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CST: 19/11/2019 15:04:56   

California BanCorp Reports Financial Results for the Second Quarter and Six Months Ended June 30, 2019

113 Days ago

OAKLAND, Calif., July 29, 2019 (GLOBE NEWSWIRE) -- California BanCorp (the “Company”) (OTCQX-CALB), the parent company of California Bank of Commerce (the “Bank”), today announced its financial results for the second quarter and six months ended June 30, 2019.

Net income was $2.55 million for the second quarter of 2019, representing an increase of $682 thousand or 36% compared to $1.87 million for the first quarter of 2019 and an increase of $391 thousand or 18% compared to $2.16 million in the second quarter of 2018. For the six months ended June 30, 2019, net income was $4.42 million representing an increase of $326 thousand or 8% compared to $4.09 million for the same period in 2018.

Per share earnings of $0.31 for the second quarter of 2019 compared to $0.23 for the first quarter of 2019 and $0.32 in the second quarter of 2018. For the six months ended June 30, 2019, per share earnings of $0.54 compared to $0.60 for the same period in 2018. Per share earnings reflect the impact of the Company’s capital raise completed in August of 2018 which increased shares outstanding by 1.18 million or 18%.

Financial Highlights

Income Statement

Three months ended June 30, 2019 compared to March 31, 2019

  • Net income increased $682 thousand to $2.6 million.
  • Revenue increased $360 thousand, or 3% to $11.1 million.
  • Non-interest expense decreased by $232 thousand, or 3% to $7.4 million.

Six months ended June 30, 2019 compared to June 30, 2018

  • Net income increased $326 thousand to $4.4 million.
  • Revenue increased $2.8 million, or 15% to $21.8 million.
  • Non-interest expense increased by $1.9 million, or 15% to $15.0 million.

Financial Position

June 30, 2019 compared to June 30, 2018

  • Total assets increased by $148 million, or 16% to $1.06 billion.
  • Total loans increased by $159 million, or 21% to $912 million.
  • Total deposits increased by $82 million, or 10% to $882 million.
  • Capital ratios remain healthy with a tier-one leverage ratio of 11.22%, tangible common equity ratio of 10.71% and total risk-based capital ratio of 12.26%.

“In the second quarter we achieved record quarterly earnings and year-over-year loan growth of $159.0 million or 21%,” stated Steve Shelton, President and Chief Executive Officer. “The second quarter results reflect the continued successful efforts of our entire team to capitalize on building quality, long-term relationships in healthy and vibrant Northern California business communities. Our capital raise in 2018 enabled us to build upon a strong foundation and continue to position our franchise as Northern California’s premier business bank.”

Net Interest Income and Margin – three and six months ended June 30, 2019 and June 30, 2018.

Net interest income for the quarter ended June 30, 2019 was $10.1 million, an increase of $247 thousand or 3% over $9.8 million for the three months ended March 31, 2019, and an increase of $1.5 million or 17% over $8.6 million for the quarter ended June 30, 2018. The increase in net interest income compared to the prior quarter of 2019 and the same period in 2018 was primarily attributable to an increase in interest income driven by the strong increase in average earning assets, specifically growth in average loans, which increased 5% over the prior quarter of 2019 and 20% over the same period in 2018.

The yield on total interest-earning assets increased to 5.07% during the quarter ended June 30, 2019, compared to 4.98% during the prior quarter and compared to 4.68% during the same period in 2018, as the result of a shift in the mix toward loans and increases in the prime rate. Average loans represented 93% of average earning assets in the quarter ended June 30, 2019, up from 92% in the prior quarter and 89% in the same period in 2018.

The Company’s net interest margin for the quarter was 4.18% compared to 4.26% for the prior quarter in 2019 and 4.10% for the same period in 2018. The decrease in margin compared to the prior quarter was primarily the result of an increase in the cost of funds related to higher wholesale borrowing activity in the period. The increase in margin compared to the same period last year was the result of an increase in the yield of average earning assets offset, in part, by an increase in the average cost of funds.

Non-Interest Income – three and six months ended June 30, 2019 and June 30, 2018.

The Company’s non-interest income for the quarters ended June 30, 2019, March 31, 2019, and June 30, 2018 was $976 thousand, $863 thousand and $888 thousand, respectively.

The increases in non-interest income of $113 thousand during the second quarter of 2019 compared to the first quarter of 2019 and $88 thousand compared to the same period last year was primarily due to increases in client deposit service charges and a loan termination fee.

For the six months ended June 30, 2019, non-interest income of $1.8 million represented a slight decrease from $1.9 million for the first six months of 2018. The decrease was primarily due to a decrease in gains on sale of loans partially offset by increases in deposit service charges and loan related fees.

Non-Interest Expense – three and six months ended June 30, 2019 and June 30, 2018.

The Company’s non-interest expense for the quarters ended June 30, 2019, March 31, 2019, and June 30, 2018 was $7.4 million, $7.6 million and $6.6 million, respectively.

For the quarter ended June 30, 2019 the decrease in non-interest expense of $232 thousand compared to the quarter ended March 31, 2019, was primarily due to a decrease in nonrecurring expenses associated with public company readiness and FDICIA implementation, and lower recurring legal and professional fees, partially offset by an increase in salaries and benefits related to hiring in support of growth. Compared to the same period in 2018, non-interest expense increased $810 thousand, primarily due to an increase in salary and benefits related to hiring to support growth.

Non-interest expenses of $15.0 million for the six months ended June 30, 2019 compared to $13.1 million for the first six months of 2018. The increase of $1.9 million was due primarily to an increase in salaries and benefits related to hiring to support the continued growth of the Bank and nonrecurring costs related to preparing for public registration and FDICIA implementation.

Balance Sheet

Total assets reached a record $1.06 billion as of June 30, 2019, up 16%, or $148 million compared to $911 million at June 30, 2018. Net loan growth of $157 million outpaced net deposit growth of $82 million as the Bank undertook a strategy in 2018 to reduce higher-cost wholesale deposits in its funding mix.

Total loans increased by $159 million, or 21% to $912 million at June 30, 2019, from $753 million at June 30, 2018, with the largest categories of growth within the loan portfolio in relationship-based commercial real estate loans at $119 million and commercial and industrial loans at $58 million. In the second quarter of 2019, total loans increased by $23 million from $889 million at March 31, 2019, with an increase in commercial and industrial loans of $17 million and an increase in commercial real estate loans of $14 million offset by a reduction in construction and other lending of $8 million.

Total deposits increased by $82 million, or 10% to $882 million at June 30, 2019, from $800 million at June 30, 2018, with growth primarily concentrated in core commercial deposits, which increased by $55 million, or 8% to $749 million. Non-interest bearing deposits, primarily commercial business operating accounts, represented 37.3% of total deposits at June 30, 2019, compared to 40.8% at June 30, 2018, primarily indicative of lower levels of operating cash from some commercial clients, as they deployed funds into commercial activity.

Credit Quality

Non-performing assets (“NPAs”) to total assets of 0.63% at June 30, 2019, compared to 0.40% at March 31, 2019 and 0.28% at June 30, 2018, with non-performing loans of $6.6 million, $4.2 million and $2.5 million, respectively, on those dates. The increase in NPAs at June 30, 2019 compared to the prior quarter related to one commercial loan that was placed on nonaccrual in the second quarter of 2019.

The allowance for loan losses increased by $1.7 million, or 17% to $11.5 million, or 1.26% of total loans at June 30, 2019, compared to $11.3 million at March 31, 2019 and $9.8 million, or 1.30% of total loans at June 30, 2018.

Shareholder’s Equity

Total shareholder’s equity increased by $35.5 million, or 39% to $126.6 million at June 30, 2019, from $91.2 million at June 30, 2018. The $35.5 million increase includes earnings during the twelve-month period totaling $9.0 million, proceeds from the exercise of stock options totaling $2.9 million and $23.6 million in net proceeds from the Company’s successful private placement of common stock during the third quarter of 2018. Tangible book value per common share increased by 19% between the periods, to $14.80 at June 30, 2019, from $12.49 at June 30, 2018.

“We are excited with the momentum of the Bank represented in this quarter’s operating results as we look to capitalize on recent investments and on emerging opportunities in our existing markets,” stated Thomas A. Sa, Senior Executive Vice President, Chief Financial Officer and Chief Operating Officer. “The capital raise in 2018 created significant capacity for the Bank and we are pleased to be deploying that capital at the pace represented in our loan growth over the past year. The capital also enabled the formation of a Sacramento, California initiative, that we expect will allow the Bank to expand and diversify our business in Northern California in the years ahead.”

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 stock trades on the OTCQX marketplace under the symbol CALB (formerly CABC). For more information on California BanCorp, call us at (510) 457-3751, or visit us at www.californiabankofcommerce.com.

Contacts

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

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

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. Also, the Company’s actual financial results in the future may differ from those currently expected or previously reported due to additional risks and uncertainties of which the Company is not currently aware or does not currently view as, but in the future may become, material to its business or operating results. 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.

Source: California BanCorp

 
California BanCorp Financial Data as of June 30, 2019 (Unaudited)
                                 
($ Thousands)   For the three months ended   Change %   For the six months ended   Change %
Income Statement   6/30/2019   3/31/2019   6/30/2018   QoQ   YoY   6/30/2019   6/30/2018   YTDoYTD
Interest and fees on loans   $ 11,743     $ 10,954     $ 9,384     7 %   25 %   $ 22,697     $ 18,483     23 %
Other interest income     478       540       424     (11 %)   13 %     1,019       827     23 %
Total interest income     12,221       11,494       9,808     6 %   25 %     23,715       19,310     23 %
                                 
Interest on deposits     1,641       1,543       997     6 %   65 %     3,184       1,860     71 %
Interest on borrowings and subordinated debentures     496       114       209     333 %   137 %     610       416     47 %
Total interest expense     2,137       1,657       1,206     29 %   77 %     3,794       2,276     67 %
Net interest income*       10,084         9,837         8,602     3 %   17 %       19,921         17,034     17 %
Provision for loan loss     246       581       191     (58 %)   29 %     826       450     84 %
Net interest income after provision     9,839       9,256       8,411     6 %   17 %     19,095       16,584     15 %
                                 
Service charges and other account fees     312       300       306     4 %   2 %     612       570     7 %
Loan related fees     508       370       320     37 %   59 %     877       743     18 %
Net gains on securities sales     -       -       -     0 %   0 %     -       -     0 %
Net gains on loan sales     -       23       108     (100 %)   (100 %)     23       283     (92 %)
Other     157       170       154     (8 %)   2 %     327       332     (2 %)
Total non-interest income*       976         863         888     13 %   10 %       1,839         1,928     (5 %)
                                 
Salaries and employee benefits     4,823       4,515       3,950     7 %   22 %     9,338       7,829     19 %
Occupancy and equipment expenses     771       745       746     3 %   3 %     1,517       1,410     8 %
Data processing, internet and software     418       419       357     (0 %)   17 %     837       742     13 %
Professional and legal     290       358       168     (19 %)   73 %     648       345     88 %
Strategic initiatives     70       648       212     (89 %)   (67 %)     718       514     40 %
Other operating expenses     1,010       930       1,140     9 %   (11 %)     1,940       2,220     (13 %)
Total operating expenses       7,383         7,615         6,573     (3 %)   12 %       14,998         13,060     15 %
                                 
Net income before taxes     3,432       2,504       2,726     37 %   26 %     5,936       5,452     9 %
Income taxes     882       636       567     39 %   56 %     1,518       1,360     12 %
Net income   $     2,550     $     1,868     $     2,159     36 %   18 %   $     4,418     $     4,092     8 %
                                 
*Revenue (net interest income + non-interest income)       11,060         10,700         9,490     3 %   17 %       21,761         18,962     15 %
                                 
Earnings Per Share                                
Basic earnings per share   $     0.32     $     0.23     $     0.33     36 %   (3 %)   $     0.55     $     0.63     (13 %)
Diluted earnings per share   $     0.31     $     0.23     $     0.32     36 %   (1 %)   $     0.54     $     0.60     (9 %)
Average shares outstanding     8,046,635       8,020,456       6,604,562               8,033,613       6,557,046      
Average diluted shares     8,124,165       8,102,543       6,843,821               8,113,184       6,831,442      
                                 
CORE EARNINGS SUMMARY                                
    For the three months ended   Change %   For the six months ended   Change %
Nonrecurring expense   6/30/2019   3/31/2019   6/30/2018   QoQ   YoY   6/30/2019   6/30/2018   YTDoYTD
Strategic initiatives   $ 70     $ 648     $ 598             $ 718     $ 900      
Total Nonrecurring expense     70       648       598               718       900      
                                 
Income taxes     21       191       176               212       266      
                                 
                                 
Nonrecurring expense (net of tax)       49         457         422                 506         635      
                                 
Core Net income   $     2,599     $     2,325     $     2,581     12 %   1 %   $     4,925     $     4,727     4 %
                                 
Core Earnings Per Share                                
Basic core earnings per share       0.32         0.29         0.39     11 %   (17 %)       0.61         0.72     (15 %)
Diluted core earnings per share       0.32         0.29         0.38     11 %   (15 %)       0.61         0.69     (12 %)
                                 
Core return on average assets     1.00 %     0.95 %     1.16 %             0.98 %     1.07 %    
Core return on average tangible common equity     8.84 %     8.19 %     12.58 %             8.52 %     11.81 %    
                                 
    For the three months ended   Change $   Change %    
Average Balance Sheet Items   6/30/2019   3/31/2019   6/30/2018   QoQ   YoY   QoQ   YoY    
Total Assets     1,040,185       995,362       894,024     44,823     146,161       5 %     16 %    
Total Loans     900,183       859,326       749,057     40,857     151,126       5 %     20 %    
Investments     39,817       42,719       12,165     (2,902 )   27,652       -7 %   N/A     
Earning Assets     967,796       936,929       840,653     30,867     127,143       3 %     15 %    
Non-Interest Bearing Deposits     323,337       334,493       317,759     (11,156 )   5,578       -3 %     2 %    
Core Deposits     741,289       760,652       665,711     (19,363 )   75,578       -3 %     11 %    
Total Deposits     838,103       857,034       775,625     (18,931 )   62,478       -2 %     8 %    
Borrowings     66,128       10,781       16,259     55,347     49,869     N/A   N/A     
Tangible Common Equity     117,969       115,117       82,247     2,852     35,722       2 %     43 %    
                                 
    For the six months ended   Change                  
Average Balance Sheet Items   6/30/2019   6/30/2018   $   %                
Total Assets     1,017,878       886,999       130,879     15 %                
Total Loans     879,910       739,472       140,438     19 %                
Investments     41,260       12,312       28,948     235 %                
Earning Assets     952,491       835,615       116,876     14 %                
Non-Interest Bearing Deposits     328,884       311,192       17,692     6 %                
Core Deposits     750,917       673,302       77,615     12 %                
Total Deposits     847,516       780,646       66,870     9 %                
Borrowings     38,608       16,114       22,494     140 %                
Tangible Common Equity     116,551       80,718       35,833     44 %                
                                 
                                 
    At the periods ended   Change $   Change %    
Balance Sheet   6/30/2019   3/31/2019   6/30/2018   QoQ   YoY   QoQ   YoY    
Cash and equivalents     55,396       61,320       111,202     (5,924 )   (55,806 )     -10 %     -50 %    
Investment securities     38,103       42,008       11,652     (3,905 )   26,451       -9 %   N/A     
Other investments     4,402       3,536       3,536     866     866       24 %     24 %    
                                 
Commercial loans     388,131       371,359       329,914     16,772     58,217       5 %     18 %    
CRE loans     477,094       462,779       357,969     14,315     119,125       3 %     33 %    
Construction and land loans     30,611       38,764       40,671     (8,153 )   (10,060 )     -21 %     -25 %    
Other loans     16,520       15,800       24,778     720     (8,258 )     5 %     -33 %    
Loans     912,356       888,702       753,332     23,654     159,024       3 %     21 %    
Allowance for loan losses     11,501       11,250       9,800     251     1,701       2 %     17 %    
Net loans       900,856         877,452         743,532       23,403       157,324       3 %     21 %    
                                 
Premises and equipment, net     1,786       1,942       2,428     (156 )   (642 )     -8 %     -26 %    
Bank owned life insurance     21,994       17,933       16,651     4,061     5,343       23 %     32 %    
Deferred income taxes, net     5,762       4,804       5,583     958     179       20 %     3 %    
Core Deposit Intangible     265       276       419     (10 )   (154 )     -4 %     -37 %    
Goodwill     7,350       7,350       7,350     -     -       0 %     0 %    
Other assets and interest receivable     23,534       21,885       9,003     1,650     14,531       8 %     161 %    
Total assets       1,059,448         1,038,506         911,356       20,942       148,092       2 %     16 %    
                                 
Demand deposits     329,497       335,719       326,556     (6,222 )   2,941       -2 %     1 %    
Interest bearing demand deposits     24,279       25,878       28,278     (1,599 )   (3,999 )     -6 %     -14 %    
Money market & savings deposits     395,379       414,734       354,785     (19,355 )   40,594       -5 %     11 %    
Time deposits     133,065       94,844       90,174     38,221     42,891       40 %     48 %    
Total deposits       882,221         871,175         799,793       11,046       82,428       1 %     10 %    
                                 
Borrowings     30,000       25,000       11,500     5,000     18,500       20 %     161 %    
Subordinated debentures, net     4,969       4,964       4,951     4     18       0 %     0 %    
Other liabilities     15,618       13,710       3,960     1,908     11,658       14 %   N/A     
Total liabilities     932,807       914,849       820,204     17,958     112,603       2 %     14 %    
                                 
Common stock     105,356       105,107       79,395     249     25,961       0 %     33 %    
Retained earnings     20,934       18,383       11,894     2,551     9,040       14 %     76 %    
Other comprehensive income     351       167       (137 )   184     488       110 %   N/A     
Total shareholder’s equity       126,641         123,657         91,152       2,984       35,489       2 %     39 %    
Total liabilities and equity       1,059,448         1,038,506         911,356       20,942       148,092       2 %     16 %    
                                 
Tangible book value per common share     14.80       14.43       12.49                      
Total shares outstanding     8,047,212       8,045,399       6,691,664                      
                                 
Core relationship deposits     749,156       778,627       694,165     (29,471 )   54,991              
                                 
                                 
    For the three months ended   For the six months ended            
Performance Ratios   6/30/2019   3/31/2019   6/30/2018   6/30/2019   6/30/2018            
Return on average assets     0.98 %     0.76 %     0.97 %   0.88 %   0.93 %            
Return on average tangible common equity     8.67 %     6.58 %     10.53 %   7.64 %   10.22 %            
Efficiency ratio     66.75 %     71.17 %     69.26 %   68.92 %   68.87 %            
                                 
Net Interest Margin                                
Net interest margin     4.18 %     4.26 %     4.10 %   4.22 %   4.17 %            
Average earning assets yield     5.07 %     4.98 %     4.68 %   5.02 %   4.66 %            
Average investment yield     3.14 %     3.14 %     2.09 %   3.14 %   2.14 %            
Average loan yield     5.23 %     5.17 %     5.03 %   5.20 %   5.04 %            
Average total deposit rate     0.79 %     0.73 %     0.51 %   0.76 %   0.48 %            
Average borrowing rate     3.01 %     4.31 %     5.18 %   3.19 %   5.19 %            
                                 
Other Ratios                                
Average total loans to total deposits     107.4 %     100.3 %     95.4 %   103.8 %   94.7 %            
Average C&I loans to total loans     41.0 %     41.2 %     43.9 %   40.3 %   43.9 %            
Average non-interest bearing deposits to total deposits     38.6 %     38.6 %     40.5 %   38.8 %   39.9 %            
Average core deposits to total deposits     88.4 %     88.4 %     87.7 %   88.6 %   86.2 %            
                                 
    At the periods ended                    
Capital Ratios - Bank   6/30/2019   3/31/2019   6/30/2018                    
Tier 1 leverage ratio     11.22 %     11.41 %     10.56 %                    
Common equity tier 1 capital ratio     10.71 %     10.81 %     10.65 %                    
Tier 1 risk-based capital ratio     10.71 %     10.81 %     10.65 %                    
Total risk-based capital ratio     12.26 %     12.38 %     12.35 %                    
                                 
    At the periods ended                    
Non-Performing Assets   6/30/2019   3/31/2019   6/30/2018                    
Non-Accrual Loans   $ 6,647     $ 4,185     $ 2,525                      
Restructured Loans     -       -       -                      
Total non-performing loans (NPL)     6,647       4,185       2,525                      
Other Real Estate Owned     -       -       -                      
Total non-performing assets (NPA)   $ 6,647     $ 4,185     $ 2,525                      
                                 
Restructured Loans Performing     1,528       1,586       1,009                      
                                 
Quarterly Net (Charge-offs)/Recoveries   $ 5     $ (135 )   $ 10                      
                                 
NPAs / Assets %     0.63 %     0.40 %     0.28 %                    
NPAs / Loans and OREO %     0.73 %     0.47 %     0.34 %                    
Loan Loss Reserves / Loans (%)     1.26 %     1.27 %     1.30 %                    
Loan Loss Reserves / NPLs (%)     173 %     269 %     388 %                    
                                 

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