California BanCorp Reports Financial Results for the Second Quarter and Six Months Ended June 30, 2023

Source: Nasdaq GlobeNewswire / 27 Jul 2023 15:30:01 America/Chicago

OAKLAND, Calif., July 27, 2023 (GLOBE NEWSWIRE) -- California BanCorp (NASDAQ: CALB), whose subsidiary is California Bank of Commerce, announced today its financial results for the second quarter and six months ended June 30, 2023.

The Company reported net income of $5.4 million for the second quarter of 2023, representing a decrease of $11,000, or 0%, compared to $5.5 million for the first quarter of 2023 and an increase of $1.2 million, or 28%, compared to $4.2 million in the second quarter of 2022. For the six months ended June 30, 2023, net income was $10.9 million representing an increase of $3.0 million, or 38%, compared to $7.9 million for the same period in 2022.

Diluted earnings per share of $0.65 for the second quarter of 2023 compared to $0.64 for the first quarter of 2023 and $0.51 for the second quarter of 2022. For the six months ended June 30, 2023, diluted earnings per share of $1.29 compared to $0.94 for the same period in 2022.

“We executed well in the second quarter and continued to generate strong financial performance with our return on average assets remaining above 1% while maintaining a prudent approach to risk management with a high level of capital, liquidity and reserves,” said Steven Shelton, Chief Executive Officer of California BanCorp. “We continued to see good stability in our deposit base and noninterest-bearing deposits remained above 40% of our total deposits, which reflects the strength of our relationship-oriented approach and the loyalty of the client base we have built. Due to the stability in our deposit base, we were able to repay the borrowings we added towards the end of the first quarter, which helped limit the amount of compression that we had in our net interest margin and support profitability. We also maintained disciplined expense control, which enabled us to continue realizing more operating leverage and improve our efficiency ratio.”

“Given our conservative approach in the current environment, we expect our balance sheet to be relatively flat over the remainder of the year. However, given the strength of the franchise we have built and the reputation we have developed for providing a superior level of service and expertise, we continue to believe that we have good opportunities to continue adding deposit relationships with high quality commercial clients. While we will continue to maintain disciplined expense control, our strong financial performance enables us to continue to make investments in our technology platform, including our treasury management solutions, that will further enhance our level of client service and improve our ability to add new client relationships. We believe these investments will help us to continue growing our client base, add more scale and improve our efficiencies, and further increase the value of our franchise,” said Mr. Shelton.

Financial Highlights:

Profitability - three months ended June 30, 2023 compared to March 31, 2023

Net income of $5.4 million and $0.65 per diluted share, compared to $5.5 million and $0.64 per diluted share, respectively.
Revenue of $19.8 million decreased $83,000, or 0%, compared to $19.9 million for the first quarter of 2023.
Net interest income of $18.6 million decreased $111,000, or 1%, compared to $18.8 million for the first quarter of 2023.
Provision for credit losses of $444,000 increased $86,000, or 24%, from $358,000 for the first quarter of 2023.
Non-interest income of $1.1 million remained consistent with the first quarter of 2023.
Non-interest expense, excluding capitalized loan origination costs, of $12.3 million decreased $197,000, or 2%, compared to $12.5 million for the first quarter of 2023.

Profitability - six months ended June 30, 2023 compared to June 30, 2022

Net income of $10.9 million and $1.29 per diluted share, compared to $7.9 million and $0.94 per diluted share, respectively.
Revenue of $39.6 million increased $4.9 million, or 14%, compared to $34.7 million in the prior year.
Net interest income of $37.4 million increased $6.7 million, or 22%, compared to $30.7 million for the same period in the prior year.
Provision for credit losses of $802,000 decreased $1.1 million, or 57%, from $1.9 million for the six months ended June 30, 2022.
Non-interest income of $2.2 million decreased $1.7 million, or 43%, from $3.9 million for the same period in the prior year.
Non-interest expense, excluding capitalized loan origination costs, of $24.8 million increased $1.0 million, or 4%, compared to $23.8 million for the six months ended June 30, 2022.

Financial Position – June 30, 2023 compared to March 31, 2023

Total assets decreased by $45.1 million, or 2%, to $2.01 billion; average total assets increased by $9.6 million to $1.98 billion.
Total gross loans decreased by $33.6 million, or 2%, to $1.58 billion.
Total deposits increased by $20.7 million, or 1%, to $1.74 billion.
Excluding junior subordinated debt securities, the Company had no other borrowings outstanding compared to $75.0 million at March 31, 2023.
Capital ratios remain healthy with a tier I leverage ratio of 9.01%, tier I capital ratio of 9.07% and total risk-based capital ratio of 12.73%.
Tangible book value per share of $21.09 increased by $0.61, or 3%.

Net Interest Income and Margin:

Net interest income for the quarter ended June 30, 2023 was $18.6 million, a decrease of $111,000 or 1%, from $18.8 million for the three months ended March 31, 2023, and an increase of $2.4 million, or 15%, from $16.2 million for the quarter ended June 30, 2022. The decrease in net interest income from the first quarter of 2023 was a result of lower net interest margin. The increase in net interest income compared to the second quarter of 2022 was primarily attributable to the growth of the loan portfolio and an increase in net interest margin.

Net interest income for the six months ended June 30, 2023 was $37.4 million, an increase of $6.7 million, or 22% over $30.7 million for the six months ended June 30, 2022. The increase in net interest income was primarily attributable to an increase in interest income as the result of a more favorable mix of earning assets combined with higher yields on those assets.

The Company’s net interest margin for the second quarter of 2023 was 3.93%, compared to 4.02% for the first quarter of 2023 and 3.65% for the same period in 2022. The decrease in margin compared to the prior quarter was primarily due to an increase in the cost of deposits and other borrowings. The increase in margin from the same period last year was primarily the result of a more favorable mix of earning assets combined with higher yields, partially offset by an increase in cost of deposits.

The Company’s net interest margin for the six months ended June 30, 2023 was 3.98% compared to 3.42% for the same period in 2022. The increase in margin compared to prior year was primarily due to loan growth and increased yields on earnings assets, partially offset by an increase in the cost of deposits and other borrowings.

Non-Interest Income:

The Company’s non-interest income for the quarters ended June 30, 2023, March 31, 2023, and June 30, 2022 was $1.1 million, $1.1 million and $1.4 million, respectively. The decrease in non-interest income from the second quarter of 2022 was primarily due to a decrease in service charges and other fee income.

For the six months ended June 30, 2023, non-interest income of $2.2 million compared to $3.9 million for the same period of 2022. The decrease in non-interest income from prior year was the result of a decrease in service charges and loan related fees and a gain recognized in the first quarter of 2022 on the sale of a portion of our solar loan portfolio.

Net interest income and non-interest income comprised total revenue of $19.8 million, $19.9 million, and $17.6 million for the quarters ended June 30, 2023, March 31, 2023, and June 30, 2022, respectively. Total revenue for the six months ended June 30, 2023 and 2022 was $39.6 million and $34.7 million, respectively.

Non-Interest Expense:

The Company’s non-interest expense for the quarters ended June 30, 2023, March 31, 2023, and June 30, 2022 was $11.6 million, $11.8 million, and $10.8 million, respectively. The increase in non-interest expense from the second quarter of 2022 was primarily due to an increase in salaries and benefits related to investments to support the continued growth of the business, partially offset by a reduction in capitalized loan origination costs. Excluding capitalized loan origination costs, non-interest expense for the second quarter of 2023, the first quarter of 2023 and the second quarter of 2022 was $12.3 million, $12.5 million, and $11.9 million, respectively.

Non-interest expense of $23.4 million for the six months ended June 30, 2023 increased by $1.7 million, or 8%, compared to $21.7 million for the same period of 2022. Excluding capitalized loan origination costs, non-interest expense was $24.8 million for the six months ended June 30, 2023 and $23.8 million for the same period in 2022 which reflects investment in infrastructure to support the continued growth of the Company.

The Company’s efficiency ratio, the ratio of non-interest expense to revenues, was 58.66%, 59.62%, and 61.41% for the quarters ended June 30, 2023, March 31, 2023, and June 30, 2022, respectively. For the six months ended June 30, 2023 and 2022, the Company’s efficiency ratio was 59.14% and 62.68%, respectively.

Balance Sheet:

Total assets of $2.01 billion as of June 30, 2023, represented a decrease of $45.1 million, or 2%, compared to $2.05 billion at March 31, 2023 and an increase of $120.3 million, or 6%, compared to $1.89 billion at June 30, 2022. The decrease in total assets from the prior quarter was primarily the result of a modest reduction in line utilization in our commercial loan portfolio. Compared to the same period in the prior year, total assets increased primarily due to strong loan growth in the commercial and real estate portfolios.

Total gross loans decreased by $33.6 million, or 2%, to $1.58 billion at June 30, 2023, from $1.62 billion at March 31, 2023 and increased by $83.3 million, or 6%, compared to $1.50 billion at June 30, 2022. During the second quarter of 2023, the reduction in gross loans was primarily the result of commercial loans decreasing by $34.2 million, or 5%. Compared to the same period in the prior year, commercial loans increased by $32.7 million, or 6%, and real estate other loans increased by $61.8 million, or 8%, primarily due to organic growth. These increases were partially offset by a decrease in SBA loans of $8.4 million, or 63%, primarily due to PPP loan forgiveness.

Total deposits increased by $20.7 million, or 1%, to $1.74 billion at June 30, 2023 from $1.72 billion at March 31, 2023, and increased by $186.2 million, or 12%, from $1.55 billion at June 30, 2022. The increase in total deposits from the end of the first quarter of 2023 was primarily due to an increase in money market and savings deposits of $16.8 million. Compared to the same period last year, the increase in total deposits was primarily concentrated in time deposits as a result of higher balances of short-term brokered certificates of deposits which were added to temporarily increase liquidity. Non-interest bearing deposits, primarily commercial business operating accounts, represented 42.7% of total deposits at June 30, 2023, compared to 43.1% at March 31, 2023 and 46.1% at June 30, 2022.

As of June 30, 2023, the Company had no outstanding borrowings, excluding junior subordinated debt securities, compared to $75.0 million at March 31, 2023 and $100.0 million at June 30, 2022. The decrease in borrowings during the second quarter of 2023 compared to the prior periods was primarily due to increased liquidity generated from the deposit portfolio.

Asset Quality:

The provision for credit losses on loans decreased to $340,000 for the second quarter of 2023 compared to $464,000 for the first quarter of 2023, and $925,000 for the second quarter of 2022. The Company did not have any loan charge-offs or recoveries during the second quarter of 2023, a loan charge-off of $247,000, or 0.02% of gross loans, and no recoveries during the first quarter of 2023, and no loan charge-offs or recoveries during the second quarter of 2022.

Non-performing assets (“NPAs”) to total assets of 0.01% at June 30, 2023 and March 31, 2023 compared to 0.03% at June 30, 2022, with non-performing loans of $181,000, $222,000 and $549,000, respectively, on those dates.

The allowance for credit losses on loans increased by $340,000 to $15.7 million, or 0.99% of total loans, at June 30, 2023, compared to $15.4 million, or 0.95% of total loans, at March 31, 2023 and $16.0 million, or 1.06% of total loans, at June 30, 2022. On January 1, 2023, the Company adopted the new current expected credit losses (CECL) standard. The Company’s allowance for credit losses on loans was 0.95% upon adoption on January 1, 2023 compared to 1.07% at December 31, 2022.

The allowance for credit losses on unfunded loan commitments increased by $156,000 to $1.9 million, or 0.31% of total unfunded loan commitments, at June 30, 2023, compared to $1.7 million, or 0.29% of total unfunded loan commitments, at March 31, 2023 and $430,000, or 0.7% of total unfunded loan commitments at June 30, 2022. The Company’s allowance for credit losses on unfunded loan commitments was 0.28% upon the adoption of CECL on January 1, 2023 compared to 0.07% at December 31, 2022.

Capital Adequacy:

At June 30, 2023, shareholders’ equity totaled $184.2 million compared to $178.6 million at March 31, 2023 and $158.7 million one year ago. As a result, the Company’s total risk-based capital ratio, tier I capital ratio and tier I leverage ratio of 12.73%, 9.07%, and 9.01%, respectively, were all above the regulatory standards for “well-capitalized” institutions of 10.00%, 8.00% and 5.00% respectively.

“Our strong financial performance and prudent balance sheet management resulted in an increase in all of our capital ratios and a 3% increase in our tangible book value per share during the second quarter,” said Thomas A. Sa, President, Chief Financial Officer and Chief Operating Officer of California BanCorp. “We also continue to have exceptional asset quality with non-performing assets remaining at just 0.01% of total assets. Further, our exposure to investor office commercial real estate, excluding medical offices, sits at just 4.0% of total loans, with no exposure in downtown San Francisco. With our high level of capital and liquidity, stable deposit base, strong asset quality, and well managed interest rate sensitivity, we believe we are well positioned to effectively manage through the current challenging environment and create long-term value for our shareholders.”

About California BanCorp:

California BanCorp, the parent company for California Bank of Commerce, offers a broad range of commercial banking services to closely held businesses and professionals located throughout Northern California. The Company’s common stock trades on the Nasdaq Global Select marketplace under the symbol CALB. For more information on California BanCorp, please visit our webite at www.californiabankofcommerce.com.

Contacts:

Steven E. Shelton, (510) 457-3751
Chief Executive Officer
seshelton@bankcbc.com

Thomas A. Sa, (510) 457-3775
President, Chief Financial Officer and Chief Operating Officer
tsa@bankcbc.com

Use of Non-GAAP Financial Information:

This press release contains both financial measures based on GAAP and non-GAAP. Non-GAAP financial measures are used where management believes them to be helpful in understanding the Company’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Forward-Looking Information:

Statements in this news release regarding expectations and beliefs about future financial performance and financial condition, as well as trends in the Company’s business and markets are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements often include words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "project," "outlook," or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could," or "may." The forward-looking statements in this news release are based on current information and on assumptions that the Company makes about future events and circumstances that are subject to a number of risks and uncertainties that are often difficult to predict and beyond the Company’s control. As a result of those risks and uncertainties, the Company’s actual financial results in the future could differ, possibly materially, from those expressed in or implied by the forward-looking statements contained in this news release and could cause the Company to make changes to future plans. Those risks and uncertainties include, but are not limited to, the risk of incurring loan losses, which is an inherent risk of the banking business; the risk that the Company will not be able to continue its internal growth rate; the risk that the United States economy will experience slowed growth or recession or will be adversely affected by domestic or international economic conditions and risks associated with the Federal Reserve Board taking actions with respect to interest rates, any of which could adversely affect, among other things, the values of real estate collateral supporting many of the Company’s loans, interest income and interest rate margins and, therefore, the Company’s future operating results; risks associated with changes in income tax laws and regulations; and risks associated with seeking new client relationships and maintaining existing client relationships. Readers of this news release are encouraged to review the additional information regarding these and other risks and uncertainties to which our business is subject that are contained in our Annual Report on Form 10-K for the year ended December 31, 2022 which is on file with the Securities and Exchange Commission (the “SEC”). Additional information will be set forth in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, which we expect to file with the SEC during the third quarter of 2023, and readers of this release are urged to review the additional information that will be contained in that report.

Due to these and other possible uncertainties and risks, readers are cautioned not to place undue reliance on the forward-looking statements contained in this news release, which speak only as of today's date, or to make predictions based solely on historical financial performance. The Company disclaims any obligation to update forward-looking statements contained in this news release, whether as a result of new information, future events or otherwise, except as may be required by law.

CALIFORNIA BANCORP AND SUBSIDIARY
SELECTED FINANCIAL INFORMATION (UNAUDITED) - PROFITABILITY
(Dollars in Thousands, Except Per Share Data)

							Change								Change
QUARTERLY HIGHLIGHTS:	Q2 2023			Q1 2023			$			%		Q2 2022			$			%

Interest income	$	27,172		$	25,539		$	1,633		6	%	$	17,706		$	9,466		53	%
Interest expense		8,526			6,782			1,744		26	%		1,483			7,043		475	%
Net interest income		18,646			18,757			(111	)	-1	%		16,223			2,423		15	%

Provision for credit losses		444			358			86		24	%		925			(481	)	-52	%
Net interest income after
provision for credit losses		18,202			18,399			(197	)	-1	%		15,298			2,904		19	%

Non-interest income		1,135			1,107			28		3	%		1,394			(259	)	-19	%
Non-interest expense		11,603			11,843			(240	)	-2	%		10,819			784		7	%
Income before income taxes		7,734			7,663			71		1	%		5,873			1,861		32	%

Income tax expense		2,294			2,212			82		4	%		1,629			665		41	%
Net income	$	5,440		$	5,451		$	(11	)	-0	%	$	4,244		$	1,196		28	%

Diluted earnings per share	$	0.65		$	0.64		$	0.01		2	%	$	0.51		$	0.14		27	%

Net interest margin		3.93	%		4.02	%	-9 Basis Points						3.65	%	+28 Basis Points

Efficiency ratio		58.66	%		59.62	%	-96 Basis Points						61.41	%	-275 Basis Points




							Change
YEAR-TO-DATE HIGHLIGHTS:	Q2 2023			Q2 2022			$			%

Interest income	$	52,711		$	33,630		$	19,081		57	%
Interest expense		15,308			2,881			12,427		431	%
Net interest income		37,403			30,749			6,654		22	%

Provision for loan losses		802			1,875			(1,073	)	-57	%
Net interest income after
provision for loan losses		36,601			28,874			7,727		27	%

Non-interest income		2,242			3,928			(1,686	)	-43	%
Non-interest expense		23,446			21,735			1,711		8	%
Income before income taxes		15,397			11,067			4,330		39	%

Income tax expense		4,506			3,150			1,356		43	%
Net income	$	10,891		$	7,917		$	2,974		38	%

Diluted earnings per share	$	1.29		$	0.94		$	0.35		37	%

Net interest margin		3.98	%		3.42	%	+56 Basis Points

Efficiency ratio		59.14	%		62.68	%	-354 Basis Points

CALIFORNIA BANCORP AND SUBSIDIARY
SELECTED FINANCIAL INFORMATION (UNAUDITED) - FINANCIAL POSITION
(Dollars in Thousands, Except Per Share Data)

							Change								Change
PERIOD-END HIGHLIGHTS:	Q2 2023			Q1 2023			$			%		Q2 2022			$		%

Total assets	$	2,005,646		$	2,050,774		$	(45,128	)	-2	%	$	1,885,352		$	120,294	6	%
Gross loans		1,583,631			1,617,263			(33,632	)	-2	%		1,500,379			83,252	6	%
Deposits		1,738,296			1,717,610			20,686		1	%		1,552,139			186,157	12	%
Tangible equity		176,783			171,099			5,684		3	%		151,251			25,532	17	%

Tangible book value per share	$	21.09		$	20.48		$	0.61		3	%	$	18.19		$	2.90	16	%

Tangible equity / total assets		8.81	%		8.34	%	+47 Basis Points						8.02	%	+79 Basis Points
Gross loans / total deposits		91.10	%		94.16	%	-306 Basis Points						96.67	%	-557 Basis Points
Noninterest-bearing deposits /
total deposits		42.69	%		43.12	%	-43 Basis Points						46.09	%	-340 Basis Points




QUARTERLY AVERAGE							Change								Change
HIGHLIGHTS:	Q2 2023			Q1 2023			$			%		Q2 2022			$		%

Total assets	$	1,983,877		$	1,974,285		$	9,592		0	%	$	1,864,196		$	119,681	6	%
Total earning assets		1,900,918			1,893,940			6,978		0	%		1,783,017			117,901	7	%
Gross loans		1,577,529			1,582,332			(4,803	)	-0	%		1,464,922			112,607	8	%
Deposits		1,684,008			1,699,930			(15,922	)	-1	%		1,567,412			116,596	7	%
Tangible equity		175,783			169,454			6,329		4	%		150,176			25,607	17	%

Tangible equity / total assets		8.86	%		8.58	%	+28 Basis Points						8.06	%	+80 Basis Points
Gross loans / total deposits		93.68	%		93.08	%	+60 Basis Points						93.46	%	+50 Basis Points
Noninterest-bearing deposits /
total deposits		42.65	%		42.88	%	-23 Basis Points						46.86	%	-421 Basis Points




YEAR-TO-DATE AVERAGE							Change
HIGHLIGHTS:	Q2 2023			Q2 2022			$			%

Total assets	$	1,979,107		$	1,896,191		$	82,916		4	%
Total earning assets		1,897,448			1,814,448			83,000		5	%
Gross loans		1,579,917			1,418,315			161,602		11	%
Deposits		1,691,925			1,609,478			82,447		5	%
Tangible equity		172,636			148,115			24,521		17	%

Tangible equity / total assets		8.72	%		7.81	%	+91 Basis Points
Gross loans / total deposits		93.38	%		88.12	%	+526 Basis Points
Noninterest-bearing deposits /
total deposits		42.76	%		45.85	%	-309 Basis Points

CALIFORNIA BANCORP AND SUBSIDIARY
SELECTED INTERIM FINANCIAL INFORMATION (UNAUDITED) - ASSET QUALITY
(Dollars in Thousands)


ALLOWANCE FOR CREDIT LOSSES (LOANS):	06/30/23			03/31/23			12/31/22			09/30/22			06/30/22


Balance, beginning of period	$	15,382		$	17,005		$	16,555		$	15,957		$	15,032
CECL adjustment		-			(1,840	)		-			-			-
Provision for credit losses, quarterly		340			464			1,100			800			925
Charge-offs, quarterly		-			(247	)		(650	)		(202	)		-
Recoveries, quarterly		-			-			-			-			-
Balance, end of period	$	15,722		$	15,382		$	17,005		$	16,555		$	15,957




NONPERFORMING ASSETS:	06/30/23			03/31/23			12/31/22			09/30/22			06/30/22

Loans accounted for on a non-accrual basis	$	181		$	222		$	1,250		$	182		$	549
Loans with principal or interest contractually
past due 90 days or more and still accruing
interest		-			-			-			161			-
Nonperforming loans	$	181		$	222		$	1,250		$	343		$	549
Other real estate owned		-			-			-			-			-
Nonperforming assets	$	181		$	222		$	1,250		$	343		$	549

Loans restructured and in compliance with
modified terms		-			-			-			-			-
Nonperforming assets and restructured loans	$	181		$	222		$	1,250		$	343		$	549


Nonperforming loans by asset type:
Commercial	$	-		$	-		$	1,028		$	161		$	-
Real estate other		-			-			-			-			-
Real estate construction and land		-			-			-			-			-
SBA		181			222			222			182			549
Other		-			-			-			-			-
Nonperforming loans	$	181		$	222		$	1,250		$	343		$	549




ASSET QUALITY:	06/30/23			03/31/23			12/31/22			09/30/22			06/30/22

Allowance for credit losses (loans) / gross loans		0.99	%		0.95	%		1.07	%		1.04	%		1.06	%
Allowance for credit losses (loans) / nonperforming loans		8686.19	%		6928.83	%		1360.40	%		4826.53	%		2906.56	%
Nonperforming assets / total assets		0.01	%		0.01	%		0.06	%		0.02	%		0.03	%
Nonperforming loans / gross loans		0.01	%		0.01	%		0.08	%		0.02	%		0.04	%
Net quarterly charge-offs / gross loans		0.00	%		0.02	%		0.04	%		0.01	%		0.00	%

CALIFORNIA BANCORP AND SUBSIDIARY
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in Thousands, Except Per Share Data)

				Three months ended						Six months ended
	06/30/23			03/31/23			06/30/22			06/30/23			06/30/22

INTEREST INCOME
Loans	$	23,476		$	22,472		$	16,298		$	45,948		$	31,184
Federal funds sold		2,238			1,760			280			3,998			416
Investment securities		1,458			1,307			1,128			2,765			2,030
Total interest income		27,172			25,539			17,706			52,711			33,630

INTEREST EXPENSE
Deposits		7,493			6,022			796			13,515			1,602
Other		1,033			760			687			1,793			1,279
Total interest expense		8,526			6,782			1,483			15,308			2,881

Net interest income		18,646			18,757			16,223			37,403			30,749
Provision for credit losses		444			358			925			802			1,875
Net interest income after provision
for credit losses		18,202			18,399			15,298			36,601			28,874

NON-INTEREST INCOME
Service charges and other fees		867			863			1,134			1,730			2,023
Gain on sale of loans		-			-			-			-			1,393
Other non-interest income		268			244			260			512			512
Total non-interest income		1,135			1,107			1,394			2,242			3,928

NON-INTEREST EXPENSE
Salaries and benefits		7,831			7,876			7,146			15,707			14,239
Premises and equipment		1,168			1,180			1,267			2,348			2,569
Other		2,604			2,787			2,406			5,391			4,927
Total non-interest expense		11,603			11,843			10,819			23,446			21,735

Income before income taxes		7,734			7,663			5,873			15,397			11,067
Income taxes		2,294			2,212			1,629			4,506			3,150

NET INCOME	$	5,440		$	5,451		$	4,244		$	10,891		$	7,917

EARNINGS PER SHARE
Basic earnings per share	$	0.65		$	0.65		$	0.51		$	1.30		$	0.96
Diluted earnings per share	$	0.65		$	0.64		$	0.51		$	1.29		$	0.94
Average common shares outstanding		8,369,907			8,339,080			8,295,014			8,354,564			8,285,950
Average common and equivalent
shares outstanding		8,414,213			8,492,067			8,395,701			8,442,607			8,393,776

PERFORMANCE MEASURES
Return on average assets		1.10	%		1.12	%		0.91	%		1.11	%		0.84	%
Return on average equity		11.91	%		12.50	%		10.80	%		12.19	%		10.26	%
Return on average tangible equity		12.41	%		13.05	%		11.34	%		12.72	%		10.78	%
Efficiency ratio		58.66	%		59.62	%		61.41	%		59.14	%		62.68	%

CALIFORNIA BANCORP AND SUBSIDIARY
INTERIM CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in Thousands)

	06/30/23			03/31/23			12/31/22			09/30/22			06/30/22

ASSETS
Cash and due from banks	$	19,763		$	15,121		$	16,686		$	24,709		$	20,378
Federal funds sold		187,904			198,804			215,696			216,345			138,057
Investment securities		151,129			153,769			155,878			157,531			165,309
Loans:
Commercial		622,270			656,519			634,535			643,131			589,562
Real estate other		856,344			853,431			848,241			824,867			794,504
Real estate construction and land		60,595			63,928			63,730			71,523			63,189
SBA		4,936			5,610			7,220			8,565			13,310
Other		39,486			37,775			39,695			39,815			39,814
Loans, gross		1,583,631			1,617,263			1,593,421			1,587,901			1,500,379
Unamortized net deferred loan costs (fees)		1,637			1,765			2,040			1,902			2,570
Allowance for credit losses		(15,722	)		(15,382	)		(17,005	)		(16,555	)		(15,957	)
Loans, net		1,569,546			1,603,646			1,578,456			1,573,248			1,486,992
Premises and equipment, net		2,625			2,848			3,072			3,382			3,736
Bank owned life insurance		25,519			25,334			25,127			24,955			24,788
Goodwill and core deposit intangible		7,452			7,462			7,472			7,483			7,493
Accrued interest receivable and other assets		41,708			43,790			39,828			40,848			38,599
Total assets	$	2,005,646		$	2,050,774		$	2,042,215		$	2,048,501		$	1,885,352

LIABILITIES
Deposits:
Demand noninterest-bearing	$	742,160		$	740,650		$	811,671		$	758,716		$	715,432
Demand interest-bearing		29,324			30,798			37,815			35,183			45,511
Money market and savings		633,620			616,864			671,016			597,244			626,156
Time		333,192			329,298			271,238			317,935			165,040
Total deposits		1,738,296			1,717,610			1,791,740			1,709,078			1,552,139

Junior subordinated debt securities		54,221			54,186			54,152			54,117			54,097
Other borrowings		-			75,000			-			100,000			100,000
Accrued interest payable and other liabilities		28,894			25,417			24,069			21,248			20,372
Total liabilities		1,821,411			1,872,213			1,869,961			1,884,443			1,726,608

SHAREHOLDERS' EQUITY
Common stock		112,167			111,609			111,257			110,786			110,289
Retained earnings		73,423			68,082			62,297			54,628			49,106
Accumulated other comprehensive loss		(1,355	)		(1,130	)		(1,300	)		(1,356	)		(651	)
Total shareholders' equity		184,235			178,561			172,254			164,058			158,744
Total liabilities and shareholders' equity	$	2,005,646		$	2,050,774		$	2,042,215		$	2,048,501		$	1,885,352
								-			-			-
CAPITAL ADEQUACY
Tier I leverage ratio		9.01	%		8.76	%		7.98	%		8.21	%		8.27	%
Tier I risk-based capital ratio		9.07	%		8.54	%		8.23	%		7.98	%		8.09	%
Total risk-based capital ratio		12.73	%		12.08	%		11.77	%		11.57	%		11.84	%
Total equity/ total assets		9.19	%		8.71	%		8.43	%		8.01	%		8.42	%
Book value per share	$	21.98		$	21.37		$	20.67		$	19.70		$	19.09

Common shares outstanding		8,383,772			8,355,378			8,332,479			8,327,781			8,317,161

CALIFORNIA BANCORP AND SUBSIDIARY
INTERIM CONSOLIDATED AVERAGE BALANCE SHEET AND YIELD DATA (UNAUDITED)
(Dollars in Thousands)

	Three months ended June 30,						Three months ended March 31,
	2023						2023

			Yields		Interest				Yields		Interest
	Average		or		Income/		Average		or		Income/
	Balance		Rates		Expense		Balance		Rates		Expense
ASSETS
Interest earning assets:
Loans (1)	$	1,577,529	5.97	%	$	23,476	$	1,582,332	5.76	%	$	22,472
Federal funds sold		170,608	5.26	%		2,238		156,941	4.55	%		1,760
Investment securities		152,781	3.83	%		1,458		154,667	3.43	%		1,307
Total interest earning assets		1,900,918	5.73	%		27,172		1,893,940	5.47	%		25,539

Noninterest-earning assets:
Cash and due from banks		19,207						18,098
All other assets (2)		63,752						62,247
TOTAL	$	1,983,877					$	1,974,285

LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Deposits:
Demand	$	30,346	0.16	%		12	$	34,032	0.08	%	$	7
Money market and savings		609,200	2.50	%		3,793		626,666	2.01	%		3,104
Time		326,291	4.53	%		3,688		310,246	3.81	%		2,911
Other		90,188	4.59	%		1,033		71,108	4.33	%		760
Total interest-bearing liabilities		1,056,025	3.24	%		8,526		1,042,052	2.64	%		6,782

Noninterest-bearing liabilities:
Demand deposits		718,171						728,986
Accrued expenses and
other liabilities		26,441						26,326
Shareholders' equity		183,240						176,921
TOTAL	$	1,983,877					$	1,974,285

Net interest income and margin (3)			3.93	%	$	18,646			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 $175,000 and $226,000, respectively.
(2) Other noninterest-earning assets includes the allowance for credit losses of $15.4 million and $17.0 million, respectively.
(3) Net interest margin is net interest income divided by total interest-earning assets.

CALIFORNIA BANCORP AND SUBSIDIARY
INTERIM CONSOLIDATED AVERAGE BALANCE SHEET AND YIELD DATA (UNAUDITED)
(Dollars in Thousands)


	Three months ended June 30,
	2023						2022

			Yields		Interest				Yields		Interest
	Average		or		Income/		Average		or		Income/
	Balance		Rates		Expense		Balance		Rates		Expense
ASSETS
Interest earning assets:
Loans (1)	$	1,577,529	5.97	%	$	23,476	$	1,464,922	4.46	%	$	16,298
Federal funds sold		170,608	5.26	%		2,238		145,329	0.77	%		280
Investment securities		152,781	3.83	%		1,458		172,766	2.62	%		1,128
Total interest earning assets		1,900,918	5.73	%		27,172		1,783,017	3.98	%		17,706

Noninterest-earning assets:
Cash and due from banks		19,207						19,735
All other assets (2)		63,752						61,444
TOTAL	$	1,983,877					$	1,864,196

LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Deposits:
Demand	$	30,346	0.16	%		12	$	42,380	0.08	%	$	8
Money market and savings		609,200	2.50	%		3,793		636,692	0.37	%		582
Time		326,291	4.53	%		3,688		153,859	0.54	%		206
Other		90,188	4.59	%		1,033		119,970	2.30	%		687
Total interest-bearing liabilities		1,056,025	3.24	%		8,526		952,901	0.62	%		1,483

Noninterest-bearing liabilities:
Demand deposits		718,171						734,481
Accrued expenses and
other liabilities		26,441						19,139
Shareholders' equity		183,240						157,675
TOTAL	$	1,983,877					$	1,864,196

Net interest income and margin (3)			3.93	%	$	18,646			3.65	%	$	16,223




(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) fees of $(175,000) and $83,000, respectively.
(2) Other noninterest-earning assets includes the allowance for credit losses of $15.4 million and $15.0 million, respectively.
(3) Net interest margin is net interest income divided by total interest-earning assets.

CALIFORNIA BANCORP AND SUBSIDIARY
INTERIM CONSOLIDATED AVERAGE BALANCE SHEET AND YIELD DATA (UNAUDITED)
(Dollars in Thousands)

	Six months ended June 30,
	2023						2022

			Yields		Interest				Yields		Interest
	Average		or		Income/		Average		or		Income/
	Balance		Rates		Expense		Balance		Rates		Expense
ASSETS
Interest earning assets:
Loans (1)	$	1,579,917	5.86	%	$	45,948	$	1,418,314	4.43	%	$	31,184
Federal funds sold		163,812	4.92	%		3,998		244,809	0.34	%		416
Investment securities		153,719	3.63	%		2,765		151,324	2.71	%		2,030
Total interest earning assets		1,897,448	5.60	%		52,711		1,814,447	3.74	%		33,630

Noninterest-earning assets:
Cash and due from banks		18,656						19,244
All other assets (2)		63,003						62,500
TOTAL	$	1,979,107					$	1,896,191

LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Deposits:
Demand	$	32,179	0.12	%		19	$	40,300	0.09	%		17
Money market and savings		617,885	2.25	%		6,897		679,662	0.37	%		1,247
Time		318,313	4.18	%		6,599		151,588	0.45	%		338
Other		80,701	4.48	%		1,793		110,370	2.34	%		1,279
Total interest-bearing liabilities		1,049,078	2.94	%		15,308		981,920	0.59	%		2,881

Noninterest-bearing liabilities:
Demand deposits		723,548						737,928
Accrued expenses and
other liabilities		26,383						20,724
Shareholders' equity		180,098						155,619
TOTAL	$	1,979,107					$	1,896,191

Net interest income and margin (3)			3.98	%	$	37,403			3.42	%	$	30,749




(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) fees of $(401,000) and $402,000, respectively.
(2) Other noninterest-earning assets includes the allowance for loan losses of $16.2 million and $14.6 million, respectively.
(3) Net interest margin is net interest income divided by total interest-earning assets.

CALIFORNIA BANCORP AND SUBSIDIARY
INTERIM CONSOLIDATED NON GAAP DATA (UNAUDITED)
(Dollars in Thousands)

REVENUE:	Three months ended						Six months ended
	06/30/23		03/31/23		06/30/22		06/30/23		06/30/22

Net interest income	$	18,646	$	18,757	$	16,223	$	37,403	$	30,749
Non-interest income		1,135		1,107		1,394		2,242		3,928
Total revenue	$	19,781	$	19,864	$	17,617	$	39,645	$	34,677




NON-INTEREST EXPENSE:	Three months ended						Six months ended
	06/30/23		03/31/23		06/30/22		06/30/23		06/30/22

Total non-interest expense	$	11,603	$	11,843	$	10,819	$	23,446	$	21,735
Total capitalized loan origination costs		694		651		1,073		1,345		2,057
Total operating expenses, before capitalization
of loan origination costs	$	12,297	$	12,494	$	11,892	$	24,791	$	23,792

California BanCorp Reports Financial Results for the Second Quarter and Six Months Ended June 30, 2023

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