QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15(d) OR THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Title of class) |
(Trading Symbol) |
(Name of exchange on which registered) | ||
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☒ | Smaller reporting company | ||||
| Emerging growth company | ||||||
CALIFORNIA BANCORP
INDEX TO QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2024
| Page | ||||||
| Part I - Financial Information |
||||||
| Item 1. |
1 | |||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
24 | ||||
| Item 3. |
38 | |||||
| Item 4. |
38 | |||||
| Part II - Other Information |
||||||
| Item 1. |
39 | |||||
| Item 1A. |
39 | |||||
| Item 2. |
39 | |||||
| Item 3. |
39 | |||||
| Item 4. |
39 | |||||
| Item 5. |
39 | |||||
| Item 6. |
40 | |||||
| 41 | ||||||
March 31, 2024 |
December 31, 2023 |
|||||||
ASSETS: |
||||||||
Cash and due from banks |
$ | $ | ||||||
Federal funds sold |
||||||||
Total cash and cash equivalents |
||||||||
Investment securities: |
||||||||
Available for sale, at fair value |
||||||||
Held to maturity, at amortized cost, net of allowance for credit losses of $ |
||||||||
Total investment securities |
||||||||
Loans, net of allowance for credit losses of $ |
||||||||
Premises and equipment, net |
||||||||
Bank owned life insurance (BOLI) |
||||||||
Goodwill and other intangible assets |
||||||||
Accrued interest receivable and other assets |
||||||||
Total assets |
$ | $ | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY: |
||||||||
Deposits |
||||||||
Noninterest-bearing |
$ | $ | ||||||
Interest-bearing |
||||||||
Total deposits |
||||||||
Other borrowings |
||||||||
Junior subordinated debt securities |
||||||||
Accrued interest payable and other liabilities |
||||||||
Total liabilities |
||||||||
Commitments and Contingencies (Note 5) |
||||||||
Shareholders’ equity |
||||||||
Preferred stock, |
||||||||
Common stock, |
||||||||
Retained earnings |
||||||||
Accumulated other comprehensive loss, net of taxes |
( |
) | ( |
) | ||||
Total shareholders’ equity |
||||||||
Total liabilities and shareholders’ equity |
$ | $ | ||||||
Three Months Ended March 31, |
||||||||
2024 |
2023 |
|||||||
Interest income |
||||||||
Loans |
$ | $ | ||||||
Federal funds sold |
||||||||
Investment securities |
||||||||
Total interest income |
||||||||
Interest expense |
||||||||
Deposits |
||||||||
Borrowings and subordinated debt |
||||||||
Total interest expense |
||||||||
Net interest income |
||||||||
Provision for credit losses |
||||||||
Net interest income after provision for credit losses |
||||||||
Non-interest income |
||||||||
Service charges and other fees |
||||||||
Other |
||||||||
Total non-interest income |
||||||||
Non-interest expense |
||||||||
Salaries and benefits |
||||||||
Premises and equipment |
||||||||
Merger related expenses |
||||||||
Professional fees |
||||||||
Data processing |
||||||||
Other |
||||||||
Total non-interest expense |
||||||||
Income before provision for income taxes |
||||||||
Provision for income taxes |
||||||||
Net income |
$ | $ | ||||||
Earnings per common share |
||||||||
Basic |
$ | $ | ||||||
Diluted |
$ | $ | ||||||
Average common shares outstanding |
||||||||
Average common and equivalent shares outstanding |
||||||||
Three Months Ended March 31, |
||||||||
2024 |
2023 |
|||||||
| Net Income |
$ | $ | ||||||
| Other comprehensive income (loss) |
||||||||
| Unrealized gains (losses) on securities available for sale, net |
||||||||
| Reclassification adjustment for securities transferred from available for sale to held to maturity in prior year, net |
( |
) | ||||||
| Amortization of unrealized losses on securities transferred from available for sale to held to maturity, net |
||||||||
| Tax effect |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Total other comprehensive income |
||||||||
| |
|
|
|
|||||
| Total comprehensive income |
$ | $ | ||||||
| |
|
|
|
|||||
| Common Stock | Retained | Accumulated Other Comprehensive Income |
Total Shareholders’ |
|||||||||||||||||
| Shares | Amount | Earnings | (Loss) | Equity | ||||||||||||||||
Balance at December 31, 2023 |
$ | $ | $ | ( |
) | $ | ||||||||||||||
Stock awards issued and related compensation expense |
||||||||||||||||||||
Shares withheld to pay taxes on stock based compensation |
( |
) | ( |
) | ( |
) | ||||||||||||||
Stock options exercised |
||||||||||||||||||||
Shares withheld to pay exercise price on stock options |
( |
) | ( |
) | — | — | ( |
) | ||||||||||||
Net income |
— | — | ||||||||||||||||||
Other comprehensive income |
— | |||||||||||||||||||
Balance at March 31, 2024 |
$ | $ | $ | ( |
) | $ | ||||||||||||||
| Common Stock | Retained | Other Comprehensive Income |
Total Shareholders’ |
|||||||||||||||||
| Shares | Amount | Earnings | (Loss) | Equity | ||||||||||||||||
Balance at December 31, 2022 |
$ | $ | $ | ( |
) | $ | ||||||||||||||
Adoption of new accounting standard |
— | — | — | |||||||||||||||||
Stock awards issued and related compensation expense |
||||||||||||||||||||
Shares withheld to pay taxes on stock based compensation |
( |
) | ( |
) | ( |
) | ||||||||||||||
Stock options exercised |
||||||||||||||||||||
Net income |
— | — | ||||||||||||||||||
Other comprehensive income |
— | |||||||||||||||||||
Balance at March 31, 2023 |
$ | $ | $ | ( |
) | $ | ||||||||||||||
Three Months Ended March 31, |
||||||||
2024 |
2023 |
|||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | $ | ||||||
Adjustments to reconcile net income to net cash (used for) provided by operating activities: |
||||||||
Provision for credit losses |
||||||||
Provision for deferred taxes |
||||||||
Depreciation |
||||||||
Deferred loan (costs) fees, net |
( |
) | ||||||
Stock based compensation, net |
||||||||
Increase in cash surrender value of life insurance |
( |
) | ( |
) | ||||
Discount on retained portion of sold loans, net |
( |
) | ( |
) | ||||
Net changes in accrued interest receivable and other assets |
( |
) | ( |
) | ||||
Net changes in accrued interest payable and other liabilities |
( |
) | ||||||
Net cash (used for) provided by operating activities |
( |
) | ||||||
Cash flows from investing activities: |
||||||||
Proceeds from principal payments on investment securities |
||||||||
Net decrease (increase) in loans |
( |
) | ||||||
Capital calls on low income tax credit investments |
( |
) | ( |
) | ||||
Purchase of premises and equipment |
( |
) | ( |
) | ||||
Purchase of bank-owned life insurance policies |
( |
) | ( |
) | ||||
Net cash provided by (used for) investing activities |
( |
) | ||||||
Cash flows from financing activities: |
||||||||
Net increase (decrease) in customer deposits |
( |
) | ||||||
(Paydown) proceeds from short term and overnight borrowings, net |
( |
) | ||||||
Proceeds from exercised stock options, net |
||||||||
Net cash (used for) provided by financing activities |
( |
) | ||||||
Decrease in cash and cash equivalents |
( |
) | ( |
) | ||||
Cash and cash equivalents, beginning of period |
||||||||
Cash and cash equivalents, end of period |
$ | $ | ||||||
Supplemental disclosure of cash flow information: |
||||||||
Recording of right to use assets and operating lease liabilities |
$ | $ | ||||||
Cash paid during the year for: |
||||||||
Interest |
$ | $ | ||||||
Income taxes |
$ | $ | ||||||
| Three months ended | ||||||||
| March 31, | ||||||||
(Dollars in thousands, except per share data) |
2024 | 2023 | ||||||
Net income available to common shareholders |
$ | $ | ||||||
Weighted average basic common shares outstanding |
||||||||
Add: dilutive potential common shares |
||||||||
Weighted average diluted common shares outstanding |
||||||||
Basic earnings per share |
$ | $ | ||||||
Diluted earnings per share |
$ | $ | ||||||
(Dollars in thousands) |
Amortized Cost |
Gross Unrealized / Unrecognized Gains |
Gross Unrealized / Unrecognized Losses |
Estimated Fair Value |
||||||||||||
At March 31, 2024: |
||||||||||||||||
Mortgage backed securities |
$ | $ | $ | ( |
) | $ | ||||||||||
Government agencies |
( |
) | ||||||||||||||
Total available for sale securities |
$ | $ | $ | ( |
) | $ | ||||||||||
Mortgage backed securities |
$ | $ | $ | ( |
) | $ | ||||||||||
Government agencies |
( |
) | ||||||||||||||
Corporate bonds |
( |
) | ||||||||||||||
Total held to maturity securities, net |
$ | $ | $ | ( |
) | $ | ||||||||||
At December 31, 2023: |
||||||||||||||||
Mortgage backed securities |
$ | $ | $ | ( |
) | $ | ||||||||||
Government agencies |
( |
) | ||||||||||||||
Total available for sale securities |
$ | $ | $ | ( |
) | $ | ||||||||||
Mortgage backed securities |
$ | $ | $ | ( |
) | $ | ||||||||||
Government agencies |
( |
) | ||||||||||||||
Corporate bonds |
( |
) | ||||||||||||||
Total held to maturity securities, net |
$ | $ | $ | ( |
) | $ | ||||||||||
| Available for Sale | Held to Maturity | |||||||||||||||
(Dollars in thousands) |
Amortized Cost |
Fair Value |
Amortized Cost |
Fair Value |
||||||||||||
Less that one year |
$ | $ | $ | $ | ||||||||||||
One to five years |
||||||||||||||||
Five to ten years |
||||||||||||||||
Beyond ten years |
||||||||||||||||
Securities not due at a single maturity date |
||||||||||||||||
Total investment securities |
$ | $ | $ | $ | ||||||||||||
| March 31, 2024 | December 31, 2023 | |||||||||||||||
(Dollars in thousands) |
Amortized Cost |
Fair Value |
Amortized Cost |
Fair Value |
||||||||||||
Aaa |
$ | $ | $ | $ | ||||||||||||
Aa1/Aa2/Aa3 |
||||||||||||||||
A1/A2/A3 |
||||||||||||||||
Not rated |
||||||||||||||||
Total held to maturity securities |
$ | $ | $ | $ | ||||||||||||
| Less Than 12 Months | More Than 12 Months | Total | ||||||||||||||||||||||
(Dollars in thousands) |
Fair Value | Unrealized Losses |
Fair Value | Unrealized Losses |
Fair Value | Unrealized Losses |
||||||||||||||||||
At March 31, 2024: |
||||||||||||||||||||||||
Mortgage backed securities |
$ | $ | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||||||||
Government agencies |
( |
) | ( |
) | ||||||||||||||||||||
Total available for sale securities |
$ | $ | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||||||||
Mortgage backed securities |
$ | $ | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||||||||
Government agencies |
( |
) | ( |
) | ||||||||||||||||||||
Corporate bonds |
( |
) | ( |
) | ||||||||||||||||||||
Total held to maturity securities |
$ | $ | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||||||||
At December 31, 2023: |
||||||||||||||||||||||||
Mortgage backed securities |
$ | $ | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||||||||
Government agencies |
( |
) | ( |
) | ||||||||||||||||||||
Total available for sale securities |
$ | $ | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||||||||
Mortgage backed securities |
$ | $ | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||||||||
Government agencies |
( |
) | ( |
) | ||||||||||||||||||||
Corporate bonds |
( |
) | ( |
) | ||||||||||||||||||||
Total held to maturity securities |
$ | $ | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||||||||
| Three Months Ended March 31, | ||||||||
(Dollars in thousands) |
2024 | 2023 | ||||||
Beginning balance |
$ | $ | ||||||
Adoption of new accounting standard |
||||||||
Provision for credit losses |
||||||||
Net charge-offs |
||||||||
| Ending balance |
$ | $ | ||||||
(Dollars in thousands) |
March 31, 2024 |
December 31, 2023 |
||||||
Commercial and industrial |
$ | $ | ||||||
Real estate - other |
||||||||
Real estate - construction and land |
||||||||
SBA |
||||||||
Other |
||||||||
Total loans, gross |
||||||||
Deferred loan origination costs, net |
||||||||
Allowance for credit losses |
( |
) | ( |
) | ||||
Total loans, net |
$ | $ | ||||||
| Term Loans by Year of Origination | ||||||||||||||||||||||||||||||||
(Dollars in thousands) |
2024 | 2023 | 2022 | 2021 | 2020 | Prior | Revolving | Total | ||||||||||||||||||||||||
Commercial and industrial |
||||||||||||||||||||||||||||||||
Pass |
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Special mention |
— | |||||||||||||||||||||||||||||||
Substandard |
— | |||||||||||||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Current period gross charge-offs |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Real estate - other |
||||||||||||||||||||||||||||||||
Pass |
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Special mention |
— | — | — | — | ||||||||||||||||||||||||||||
Substandard |
— | — | — | — | — | |||||||||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Current period gross charge-offs |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Real estate - construction and land |
||||||||||||||||||||||||||||||||
Pass |
$ | — | $ | $ | $ | $ | — | $ | — | $ | — | $ | ||||||||||||||||||||
Special mention |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Substandard |
— | — | — | — | — | |||||||||||||||||||||||||||
Total |
$ | — | $ | $ | $ | $ | — | $ | $ | — | $ | |||||||||||||||||||||
Current period gross charge-offs |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
SBA |
||||||||||||||||||||||||||||||||
Pass |
$ | — | $ | — | $ | $ | — | $ | — | $ | $ | $ | ||||||||||||||||||||
Special mention |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Substandard |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Total |
$ | — | $ | — | $ | $ | — | $ | — | $ | $ | $ | ||||||||||||||||||||
Current period gross charge-offs |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | $ | — | $ | ||||||||||||||||||
Other |
||||||||||||||||||||||||||||||||
Pass |
$ | $ | $ | $ | — | $ | $ | $ | $ | |||||||||||||||||||||||
Special mention |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Substandard |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Total |
$ | $ | $ | $ | — | $ | $ | $ | $ | |||||||||||||||||||||||
Current period gross charge-offs |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | $ | — | $ | ||||||||||||||||||
Total |
||||||||||||||||||||||||||||||||
Pass |
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Special mention |
— | |||||||||||||||||||||||||||||||
Substandard |
— | |||||||||||||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Current period gross charge-offs |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | $ | — | $ | ||||||||||||||||||
| Term Loans by Year of Origination | ||||||||||||||||||||||||||||||||
(Dollars in thousands) |
2023 | 2022 | 2021 | 2020 | 2019 | Prior | Revolving | Total | ||||||||||||||||||||||||
Commercial and industrial |
||||||||||||||||||||||||||||||||
Pass |
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Special mention |
||||||||||||||||||||||||||||||||
Substandard |
— | |||||||||||||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Current period gross charge-offs |
$ | — | $ | $ | — | $ | — | $ | — | $ | $ | $ | ||||||||||||||||||||
Real estate - other |
||||||||||||||||||||||||||||||||
Pass |
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Special mention |
— | — | — | |||||||||||||||||||||||||||||
Substandard |
— | — | — | — | ||||||||||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Current period gross charge-offs |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Real estate - construction and land |
||||||||||||||||||||||||||||||||
Pass |
$ | $ | $ | $ | — | $ | — | $ | — | $ | — | $ | ||||||||||||||||||||
Special mention |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Substandard |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Total |
$ | $ | $ | $ | — | $ | — | $ | $ | — | $ | |||||||||||||||||||||
Current period gross charge-offs |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
SBA |
||||||||||||||||||||||||||||||||
Pass |
$ | — | $ | $ | $ | — | $ | $ | $ | $ | ||||||||||||||||||||||
Special mention |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Substandard |
— | — | — | — | — | |||||||||||||||||||||||||||
Total |
$ | — | $ | $ | $ | — | $ | $ | $ | $ | ||||||||||||||||||||||
Current period gross charge-offs |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Other |
||||||||||||||||||||||||||||||||
Pass |
$ | — | $ | $ | — | $ | $ | $ | $ | $ | ||||||||||||||||||||||
Special mention |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Substandard |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Total |
$ | — | $ | $ | — | $ | $ | $ | $ | $ | ||||||||||||||||||||||
Current period gross charge-offs |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Total |
||||||||||||||||||||||||||||||||
Pass |
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Special mention |
||||||||||||||||||||||||||||||||
Substandard |
||||||||||||||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Current period gross charge-offs |
$ | — | $ | $ | — | $ | — | $ | — | $ | $ | $ | ||||||||||||||||||||
(Dollars in thousands) |
30 Days | 60 Days | 90+ Days | Nonaccrual | Current | Total | ||||||||||||||||||
As of March 31, 2024: |
||||||||||||||||||||||||
Commercial and industrial |
$ | $ | — | $ | — | $ | |
$ | $ | |||||||||||||||
Real estate - other |
— | — | — | |||||||||||||||||||||
Real estate - construction and land |
— | — | — | |||||||||||||||||||||
SBA |
— | — | ||||||||||||||||||||||
Other |
— | |||||||||||||||||||||||
Total loans, gross |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
As of December 31, 2023: |
||||||||||||||||||||||||
Commercial and industrial |
$ | — | $ | — | $ | — | $ | |
$ | $ | ||||||||||||||
Real estate - other |
— | — | — | |||||||||||||||||||||
Real estate - construction and land |
— | — | — | — | ||||||||||||||||||||
SBA |
— | — | — | |||||||||||||||||||||
Other |
— | — | — | — | ||||||||||||||||||||
Total loans, gross |
$ | $ | — | $ | — | $ | $ | $ | ||||||||||||||||
(Dollars in thousands) |
Nonaccrual Loans with No Allowance |
Nonaccrual Loans with an Allowance |
Total Nonaccrual Loans |
|||||||||
As of March 31, 2024: |
||||||||||||
Commercial and industrial |
$ | $ | $ | |||||||||
SBA |
||||||||||||
Total nonaccrual loans |
$ | $ | |
$ | ||||||||
As of December 31, 2023: |
||||||||||||
Commercial and industrial |
$ | $ | $ | |||||||||
SBA |
||||||||||||
Total nonaccrual loans |
$ | $ | $ | |||||||||
(Dollars in thousands) |
Residential Property |
Business Assets |
Total Collateral Dependent Loans |
|||||||||
As of March 31, 2024: |
||||||||||||
Commercial and industrial |
$ | $ | $ | |||||||||
SBA |
||||||||||||
Total collateral dependent loans |
$ | $ | $ | |||||||||
As of December 31, 2023: |
||||||||||||
Commercial and industrial |
$ | |
$ | $ | ||||||||
SBA |
||||||||||||
Total collateral dependent loans |
$ | $ | $ | |||||||||
(Dollars in thousands) |
Commercial and Industrial |
Real Estate Other |
Real Estate Construction and Land |
SBA | Other | Total | ||||||||||||||||||
Three months ended March 31, 2024: |
||||||||||||||||||||||||
Beginning balance |
$ | |
$ | $ | $ | $ | $ | |
||||||||||||||||
Provision for credit losses |
( |
) | ( |
) | ||||||||||||||||||||
Charge-offs |
— | — | — | ( |
) | ( |
) | ( |
) | |||||||||||||||
Recoveries |
— | — | — | — | ||||||||||||||||||||
Ending balance |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Allowance for credit losses / gross loans |
% | % | % | % | % | % | ||||||||||||||||||
Net recoveries (charge-offs) / gross loans |
% | % | % | - |
% | - |
% | - |
% | |||||||||||||||
Three months ended March 31, 2023: |
||||||||||||||||||||||||
Beginning balance |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Adoption of new accounting standard |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
Provision for credit losses |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Charge-offs |
( |
) | — | — | — | — | ( |
) | ||||||||||||||||
Recoveries |
— | — | — | — | — | — | ||||||||||||||||||
Ending balance |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Allowance for loan losses / gross loans |
% | % | % | % | % | % | ||||||||||||||||||
Net recoveries (charge-offs) / gross loans |
- |
% | % | % | % | % | - |
% | ||||||||||||||||
(Dollars in thousands) |
Amortized Cost |
% of Total Portfolio Segment |
Financial Effect | |||||||
Commercial and industrial |
$ | % | Term Extension - maturity date extended from to | |||||||
Commercial and industrial |
% | Term Extension - maturity date extended from to | ||||||||
Total modified loans |
$ | |
||||||||
(Dollars in thousands) |
Due in One Year Or Less |
Over One Year But Less Than Five Years |
Over Five Years |
Total | ||||||||||||
Unfunded fixed rate loan commitments: |
||||||||||||||||
Interest rate less than or equal to |
$ | $ | $ | $ | ||||||||||||
Interest rate between |
||||||||||||||||
Interest rate greater than or equal to |
||||||||||||||||
Total unfunded fixed rate loan commitments |
$ | $ | $ | $ | ||||||||||||
| Three Months Ended March 31, | ||||||||
(Dollars in thousands) |
2024 | 2023 | ||||||
Beginning balance |
$ | $ | ||||||
Adoption of new accounting standard |
||||||||
Provision for credit losses |
( |
) | ( |
) | ||||
Ending balance |
$ | $ | ||||||
(Dollars in thousands) |
March 31, 2024 |
|||
Operating lease cost (cost resulting from lease payments) |
$ | |||
Operating lease - operating cash flows (fixed payments) |
$ | |||
right-of-use |
$ | |||
Operating lease liabilities (other liabilities) |
$ | |
||
Weighted average lease term - operating leases |
||||
Weighted average discount rate - operating leases |
% | |||
(Dollars in thousands) |
March 31, 2024 |
|||
2024 |
$ | |||
2025 |
||||
2026 |
||||
2027 |
||||
2028 |
||||
Thereafter |
||||
Total undiscounted cash flows |
||||
Discount on cash flows |
( |
) | ||
liability |
$ | |||
| Carrying Amount |
Fair Value Measurements | |||||||||||||||||||
(Dollars in thousands) |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
As of March 31, 2024: |
||||||||||||||||||||
Financial assets: |
||||||||||||||||||||
Cash and cash equivalents |
$ | $ | $ | — | $ | — | $ | |||||||||||||
Investment securities: |
||||||||||||||||||||
Available for sale |
— | |||||||||||||||||||
Held to maturity |
||||||||||||||||||||
Loans, net |
— | — | ||||||||||||||||||
Accrued interest receivable |
— | |||||||||||||||||||
Financial liabilities: |
||||||||||||||||||||
Deposits |
$ | $ | $ | $ | — | $ | ||||||||||||||
Subordinated debt |
— | — | ||||||||||||||||||
Accrued interest payable |
— | |||||||||||||||||||
As of December 31, 2023: |
||||||||||||||||||||
Financial assets: |
||||||||||||||||||||
Cash and due from banks |
$ | $ | $ | — | $ | — | $ | |||||||||||||
Investment securities: |
||||||||||||||||||||
Available for sale |
— | |||||||||||||||||||
Held to maturity |
||||||||||||||||||||
Loans, net |
— | |||||||||||||||||||
Accrued interest receivable |
— | |||||||||||||||||||
Financial liabilities: |
||||||||||||||||||||
Deposits |
$ | $ | $ | $ | — | $ | ||||||||||||||
Other borrowings |
— | — | ||||||||||||||||||
Subordinated debt |
— | — | ||||||||||||||||||
Accrued interest payable |
— | |||||||||||||||||||
(Dollars in thousands) |
Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
As of March 31, 2024: |
||||||||||||||||
Investments available for sale: |
||||||||||||||||
Mortgage backed securities |
$ | $ | — | $ | $ | — | ||||||||||
Government agencies |
— | — | ||||||||||||||
Total assets measured at fair value on a recurring basis |
$ | $ | — | $ | $ | |||||||||||
As of December 31, 2023: |
||||||||||||||||
Investments available for sale: |
||||||||||||||||
Mortgage backed securities |
$ | $ | — | $ | |
$ | — | |||||||||
Government agencies |
— | — | ||||||||||||||
Total assets measured at fair value on a recurring basis |
$ | $ | — | $ | $ | |||||||||||
| Carrying Amount |
Fair Value Measurements | |||||||||||||||
(Dollars in thousands) |
Level 1 | Level 2 | Level 3 | |||||||||||||
As of March 31, 2024: |
||||||||||||||||
Individually evaluated loans - Commercial |
$ | $ | — | $ | — | $ | ||||||||||
Individually evaluated loans - SBA |
— | — | ||||||||||||||
Total assets measured at fair value on a non-recurring basis |
$ | $ | — | $ | — | $ | ||||||||||
As of December 31, 2023: |
||||||||||||||||
Impaired loans - Commercial |
$ | $ | — | $ | — | $ | ||||||||||
Impaired loans - SBA |
— | — | ||||||||||||||
Total assets measured at fair value on a non-recurring basis |
$ | $ | — | $ | — | $ | ||||||||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following is a discussion of our financial condition at March 31, 2024 and December 31, 2023 and our results of operations for the three months ended March 31, 2024 and 2023, and should be read in conjunction with our audited consolidated financial statements set forth in our Annual Report on Form 10-K for the year ended December 31, 2023 that was filed with the Securities and Exchange Commission (the “SEC”) on March 21, 2024 (our “Annual Report”) and with the accompanying unaudited notes to consolidated financial statements set forth in this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024 (this “Report”). Because we conduct all of our material business operations through our bank subsidiary, California Bank of Commerce, the discussion and analysis relates to activities primarily conducted by the Bank.
Forward Looking Statements
Statements contained in this Report that are not historical facts or that discuss our expectations, beliefs or views regarding future events, such as our future operations or future financial performance, or financial or other trends in our business or in the markets in which we operate, and our future plans constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. Additionally, statements regarding expectations, plans or objectives for future operations, products or services, loan recoveries and the proposed merger (the “Merger”) of the Company and Southern California Bancorp may be forward-looking statements. Often, forward-looking statements include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “project,” “forecast,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” The information contained in such forward-looking statements is based on current information available to us and on assumptions that we make about future economic and market conditions and other events over which we do not have control. In addition, our business and the markets in which we operate are subject to a number of risks and uncertainties. Such risks and uncertainties, and the occurrence of events in the future or changes in circumstances that had not been anticipated, could cause our financial condition or actual operating results in the future to differ materially from our expected financial condition or operating results that are set forth in the forward-looking statements contained in this Report and could, therefore, also affect the price performance of our shares.
In addition to the risk of incurring loan losses and provision for credit losses, which is an inherent risk of the banking business, these risks and uncertainties include, but are not limited to, the following: deteriorating economic conditions and macroeconomic factors such as unemployment rates and the volume of bankruptcies, as well as changes in monetary, fiscal or tax policy, any of which could cause us to incur losses and adversely affect our results of operations in the future; the risk that the credit quality of our borrowers declines; potential declines in the value of the collateral for secured loans; the risk of a recession in the United States economy, and domestic or international economic conditions, which could cause us to incur credit losses and adversely affect our results of operations in the future; changes in prevailing interest rates, which may adversely affect our interest margins, net interest income and the value of our investment securities; the risk that we will not be able to manage our liquidity, interest rate or operational risks effectively, in which event our operating results or financial condition could be harmed; risks associated with seeking new client relationships and maintaining existing client relationships; the impacts of inflation; the prospect of changes in government regulation of banking and other financial services organizations, which could impact our costs of doing business and restrict our ability to take advantage of business and growth opportunities; our ability to retain deposits during the pendency of the Merger, and integration and conversion activities related to the Merger; terms and conditions in our merger agreement with Southern California Bancorp that restrict our business while the Merger is pending; the occurrence of any event, change, or other circumstances that could give rise to the right of one or both of the parties to terminate the merger agreement; delays in completing the Merger; the failure to satisfy any of the conditions to the Merger on a timely basis or at all; the possibility that the anticipated benefits of the Merger will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas we and California Bank of Commerce do business; certain restrictions during the pendency of the Merger that may impact the parties’ ability to pursue certain business opportunities or strategic transactions; the possibility that the Merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; diversion of management’s attention from ongoing business operations and opportunities during the pendency of the Merger; and potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the Merger and the integration of the two companies and banks. Readers of this Report are encouraged to review the additional information regarding these and other risks and uncertainties to which our business is subject that is contained in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023, as such information may be updated from time to time in subsequent filings we may make with the SEC. We urge you to read those risk factors in conjunction with your review of the following discussion and analysis of our results of operations for the three months ended, and our financial condition at, March 31, 2024.
24
Due to the risks and uncertainties we face, readers are cautioned not to place undue reliance on the forward-looking statements contained in this Report, which speak only as of the date of this Report, or to make predictions about future performance based solely on historical financial performance. We also disclaim any obligation to update forward-looking statements contained in this Report as a result of new information, future events or otherwise, except as may otherwise be required by law.
Overview
California BanCorp (the “Company,” “we” or “us”), a California corporation headquartered in Oakland, California, is the bank holding company for its wholly-owned subsidiary California Bank of Commerce (the “Bank”). The Bank has a full service branch in California located in Contra Costa County and 4 loan production offices in California located in Alameda County, Contra Costa County, Sacramento County, and Santa Clara County.
Proposed Merger with Southern California Bancorp
On January 30, 2024, the Company entered into a merger agreement with Southern California Bancorp (“SCB”), the bank holding company for Bank of Southern California, N.A. (“BSC”). The merger agreement provides that, subject to the receipt of required regulatory and shareholders approvals and the satisfaction of other conditions, the Company will merge with and into SCB and the Bank will merge with and into BSC. As a result of the merger, each outstanding share of California BanCorp common stock will convert into the right to receive 1.590 shares of SCB common stock. Immediately after the merger, the Company expects that the Company’s shareholders will own approximately 43% of the combined company and SCB’s shareholders will own approximately 57% of the combined company.
Critical Accounting Policies
Our unaudited consolidated financial statements are prepared in accordance with GAAP and with general practices within the financial services industry. Application of these principles requires management to make complex and subjective estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under current circumstances. These assumptions form the basis for our judgments about the carrying values of assets and liabilities that are not readily available from independent, objective sources. We evaluate our estimates on an ongoing basis. Use of alternative assumptions may have resulted in significantly different estimates. Actual results may differ from these estimates.
Our most significant accounting policies are described in Note 1 to our audited financial statements for the year ended December 31, 2023, included in our Annual Report on Form 10-K and in Note 1 to our unaudited financial statements, which are included elsewhere in this Quarterly Report on Form 10-Q.
Non-GAAP Financial Measures
Some of the financial measures discussed in this Report are considered non-GAAP financial measures. A non-GAAP financial measure is a financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, from the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles.
We believe that non-GAAP financial measures provide useful information to management and investors that is supplementary to our statements of financial condition, results of income and cash flows computed in accordance with GAAP. However, we acknowledge that our non-GAAP financial measures have limitations. As such, you should not view this disclosure as a substitute for results determined in accordance with GAAP, and it is not necessarily comparable to non-GAAP financial measures that other banking companies use. Other banking companies may use names similar to those we use for the non-GAAP financial measures we disclose, but may calculate them differently. You should understand how we and other companies each calculate their non-GAAP financial measures when making comparisons.
25
The following table summarizes the details of the non-GAAP financial measure reflecting net income adjusted for the impact of merger related expenses that the Company has included in this Report for the three months ended March 31, 2024 and 2023.
| Three months ended | ||||||||
| March 31, | ||||||||
| (Dollars in thousands) |
2024 | 2023 | ||||||
| Net income |
$ | 3,817 | $ | 5,451 | ||||
| Add: After-tax merger related expenses |
1,024 | — | ||||||
|
|
|
|
|
|||||
| Adjusted net income |
$ | 4,841 | $ | 5,451 | ||||
|
|
|
|
|
|||||
The following table summarizes the details of the non-GAAP financial measure reflecting earnings per share adjusted for the impact of merger related expenses that the Company has included in this Report for the three months ended March 31, 2024 and 2023.
| Three months ended | ||||||||
| March 31, | ||||||||
| (Dollars in thousands, except per share data) |
2024 | 2023 | ||||||
| Adjusted net income |
$ | 4,841 | $ | 5,451 | ||||
| Adjusted basic earnings per share |
$ | 0.58 | $ | 0.65 | ||||
|
|
|
|
|
|||||
| Adjusted diluted earnings per share |
$ | 0.57 | $ | 0.64 | ||||
|
|
|
|
|
|||||
| Average common shares outstanding |
8,413,735 | 8,339,080 | ||||||
|
|
|
|
|
|||||
| Average common and equivalent shares outstanding |
8,566,712 | 8,492,067 | ||||||
|
|
|
|
|
|||||
The following table summarizes the details of the non-GAAP financial measure reflecting total revenue that the Company has included in this Report for the three months ended March 31, 2024 and 2023.
| Three months ended | ||||||||
| March 31, | ||||||||
| (Dollars in thousands) |
2024 | 2023 | ||||||
| Net interest income |
$ | 17,715 | $ | 18,757 | ||||
| Non-interest income |
1,705 | 1,107 | ||||||
|
|
|
|
|
|||||
| Total revenue |
$ | 19,420 | $ | 19,864 | ||||
|
|
|
|
|
|||||
26
The following table summarizes the details of the non-GAAP financial measure reflecting non-interest expense adjusted for capitalized loan origination costs and the impact of merger related expenses that the Company has included in this Report for the three months ended March 31, 2024 and 2023.
| Three months ended | ||||||||
| March 31, | ||||||||
| (Dollars in thousands) |
2024 | 2023 | ||||||
| Non-interest expense |
$ | 13,704 | $ | 11,843 | ||||
| Add: Capitalized loan origination costs |
414 | 651 | ||||||
| Less: Merger related expenses |
(1,024 | ) | — | |||||
|
|
|
|
|
|||||
| Total non-interest expense, before capitalization of loan origination costs and merger related expenses |
$ | 13,094 | $ | 12,494 | ||||
|
|
|
|
|
|||||
The following table summarizes the details of the non-GAAP financial measure reflecting the efficiency ratio adjusted for the impact of merger related expenses that the Company has included in this Report for the three months ended March 31, 2024 and 2023.
| Three months ended | ||||||||
| March 31, | ||||||||
| (Dollars in thousands) |
2024 | 2023 | ||||||
| Non-interest expense |
$ | 13,704 | $ | 11,843 | ||||
| Less: Merger related expenses |
(1,024 | ) | — | |||||
|
|
|
|
|
|||||
| Total non-interest expense, before merger related expenses |
$ | 12,680 | $ | 11,843 | ||||
| Total revenue |
$ | 19,420 | $ | 19,864 | ||||
|
|
|
|
|
|||||
| Adjusted efficiency ratio |
65.29 | % | 59.62 | % | ||||
|
|
|
|
|
|||||
Results of Operations – Three Months Ended March 31, 2024 and 2023:
Overview
For the three months ended March 31, 2024 and March 31, 2023, net income was $3.8 million and $5.5 million, respectively, representing a decrease of $1.6 million, or 30%. Compared to the same period last year, net interest income after the provision for credit losses decreased by $810,000, non-interest income increased by $598,000, non-interest expense increased by $1.9 million, and income tax expense decreased by $439,000. Excluding the impact of merger related expenses pertaining to the pending transaction with Southern California Bancorp, the Company’s net income for the first quarter of 2024 was $4.8 million (See Non-GAAP Financial Measures).
Diluted earnings per share were $0.45 for the first quarter of 2024, compared to $0.64 for the first quarter of 2023. Excluding the impact of merger related expenses, the Company’s diluted earnings per share were $0.57 for the first quarter of 2024 (See Non-GAAP Financial Measures).
Net Interest Income and Margin
Net interest income, the difference between interest earned on loans and investments and interest paid on deposits and borrowings, is the principal component of the Company’s earnings. Net interest income is affected by changes in the nature and volume of earning assets and interest-bearing liabilities held during the quarter, the rates earned on such assets and the rates paid on interest bearing liabilities.
27
Net interest income for the three months ended March 31, 2024, was $17.7 million, a decrease of $1.1 million, or 6% from $18.8 million for the same period in 2023. The decrease in net interest income was primarily attributable to a less favorable mix of average earning assets and an increase in the cost of deposits, which negatively impacted net interest margin. Contributing to the less favorable mix of average earning assets, the Company experienced a reduction in loan balances as a result of conservative underwriting combined with decreased demand and pay-offs occurring in the normal course of business. Net interest margin decreased by 13 basis points to 3.89% for the three months ended March 31, 2024, compared to 4.02% for the three months ended March 31, 2023.
Average total interest-earning assets were $1.83 billion in the first quarter of 2024 compared to $1.89 billion for the same period during 2023. The decrease in total interest-earning assets was primarily due to the reduction in the loan portfolio combined with decreased liquidity resulting from a lower balance of demand deposits. For the quarter ended March 31, 2024, the yield on average earning assets increased 54 basis points to 6.01% from 5.47% for the quarter ended March 31, 2023. The yield on total average gross loans in the three months ended March 31, 2024 was 6.24%, representing an increase of 48 basis points compared to 5.76% in the same period one year earlier. For the three months ended March 31, 2024 compared to the same period in 2023, the yield on average federal funds sold increased 83 basis points to 5.38% from 4.55%, and the yield on average investment securities increased 86 basis points to 4.29% from 3.43%.
For the three months ended March 31, 2024, average loans decreased $63.6 million, or 4%, from the quarter ended March 31, 2023 and average interest-bearing deposit balances decreased $1.4 million, or 0%, from the same quarter in the prior year. Average noninterest-bearing deposits for the first quarter of 2024 decreased $71.7 million, or 10%, from the same period in the prior year. The average loan to deposit ratio for the first quarter of 2024 was 93.19% compared to 93.08% for the first quarter of 2023.
Of the $63.6 million decrease in average loan balances year over year, average commercial and real estate related loans decreased by $31.0 million and $27.3 million, respectively. Additionally, SBA loans decreased by $2.0 million, and other loans decreased by $3.3 million.
The cost of interest-bearing deposits was 3.76% during the quarter ended March 31, 2024 compared to 2.49% in the same quarter one year earlier. In addition, the overall cost of average total deposit balances increased by 82 basis points to 2.24% in the first quarter of 2024 compared to 1.42% in the first quarter of 2023.
28
The following table shows the composition of average earning assets and average funding sources, average yields and rates, and the net interest margin for the quarters ended March 31, 2024 and 2023.
| Three months ended March 31, | ||||||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||||||
| (Dollars in thousands) |
Average Balance |
Yields or Rates |
Interest Income/ Expense |
Average Balance |
Yields or Rates |
Interest Income/ Expense |
||||||||||||||||||
| ASSETS |
||||||||||||||||||||||||
| Interest earning assets: |
||||||||||||||||||||||||
| Loans (1) |
$ | 1,518,722 | 6.24 | % | $ | 23,574 | $ | 1,582,332 | 5.76 | % | $ | 22,472 | ||||||||||||
| Federal funds sold |
174,551 | 5.38 | % | 2,334 | 156,941 | 4.55 | % | 1,760 | ||||||||||||||||
| Investment securities |
138,060 | 4.29 | % | 1,474 | 154,667 | 3.43 | % | 1,307 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total interest earning assets |
1,831,333 | 6.01 | % | 27,382 | 1,893,940 | 5.47 | % | 25,539 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Noninterest-earning assets: |
||||||||||||||||||||||||
| Cash and due from banks |
18,858 | 18,098 | ||||||||||||||||||||||
| All other assets (2) |
65,951 | 62,247 | ||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| TOTAL |
$ | 1,916,142 | $ | 1,974,285 | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||||||||||||||||
| Interest-bearing liabilities: |
||||||||||||||||||||||||
| Deposits: |
||||||||||||||||||||||||
| Demand |
$ | 24,736 | 0.20 | % | 12 | $ | 34,032 | 0.08 | % | $ | 7 | |||||||||||||
| Money market and savings |
635,696 | 3.12 | % | 4,928 | 626,666 | 2.01 | % | 3,104 | ||||||||||||||||
| Time |
311,884 | 5.36 | % | 4,156 | 310,246 | 3.81 | % | 2,911 | ||||||||||||||||
| Other |
55,130 | 4.17 | % | 571 | 71,108 | 4.33 | % | 760 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total interest-bearing liabilities |
1,027,446 | 3.78 | % | 9,667 | 1,042,052 | 2.64 | % | 6,782 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Noninterest-bearing liabilities: |
||||||||||||||||||||||||
| Demand deposits |
657,320 | 728,986 | ||||||||||||||||||||||
| Accrued expenses and other liabilities |
30,856 | 26,326 | ||||||||||||||||||||||
| Shareholders’ equity |
200,520 | 176,921 | ||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| TOTAL |
$ | 1,916,142 | $ | 1,974,285 | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Net interest income and margin (3) |
3.89 | % | $ | 17,715 | 4.02 | % | $ | 18,757 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| (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 costs of $34,000 and $226,000 for the three months ended March 31, 2024 and 2023, respectively. |
| (2) | Other noninterest-earning average assets includes the allowance for credit losses of $16.1 million and $17.0 million for the three months ended March 31, 2024 and 2023, respectively. |
| (3) | Net interest margin is net interest income divided by total interest-earning assets. |
29
The following table shows the effect of the interest differential of volume and rate changes for the quarters ended March 31, 2024 and 2023. The change in interest due to both rate and volume has been allocated in proportion to the relationship of absolute dollar amounts of change in each.
| Three Months Ended March 31, | ||||||||||||
| 2024 vs. 2023 | ||||||||||||
| Increase (Decrease) Due to | ||||||||||||
| Change in: | ||||||||||||
| (Dollars in thousands) |
Average Volume |
Average Rate |
Net Change |
|||||||||
| Interest income: |
||||||||||||
| Loans |
$ | (987 | ) | $ | 2,089 | $ | 1,102 | |||||
| Federal funds sold |
235 | 339 | 574 | |||||||||
| Investment securities |
(177 | ) | 344 | 167 | ||||||||
| Interest expense: |
||||||||||||
| Deposits |
||||||||||||
| Demand |
(5 | ) | 10 | 5 | ||||||||
| Money market and savings |
70 | 1,754 | 1,824 | |||||||||
| Time |
22 | 1,223 | 1,245 | |||||||||
| Other borrowings |
(165 | ) | (24 | ) | (189 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net interest income |
$ | (851 | ) | $ | (191 | ) | $ | (1,042 | ) | |||
|
|
|
|
|
|
|
|||||||
Interest Income
Interest income increased by $1.9 million in the first quarter of 2024 compared to the same period of 2023, primarily due to an increase in the prime rate which generated higher yields on our loan portfolio. The prime rate at March 31, 2024 and March 31, 2023 was 8.50% and 8.00%, respectively. Interest earned on our loan portfolio of $23.6 million in the first quarter of 2024 represented an increase of $1.1 million, or 5%, compared to $22.5 million for the first quarter of 2023. Interest earned on federal funds sold of $2.3 million for the three months ended March 31, 2024 compared to $1.8 million for the same period in the prior year. Interest earned on investment securities of $1.5 million for the three months ended March 31, 2024 compared to $1.3 million for the three months ended March 31, 2023.
Interest Expense
Interest expense increased by $2.9 million in the first quarter of 2024 compared to the same period of 2023, primarily due to the effect of increased rates paid on interest-bearing deposits and other borrowings. The average rate paid on interest-bearing liabilities in the first quarter of 2024 compared to the same period one year earlier increased 114 basis point to 3.78% from 2.64%.
Provision for Credit Losses
The provision for credit losses of $126,000 for the three months ended March 31, 2024 was comprised of $301,000 pertaining to the allowance for credit losses on loans, $(195,000) pertaining to the allowance for credit losses for unfunded loan commitments, and $20,000 pertaining to the allowance for credit losses for held to maturity securities.
The provision for credit losses on loans of $301,000 for the first quarter of 2024 compared to a provision for credit losses on loans of $464,000 for the first quarter of 2023. The Company had loan charge-offs of $439,000 and recoveries of $91,000 during the first quarter of 2024, compared to loan charge-offs of $247,000 and no recoveries during the first quarter of 2023. The allowance for credit losses on loans as a percentage of outstanding loans was 1.05% at March 31, 2024 and 1.03% at December 31, 2023.
30
Non-interest Income
The following table reflects the major components of the Company’s non-interest income for the three months ended March 31, 2024 and 2023.
| Three Months Ended March 31, |
Increase (Decrease) | |||||||||||||||
| (Dollars in thousands) |
2024 | 2023 | Amount | Percent | ||||||||||||
| Service charges and other fees |
$ | 1,379 | $ | 863 | $ | 516 | 60 | % | ||||||||
| Earnings on BOLI |
185 | 173 | 12 | 7 | % | |||||||||||
| Other |
141 | 71 | 70 | 99 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total non-interest income |
$ | 1,705 | $ | 1,107 | $ | 598 | 54 | % | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
Non-interest income increased by $598,000, or 54% in the first quarter of 2024, compared to the first quarter of 2023. The increase was primarily due to an increase in service charges and other fee income related to treasury management activities and prepayment penalties assessed on loans.
Net interest income and non-interest income comprised total revenue of $19.4 million and $19.9 million for the quarters ended March 31, 2024 and March 31, 2023, respectively (See Non-GAAP Financial Measures).
Non-interest Expense
The following table reflects the major components of the Company’s non-interest expense for the three months ended March 31, 2024 and 2023.
| Three Months Ended March 31, |
Increase (Decrease) | |||||||||||||||
| (Dollars in thousands) |
2024 | 2023 | Amount | Percent | ||||||||||||
| Salaries and benefits |
$ | 8,852 | $ | 7,876 | $ | 976 | 12 | % | ||||||||
| Premises and equipment |
1,452 | 1,180 | 272 | 23 | % | |||||||||||
| Merger related expenses |
1,024 | — | 1,024 | 100 | % | |||||||||||
| Professional fees |
443 | 450 | (7 | ) | -2 | % | ||||||||||
| Data processing |
432 | 608 | (176 | ) | -29 | % | ||||||||||
| Other |
1,501 | 1,729 | (228 | ) | -13 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total non-interest expense |
$ | 13,704 | $ | 11,843 | $ | 1,861 | 16 | % | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
Non-interest expense was $13.7 million and $11.8 million for the three months ended March 31, 2024 and 2023, respectively. Excluding capitalized loan origination costs and the impact of merger related expenses, non-interest expense for the first quarter of 2024 was $13.1 million compared to $12.5 million for the first quarter of 2023, representing an increase of $600,000, or 5% (See Non-GAAP Financial Measures). The increase in non-interest expense, excluding capitalized origination costs and merger related expenses, from the first quarter of 2024 was primarily due to an increase in salaries and benefits as well as premises and equipment related to investments to support the growth of the business.
For the three months ended March 31, 2024 and 2023, the Company’s efficiency ratio, the ratio of non-interest expense to revenues, was 70.57% and 59.62%, respectively. Excluding the impact of merger related expenses, the Company’s efficiency ratio was 65.29% for the first quarter of 2024 (See Non-GAAP Financial Measures).
Provision for Income Taxes
Income tax expense was $1.8 million for the first quarter of 2024 and $2.2 million for the same period in prior year. The effective tax rates for those time periods were 31.7% and 28.9%, respectively. The increase in the effective tax rate from the prior year was due to the recognition of non-deductible merger related expenses.
31
Financial Condition:
Overview
Total assets of the Company were $1.92 billion as of March 31, 2024 compared to $1.99 billion as of December 31, 2023. The decrease in total assets from year-end was primarily due to slower loan growth as a result of conservative new loan production and decreased liquidity related to a reduction in non-interest bearing deposits and other borrowings.
Loan Portfolio
Our loan portfolio consists almost entirely of loans to customers who have a full banking relationship with us. Gross loan balances decreased by $38.6 million, or 2%, from December 31, 2023 to March 31, 2024 primarily due to a reduction in commercial and industrial loans and real estate related loans.
The loan portfolio at March 31, 2024 and December 31, 2023 was comprised of approximately 40% of commercial and industrial loans. In addition, commercial real estate loans comprised 57% of our loans at March 31, 2024 and December 31, 2023. Our loans are generated by our relationship managers and executives. Our senior management is actively involved in the lending, underwriting, and collateral valuation processes. Higher dollar loans or loan commitments are also approved through a bank loan committee comprised of executives and outside board members.
The following table reflects the composition of the Company’s loan portfolio and the percentage distribution at March 31, 2024 and December 31, 2023.
| (Dollars in thousands) |
March 31, 2024 |
December 31, 2023 |
||||||
| Commercial and industrial |
$ | 610,459 | $ | 626,615 | ||||
| Real estate - other |
834,143 | 849,306 | ||||||
| Real estate - construction and land |
35,886 | 44,186 | ||||||
| SBA |
3,919 | 4,032 | ||||||
| Other |
36,484 | 35,394 | ||||||
|
|
|
|
|
|||||
| Total loans, gross |
1,520,891 | 1,559,533 | ||||||
| Deferred loan origination costs, net |
1,223 | 1,107 | ||||||
| Allowance for credit losses |
(15,981 | ) | (16,028 | ) | ||||
|
|
|
|
|
|||||
| Total loans, net |
$ | 1,506,133 | $ | 1,544,612 | ||||
|
|
|
|
|
|||||
| Commercial and industrial |
40 | % | 40 | % | ||||
| Real estate - other |
55 | % | 54 | % | ||||
| Real estate - construction and land |
2 | % | 3 | % | ||||
| SBA |
1 | % | 1 | % | ||||
| Other |
2 | % | 2 | % | ||||
|
|
|
|
|
|||||
| Total loans, gross |
100 | % | 100 | % | ||||
|
|
|
|
|
|||||
32
The following table shows the maturity distribution for total loans outstanding as of March 31, 2024. The maturity distribution is grouped by remaining scheduled principal payments that are due within one year, after one but within five years, after five years but within fifteen years, or after fifteen years. The principal balances of loans are indicated by both fixed and variable rate categories.
| (Dollars in thousands) |
Due in One Year Or Less |
Over One Year But Less Than Five Years |
Over Five Years But Less Than Fifteen Years |
Over Fifteen Years |
Total | |||||||||||||||
| Commercial and industrial |
$ | 191,014 | $ | 317,172 | $ | 102,273 | $ | — | $ | 610,459 | ||||||||||
| Real estate - other |
40,144 | 492,815 | 289,810 | 11,374 | 834,143 | |||||||||||||||
| Real estate - construction and land |
33,653 | 1,227 | 1,006 | — | 35,886 | |||||||||||||||
| SBA |
53 | 1,062 | 1,996 | 808 | 3,919 | |||||||||||||||
| Other |
2,464 | 1,569 | 32,451 | 36,484 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total loans, gross |
$ | 267,328 | $ | 813,845 | $ | 395,085 | $ | 44,633 | $ | 1,520,891 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Loans With | ||||||||||||
| (Dollars in thousands) |
Fixed Rates (1) |
Variable Rates |
Total | |||||||||
| Commercial and industrial |
$ | 150,375 | $ | 460,084 | $ | 610,459 | ||||||
| Real estate - other |
570,177 | 263,966 | 834,143 | |||||||||
| Real estate - construction and land |
3,541 | 32,345 | 35,886 | |||||||||
| SBA |
— | 3,919 | 3,919 | |||||||||
| Other |
33,972 | 2,512 | 36,484 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total loans, gross |
$ | 758,065 | $ | 762,826 | $ | 1,520,891 | ||||||
|
|
|
|
|
|
|
|||||||
| (1) | Excludes variable rate loans on floors |
Nonperforming Assets
Nonperforming assets are comprised of loans on nonaccrual status, loans 90 days or more past due and still accruing interest, and other real estate owned. We had no other real estate owned at March 31, 2024 and December 31, 2023. A loan is placed on nonaccrual status if there is concern that principal and interest may not be fully collected or if the loan has been past due for a period of 90 days or more, unless the obligation is both well secured and in process of legal collection. When loans are placed on nonaccrual status, all interest previously accrued but not collected is reversed against current period interest income. Income on nonaccrual loans is subsequently recognized only to the extent that cash is received and the loan’s principal balance is deemed collectible. Loans are returned to accrual status when they are brought current with respect to principal and interest payments and future payments are reasonably assured.
33
The following table presents information regarding the Company’s nonperforming and modified loans as of March 31, 2024 and December 31, 2023.
| (Dollars in thousands) |
March 31, 2024 |
December 31, 2023 |
||||||
| Nonaccrual loans |
$ | 1,212 | $ | 3,781 | ||||
| Loans over 90 days past due and still accruing |
240 | — | ||||||
|
|
|
|
|
|||||
| Total nonperforming loans |
1,452 | 3,781 | ||||||
| Foreclosed assets |
— | — | ||||||
|
|
|
|
|
|||||
| Total nonperforming assets |
$ | 1,452 | $ | 3,781 | ||||
|
|
|
|
|
|||||
| Modified loans |
$ | 14,706 | $ | 9,737 | ||||
|
|
|
|
|
|||||
| Nonperforming loans / gross loans |
0.10 | % | 0.24 | % | ||||
| Allowance for credit losses / nonperforming loans |
1100.62 | % | 423.91 | % | ||||
Allowance for Credit Losses
Effective January 1, 2023, the Company adopted the Current Expected Credit Losses (CECL) Methodology for estimating the allowance for credit losses. Our allowance for credit losses is maintained at a level management believes is adequate to account for expected credit losses in the loan portfolio as of the reporting date. We determine the allowance based on a quarterly evaluation of risk.
Our allowance is established through charges to the provision for credit losses. Loans, or portions of loans, deemed to be uncollectible are charged against the allowance. Recoveries of previously charged-off amounts are credited to our allowance for credit losses. The allowance is decreased by the reversal of prior provisions when the total allowance balance is deemed excessive for the risks inherent in the portfolio. The allowance for credit losses balance is neither indicative of the specific amounts of future charge-offs that may occur, nor is it an indicator of any future loss trends.
34
The following table provides information on the activity within the allowance for credit losses as of and for the periods indicated.
| (Dollars in thousands) |
Commercial and Industrial |
Real Estate Other |
Real Estate Construction and Land |
SBA | Other | Total | ||||||||||||||||||
| Three months ended March 31, 2024: |
||||||||||||||||||||||||
| Beginning balance |
$ | 10,853 | $ | 3,218 | $ | 492 | $ | 521 | $ | 944 | $ | 16,028 | ||||||||||||
| Provision for credit losses |
231 | (120 | ) | 50 | (7 | ) | 147 | 301 | ||||||||||||||||
| Charge-offs |
— | — | — | (309 | ) | (130 | ) | (439 | ) | |||||||||||||||
| Recoveries |
91 | — | — | — | — | 91 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ending balance |
$ | 11,175 | $ | 3,098 | $ | 542 | $ | 205 | $ | 961 | $ | 15,981 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Allowance for credit losses / gross loans |
1.83 | % | 0.37 | % | 1.51 | % | 5.23 | % | 2.63 | % | 1.05 | % | ||||||||||||
| Net recoveries (charge-offs) / gross loans |
0.01 | % | 0.00 | % | 0.00 | % | -7.88 | % | -0.36 | % | -0.02 | % | ||||||||||||
| Three months ended March 31, 2023: |
||||||||||||||||||||||||
| Beginning balance |
$ | 10,620 | $ | 5,322 | $ | 884 | $ | 132 | $ | 47 | $ | 17,005 | ||||||||||||
| Adoption of new accounting standard |
(1,566 | ) | (1,725 | ) | 1 | (91 | ) | 1,541 | (1,840 | ) | ||||||||||||||
| Provision for credit losses |
1,912 | (654 | ) | (142 | ) | 1 | (653 | ) | 464 | |||||||||||||||
| Charge-offs |
(247 | ) | — | — | — | — | (247 | ) | ||||||||||||||||
| Recoveries |
— | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ending balance |
$ | 10,719 | $ | 2,943 | $ | 743 | $ | 42 | $ | 935 | $ | 15,382 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Allowance for loan losses / gross loans |
1.63 | % | 0.34 | % | 1.16 | % | 0.75 | % | 2.48 | % | 0.95 | % | ||||||||||||
| Net recoveries (charge-offs) / gross loans |
-0.04 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | -0.02 | % | ||||||||||||
Investment Portfolio
Our investment portfolio is comprised of debt securities. We use two classifications for our investment portfolio: available for sale and held to maturity. Securities that we have the positive intent and ability to hold to maturity are classified as “held to maturity securities” and reported at amortized cost. Securities not classified as held to maturity securities are classified as “investment securities available for sale” and reported at fair value.
Our investments provide a source of liquidity as they can be pledged to support borrowed funds or can be liquidated to generate cash proceeds. The investment portfolio is also a significant resource to us in managing interest rate risk, as the maturity and interest rate characteristics of this asset class can be readily changed to match changes in the loan and deposit portfolios. The majority of our investment portfolio is comprised of mortgage backed securities, government agency securities, and corporate bonds.
35
The following table reflects the amortized cost and fair market values for the total portfolio for each of the categories of investments in our securities portfolio as of March 31, 2024 and December 31, 2023.
| (Dollars in thousands) |
Amortized Cost |
Gross Unrealized / Unrecognized Gains |
Gross Unrealized / Unrecognized Losses |
Estimated Fair Value |
||||||||||||
| At March 31, 2024: |
||||||||||||||||
| Mortgage backed securities |
$ | 12,288 | $ | 22 | $ | (787 | ) | $ | 11,523 | |||||||
| Government agencies |
19,941 | — | (386 | ) | 19,555 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total available for sale securities |
$ | 32,229 | $ | 22 | $ | (1,173 | ) | $ | 31,078 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Mortgage backed securities |
$ | 51,997 | $ | 76 | $ | (6,718 | ) | $ | 45,355 | |||||||
| Government agencies |
3,070 | — | (507 | ) | 2,563 | |||||||||||
| Corporate bonds |
40,773 | — | (3,978 | ) | 36,795 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total held to maturity securities, net |
$ | 95,840 | $ | 76 | $ | (11,203 | ) | $ | 84,713 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| At December 31, 2023: |
||||||||||||||||
| Mortgage backed securities |
$ | 15,882 | $ | 25 | $ | (758 | ) | $ | 15,149 | |||||||
| Government agencies |
29,916 | — | (505 | ) | 29,411 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total available for sale securities |
$ | 45,798 | $ | 25 | $ | (1,263 | ) | $ | 44,560 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Mortgage backed securities |
$ | 56,928 | $ | — | $ | (6,140 | ) | $ | 50,788 | |||||||
| Government agencies |
3,072 | — | (513 | ) | 2,559 | |||||||||||
| Corporate bonds |
40,841 | — | (4,158 | ) | 36,683 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total held to maturity securities, net |
$ | 100,841 | $ | — | $ | (10,811 | ) | $ | 90,030 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
The Company adopted ASC 326 on January 1, 2023 and, as a result, records an allowance for credit losses on investment securities. No allowances for credit losses have been recognized, individually or collectively, on available for sale securities in an unrealized loss position, as management does not believe any of the securities are impaired due to reasons of credit quality at March 31, 2024. As of March 31, 2024 and December 31, 2023, the Company determined that an allowance for credit losses of $75,000 and $55,000, respectively, was required for held to maturity securities. The allowance for credit losses pertained to corporate bonds and was presented as a reduction to the amortized cost of held to maturity securities outstanding.
Deposits
Our deposits are primarily generated through core customer relationships, related predominantly to business relationships. Many of our business customers maintain high levels of liquid balances in their demand deposit accounts and use the Bank’s treasury management services. An additional source of deposits is periodically obtained through third-party brokers. At March 31, 2024 and December 31, 2023, the Company held wholesale brokered time deposits of $261.6 million and $244.0 million, respectively.
The Company is also a participant in the Certificate of Deposit Account Registry Service (CDARS), IntraFi Network (ICS), and Reich & Tang Deposit Solutions (R&T) network, all of which provide reciprocal deposit placement services to fully qualify large customer deposits for FDIC insurance among other participating banks. At March 31, 2024 and December 31, 2023, the Company had $456.8 million and $460.0 million of reciprocal deposits, respectively. At March 31, 2024 and December 31, 2023 insured deposits represented 61% of the total deposit portfolio and uninsured deposits represented 39% of the total deposit portfolio.
At March 31, 2024, approximately 39% of our deposits were in noninterest-bearing demand deposits. The balance of our deposits at March 31, 2024 were held in interest-bearing demand, savings and money market accounts and time deposits. Approximately 41% of total deposits were held in interest-bearing demand, savings and money market deposit accounts at March 31, 2024, which provide our customers with interest and liquidity. Time deposits comprised the remaining 20% of our deposits at March 31, 2024.
36
The following table provides a comparative distribution of our deposits by outstanding balance as well as by percentage of total deposits at the dates indicated.
| (Dollars in thousands) |
Balance | % of Total | ||||||
| At March 31, 2024: |
||||||||
| Demand noninterest-bearing |
$ | 633,489 | 39 | % | ||||
| Demand interest-bearing |
21,911 | 1 | % | |||||
| Money market and savings |
656,236 | 40 | % | |||||
| Time |
327,880 | 20 | % | |||||
|
|
|
|
|
|||||
| Total deposits |
$ | 1,639,516 | 100 | % | ||||
|
|
|
|
|
|||||
| At December 31, 2023: |
||||||||
| Demand noninterest-bearing |
$ | 657,302 | 40 | % | ||||
| Demand interest-bearing |
26,715 | 2 | % | |||||
| Money market and savings |
631,015 | 39 | % | |||||
| Time |
310,212 | 19 | % | |||||
|
|
|
|
|
|||||
| Total deposits |
$ | 1,625,244 | 100 | % | ||||
|
|
|
|
|
|||||
The aggregate amount of time deposits in excess of the FDIC insurance limit was $33.9 million at March 31, 2024 and December 31, 2023. The following table reflects the aggregate maturities of those deposits as of the respective reporting periods.
| (Dollars in thousands) |
March 31, 2024 |
December 31, 2023 |
||||||
| 3 months or less |
$ | 28,024 | $ | 5,827 | ||||
| Over 3 months through 6 months |
5,847 | 28,022 | ||||||
| Over 6 months through 12 months |
9 | 6 | ||||||
| Over 12 months |
— | — | ||||||
|
|
|
|
|
|||||
| Total uninsured time deposits |
$ | 33,880 | $ | 33,855 | ||||
|
|
|
|
|
|||||
Liquidity
Our primary source of funding is deposits from our core banking relationships. However, the majority of the Bank’s deposits are transaction accounts or money market accounts that are payable on demand. Additionally, a small number of customers represent a large portion of the Bank’s deposits, as evidenced by the fact that approximately 20% of deposits were represented by the 10 largest depositors at both March 31, 2024 and December 31, 2023. We strive to manage our liquidity in a manner that enables us to meet expected and unexpected liquidity needs under both normal and adverse conditions. The Bank maintains significant on-balance sheet and off-balance liquidity sources, including a marketable securities portfolio, the ability to supplement core deposits with brokered time deposits combined with the stability provided by utilizing reciprocal deposit networks, and our borrowing capacity through various secured and unsecured sources. Our borrowing capacity includes lines of credit with the FRB, FHLB, and correspondent banks that enable us to borrow funds as described in Note 4 to the consolidated financial statements included in Item 1 of this Report.
Capital Resources
We are subject to various regulatory capital requirements administered by federal and state banking regulators. Our capital management consists of providing equity to support our current operations and future growth. Failure to meet minimum regulatory capital requirements may result in mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on our financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities and off-balance sheet items as calculated under regulatory accounting policies. At March 31, 2024 and December 31, 2023, we were in compliance with all applicable regulatory capital requirements, including the capital conservation buffer, and the Bank’s capital ratios exceeded the minimums necessary to be considered ‘‘well-capitalized’’ for purposes of the FDIC’s prompt corrective action regulations. At March 31, 2024, the capital conservation buffer was 5.63%.
37
At March 31, 2024, the Bank had a Tier 1 risk-based capital ratio of 12.69%, a total capital to risk-weighted assets ratio of 13.63%, and a leverage ratio of 12.72%. At December 31, 2023, the Bank had a Tier 1 risk-based capital ratio of 12.04%, a total capital to risk-weighted assets ratio of 12.96%, and a leverage ratio of 12.14%.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company, we are not required to provide the information required by this item.
Item 4. Controls and Procedures
Management of the Company, with the participation of its Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness as of September 30, 2023 of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management was required to apply judgment in evaluating its controls and procedures. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the fiscal quarter covered by this Form 10-Q.
Changes in Internal Control over Financial Reporting
There was no change in the Company’s internal control over financial reporting that occurred during the Company’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, such controls.
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Item 6. Exhibits
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| California BanCorp | ||||||
| Dated: May 9, 2024 | By: | /s/ Steven E. Shelton | ||||
| Steven E. Shelton | ||||||
| Chief Executive Officer | ||||||
| (Principal Executive Officer) | ||||||
| Dated: May 9, 2024 | By: | /s/ Thomas A. Sa | ||||
| Thomas A. Sa | ||||||
| President and Chief Financial Officer | ||||||
| (Principal Financial and Accounting Officer) | ||||||
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