8-K
California BanCorp \ CA (BCAL)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Dateof Report (Date of earliest event reported): July 25, 2023
SOUTHERN
CALIFORNIA BANCORP
(Exact name of registrant as specified in its charter)
| California | 001-41684 | 84-3288397 |
|---|---|---|
| (State<br> or other jurisdiction<br><br> <br>of<br> incorporation) | (Commission<br><br> <br>File<br> Number) | (IRS<br> Employer<br><br> <br>Identification<br> Number) |
| 12265 El Camino Real, Suite 210 | ||
| --- | --- | |
| San Diego, California | 92310 | |
| (Address<br> of Principal Executive Offices) | (Zip<br> Code) |
(844)265-7622
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written<br> communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting<br> material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement<br> communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement<br> communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common<br> Stock | BCAL | The<br> Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
| Item 2.02 | Results of Operations and Financial Condition |
|---|
On July 25, 2023, Southern California Bancorp (the “Company”) issued an earnings release reporting its consolidated financial results as of and for the second quarter of 2023. A copy of that earnings release is furnished as Exhibit 99.1 hereto.
| Item 7.01 | Regulation FD Disclosure |
|---|
A copy of a slide presentation that the Company may use for upcoming meetings with investors and other interested parties is furnished as Exhibit 99.2 hereto. Additionally, the Company has posted the slide presentation in the Investor Relations section of its website at https://investor.banksocal.com. Information obtained or linked to the foregoing website shall not be deemed to be included in this Current Report on Form 8-K.
In accordance with General Instruction B.2 of Form 8-K, the information contained in this Current Report on Form 8-K, including Exhibit 99.1 and Exhibit 99.2, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall such information be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing..
| Item 9.01 | Financial Statements and Exhibits. |
|---|
| Exhibit No. | Description |
|---|---|
| 99.1 | Earnings Press Release date July 25, 2023 |
| 99.2 | Investor Presentation, Second Quarter 2023 |
| 104 | Cover<br> Page Interactive Data File (embedded within the Inline XBRL document) |
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 hereunto duly authorized.
| SOUTHERN<br> CALIFORNIA BANCORP | ||
|---|---|---|
| Date:<br> July 25, 2023 | By: | /s/ DAVID I. RAINER |
| David<br> I. Rainer | ||
| Chief<br> Executive Officer |
Exhibit99.1
SOUTHERNCALIFORNIA BANCORP REPORTS NET INCOME OF$6.7 MILLION FOR THE SECOND QUARTER
SanDiego, Calif., July 25, 2023 – Southern California Bancorp (“us,” “we,” “our,” or the “Company”) (NASDAQ: BCAL), the holding company for Bank of Southern California, N.A. (the “Bank”) announces its consolidated financial results for the second quarter of 2023.
Southern California Bancorp reported net income of $6.7 million for the second quarter of 2023, or $0.36 per diluted share, compared to net loss of $736 thousand, or $0.04 per diluted share in the second quarter of 2022, and net income of $8.2 million, or $0.44 per diluted share in the first quarter of 2023.
“I am pleased to report that our strong year-to-date performance in 2023 includes net interest income of $48.3 million and net income of $14.9 million, showing considerable improvement from $38.7 million and $710 thousand, respectively, in the corresponding year-to-date period in 2022,” said David Rainer, Chairman and CEO of Southern California Bancorp and Bank of Southern California. “We believe this improvement in performance is due to the strong execution of our relationship-based business banking model.
“Second quarter net income of $6.7 million helped drive our tangible book value per share to $12.82, an increase of $0.33, or 2.6% from the prior quarter. Our balance sheet continues to be strong, with deposit balances remaining steady, as we have elected to vigorously defend our deposit base in the face of increasing competition and deposit costs. Our loan portfolio grew by $19.8 million in the second quarter, with a focus on full banking relationships, that include a deposit component.”
SecondQuarter 2023 Highlights
| ● | Net income of $6.7 million, compared with $8.2 million in the prior quarter |
|---|---|
| ● | Diluted earnings per share of $0.36, compared with $0.44 the prior quarter |
| ● | Net interest margin of 4.36%, compared with 4.71% in the prior quarter; average loan yield of 5.91% compared with 5.78% in the prior<br> quarter |
| ● | Return on average assets of 1.18%, compared with 1.46% in the prior quarter |
| ● | Return on average common equity of 9.93%, compared with 12.72% in the prior quarter |
| ● | Efficiency ratio of 59.6%, compared with 56.8% in the prior quarter |
| ● | Tangible book value per common share (“TBV”) (non-GAAP^1^) of $12.82 at June 30, 2023, up $0.33 from $12.49 at<br> March 31, 2023 |
| ● | Total assets of $2.31 billion, a slight increase from March 31, 2023 |
| ● | Total loans, including loans held for sale, of $1.91 billion, compared with $1.89 billion at March 31, 2023 |
| ● | Nonperforming assets to total assets ratio of 0.002% at June 30, 2023, compared with 0.000% at March 31, 2023 |
| ● | Total deposits of $1.98 billion, down $4.9 million or 0.2%, compared with $1.99 billion at March 31, 2023 |
| ● | Noninterest-bearing demand deposits were $776.9 million, representing 39.2% of total deposits, compared with $882.0 million, or 44.4% of total deposits<br> at March 31, 2023 |
| ● | Cost of deposits was 1.29%, compared with 0.80% in the prior quarter |
| ● | Bank’s capital exceeds minimums to be “well-capitalized,” the highest regulatory capital category |
^1^Reconciliations of the non–U.S. generally accepted accounting principles (“GAAP”) measures are set forth at the end of this press release.
“Given the recent turmoil in the banking industry, we have opportunistically hired a few new business relationship managers and continue to scout for additional talent,” said Rainer. “We are building on an already exceptional team and are focused on a strategy of deposit gathering through new relationships—using exception pricing where appropriate—and consequently we are seeing an increase in account openings.
“Reflecting our culture of prudent underwriting, the credit quality of our loan portfolio remains outstanding; our nonperforming assets to total assets ratio ended the second quarter at 0.002%.”
SecondQuarter Operating Results
NetIncome
Net income for the second quarter of 2023 was $6.7 million, or $0.36 per diluted share, compared with net income of $8.2 million, or $0.44 per diluted share in the first quarter of 2023. Pre-tax, pre-provision income (non-GAAP) for the second quarter was $9.9 million, a decrease of $1.5 million or 13.4% from the prior quarter.
NetInterest Income and Net Interest Margin
Net interest income for the second quarter of 2023 was $23.4 million, compared to $24.9 million in the prior quarter. The decrease in net interest income was primarily due to a $2.5 million increase in total interest expense, partially offset by a $1.1 million increase in total interest and dividend income in the second quarter of 2023 as compared to the prior quarter. During the second quarter of 2023, loan interest income increased $1.0 million, total debt securities income increased $71 thousand, and interest and dividend income from other financial institutions increased $12 thousand. The increase in interest income was due to a number of factors: a higher average total loan balance from organic loan growth; a change in the interest-earning asset mix; and higher yields on interest-earning assets resulting from increases in the target Fed funds rate. Average interest-earning assets increased $9.9 million, the result of a $5.8 million increase in average total loans, a $5.5 million increase in average total debt securities, a $5.2 million increase in average deposits in other financial institutions, and a $1.1 million increase in average restricted stock investments and other bank stock, partially offset by a $7.7 million decrease in average Fed funds sold/resale agreements. The increase in interest expense for the second quarter of 2023 was primarily due to a $2.4 million increase in interest expense on interest-bearing deposits, the result of a $101.7 million increase in average interest-bearing deposits, coupled with a 68 basis point increase in interest-bearing deposit costs.
Net interest margin for the second quarter of 2023 was 4.36%, compared with 4.71% in the prior quarter. The decrease was primarily related to a 50 basis point increase in the cost of funds, partially offset by a 11 basis point increase in the total interest-earning assets yield, the result of higher market interest rates and a change in the Bank’s interest-earning asset mix. The yield on total earning assets in the second quarter of 2023 was 5.64%, compared with 5.53% in the prior quarter. The yield on average total loans in the second quarter of 2023 was 5.91%, an increase of 13 basis points from 5.78% in the prior quarter.
Cost of funds for the second quarter of 2023 was 138 basis points, an increase of 50 basis points from 88 basis points in the prior quarter. The increase was primarily driven by a 68 basis point increase in the cost of interest-bearing deposits, coupled with an increase in average interest-bearing deposits, and a decrease in average noninterest-bearing deposits. Average noninterest-bearing demand deposits decreased $109.6 million to $805.6 million and represented 41.3% of total average deposits for the second quarter of 2023, compared with $915.2 million and 46.7%, respectively, for the prior quarter; average interest-bearing deposits increased $101.7 million to $1.15 billion during the second quarter of 2023. The total cost of deposits in the second quarter of 2023 was 129 basis points, an increase of 49 basis points from 80 basis points in the prior quarter.
Average total borrowings increased $8.5 million to $40.6 million for the second quarter of 2023, primarily due to an increase of $8.4 million in average Federal Home Loan Bank (FHLB) borrowings during the quarter. The average cost of total borrowings was 5.66% for the second quarter of 2023, up from 5.54% in the prior quarter.
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Provisionfor Credit Losses
The Company recorded a reversal of provision for credit losses of $15 thousand in the second quarter of 2023, compared to a $202 thousand provision for credit losses in the prior quarter. The provision for credit losses in the second quarter of 2023 included a $135 thousand negative provision for unfunded commitments primarily due to lower unfunded loan commitments. Total unfunded loan commitments decreased $33.9 million to $523.6 million at June 30, 2023, from $557.5 million at March 31, 2023. The provision for credit losses for loan portfolio in the second quarter of 2023 was $120 thousand, a decrease of $158 thousand from $278 thousand in the prior quarter. The decrease was driven by a number of factors: a decrease in classified loans, changes in the portfolio mix, and a decrease in the qualitative reserve, partially offset by change in our reasonable and supportable forecast, primarily related to the economic outlook from the Federal Reserve’s actions to control inflation, and an increase in total loan balances. The Company’s management continues to monitor macroeconomic variables related to increasing interest rates, inflation and the concerns of an economic downturn, and believes it is appropriately provisioned for the current environment.
NoninterestIncome
Total noninterest income in the second quarter of 2023 was $1.1 million, a decrease of $474 thousand compared to total noninterest income of $1.6 million in the first quarter of 2023. In the second quarter of 2023, the Company recorded a gain on sale of loans of $77 thousand on the sale of $1.0 million of SBA 7A loans, a decrease of $731 thousand from the gain on sale of loans of $808 thousand in the first quarter of 2023, of which $797 thousand was recorded on the sale of $9.9 million in SBA 7A loans. Additionally, a $39 thousand gain on sale of loans was recorded on a nonaccrual 1-4 family residential loan in the prior quarter. Service charges and fees on deposit accounts was $530 thousand, an increase of $91 thousand compared to $439 thousand in the prior quarter. The increase was primarily due to higher analysis charges for certain deposit accounts. The Company recorded a gain on sale of debt securities of $34 thousand in the second quarter of 2023, for which there was no comparable transaction in the prior quarter. Other charges and fees was $136 thousand, an increase of $111 thousand compared to $25 thousand in the prior quarter. The increase was primarily due to higher income from equity investments.
NoninterestExpense
Total noninterest expense for the second quarter of 2023 was $14.6 million, a decrease of $412 thousand from total noninterest expense of $15.0 million in the prior quarter. In the second quarter of 2023, salaries and employee benefits decreased by $567 thousand, and legal, audit and professional fees decreased by $118 thousand, partially offset by data processing and communications, which increased by $120 thousand, and other expenses, which increased by $158 thousand.
The $567 thousand decrease in salaries and benefits was due primarily to lower stock compensation expense related to the accelerated stock compensation expense resulting from the vesting of performance-based restricted stock units of $632 thousand recorded in the prior quarter, an increase in the deferred loan origination costs resulting from higher loan growth in the second quarter of 2023, and a decrease in payroll taxes and benefits expense. The $118 thousand decrease in legal, audit and professional fees was due primarily to completion of the Company’s listing on the Nasdaq Capital Market early in the second quarter of 2023. The $120 thousand increase in data processing and communications was due primarily to an increase in network and core system data processing expense. The $158 thousand increase in other expense was due primarily to the increase in customer service related expense, and travel expense, partially offset by the decrease in sundry losses resulting from the recoveries of affidavits of forgery that were charged-off in previous quarters.
Efficiency ratio (non-GAAP) for the second quarter of 2023 was 59.6%, compared to 56.8% in the prior quarter.
IncomeTax
In the second quarter of 2023, the Company’s income tax expense was $3.2 million, compared with $3.0 million in the first quarter of 2023. The effective rate was 32.3% for the second quarter of 2023 and 26.8% for the first quarter of 2023. The effective rate was 29.4% for the six months ended June 30, 2023. The increase in the effective tax rate for the second quarter of 2023 was primarily attributable to the impact of the vesting and exercise of equity awards combined with changes in the Company’s stock price over time.
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BalanceSheet
Assets
Total assets at June 30, 2023 were $2.31 billion, an increase of $17.1 million or 0.7% from March 31, 2023. The increase in total assets from the prior quarter was primarily related to a $2.5 million increase in cash and cash equivalents and a $19.9 million increase in total loans, including loans held for sale, partially offset by a $4.6 million decrease in securities available-for-sale.
Loans
Total loans held for investment were $1.91 billion at June 30, 2023, compared to $1.89 billion at March 31, 2023, with second quarter of 2023 new originations of $63.3 million and payoffs and net paydowns of $37.7 million. Total loans secured by real estate increased by $22.4 million, with construction and land development loans increasing by $19.2 million, and commercial real estate loans increasing by $24.8 million, partially offset by a decrease in 1-4 family residential and multifamily decreasing $3.9 million and $17.7 million, respectively. In addition, commercial and industrial loans decreased by $1.4 million. The Company had $1.1 million in SBA 7A loans held for sale at June 30, 2023, compared to $577 thousand at March 31, 2023; most of these loans are expected to be sold in the secondary market in the third quarter of 2023.
Deposits
Total deposits at June 30, 2023 were $1.98 billion, a decrease of $4.9 million from March 31, 2023. Noninterest-bearing demand deposits at June 30, 2023 were $776.9 million, or 39.2% of total deposits, compared with $882.0 million, or 44.4% of total deposits at March 31, 2023. At June 30, 2023, total interest-bearing deposits were $1.20 billion, compared to $1.10 billion at March 31, 2023. At June 30, 2023, total brokered time deposits were $98.4 million, compared to $84.5 million at March 31, 2023. Given the nature of the Company’s commercial banking model, at June 30, 2023, approximately 40% of total deposits exceeded the FDIC insurance limits; however, the Company offers the Insured Cash Sweep (ICS) product, providing customers with FDIC insurance coverage at ICS network institutions. At June 30, 2023, ICS deposits increased to $256.3 million, or 13% of total deposits, compared to $140.3 million, or 7% of total deposits at March 31, 2023.
FederalHome Loan Bank (“FHLB”) and Federal Reserve Bank (“Federal Reserve”) Borrowings
At June 30, 2023, the Company had overnight FHLB borrowings of $15.0 million, a $15.0 million increase from March 31, 2023. There were no outstanding Federal Reserve Discount Window borrowings at June 30, 2023. The Company did not participate in the Federal Reserve Bank Term Funding Program.
At June 30, 2023, the Company had available borrowing capacity from the FHLB secured lines of credit of approximately $405 million and available borrowing capacity from the Federal Reserve Discount Window of approximately $142 million. The Company also had available borrowing capacity from two unsecured credit lines from correspondent banks of approximately $60 million at June 30, 2023, with no outstanding borrowings. Total available borrowing capacity was $606.7 million at June 30, 2023. Additionally, the Company had unpledged liquid securities at fair value approximately $120 million and cash and cash equivalents of $104.6 million at June 30, 2023.
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AssetQuality
Total non-performing assets increased to $40 thousand, or 0.002% of total assets at June 30, 2023, compared with $1 thousand, or 0.000% of total assets at March 31, 2023. The increase from March 31, 2023, was due primarily to a commercial and industrial loan with a net carrying value of $41 thousand that was placed on non-accrual status during the second quarter of 2023. Special mention loans decreased by $1.2 million during the second quarter of 2023 to $10.6 million at June 30, 2023 due mostly to paydowns totaling $1.1 million, coupled with three commercial and industrial loans from one relationship totaling $590 thousand that were downgraded from special mention loans to substandard loans, partially offset by two commercial and industrial loans from one relationship totaling $494 thousand that were downgraded from pass loans to special mention. Substandard loans decreased by $1.7 million during the second quarter of 2023 to $4.7 million at June 30, 2023 due mostly to payoffs totaling $2.1 million, partially offset by the three commercial and industrial loans downgraded from special mention.
The Company had no loans over 90 days past due that were accruing interest at June 30, 2023 and March 31, 2023.
There were no loan delinquencies (30-89 days past due) at June 30, 2023, compared to $123 thousand of loan delinquencies (30-89 days past due) at March 31, 2023.
The allowance for credit losses, which is comprised of allowance for loan losses (ALL) and reserve for unfunded loan commitments, totaled $24.0 million, or 1.26% of total loans at June 30, 2023, compared to $24.1 million, or 1.27% at March 31, 2023. The $24 thousand decrease in the allowance includes a $120 thousand provision for credit losses for the loan portfolio and a $135 thousand negative credit provision for unfunded loan commitments, coupled with a net charge-off of $9 thousand for the quarter ended June 30, 2023.
Allowance for loan losses was $22.5 million, or 1.18% of total loans at June 30, 2023, compared to $22.4 million, or 1.18% at March 31, 2023.
Capital
Tangible book value (non-GAAP) per common share at June 30, 2023, was $12.82, compared with $12.49 at March 31, 2023. In the second quarter of 2023, tangible book value was primarily impacted by net income, stock-based compensation expense, and net of tax unrealized losses on debt securities available-for-sale. Other comprehensive losses related to unrealized losses, net of taxes, on securities available-for-sale increased by $1.6 million to $6.6 million at June 30, 2023 from $5.0 million at March 31, 2023. Tangible common equity (non-GAAP) as a percent of total tangible assets at June 30, 2023 increased to 10.33% from 10.13% in the prior quarter, and unrealized losses as a percent of tangible capital equity at June 30, 2023 increased to 2.8% from 2.2% in the prior quarter.
The Bank’s leverage capital ratio and total risk-based capital ratio were 11.47% and 12.98%, respectively, at June 30, 2023. The Bank elected the three-year phase-in period under the regulatory capital rules, which allow a phase-in of the Day 1 CECL transition adjustment to the regulatory capital at 25% per year over a three-year transition period.
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ABOUTSOUTHERN CALIFORNIA BANCORP AND BANK OF SOUTHERN CALIFORNIA, N.A.
Southern California Bancorp (NASDAQ: BCAL) is a registered bank holding company headquartered in San Diego, California. Bank of Southern California, N.A., a national banking association chartered under the laws of the United States (the “Bank”) and regulated by the Office of Comptroller of the Currency, is a wholly owned subsidiary of Southern California Bancorp. Established in 2001 and headquartered in San Diego, California, the Bank offers a range of financial products and services to individuals, professionals, and small- to medium-sized businesses through its 13 branch offices serving Orange, Los Angeles, Riversides, San Diego, and Ventura counties, as well as the Inland Empire. The Bank’s solutions-driven, relationship-based approach to banking provides accessibility to decision makers and enhances value through strong partnerships with its clients. Additional information is available at www.banksocal.com.
CAUTIONARYNOTE REGARDING FORWARD-LOOKING STATEMENTS
In addition to historical information, this release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and other matters that are not historical facts. Examples of forward-looking statements include, among others, statements regarding plans or objectives for future operations, products or services, and forecasts relating to financial and operating results or other measures of economic performance. Forward-looking statements reflect management’s current view about future events and involve risks and uncertainties that may cause actual results to differ from those expressed in the forward-looking statement or historical results. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and often include the words or phrases such as “aim,” “can,” “may,” “could,” “predict,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “hope,” “intend,” “plan,” “potential,” “project,” “will likely result,” “continue,” “seek,” “shall,” “possible,” “projection,” “optimistic,” and “outlook,” and variations of these words and similar expressions.
Some factors that could cause actual results to differ materially from historical or expected results include, among others: the risk factors discussed in the Company’s Registration Statement on Form 10, as amended, filed with the Securities and Exchange Commission; changes in general economic conditions, either nationally or locally in the areas in which the Company conducts business; the impact on financial markets from geopolitical conflicts; inflation, interest rate, market and monetary fluctuations; increases in competitive pressures among financial institutions and businesses offering similar products and services; higher than anticipated defaults in the Company’s loan portfolio; changes in management’s estimate of the adequacy of the allowance for credit losses; legislative or regulatory changes or changes in accounting principles, policies or guidelines; and the impacts of recent bank failures.
Additional information regarding these and other risks and uncertainties to which our business and future financial performance are subject is contained in the Company’s Registration Statement on Form 10, as amended, its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2023, and other documents the Company files with the SEC from time to time.
Any forward-looking statement made in this release is based only on information currently available to management and speaks only as of the date on which it is made. The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements or to conform such forward-looking statements to actual results or to changes in its opinions or expectations, except as required by law.
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SouthernCalifornia Bancorp and Subsidiary
Financial Highlights (Unaudited)
| At or for the Three Months Ended | At or for the Six Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30,<br> 2023 | March 31,<br><br> <br>2023 | June 30,<br><br> <br>2022 | June 30,<br><br> <br>2023 | June 30,<br><br> <br>2022 | ||||||||||
| ( in thousands except share and per share data) | ||||||||||||||
| EARNINGS | ||||||||||||||
| Net interest income | $ | 24,892 | $ | 20,936 | $ | 48,318 | $ | 38,731 | ||||||
| (Reversal of) Provision for credit losses | ) | $ | 202 | $ | 1,796 | $ | 187 | $ | 3,646 | |||||
| Noninterest income | $ | 1,570 | $ | 1,526 | $ | 2,666 | $ | 3,129 | ||||||
| Noninterest expense | $ | 15,019 | $ | 21,708 | $ | 29,626 | $ | 37,260 | ||||||
| Income tax expense (benefit) | $ | 3,017 | $ | (306 | ) | $ | 6,229 | $ | 244 | |||||
| Net income (loss) | $ | 8,224 | $ | (736 | ) | $ | 14,942 | $ | 710 | |||||
| Pre-tax pre-provision income ^(1)^ | $ | 11,443 | $ | 754 | $ | 21,358 | $ | 4,600 | ||||||
| Adjusted pre-tax pre-provision income ^(1)^ | $ | 11,443 | $ | 7,798 | $ | 21,358 | $ | 12,168 | ||||||
| Diluted earnings (loss) per share | $ | 0.44 | $ | (0.04 | ) | $ | 0.80 | $ | 0.04 | |||||
| Shares outstanding at period end | 18,271,194 | 17,840,626 | 18,296,365 | 17,840,626 | ||||||||||
| PERFORMANCE RATIOS | ||||||||||||||
| Return on average assets | % | 1.46 | % | (0.13 | )% | 1.32 | % | 0.06 | % | |||||
| Adjusted return on average assets ^(1)^ | % | 1.46 | % | 0.73 | % | 1.32 | % | 0.53 | % | |||||
| Return on average common equity | % | 12.72 | % | (1.19 | )% | 11.29 | % | 0.58 | % | |||||
| Adjusted return on average common equity ^(1)^ | % | 12.72 | % | 6.82 | % | 11.29 | % | 4.93 | % | |||||
| Yield on total loans | % | 5.78 | % | 4.74 | % | 5.85 | % | 4.72 | % | |||||
| Yield on interest earning assets | % | 5.53 | % | 3.99 | % | 5.58 | % | 3.77 | % | |||||
| Cost of deposits | % | 0.80 | % | 0.07 | % | 1.05 | % | 0.07 | % | |||||
| Cost of funds | % | 0.88 | % | 0.13 | % | 1.13 | % | 0.13 | % | |||||
| Net interest margin | % | 4.71 | % | 3.87 | % | 4.54 | % | 3.64 | % | |||||
| Efficiency ratio ^(1)^ | % | 56.76 | % | 96.64 | % | 58.11 | % | 89.01 | % | |||||
| Adjusted efficiency ratio ^(1)^ | % | 56.76 | % | 65.28 | % | 58.11 | % | 70.93 | % |
All values are in US Dollars.
| As of | ||||||||
|---|---|---|---|---|---|---|---|---|
| June 30,<br> 2023 | March 31,<br><br> <br>2023 | December 31, 2022 | ||||||
| ( in thousands except share and per share data) | ||||||||
| CAPITAL | ||||||||
| Tangible equity to tangible assets ^(1)^ | % | 10.13 | % | 9.84 | % | |||
| Book value (BV) per common share | $ | 14.64 | $ | 14.51 | ||||
| Tangible BV per common share ^(1)^ | $ | 12.49 | $ | 12.32 | ||||
| ASSET QUALITY | ||||||||
| Allowance for loan losses (ALL) | $ | 22,391 | $ | 17,099 | ||||
| Reserve for unfunded loan commitments | $ | 1,673 | $ | 1,310 | ||||
| Allowance for credit losses (ACL) | $ | 24,064 | $ | 18,409 | ||||
| ALL to total loans | % | 1.18 | % | 0.90 | % | |||
| ACL to total loans | % | 1.27 | % | 0.97 | % | |||
| Nonperforming loans | $ | 1 | $ | 41 | ||||
| Other real estate owned | $ | — | $ | — | ||||
| Nonperforming assets to total assets | % | — | % | — | % | |||
| END OF PERIOD BALANCES | ||||||||
| Total loans, including loans held for sale | $ | 1,894,509 | $ | 1,906,800 | ||||
| Total assets | $ | 2,292,053 | $ | 2,283,927 | ||||
| Deposits | $ | 1,985,856 | $ | 1,931,905 | ||||
| Loans to deposits | % | 95.4 | % | 98.7 | % | |||
| Shareholders’ equity | $ | 267,539 | $ | 260,355 |
All values are in US Dollars.
(1)Non-GAAP measure. See – GAAP to Non-GAAP reconciliation
| At or for the<br> Three Months Ended | At or for the<br><br> <br>Six Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ALLOWANCE for CREDIT LOSSES | June 30,<br> 2023 | March 31,<br><br> <br>2023 | June 30,<br><br> <br>2022 | June 30,<br><br> <br>2023 | June 30,<br><br> <br>2022 | |||||||||
| ( in thousands) | ||||||||||||||
| Allowance for loan losses | ||||||||||||||
| Balance at beginning of period | $ | 17,099 | $ | 13,534 | $ | 17,099 | $ | 11,657 | ||||||
| Adoption of ASU 2016-13 ^(1)^ | 5,027 | — | 5,027 | — | ||||||||||
| Provision for credit losses | 278 | 1,650 | 398 | 3,500 | ||||||||||
| Charge-offs | ) | (27 | ) | (21 | ) | (36 | ) | (21 | ) | |||||
| Recoveries | 14 | (27 | ) | 14 | — | |||||||||
| Net (charge-offs) | ) | (13 | ) | (48 | ) | (22 | ) | (21 | ) | |||||
| Balance, end of period | $ | 22,391 | $ | 15,136 | $ | 22,502 | $ | 15,136 | ||||||
| Reserve for unfunded loan commitments | ||||||||||||||
| Balance, beginning of period | $ | 1,310 | $ | 804 | $ | 1,310 | $ | 804 | ||||||
| Adoption of ASU 2016-13 ^(1)^ | 439 | — | 439 | — | ||||||||||
| Provision (reversal) for credit losses | ) | (76 | ) | 146 | (211 | ) | 146 | |||||||
| Balance, end of period | 1,673 | 950 | 1,538 | 950 | ||||||||||
| Allowance for credit losses | $ | 24,064 | $ | 16,086 | $ | 24,040 | $ | 16,086 | ||||||
| ALL to total loans | % | 1.18 | % | 0.85 | % | 1.18 | % | 0.85 | % | |||||
| ACL to total loans | % | 1.27 | % | 0.91 | % | 1.26 | % | 0.91 | % |
All values are in US Dollars.
| (1) | Represents the impact of adopting ASU 2016-13, Financial Instruments - Credit Losses on January 1, 2023. As a result of adopting ASU 2016-13, our methodology to compute our allowance for credit losses is based on a current expected credit loss methodology, rather than the previously applied incurred loss methodology. |
|---|
| 7 |
| --- |
SouthernCalifornia Bancorp and Subsidiary
Balance Sheets (Unaudited)
| March 31,<br><br> <br>2023 | December 31,<br><br> <br>2022 | ||||||
|---|---|---|---|---|---|---|---|
| ASSETS | |||||||
| Cash and due from banks | $ | 34,159 | $ | 60,295 | |||
| Federal funds sold & interest-bearing balances | 67,980 | 26,465 | |||||
| Total cash and cash equivalents | 102,139 | 86,760 | |||||
| Securities available-for-sale, at fair value | 124,438 | 112,580 | |||||
| Securities held-to-maturity, at cost (fair value of 48,563 at June 30, 2023; 49,713 at March 31, 2023; and 47,906 at December 31, 2022) | 53,864 | 53,946 | |||||
| Loans held for sale | 577 | 9,027 | |||||
| Loans held for investment: | |||||||
| Construction & land development | 256,096 | 239,067 | |||||
| 1-4 family residential | 154,071 | 144,322 | |||||
| Multifamily | 227,676 | 218,606 | |||||
| Other commercial real estate | 936,513 | 958,676 | |||||
| Commercial & industrial | 314,248 | 331,644 | |||||
| Other consumer | 5,328 | 5,458 | |||||
| Total loans held for investment | 1,893,932 | 1,897,773 | |||||
| Allowance for credit losses - loans | ) | (22,391 | ) | (17,099 | ) | ||
| Total loans held for investment, net | 1,871,541 | 1,880,674 | |||||
| Restricted stock at cost | 14,557 | 14,543 | |||||
| Premises and equipment | 14,105 | 14,334 | |||||
| Right of use asset | 8,384 | 8,607 | |||||
| Goodwill | 37,803 | 37,803 | |||||
| Core deposit intangible | 1,493 | 1,584 | |||||
| Bank owned life insurance | 38,196 | 37,972 | |||||
| Deferred taxes, net | 10,492 | 10,699 | |||||
| Accrued interest and other assets | 14,464 | 15,398 | |||||
| Total assets | $ | 2,292,053 | $ | 2,283,927 | |||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
| Deposits: | |||||||
| Noninterest-bearing demand | $ | 882,000 | $ | 923,899 | |||
| Interest-bearing NOW accounts | 248,809 | 209,625 | |||||
| Money market and savings accounts | 677,636 | 668,602 | |||||
| Time deposits | 177,411 | 129,779 | |||||
| Total deposits | 1,985,856 | 1,931,905 | |||||
| Borrowings | 17,794 | 67,770 | |||||
| Operating lease liability | 10,925 | 11,055 | |||||
| Accrued interest and other liabilities | 9,939 | 12,842 | |||||
| Total liabilities | 2,024,514 | 2,023,572 | |||||
| Shareholders’ Equity: | |||||||
| Common stock - 50,000,000 shares authorized, no par value; issued and outstanding 18,296,365 at June 30, 2023; 18,271,194 at March 31, 2023 and 17,940,283 at December 31, 2022) | 219,659 | 218,280 | |||||
| Retained earnings | 52,889 | 48,516 | |||||
| Accumulated other comprehensive loss - net of taxes | ) | (5,009 | ) | (6,441 | ) | ||
| Total shareholders’ equity | 267,539 | 260,355 | |||||
| Total liabilities and shareholders’ equity | $ | 2,292,053 | $ | 2,283,927 |
All values are in US Dollars.
| 8 |
| --- |
SouthernCalifornia Bancorp and Subsidiary
Income Statements - Quarterly and Year-to-Date (Unaudited)
| Three Months Ended | Six Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30,<br> 2023 | March 31,<br><br> <br>2023 | June 30,<br><br> <br>2022 | June 30,<br><br> <br>2023 | June 30,<br><br> <br>2022 | |||||||
| ( in thousands except share and per share data) | |||||||||||
| INTEREST AND DIVIDEND INCOME | |||||||||||
| Interest and fees on loans | $ | 27,019 | $ | 19,947 | $ | 55,006 | $ | 37,678 | |||
| Interest on debt securities | 731 | 476 | 1,564 | 730 | |||||||
| Interest on tax-exempted debt securities | 487 | 325 | 943 | 401 | |||||||
| Interest and dividends from other institutions | 972 | 836 | 1,956 | 1,260 | |||||||
| Total interest and dividend income | 29,209 | 21,584 | 59,469 | 40,069 | |||||||
| INTEREST EXPENSE | |||||||||||
| Interest on NOW, savings, and money market accounts | 2,903 | 264 | 7,633 | 546 | |||||||
| Interest on time deposits | 975 | 81 | 2,506 | 179 | |||||||
| Interest on borrowings | 439 | 303 | 1,012 | 613 | |||||||
| Total interest expense | 4,317 | 648 | 11,151 | 1,338 | |||||||
| Net interest income | 24,892 | 20,936 | 48,318 | 38,731 | |||||||
| (Reversal of) Provision for credit losses ^(1)^ | ) | 202 | 1,796 | 187 | 3,646 | ||||||
| Net interest income after provision for credit losses | 24,690 | 19,140 | 48,131 | 35,085 | |||||||
| NONINTEREST INCOME | |||||||||||
| Service charges and fees on deposit accounts | 439 | 385 | 969 | 872 | |||||||
| Gain on sale of loans | 808 | 767 | 885 | 816 | |||||||
| Bank owned life insurance income | 223 | 215 | 455 | 1,047 | |||||||
| Servicing and related income on loans | 75 | 25 | 162 | 94 | |||||||
| Gain on sale of debt securities | — | — | 34 | — | |||||||
| Other charges and fees | 25 | 134 | 161 | 300 | |||||||
| Total noninterest income | 1,570 | 1,526 | 2,666 | 3,129 | |||||||
| NONINTEREST EXPENSE | |||||||||||
| Salaries and employee benefits | 10,241 | 9,361 | 19,915 | 19,557 | |||||||
| Occupancy and equipment expenses | 1,447 | 1,732 | 2,974 | 3,142 | |||||||
| Data processing | 1,056 | 1,092 | 2,232 | 2,512 | |||||||
| Legal, audit and professional | 785 | 608 | 1,452 | 1,225 | |||||||
| Regulatory assessments | 452 | 421 | 819 | 760 | |||||||
| Director and shareholder expenses | 213 | 221 | 427 | 416 | |||||||
| Merger and related expenses | — | 544 | — | 1,068 | |||||||
| Core deposit intangible amortization | 91 | 99 | 181 | 198 | |||||||
| Loss contingency expense | — | 6,500 | — | 6,500 | |||||||
| Other expense | 734 | 1,130 | 1,626 | 1,882 | |||||||
| Total noninterest expense | 15,019 | 21,708 | 29,626 | 37,260 | |||||||
| Income (loss) before income taxes | 11,241 | (1,042 | ) | 21,171 | 954 | ||||||
| Income tax expense (benefit) | 3,017 | (306 | ) | 6,229 | 244 | ||||||
| Net income (loss) | $ | 8,224 | $ | (736 | ) | $ | 14,942 | $ | 710 | ||
| Net income (loss) per share - basic | $ | 0.46 | $ | (0.04 | ) | $ | 0.82 | $ | 0.04 | ||
| Net income (loss) per share - diluted | $ | 0.44 | $ | (0.04 | ) | $ | 0.80 | $ | 0.04 | ||
| Pre-tax, pre-provision income ^(2)^ | $ | 11,443 | $ | 754 | $ | 21,358 | $ | 4,600 | |||
| Adjusted pre-tax, pre-provision income ^(2)^ | $ | 11,443 | $ | 7,798 | $ | 21,358 | $ | 12,168 |
All values are in US Dollars.
| (1) | Included (reversal of) provision for unfunded commitments of $(135) thousand, $(76) thousand and $146 thousand for the three months ended June 30, 2023, March 31, 2023 and June 30, 2022, respectively; and $(211) thousand and $146 thousand for the six months ended June 30, 2023 and June 30, 2022, respectively. |
|---|---|
| (2) | Non-GAAP measure. See – GAAP to Non-GAAP reconciliation. |
| 9 |
| --- |
SouthernCalifornia Bancorp and Subsidiary
Average Balance Sheets and Yield Analysis
(Unaudited)
| Three Months Ended | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2023 | March 31, 2023 | June 30, 2022 | ||||||||||||||||||
| Average<br> Balance | Income/<br><br> <br>Expense | Yield/<br><br> <br>Cost | Average<br><br> <br>Balance | Income/<br><br> <br>Expense | Yield/<br><br> <br>Cost | Average<br><br> <br>Balance | Income/<br><br> <br>Expense | Yield/<br><br> <br>Cost | ||||||||||||
| ( in thousands) | ||||||||||||||||||||
| Assets | ||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||
| Total non-PPP loans | $ | 27,973 | 5.92 | % | $ | 1,890,758 | $ | 27,005 | 5.79 | % | $ | 1,679,902 | $ | 19,668 | 4.70 | % | ||||
| Total PPP loans | 14 | 1.74 | % | 3,476 | 14 | 1.63 | % | 9,072 | 279 | 12.34 | % | |||||||||
| Total loans | 27,987 | 5.91 | % | 1,894,234 | 27,019 | 5.78 | % | 1,688,974 | 19,947 | 4.74 | % | |||||||||
| Taxable debt securities | 833 | 3.15 | % | 97,023 | 731 | 3.06 | % | 100,548 | 476 | 1.90 | % | |||||||||
| Tax-exempt debt securities ^(1)^ | 456 | 3.29 | % | 74,188 | 487 | 3.37 | % | 56,054 | 325 | 2.94 | % | |||||||||
| Deposits in other financial institutions | 537 | 5.04 | % | 37,611 | 457 | 4.93 | % | 246,506 | 439 | 0.71 | % | |||||||||
| Fed funds sold/resale agreements | 228 | 5.18 | % | 25,306 | 287 | 4.60 | % | 64,004 | 144 | 0.90 | % | |||||||||
| Restricted stock investments and other bank stock | 219 | 5.48 | % | 14,902 | 228 | 6.20 | % | 14,914 | 253 | 6.80 | % | |||||||||
| Total interest-earning assets | 30,260 | 5.64 | % | 2,143,264 | 29,209 | 5.53 | % | 2,171,000 | 21,584 | 3.99 | % | |||||||||
| Total noninterest-earning assets | 134,707 | 137,829 | ||||||||||||||||||
| Total assets | $ | 2,277,971 | $ | 2,308,829 | ||||||||||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||
| Interest-bearing NOW accounts | $ | 1,279 | 1.66 | % | $ | 206,785 | $ | 316 | 0.62 | % | $ | 211,663 | $ | 56 | 0.11 | % | ||||
| Money market and savings accounts | 3,451 | 2.09 | % | 685,368 | 2,587 | 1.53 | % | 669,183 | 208 | 0.12 | % | |||||||||
| Time deposits | 1,531 | 3.51 | % | 152,613 | 975 | 2.59 | % | 87,176 | 81 | 0.37 | % | |||||||||
| Total interest-bearing deposits | 6,261 | 2.19 | % | 1,044,766 | 3,878 | 1.51 | % | 968,022 | 345 | 0.14 | % | |||||||||
| Borrowings: | ||||||||||||||||||||
| FHLB advances | 302 | 5.31 | % | 14,356 | 168 | 4.75 | % | — | — | —% | ||||||||||
| Subordinated debt | 271 | 6.10 | % | 17,783 | 271 | 6.18 | % | 17,711 | 271 | 6.14 | % | |||||||||
| TruPS | — | —% | — | — | —% | 2,262 | 32 | 5.67 | % | |||||||||||
| Total borrowings | 573 | 5.66 | % | 32,139 | 439 | 5.54 | % | 19,973 | 303 | 6.08 | % | |||||||||
| Total interest-bearing liabilities | 6,834 | 2.31 | % | 1,076,905 | 4,317 | 1.63 | % | 987,995 | 648 | 0.26 | % | |||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||
| Noninterest-bearing deposits ^(2)^ | 915,160 | 1,053,615 | ||||||||||||||||||
| Other liabilities | 23,788 | 18,779 | ||||||||||||||||||
| Shareholders’ equity | 262,118 | 248,440 | ||||||||||||||||||
| Total Liabilities and Shareholders’ Equity | $ | 2,277,971 | $ | 2,308,829 | ||||||||||||||||
| Net interest spread | 3.33 | % | 3.90 | % | 3.72 | % | ||||||||||||||
| Net interest income and margin | $ | 23,426 | 4.36 | % | $ | 24,892 | 4.71 | % | $ | 20,936 | 3.87 | % | ||||||||
| Cost of deposits | 1.29 | % | 0.80 | % | 0.07 | % | ||||||||||||||
| Cost of funds | 1.38 | % | 0.88 | % | 0.13 | % |
All values are in US Dollars.
(1)Tax-exempt debt securities yields are presented on a tax equivalent basis using a 21% tax rate.
(2)Average noninterest-bearing deposits represent 41.27%, 46.69% and 52.12% of average total deposits for the three months ended June 30,2023, March 31, 2023 and June 30, 2022, respectively.
| 10 |
| --- |
SouthernCalifornia Bancorp and Subsidiary
Average Balance Sheets and Yield Analysis
(Unaudited)
| Six Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2023 | June 30, 2022 | ||||||||||||
| Average<br> Balance | Income/<br><br> <br>Expense | Yield/<br><br> <br>Cost | Average<br><br> <br>Balance | Income/<br><br> <br>Expense | Yield/<br><br> <br>Cost | ||||||||
| ( in thousands) | |||||||||||||
| Assets | |||||||||||||
| Interest-earning assets: | |||||||||||||
| Total non-PPP loans | $ | 55,006 | 5.86 | % | $ | 1,588,645 | $ | 36,077 | 4.58 | % | |||
| Total PPP loans | — | —% | 21,898 | 1,601 | 14.74 | % | |||||||
| Total loans | 55,006 | 5.85 | % | 1,610,543 | 37,678 | 4.72 | % | ||||||
| Taxable debt securities | 1,564 | 3.10 | % | 86,507 | 730 | 1.70 | % | ||||||
| Tax-exempt debt securities ^(1)^ | 943 | 3.33 | % | 35,721 | 401 | 2.87 | % | ||||||
| Deposits in other financial institutions | 994 | 4.99 | % | 354,641 | 633 | 0.36 | % | ||||||
| Fed funds sold/resale agreements | 515 | 4.84 | % | 44,024 | 155 | 0.71 | % | ||||||
| Restricted stock investments and other bank stock | 447 | 5.83 | % | 14,464 | 472 | 6.58 | % | ||||||
| Total interest-earning assets | 59,469 | 5.58 | % | 2,145,900 | 40,069 | 3.77 | % | ||||||
| Total noninterest-earning assets | 138,550 | ||||||||||||
| Total assets | $ | 2,284,450 | |||||||||||
| Liabilities and Shareholders’ Equity | |||||||||||||
| Interest-bearing liabilities: | |||||||||||||
| Interest-bearing NOW accounts | $ | 1,595 | 1.25 | % | $ | 201,155 | $ | 137 | 0.14 | % | |||
| Money market and savings accounts | 6,038 | 1.81 | % | 681,600 | 409 | 0.12 | % | ||||||
| Time deposits | 2,506 | 3.08 | % | 92,076 | 179 | 0.39 | % | ||||||
| Total interest-bearing deposits | 10,139 | 1.87 | % | 974,831 | 725 | 0.15 | % | ||||||
| Borrowings: | |||||||||||||
| FHLB advances | 469 | 5.09 | % | — | — | — | % | ||||||
| Subordinated debt | 543 | 6.15 | % | 17,700 | 543 | 6.19 | % | ||||||
| TruPS | — | — | % | 2,498 | 70 | 5.65 | % | ||||||
| Total<br> borrowings | 1,012 | 5.61 | % | 20,198 | 613 | 6.12 | % | ||||||
| Total interest-bearing liabilities | 11,151 | 1.99 | % | 995,029 | 1,338 | 0.27 | % | ||||||
| Noninterest-bearing liabilities: | |||||||||||||
| Noninterest-bearing deposits<br> ^(2)^ | 1,022,075 | ||||||||||||
| Other liabilities | 19,260 | ||||||||||||
| Shareholders’ equity | 248,086 | ||||||||||||
| Total Liabilities and Shareholders’ Equity | $ | 2,284,450 | |||||||||||
| Net interest spread | 3.59 | % | 3.50 | % | |||||||||
| Net interest income and margin | $ | 48,318 | 4.54 | % | $ | 38,731 | 3.64 | % | |||||
| Cost of deposits | 1.05 | % | 0.07 | % | |||||||||
| Cost of funds | 1.13 | % | 0.13 | % |
All values are in US Dollars.
| (1) | Tax-exempt debt securities yields are presented on a tax equivalent basis using a 21% tax rate. |
|---|---|
| (2) | Average noninterest-bearing deposits represent 43.97%, and 51.18% of average total deposits for the six months ended June 30, 2023 and June 30, 2022, respectively. |
| 11 |
| --- |
SouthernCalifornia Bancorp and Subsidiary
GAAP to Non-GAAP Reconciliation
(Unaudited)
The following tables present a reconciliation of non-GAAP financial measures to GAAP measures for: (1) adjusted net income, (2) efficiency ratio, (3) adjusted efficiency ratio, (4) pre-tax pre-provision income, (5) adjusted pre-tax pre-provision income, (6) average tangible common equity, (7) adjusted return on average assets, (8) adjusted return on average equity, (9) return on average tangible common equity, (10) adjusted return on average tangible common equity, (11) tangible common equity, (12) tangible assets, (13) tangible common equity to tangible asset ratio, and (14) tangible book value per share. We believe the presentation of certain non-GAAP financial measures provides useful information to assess our consolidated financial condition and consolidated results of operations and to assist investors in evaluating our financial results relative to our peers. These non-GAAP financial measures complement our GAAP reporting and are presented below to provide investors and others with information that we use to manage the business each period. Because not all companies use identical calculations, the presentation of these non-GAAP financial measures may not be comparable to other similarly titled measures used by other companies. These non-GAAP measures should be taken together with the corresponding GAAP measures and should not be considered a substitute of the GAAP measures.
| Three Months Ended | Six Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30,<br> 2023 | March 31,<br><br> <br>2023 | June 30,<br><br> <br>2022 | June 30,<br><br> <br>2023 | June 30,<br><br> <br>2022 | ||||||||||
| ( in thousands) | ||||||||||||||
| Adjusted net income | ||||||||||||||
| Net income (loss) | $ | 8,224 | $ | (736 | ) | $ | 14,942 | $ | 710 | |||||
| Add: After-tax merger and related expenses ^(1)^ | — | 383 | — | 770 | ||||||||||
| Add: After-tax loss contingency expenses ^(1)^ | — | 4,579 | — | 4,579 | ||||||||||
| Adjusted net income (non-GAAP) | $ | 8,224 | $ | 4,226 | $ | 14,942 | $ | 6,059 | ||||||
| Efficiency Ratio | ||||||||||||||
| Noninterest expense | $ | 15,019 | $ | 21,708 | $ | 29,626 | $ | 37,260 | ||||||
| Less: Merger and related expenses | — | 544 | — | 1,068 | ||||||||||
| Deduct: Loss contingency expenses | — | 6,500 | — | 6,500 | ||||||||||
| Adjusted noninterest expense | $ | 15,019 | $ | 14,664 | $ | 29,626 | $ | 29,692 | ||||||
| Net interest income | 24,892 | 20,936 | 48,318 | 38,731 | ||||||||||
| Noninterest income | 1,570 | 1,526 | 2,666 | 3,129 | ||||||||||
| Total net interest income and noninterest income | $ | 26,462 | $ | 22,462 | $ | 50,984 | $ | 41,860 | ||||||
| Efficiency ratio (non-GAAP) | % | 56.8 | % | 96.6 | % | 58.1 | % | 89.0 | % | |||||
| Adjusted efficiency ratio (non-GAAP) | % | 56.8 | % | 65.3 | % | 58.1 | % | 70.9 | % | |||||
| Pre-tax pre-provision income | ||||||||||||||
| Net interest income | $ | 24,892 | $ | 20,936 | $ | 48,318 | $ | 38,731 | ||||||
| Noninterest income | 1,570 | 1,526 | 2,666 | 3,129 | ||||||||||
| Total net interest income and noninterest income | 26,462 | 22,462 | 50,984 | 41,860 | ||||||||||
| Less: Noninterest expense | 15,019 | 21,708 | 29,626 | 37,260 | ||||||||||
| Pre-tax pre-provision income (non-GAAP) | $ | 11,443 | $ | 754 | $ | 21,358 | $ | 4,600 | ||||||
| Add: Merger and related expenses | — | 544 | — | 1,068 | ||||||||||
| Add: Loss contingency expenses | — | 6,500 | — | 6,500 | ||||||||||
| Adjusted pre-tax pre-provision income (non-GAAP) | $ | 11,443 | $ | 7,798 | $ | 21,358 | $ | 12,168 |
All values are in US Dollars.
(1)After-tax merger and related expenses and loss contingency expenses are presented using a 29.56% tax rate.
| 12 |
| --- | | | Three<br> Months Ended | | | | | | | | Six<br> Months Ended | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | June 30,<br> 2023 | | March 31,<br><br> <br>2023 | | | June 30,<br><br> <br>2022 | | | June 30,<br><br> <br>2023 | | | June 30,<br><br> <br>2022 | | | | | (<br> in thousands) | | | | | | | | | | | | | | | Return<br> on Average Assets, Equity, and Tangible Equity | | | | | | | | | | | | | | | | Net income (loss) | | | $ | 8,224 | | $ | (736 | ) | $ | 14,942 | | $ | 710 | | | Adjusted net income (non-GAAP) | | | $ | 8,224 | | $ | 4,226 | | $ | 14,942 | | $ | 6,059 | | | Average assets | | | $ | 2,277,971 | | $ | 2,308,829 | | $ | 2,282,448 | | $ | 2,284,450 | | | Average shareholders’ equity | | | | 262,118 | | | 248,440 | | | 266,827 | | | 248,086 | | | Less: Average intangible assets | | | | 39,340 | | | 38,655 | | | 39,294 | | | 38,707 | | | Average tangible common equity (non-GAAP) | | | $ | 222,778 | | $ | 209,785 | | $ | 227,533 | | $ | 209,379 | | | Return on average assets | | % | | 1.46 | % | | (0.13 | %) | | 1.32 | % | | 0.06 | % | | Adjusted return on average assets (non-GAAP) | | % | | 1.46 | % | | 0.73 | % | | 1.32 | % | | 0.53 | % | | Return on average equity | | % | | 12.72 | % | | (1.19 | %) | | 11.29 | % | | 0.58 | % | | Adjusted return on average equity (non-GAAP) | | % | | 12.72 | % | | 6.82 | % | | 11.29 | % | | 4.93 | % | | Return on average tangible common equity (non-GAAP) | | % | | 14.97 | % | | (1.41 | %) | | 13.24 | % | | 0.68 | % | | Adjusted return on average tangible common equity (non-GAAP) | | % | | 14.97 | % | | 8.08 | % | | 13.24 | % | | 5.84 | % |
All values are in US Dollars.
| June 30,<br> 2023 | March 31,<br><br> <br>2023 | December 31,<br><br> <br>2022 | ||||||
|---|---|---|---|---|---|---|---|---|
| ( in thousands except share and per share data) | ||||||||
| Tangible Common Equity Ratio/Tangible Book Value Per Share | ||||||||
| Shareholders’ equity | $ | 267,539 | $ | 260,355 | ||||
| Less: Intangible assets | 39,296 | 39,387 | ||||||
| Tangible common equity (non-GAAP) | $ | 228,243 | $ | 220,968 | ||||
| Total assets | $ | 2,292,053 | $ | 2,283,927 | ||||
| Less: Intangible assets | 39,296 | 39,387 | ||||||
| Tangible assets (non-GAAP) | $ | 2,252,757 | $ | 2,244,540 | ||||
| Equity to asset ratio | % | 11.67 | % | 11.40 | % | |||
| Tangible common equity to tangible asset ratio (non-GAAP) | % | 10.13 | % | 9.84 | % | |||
| Book value per share | $ | 14.64 | $ | 14.51 | ||||
| Tangible book value per share (non-GAAP) | $ | 12.49 | $ | 12.32 | ||||
| Shares outstanding | 18,271,194 | 17,940,283 |
All values are in US Dollars.
INVESTORRELATIONS CONTACT
Kevin Mc Cabe
Bank of Southern California
kmccabe@banksocal.com
818.637.7065
| 13 |
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Exhibit 99.2
