute our allowance for credit losses is based on a current expected credit loss methodology, rather than the previously applied incurred loss methodology.
(2) Included in "Accrued interest and other liabilities" on the consolidated balance sheet.
Southern California Bancorp and Subsidiary
Balance Sheets (Unaudited)
| March 31, 2024 | December 31, 2023 | |||||||
| ASSETS | ($ in thousands) | |||||||
| Cash and due from banks | $ | 53,695 | $ | 33,008 | ||||
| Federal funds sold & interest-bearing balances | 32,847 | 53,785 | ||||||
| Total cash and cash equivalents | 86,542 | 86,793 | ||||||
| Debt securities available-for-sale, at fair value (amortized cost of | 126,957 | 130,035 | ||||||
| Debt securities held-to-maturity, at cost (fair value of | 53,533 | 53,616 | ||||||
| Loans held for sale | 2,803 | 7,349 | ||||||
| Loans held for investment: | ||||||||
| Construction & land development | 242,098 | 243,521 | ||||||
| 1-4 family residential | 149,361 | 143,903 | ||||||
| Multifamily | 183,846 | 221,247 | ||||||
| Other commercial real estate | 1,025,381 | 1,024,243 | ||||||
| Commercial & industrial | 279,788 | 320,142 | ||||||
| Other consumer | 2,808 | 4,386 | ||||||
| Total loans held for investment | 1,883,282 | 1,957,442 | ||||||
| Allowance for credit losses - loans | (22,254 | ) | (22,569 | ) | ||||
| Total loans held for investment, net | 1,861,028 | 1,934,873 | ||||||
| Restricted stock at cost | 16,066 | 16,055 | ||||||
| Premises and equipment | 12,990 | 13,270 | ||||||
| Right of use asset | 8,711 | 9,291 | ||||||
| Other real estate owned, net | 13,114 | — | ||||||
| Goodwill | 37,803 | 37,803 | ||||||
| Core deposit intangible | 1,130 | 1,195 | ||||||
| Bank owned life insurance | 39,179 | 38,918 | ||||||
| Deferred taxes, net | 10,204 | 11,137 | ||||||
| Accrued interest and other assets | 19,655 | 19,917 | ||||||
| Total assets | $ | 2,289,715 | $ | 2,360,252 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Deposits: | ||||||||
| Noninterest-bearing demand | $ | 651,991 | $ | 675,098 | ||||
| Interest-bearing NOW accounts | 358,598 | 381,943 | ||||||
| Money market and savings accounts | 661,835 | 636,685 | ||||||
| Time deposits | 258,120 | 249,830 | ||||||
| Total deposits | 1,930,544 | 1,943,556 | ||||||
| Borrowings | 44,889 | 102,865 | ||||||
| Operating lease liability | 11,440 | 12,117 | ||||||
| Accrued interest and other liabilities | 10,343 | 13,562 | ||||||
| Total liabilities | 1,997,216 | 2,072,100 | ||||||
| Shareholders' Equity: | ||||||||
| Common stock - 50,000,000 shares authorized, no par value; issued and outstanding 18,527,178 at March 31, 2024 and 18,369,115 at December 31, 2023) | 223,128 | 222,036 | ||||||
| Retained earnings | 75,510 | 70,575 | ||||||
| Accumulated other comprehensive loss - net of taxes | (6,139 | ) | (4,459 | ) | ||||
| Total shareholders' equity | 292,499 | 288,152 | ||||||
| Total liabilities and shareholders' equity | $ | 2,289,715 | $ | 2,360,252 | ||||
Southern California Bancorp and Subsidiary
Income Statements - Quarterly and Year-to-Date (Unaudited)
| Three Months Ended | ||||||||||||
| March 31, 2024 | December 31, 2023 | March 31, 2023 | ||||||||||
| ($ in thousands except share and per share data) | ||||||||||||
| INTEREST AND DIVIDEND INCOME | ||||||||||||
| Interest and fees on loans | $ | 28,584 | $ | 29,968 | $ | 27,019 | ||||||
| Interest on debt securities | 1,213 | 991 | 731 | |||||||||
| Interest on tax-exempted debt securities | 306 | 353 | 487 | |||||||||
| Interest and dividends from other institutions | 1,161 | 1,257 | 972 | |||||||||
| Total interest and dividend income | 31,264 | 32,569 | 29,209 | |||||||||
| INTEREST EXPENSE | ||||||||||||
| Interest on NOW, savings, and money market accounts | 6,770 | 6,606 | 2,903 | |||||||||
| Interest on time deposits | 3,021 | 2,331 | 975 | |||||||||
| Interest on borrowings | 979 | 1,073 | 439 | |||||||||
| Total interest expense | 10,770 | 10,010 | 4,317 | |||||||||
| Net interest income | 20,494 | 22,559 | 24,892 | |||||||||
| (Reversal of ) provision for credit losses (1) | (331 | ) | 824 | 202 | ||||||||
| Net interest income after provision for credit losses | 20,825 | 21,735 | 24,690 | |||||||||
| NONINTEREST INCOME (LOSS) | ||||||||||||
| Service charges and fees on deposit accounts | 525 | 507 | 439 | |||||||||
| Gain on sale of loans | 415 | — | 808 | |||||||||
| Bank owned life insurance income | 261 | 253 | 223 | |||||||||
| Servicing and related income on loans | 73 | 17 | 75 | |||||||||
| Loss on sale of debt securities | — | (1,008 | ) | — | ||||||||
| Other charges and fees | 139 | 129 | 25 | |||||||||
| Total noninterest income (loss) | 1,413 | (102 | ) | 1,570 | ||||||||
| NONINTEREST EXPENSE | ||||||||||||
| Salaries and employee benefits | 9,610 | 9,598 | 10,241 | |||||||||
| Occupancy and equipment expenses | 1,452 | 1,678 | 1,447 | |||||||||
| Data processing | 1,150 | 1,158 | 1,056 | |||||||||
| Legal, audit and professional | 516 | 1,161 | 785 | |||||||||
| Regulatory assessments | 387 | 320 | 452 | |||||||||
| Director and shareholder expenses | 203 | 207 | 213 | |||||||||
| Merger and related expenses | 549 | — | — | |||||||||
| Core deposit intangible amortization | 65 | 80 | 91 | |||||||||
| Other expense | 1,049 | 1,137 | 734 | |||||||||
| Total noninterest expense | 14,981 | 15,339 | 15,019 | |||||||||
| Income before income taxes | 7,257 | 6,294 | 11,241 | |||||||||
| Income tax expense | 2,322 | 1,882 | 3,017 | |||||||||
| Net income | $ | 4,935 | $ | 4,412 | $ | 8,224 | ||||||
| Net income per share - basic | $ | 0.27 | $ | 0.24 | $ | 0.46 | ||||||
| Net income per share - diluted | $ | 0.26 | $ | 0.24 | $ | 0.44 | ||||||
| Weighted average common share-diluted | 18,801,716 | 18,727,519 | 18,620,791 | |||||||||
| Pre-tax, pre-provision income (2) | $ | 6,926 | $ | 7,118 | $ | 11,443 | ||||||
(1) Included reversal of provision for unfunded loan commitments of
(2) Non-GAAP measure. See – GAAP to Non-GAAP reconciliation.
Southern California Bancorp and Subsidiary
Average Balance Sheets and Yield Analysis
(Unaudited)
| Three Months Ended | ||||||||||||||||||||||||||||||||||||
| March 31, 2024 | December 31, 2023 | March 31, 2023 | ||||||||||||||||||||||||||||||||||
| Average Balance | Income/ Expense | Yield/ Cost | Average Balance | Income/ Expense | Yield/ Cost | Average Balance | Income/ Expense | Yield/ Cost | ||||||||||||||||||||||||||||
| Assets | ($ in thousands) | |||||||||||||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||||||||||||||
| Total loans | $ | 1,909,271 | $ | 28,584 | 6.02 | % | $ | 1,954,396 | $ | 29,968 | 6.08 | % | $ | 1,894,234 | $ | 27,019 | 5.78 | % | ||||||||||||||||||
| Taxable debt securities | 126,803 | 1,213 | 3.85 | % | 113,375 | 991 | 3.47 | % | 97,023 | 731 | 3.06 | % | ||||||||||||||||||||||||
| Tax-exempt debt securities (1) | 53,842 | 306 | 2.89 | % | 58,644 | 353 | 3.02 | % | 74,188 | 487 | 3.37 | % | ||||||||||||||||||||||||
| Deposits in other financial institutions | 54,056 | 716 | 5.33 | % | 56,313 | 759 | 5.35 | % | 37,611 | 457 | 4.93 | % | ||||||||||||||||||||||||
| Fed funds sold/resale agreements | 9,771 | 134 | 5.52 | % | 9,008 | 125 | 5.51 | % | 25,306 | 287 | 4.60 | % | ||||||||||||||||||||||||
| Restricted stock investments and other bank stock | 16,412 | 311 | 7.62 | % | 16,394 | 373 | 9.03 | % | 14,902 | 228 | 6.20 | % | ||||||||||||||||||||||||
| Total interest-earning assets | 2,170,155 | 31,264 | 5.79 | % | 2,208,130 | 32,569 | 5.85 | % | 2,143,264 | 29,209 | 5.53 | % | ||||||||||||||||||||||||
| Total noninterest-earning assets | 139,672 | 137,193 | 134,707 | |||||||||||||||||||||||||||||||||
| Total assets | $ | 2,309,827 | $ | 2,345,323 | $ | 2,277,971 | ||||||||||||||||||||||||||||||
| Liabilities and Shareholders' Equity | ||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||
| Interest-bearing NOW accounts | $ | 359,784 | $ | 2,045 | 2.29 | % | $ | 362,579 | $ | 1,860 | 2.04 | % | $ | 206,785 | $ | 316 | 0.62 | % | ||||||||||||||||||
| Money market and savings accounts | 648,640 | 4,725 | 2.93 | % | 669,391 | 4,746 | 2.81 | % | 685,368 | 2,587 | 1.53 | % | ||||||||||||||||||||||||
| Time deposits | 255,474 | 3,021 | 4.76 | % | 208,700 | 2,331 | 4.43 | % | 152,613 | 975 | 2.59 | % | ||||||||||||||||||||||||
| Total interest-bearing deposits | 1,263,898 | 9,791 | 3.12 | % | 1,240,670 | 8,937 | 2.86 | % | 1,044,766 | 3,878 | 1.51 | % | ||||||||||||||||||||||||
| Borrowings: | ||||||||||||||||||||||||||||||||||||
| FHLB advances | 50,593 | 708 | 5.63 | % | 56,380 | 802 | 5.64 | % | 14,356 | 168 | 4.75 | % | ||||||||||||||||||||||||
| Subordinated debt | 17,878 | 271 | 6.10 | % | 17,854 | 271 | 6.02 | % | 17,783 | 271 | 6.18 | % | ||||||||||||||||||||||||
| Total borrowings | 68,471 | 979 | 5.75 | % | 74,234 | 1,073 | 5.73 | % | 32,139 | 439 | 5.54 | % | ||||||||||||||||||||||||
| Total interest-bearing liabilities | 1,332,369 | 10,770 | 3.25 | % | 1,314,904 | 10,010 | 3.02 | % | 1,076,905 | 4,317 | 1.63 | % | ||||||||||||||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||
| Noninterest-bearing deposits (2) | 661,265 | 721,169 | 915,160 | |||||||||||||||||||||||||||||||||
| Other liabilities | 26,430 | 27,178 | 23,788 | |||||||||||||||||||||||||||||||||
| Shareholders' equity | 289,763 | 282,072 | 262,118 | |||||||||||||||||||||||||||||||||
| Total Liabilities and Shareholders' Equity | $ | 2,309,827 | $ | 2,345,323 | $ | 2,277,971 | ||||||||||||||||||||||||||||||
| Net interest spread | 2.54 | % | 2.83 | % | 3.90 | % | ||||||||||||||||||||||||||||||
| Net interest income and margin | $ | 20,494 | 3.80 | % | $ | 22,559 | 4.05 | % | $ | 24,892 | 4.71 | % | ||||||||||||||||||||||||
| Cost of deposits | 2.05 | % | 1.81 | % | 0.80 | % | ||||||||||||||||||||||||||||||
| Cost of funds | 2.17 | % | 1.95 | % | 0.88 | % | ||||||||||||||||||||||||||||||
(1) Tax-exempt debt securities yields are presented on a tax equivalent basis using a
(2) Average noninterest-bearing deposits represent
Southern California Bancorp and Subsidiary
GAAP to Non-GAAP Reconciliation
(Unaudited)
The following tables present a reconciliation of non-GAAP financial measures to GAAP measures for: (1) adjusted net income, (2) efficiency ratio, (3) adjusted efficiency ratio, (4) pre-tax pre-provision income, (5) adjusted pre-tax pre-provision income, (6) average tangible common equity, (7) adjusted return on average assets, (8) adjusted return on average equity, (9) return on average tangible common equity, (10) adjusted return on average tangible common equity, (11) tangible common equity, (12) tangible assets, (13) tangible common equity to tangible asset ratio, and (14) tangible book value per share. We believe the presentation of certain non-GAAP financial measures provides useful information to assess our consolidated financial condition and consolidated results of operations and to assist investors in evaluating our financial results relative to our peers. These non-GAAP financial measures complement our GAAP reporting and are presented below to provide investors and others with information that we use to manage the business each period. Because not all companies use identical calculations, the presentation of these non-GAAP financial measures may not be comparable to other similarly titled measures used by other companies. These non-GAAP measures should be taken together with the corresponding GAAP measures and should not be considered a substitute of the GAAP measures.
| Three Months Ended | ||||||||||||
| March 31, 2024 | December 31, 2023 | March 31, 2023 | ||||||||||
| ($ in thousands) | ||||||||||||
| Adjusted net income | ||||||||||||
| Net income | $ | 4,935 | $ | 4,412 | $ | 8,224 | ||||||
| Add: After-tax merger and related expenses (1) | 547 | — | — | |||||||||
| Adjusted net income (non-GAAP) | $ | 5,482 | $ | 4,412 | $ | 8,224 | ||||||
| Efficiency Ratio | ||||||||||||
| Noninterest expense | $ | 14,981 | $ | 15,339 | $ | 15,019 | ||||||
| Deduct: Merger and related expenses | 549 | — | — | |||||||||
| Adjusted noninterest expense | 14,432 | 15,339 | 15,019 | |||||||||
| Net interest income | 20,494 | 22,559 | 24,892 | |||||||||
| Noninterest income (loss) | 1,413 | (102 | ) | 1,570 | ||||||||
| Total net interest income and noninterest income | $ | 21,907 | $ | 22,457 | $ | 26,462 | ||||||
| Efficiency ratio (non-GAAP) | 68.4 | % | 68.3 | % | 56.8 | % | ||||||
| Adjusted efficiency ratio (non-GAAP) | 65.9 | % | 68.3 | % | 56.8 | % | ||||||
| Pre-tax pre-provision income | ||||||||||||
| Net interest income | $ | 20,494 | $ | 22,559 | $ | 24,892 | ||||||
| Noninterest income (loss) | 1,413 | (102 | ) | 1,570 | ||||||||
| Total net interest income and noninterest income | 21,907 | 22,457 | 26,462 | |||||||||
| Less: Noninterest expense | 14,981 | 15,339 | 15,019 | |||||||||
| Pre-tax pre-provision income (non-GAAP) | 6,926 | 7,118 | 11,443 | |||||||||
| Add: Merger and related expenses | 549 | — | — | |||||||||
| Adjusted pre-tax pre-provision income (non-GAAP) | $ | 7,475 | $ | 7,118 | $ | 11,443 | ||||||
| (1) After-tax merger and related expenses and litigation settlements, net are presented using a | ||||||||||||
| Return on Average Assets, Equity, and Tangible Equity | ||||||||||||
| Net income | $ | 4,935 | $ | 4,412 | $ | 8,224 | ||||||
| Adjusted net income (non-GAAP) | $ | 5,482 | $ | 4,412 | $ | 8,224 | ||||||
| Average assets | $ | 2,309,827 | $ | 2,345,323 | $ | 2,277,971 | ||||||
| Average shareholders' equity | 289,763 | 282,072 | 262,118 | |||||||||
| Less: Average intangible assets | 38,964 | 39,035 | 39,340 | |||||||||
| Average tangible common equity (non-GAAP) | $ | 250,799 | $ | 243,037 | $ | 222,778 | ||||||
| Return on average assets | 0.86 | % | 0.75 | % | 1.46 | % | ||||||
| Adjusted return on average assets (non-GAAP) | 0.95 | % | 0.75 | % | 1.46 | % | ||||||
| Return on average equity | 6.85 | % | 6.21 | % | 12.72 | % | ||||||
| Adjusted return on average equity (non-GAAP) | 7.61 | % | 6.21 | % | 12.72 | % | ||||||
| Return on average tangible common equity (non-GAAP) | 7.91 | % | 7.20 | % | 14.97 | % | ||||||
| Adjusted return on average tangible common equity (non-GAAP) | 8.79 | % | 7.20 | % | 14.97 | % | ||||||
| March 31, 2024 | December 31, 2023 | |||||||
| ($ in thousands except share and per share data) | ||||||||
| Tangible Common Equity Ratio/Tangible Book Value Per Share | ||||||||
| Shareholders' equity | $ | 292,499 | $ | 288,152 | ||||
| Less: Intangible assets | 38,933 | 38,998 | ||||||
| Tangible common equity (non-GAAP) | $ | 253,566 | $ | 249,154 | ||||
| Total assets | $ | 2,289,715 | $ | 2,360,252 | ||||
| Less: Intangible assets | 38,933 | 38,998 | ||||||
| Tangible assets (non-GAAP) | $ | 2,250,782 | $ | 2,321,254 | ||||
| Equity to asset ratio | 12.77 | % | 12.21 | % | ||||
| Tangible common equity to tangible asset ratio (non-GAAP) | 11.27 | % | 10.73 | % | ||||
| Book value per share | $ | 15.79 | $ | 15.69 | ||||
| Tangible book value per share (non-GAAP) | $ | 13.69 | $ | 13.56 | ||||
| Shares outstanding | 18,527,178 | 18,369,115 | ||||||
INVESTOR RELATIONS CONTACT
Kevin Mc Cabe
Bank of Southern California
kmccabe@banksocal.com
818.637.7065
FAQ
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