SOUTHERN CALIFORNIA BANCORP REPORTS NET INCOME OF $4.4 MILLION FOR THE FOURTH QUARTER AND $25.9 MILLION FOR THE FULL YEAR OF 2023
- Significant increase in net income and earnings per share for 2023 compared to 2022
- Substantial growth in return on average assets and net interest margin
- Positive total loan growth of $29.4 million for the fourth quarter
- Increase in tangible book value per share by $0.48 to $13.56
- Decrease in net income for Q4 2023 compared to Q4 2022
- Impact of a $1 million pre-tax loss on the sale of securities
- Charge-off of $1.3 million for a nonaccrual loan reported in the prior quarter
Insights
Reviewing the financial results of Southern California Bancorp, several key metrics stand out. The year-over-year growth in net income of 61% is a significant achievement, particularly in the context of a challenging economic environment. This kind of growth outpaces the industry average for regional banks, which typically aim for single-digit growth percentages. The expansion of the net interest margin (NIM) to 4.33% from 4.06% is also noteworthy, as it suggests the bank has effectively managed its interest-earning assets and liabilities in a period of rising interest rates. This is a critical metric for profitability in the banking sector.
However, the reported decline in net income in the fourth quarter relative to both the previous quarter and the same quarter of the prior year warrants attention. The $1 million pre-tax loss on the sale of securities may raise concerns about the bank's investment strategies, though the reallocation of funds into higher-yielding securities could be a strategic move to bolster future earnings. Investors should monitor subsequent quarters to assess whether this strategy pays off in terms of increased interest income.
From a market perspective, Southern California Bancorp's strategic merger with California BanCorp could potentially enhance its market share and competitive positioning within the region. Mergers and acquisitions in the banking industry can lead to increased economies of scale, expanded customer bases and improved financial performance. However, the success of such mergers often hinges on the seamless integration of the two entities and the ability to realize projected synergies.
The increase in tangible book value per share by 3.7% signals to investors that the company is growing its intrinsic value, which can be a positive indicator of financial health and shareholder value. It's also important to note that the bank's loan growth contributes to its revenue stream, but it also implies an increased exposure to credit risk, especially in an economic downturn. The charge-off for a nonaccrual loan highlights this risk and underscores the importance of credit quality management.
Regarding the broader economic implications, the bank's performance, particularly the increase in loan yield to 5.94%, reflects the current high-interest-rate environment, which can be both a boon and a challenge for financial institutions. While higher yields on loans can lead to increased earnings, they also raise the cost of borrowing for consumers and businesses, potentially leading to a slowdown in loan demand and economic activity. Moreover, the bank's ability to grow its return on average assets (ROAA) to 1.12% from 0.70% is a strong indicator of efficient asset utilization, a critical factor for profitability, especially in a period where the Federal Reserve's monetary policy is focused on tightening liquidity to combat inflation.
— The Company Also Announced in a Separate Release that it has Entered into a Merger Agreement with California BanCorp
San Diego, Calif., Jan. 30, 2024 (GLOBE NEWSWIRE) -- Southern California Bancorp (“us,” “we,” “our,” or the “Company”) (NASDAQ: BCAL), the holding company for Bank of Southern California, N.A. (the “Bank”) announces its consolidated financial results for the fourth quarter and full year of 2023.
Southern California Bancorp reported net income of
“I’m pleased to report our 2023 full year results show strong growth over 2022, with 2023 net income of
“The highlights of our fourth quarter results include total loan growth of
“We are very excited about the merger with California BanCorp and California Bank of Commerce, which was jointly announced this morning. We believe it will be beneficial for both companies’ shareholders, as well as our clients and employees, and I look forward to working with California BanCorp Chief Executive Officer Steven Shelton and his team as we integrate our operations into one organization.”
Fourth Quarter 2023 Highlights
| ● | Net income of | |
| ● | Diluted earnings per share of | |
| ● | Net interest margin of | |
| ● | Return on average assets of |
1 Reconciliations of the non–U.S. generally accepted accounting principles (“GAAP”) measures are set forth at the end of this press release.
| ● | Return on average common equity of | |
| ● | Efficiency ratio (non-GAAP1) of | |
| ● | Tangible book value per common share (“TBV”) (non-GAAP1) of | |
| ● | Total assets of | |
| ● | Total loans, including loans held for sale of | |
| ● | Nonperforming assets to total assets ratio of | |
| ● | Total deposits of | |
| ● | Noninterest-bearing demand deposits were | |
| ● | Cost of deposits was | |
| ● | Cost of funds was | |
| ● | Bank’s capital exceeds minimums to be “well-capitalized,” the highest regulatory capital category |
Full Year 2023 Highlights
| ● | Net income increased to | |
| ● | Diluted earnings per share of | |
| ● | Total loan interest income increased to | |
| ● | Net interest margin of | |
| ● | Efficiency ratio (non-GAAP1) of | |
| ● | Provision for credit losses of | |
| ● | Total assets of | |
| ● | Total loans, including loans held for sale, increased to | |
| ● | Total deposits of | |
| ● | Noninterest bearing demand deposits were | |
| ● | Cost of deposits was | |
| ● | Tangible book value per common share (“TBV”) (non-GAAP1) of |
Fourth Quarter Operating Results
Net Income
Net income for the fourth quarter of 2023 was
Net Interest Income and Net Interest Margin
Net interest income for the fourth quarter of 2023 was
Net interest margin for the fourth quarter of 2023 was
Cost of funds for the fourth quarter of 2023 was 195 basis points, an increase of 33 basis points from 162 basis points in the prior quarter. The increase was primarily driven by a 31 basis point increase in the cost of interest-bearing deposits, a 13 basis point increase in the cost of FHLB borrowings, an increase in average interest-bearing deposits, and a decrease in average noninterest-bearing deposits. Average noninterest-bearing demand deposits decreased
Average total borrowings increased
Provision for Credit Losses
The Company recorded a provision for credit losses of
Noninterest (Loss) Income
The Company recorded a loss on noninterest income of
Noninterest Expense
Total noninterest expense for the fourth quarter of 2023 was
The
Efficiency ratio (non-GAAP1) for the fourth quarter of 2023 was
Income Tax
In the fourth quarter of 2023, the Company’s income tax expense was
Balance Sheet
Assets
Total assets at December 31, 2023 were
Loans
Total loans held for investment were
Deposits
Total deposits at December 31, 2023 were
Federal Home Loan Bank (“FHLB”) and Liquidity
At December 31, 2023, the Company had overnight FHLB borrowings of
At December 31, 2023, the Company had available borrowing capacity from the FHLB secured line of credit of approximately
Asset Quality
Total non-performing assets decreased to
The Company had no loans over 90 days past due that were accruing interest at December 31, 2023, and September 30, 2023.
There were
The allowance for credit losses, which is comprised of allowance for loan losses (ALL) and reserve for unfunded loan commitments, totaled
The allowance for loan losses was
Capital
Tangible book value (non-GAAP) per common share at December 31, 2023, was
The Bank’s leverage capital ratio and total risk-based capital ratio were
ABOUT SOUTHERN CALIFORNIA BANCORP AND BANK OF SOUTHERN CALIFORNIA, N.A.
Southern California Bancorp (NASDAQ: BCAL) is a registered bank holding company headquartered in San Diego, California. Bank of Southern California, N.A., a national banking association chartered under the laws of the United States (the “Bank”) and regulated by the Office of Comptroller of the Currency, is a wholly owned subsidiary of Southern California Bancorp. Established in 2001 and headquartered in San Diego, California, the Bank offers a range of financial products and services to individuals, professionals, and small- to medium-sized businesses through its 13 branch offices serving Orange, Los Angeles, Riverside, San Diego, and Ventura counties, as well as the Inland Empire. The Bank’s solutions-driven, relationship-based approach to banking provides accessibility to decision makers and enhances value through strong partnerships with its clients. Additional information is available at www.banksocal.com.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
In addition to historical information, this release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and other matters that are not historical facts. Examples of forward-looking statements include, among others, statements regarding expectations, plans or objectives for future operations, products or services, loan recoveries and the proposed merger (the “Merger”) of the Company and California
BanCorp (“CBC”), as well as forecasts relating to financial and operating results or other measures of economic performance. Forward-looking statements reflect management’s current view about future events and involve risks and uncertainties that may cause actual results to differ from those expressed in the forward-looking statement or historical results. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and often include the words or phrases such as “aim,” “can,” “may,” “could,” “predict,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “hope,” “intend,” “plan,” “potential,” “project,” “will likely result,” “continue,” “seek,” “shall,” “possible,” “projection,” “optimistic,” and “outlook,” and variations of these words and similar expressions.
Some factors that could cause actual results to differ materially from historical or expected results include, among others: the risk factors discussed in the Company’s Registration Statement on Form 10, as amended, filed with the Securities and Exchange Commission (“SEC”); changes in real estate markets and general economic conditions, either nationally or locally in the areas in which the Company conducts business; the impact on financial markets from geopolitical conflicts; inflation, interest rate, market and monetary fluctuations; increases in competitive pressures among financial institutions and businesses offering similar products and services; higher than anticipated defaults in the Company’s loan portfolio; changes in management’s estimate of the adequacy of the allowance for credit losses; legislative or regulatory changes or changes in accounting principles, policies or guidelines; the impacts of recent bank failures; the occurrence of any event, change or other circumstances that could give rise to the right of the Company or CBC to terminate their agreement with respect to the Merger; the outcome of any legal proceedings that may be instituted against the Company or CBC; delays in completing the Merger; the failure to obtain necessary regulatory approvals (and the risk that such approvals impose conditions that could adversely affect the combined company or the expected benefits of the Merger); the failure to obtain shareholder approvals or to satisfy any of the other conditions to the Merger on a timely basis or at all; the ability to complete the Merger and integration of the Company and CBC successfully; costs being greater than anticipated; cost savings being less than anticipated; the risk that the Merger disrupts the business of the Company, CBC or both; difficulties in retaining senior management, employees or customers; and other factors that may affect the future results of the Company and CBC.
Additional information regarding these and other risks and uncertainties to which our business and future financial performance are subject is contained in the Company’s Registration Statement on Form 10, as amended and other documents the Company files with the SEC from time to time.
Any forward-looking statement made in this release is based only on information currently available to management and speaks only as of the date on which it is made. The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements or to conform such forward-looking statements to actual results or to changes in its opinions or expectations, except as required by law.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the Merger, the Company will file with the SEC a Registration Statement on Form S-4 that will include a joint proxy statement of the Company and CBC and a prospectus of the Company, as well as other relevant documents concerning the proposed transaction. Certain matters in respect of the Merger will be submitted to the Company’s and CBC’s shareholders for their consideration. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
INVESTORS AND SHAREHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER WHEN THEY BECOME AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE MERGER BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Investors will be able to obtain a free copy of the definitive joint proxy statement/prospectus, as well as other filings containing information about the Company and CBC, without charge, at the SEC’s website, www.sec.gov. Copies of the joint proxy statement/prospectus and the filings with the SEC that will be incorporated by reference in the joint proxy statement/prospectus can also be obtained, without charge, in the “Investor Relations” section of the Company’s website at www.banksocal.com (for the Company’s filings) and in the “Investor Relations” section of CBC’s website, www.californiabankofcommerce.com (for CBC’s filings).
PARTICIPANTS IN THE SOLICITATION
The Company, CBC and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of the Company and CBC in connection with the Merger. Information regarding the Company’s directors and executive officers and their ownership of Company common stock is available in the Company’s definitive proxy statement for its 2023 annual meeting of shareholders filed with the SEC on June 13, 2023 and other documents filed by the Company with the SEC. Information regarding CBC’s directors and executive officers and their ownership of CBC common stock is available in CBC’s definitive proxy statement for its 2023 annual meeting of shareholders filed with the SEC on April 20, 2023 and other documents filed by CBC with the SEC. Other information regarding the participants in the proxy solicitation and their ownership of common stock will be contained in the joint proxy statement/prospectus relating to the Merger. Free copies of these documents may be obtained as described in the preceding paragraph.
Southern California Bancorp and Subsidiary
Financial Highlights (Unaudited)
| At or for the Three Months Ended | At or for the Year Ended | |||||||||||||||||||
| December 31, 2023 | September 30, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | ||||||||||||||||
| EARNINGS | ($ in thousands except share and per share data) | |||||||||||||||||||
| Net interest income | $ | 22,559 | $ | 23,261 | $ | 25,269 | $ | 94,138 | $ | 87,786 | ||||||||||
| Provision for (reversal of) credit losses | $ | 824 | $ | (96 | ) | $ | 750 | $ | 915 | $ | 5,956 | |||||||||
| Noninterest (loss) income | $ | (102 | ) | $ | 815 | $ | 188 | $ | 3,379 | $ | 3,675 | |||||||||
| Noninterest expense | $ | 15,339 | $ | 14,781 | $ | 13,112 | $ | 59,746 | $ | 63,522 | ||||||||||
| Income tax expense | $ | 1,882 | $ | 2,835 | $ | 3,121 | $ | 10,946 | $ | 5,870 | ||||||||||
| Net income | $ | 4,412 | $ | 6,556 | $ | 8,474 | $ | 25,910 | $ | 16,113 | ||||||||||
| Pre-tax pre-provision income (1) | $ | 7,118 | $ | 9,295 | $ | 12,345 | $ | 37,771 | $ | 27,939 | ||||||||||
| Adjusted pre-tax pre-provision income (1) | $ | 7,118 | $ | 9,295 | $ | 12,337 | $ | 37,771 | $ | 34,416 | ||||||||||
| Diluted earnings per share | $ | 0.24 | $ | 0.35 | $ | 0.46 | $ | 1.39 | $ | 0.88 | ||||||||||
| Shares outstanding at period end | 18,369,115 | 18,309,282 | 17,940,283 | 18,369,115 | 17,940,283 | |||||||||||||||
| PERFORMANCE RATIOS | ||||||||||||||||||||
| Return on average assets | 0.75 | % | 1.12 | % | 1.46 | % | 1.12 | % | 0.70 | % | ||||||||||
| Adjusted return on average assets (1) | 0.75 | % | 1.12 | % | 1.45 | % | 1.12 | % | 0.90 | % | ||||||||||
| Return on average common equity | 6.21 | % | 9.38 | % | 13.21 | % | 9.48 | % | 6.44 | % | ||||||||||
| Adjusted return on average common equity (1) | 6.21 | % | 9.38 | % | 13.20 | % | 9.48 | % | 8.28 | % | ||||||||||
| Yield on total loans | 6.08 | % | 5.97 | % | 5.47 | % | 5.94 | % | 5.02 | % | ||||||||||
| Yield on interest earning assets | 5.85 | % | 5.72 | % | 5.14 | % | 5.69 | % | 4.33 | % | ||||||||||
| Cost of deposits | 1.81 | % | 1.56 | % | 0.51 | % | 1.37 | % | 0.23 | % | ||||||||||
| Cost of funds | 1.95 | % | 1.62 | % | 0.56 | % | 1.46 | % | 0.29 | % | ||||||||||
| Net interest margin | 4.05 | % | 4.23 | % | 4.62 | % | 4.33 | % | 4.06 | % | ||||||||||
| Efficiency ratio (1) | 68.30 | % | 61.39 | % | 51.51 | % | 61.27 | % | 69.45 | % | ||||||||||
| Adjusted efficiency ratio (1) | 68.30 | % | 61.39 | % | 51.54 | % | 61.27 | % | 62.37 | % | ||||||||||
| As of | ||||||||||||
| December 31, 2023 | September 30, 2023 | December 31, 2022 | ||||||||||
| CAPITAL | ($ in thousands except share and per share data) | |||||||||||
| Tangible equity to tangible assets (1) | 10.73 | % | 10.53 | % | 9.84 | % | ||||||
| Book value (BV) per common share | $ | 15.69 | $ | 15.21 | $ | 14.51 | ||||||
| Tangible BV per common share (1) | $ | 13.56 | $ | 13.08 | $ | 12.32 | ||||||
| ASSET QUALITY | ||||||||||||
| Allowance for loan losses (ALL) | $ | 22,569 | $ | 22,705 | $ | 17,099 | ||||||
| Reserve for unfunded loan commitments | $ | 933 | $ | 1,240 | $ | 1,310 | ||||||
| Allowance for credit losses (ACL) | $ | 23,502 | $ | 23,945 | $ | 18,409 | ||||||
| ALL to total loans held for investment | 1.15 | % | 1.18 | % | 0.90 | % | ||||||
| ACL to total loans held for investment | 1.20 | % | 1.24 | % | 0.97 | % | ||||||
| Nonperforming loans | $ | 13,004 | $ | 14,272 | $ | 41 | ||||||
| Other real estate owned | $ | — | $ | — | $ | — | ||||||
| Nonperforming assets to total assets | 0.55 | % | 0.62 | % | — | % | ||||||
| END OF PERIOD BALANCES | ||||||||||||
| Total loans, including loans held for sale | $ | 1,964,791 | $ | 1,935,364 | $ | 1,906,800 | ||||||
| Total assets | $ | 2,360,252 | $ | 2,313,649 | $ | 2,283,927 | ||||||
| Deposits | $ | 1,943,556 | $ | 1,983,857 | $ | 1,931,905 | ||||||
| Loans to deposits | 101.1 | % | 97.6 | % | 98.7 | % | ||||||
| Shareholders’ equity | $ | 288,152 | $ | 278,550 | $ | 260,355 | ||||||
| (1 | ) | Non-GAAP measure. See – GAAP to Non-GAAP reconciliation |
| At or for the Three Months Ended | At or for the Year Ended | |||||||||||||||||||
| ALLOWANCE for CREDIT LOSSES | December 31, 2023 | September 30, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||||
| ($ in thousands) | ||||||||||||||||||||
| Allowance for loan losses | ||||||||||||||||||||
| Balance at beginning of period | $ | 22,705 | $ | 22,502 | $ | 16,436 | $ | 17,099 | $ | 11,657 | ||||||||||
| Adoption of ASU 2016-13 (1) | — | — | — | 5,027 | — | |||||||||||||||
| Provision for credit losses | 1,131 | 202 | 650 | 1,731 | 5,450 | |||||||||||||||
| Charge-offs | (1,267 | ) | — | — | (1,303 | ) | (21 | ) | ||||||||||||
| Recoveries | — | 1 | 13 | 15 | 13 | |||||||||||||||
| Net (charge-offs) recoveries | (1,267 | ) | 1 | 13 | (1,288 | ) | (8 | ) | ||||||||||||
| Balance, end of period | $ | 22,569 | $ | 22,705 | $ | 17,099 | $ | 22,569 | $ | 17,099 | ||||||||||
| Reserve for unfunded loan commitments | ||||||||||||||||||||
| Balance, beginning of period | $ | 1,240 | $ | 1,538 | $ | 1,210 | $ | 1,310 | $ | 804 | ||||||||||
| Adoption of ASU 2016-13 (1) | — | — | — | 439 | — | |||||||||||||||
| (Reversal of) provision for credit losses | (307 | ) | (298 | ) | 100 | (816 | ) | 506 | ||||||||||||
| Balance, end of period | 933 | 1,240 | 1,310 | 933 | 1,310 | |||||||||||||||
| Allowance for credit losses | $ | 23,502 | $ | 23,945 | $ | 18,409 | $ | 23,502 | $ | 18,409 | ||||||||||
| ALL to total loans held for investment | 1.15 | % | 1.18 | % | 0.90 | % | 1.15 | % | 0.90 | % | ||||||||||
| ACL to total loans held for investment | 1.20 | % | 1.24 | % | 0.97 | % | 1.20 | % | 0.97 | % | ||||||||||
| (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. |
Southern California Bancorp and Subsidiary
Balance Sheets (Unaudited)
| December 31, 2023 | September 30, 2023 | December 31, 2022 | ||||||||||
| ASSETS | ($ in thousands) | |||||||||||
| Cash and due from banks | $ | 33,008 | $ | 33,517 | $ | 60,295 | ||||||
| Federal funds sold & interest-bearing balances | 53,785 | 61,604 | 26,465 | |||||||||
| Total cash and cash equivalents | 86,793 | 95,121 | 86,760 | |||||||||
| Securities available-for-sale, at fair value | 130,035 | 111,840 | 112,580 | |||||||||
| Securities held-to-maturity, at cost (fair value of | 53,616 | 53,699 | 53,946 | |||||||||
| Loans held for sale | 7,349 | 4,813 | 9,027 | |||||||||
| Loans held for investment: | ||||||||||||
| Construction & land development | 243,521 | 237,320 | 239,067 | |||||||||
| 1-4 family residential | 143,903 | 141,668 | 144,322 | |||||||||
| Multifamily | 221,247 | 218,170 | 218,606 | |||||||||
| Other commercial real estate | 1,024,243 | 1,019,647 | 958,676 | |||||||||
| Commercial & industrial | 320,142 | 310,990 | 331,644 | |||||||||
| Other consumer | 4,386 | 2,756 | 5,458 | |||||||||
| Total loans held for investment | 1,957,442 | 1,930,551 | 1,897,773 | |||||||||
| Allowance for credit losses - loans | (22,569 | ) | (22,705 | ) | (17,099 | ) | ||||||
| Total loans held for investment, net | 1,934,873 | 1,907,846 | 1,880,674 | |||||||||
| Restricted stock at cost | 16,055 | 16,027 | 14,543 | |||||||||
| Premises and equipment | 13,270 | 13,565 | 14,334 | |||||||||
| Right of use asset | 9,291 | 10,007 | 8,607 | |||||||||
| Goodwill | 37,803 | 37,803 | 37,803 | |||||||||
| Core deposit intangible | 1,195 | 1,275 | 1,584 | |||||||||
| Bank owned life insurance | 38,918 | 38,665 | 37,972 | |||||||||
| Deferred taxes, net | 11,137 | 12,542 | 10,699 | |||||||||
| Accrued interest and other assets | 19,917 | 10,446 | 15,398 | |||||||||
| Total assets | $ | 2,360,252 | $ | 2,313,649 | $ | 2,283,927 | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| Deposits: | ||||||||||||
| Noninterest-bearing demand | $ | 675,098 | $ | 735,979 | $ | 923,899 | ||||||
| Interest-bearing NOW accounts | 381,943 | 354,489 | 209,625 | |||||||||
| Money market and savings accounts | 636,685 | 699,942 | 668,602 | |||||||||
| Time deposits | 249,830 | 193,447 | 129,779 | |||||||||
| Total deposits | 1,943,556 | 1,983,857 | 1,931,905 | |||||||||
| Borrowings | 102,865 | 25,842 | 67,770 | |||||||||
| Operating lease liability | 12,117 | 12,657 | 11,055 | |||||||||
| Accrued interest and other liabilities | 13,562 | 12,743 | 12,842 | |||||||||
| Total liabilities | 2,072,100 | 2,035,099 | 2,023,572 | |||||||||
| Shareholders’ Equity: | ||||||||||||
| Common stock - 50,000,000 shares authorized, no par value; issued and outstanding 18,369,115 at December 31, 2023; 18,309,282 at September 30, 2023 and 17,940,283 at December 31, 2022) | 222,036 | 221,632 | 218,280 | |||||||||
| Retained earnings | 70,575 | 66,163 | 48,516 | |||||||||
| Accumulated other comprehensive loss - net of taxes | (4,459 | ) | (9,245 | ) | (6,441 | ) | ||||||
| Total shareholders’ equity | 288,152 | 278,550 | 260,355 | |||||||||
| Total liabilities and shareholders’ equity | $ | 2,360,252 | $ | 2,313,649 | $ | 2,283,927 | ||||||
Southern California Bancorp and Subsidiary
Income Statements - Quarterly and Year-to-Date (Unaudited)
| Three Months Ended | Year Ended | |||||||||||||||||||
| December 31, 2023 | September 30, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | ||||||||||||||||
| ($ in thousands except share and per share data) | ||||||||||||||||||||
| INTEREST AND DIVIDEND INCOME | ||||||||||||||||||||
| Interest and fees on loans | $ | 29,968 | $ | 28,977 | $ | 25,781 | $ | 113,951 | $ | 86,366 | ||||||||||
| Interest on debt securities | 991 | 942 | 647 | 3,497 | 2,013 | |||||||||||||||
| Interest on tax-exempted debt securities | 353 | 359 | 488 | 1,655 | 1,372 | |||||||||||||||
| Interest and dividends from other institutions | 1,257 | 1,206 | 1,227 | 4,419 | 3,824 | |||||||||||||||
| Total interest and dividend income | 32,569 | 31,484 | 28,143 | 123,522 | 93,575 | |||||||||||||||
| INTEREST EXPENSE | ||||||||||||||||||||
| Interest on NOW, savings, and money market accounts | 6,606 | 5,922 | 2,096 | 20,161 | 3,793 | |||||||||||||||
| Interest on time deposits | 2,331 | 1,867 | 463 | 6,704 | 797 | |||||||||||||||
| Interest on borrowings | 1,073 | 434 | 315 | 2,519 | 1,199 | |||||||||||||||
| Total interest expense | 10,010 | 8,223 | 2,874 | 29,384 | 5,789 | |||||||||||||||
| Net interest income | 22,559 | 23,261 | 25,269 | 94,138 | 87,786 | |||||||||||||||
| Provision for (reversal of) credit losses (1) | 824 | (96 | ) | 750 | 915 | 5,956 | ||||||||||||||
| Net interest income after provision for credit losses | 21,735 | 23,357 | 24,519 | 93,223 | 81,830 | |||||||||||||||
| NONINTEREST (LOSS) INCOME | ||||||||||||||||||||
| Service charges and fees on deposit accounts | 507 | 470 | 456 | 1,946 | 1,796 | |||||||||||||||
| (Loss) gain on sale of loans | — | (54 | ) | 293 | 831 | 1,349 | ||||||||||||||
| Bank owned life insurance income | 253 | 238 | 221 | 946 | 1,490 | |||||||||||||||
| Servicing and related income on loans | 17 | 61 | 53 | 240 | 192 | |||||||||||||||
| Loss on sale of debt securities | (1,008 | ) | — | (994 | ) | (974 | ) | (994 | ) | |||||||||||
| Loss on sale of building and related fixed assets | — | — | — | — | (768 | ) | ||||||||||||||
| Other charges and fees | 129 | 100 | 159 | 390 | 610 | |||||||||||||||
| Total noninterest (loss) income | (102 | ) | 815 | 188 | 3,379 | 3,675 | ||||||||||||||
| NONINTEREST EXPENSE | ||||||||||||||||||||
| Salaries and employee benefits | 9,598 | 9,736 | 8,634 | 39,249 | 37,069 | |||||||||||||||
| Occupancy and equipment expenses | 1,678 | 1,579 | 1,458 | 6,231 | 6,210 | |||||||||||||||
| Data processing | 1,158 | 1,144 | 1,089 | 4,534 | 4,609 | |||||||||||||||
| Legal, audit and professional | 1,161 | 598 | 487 | 3,211 | 2,597 | |||||||||||||||
| Regulatory assessments | 320 | 369 | 345 | 1,508 | 1,550 | |||||||||||||||
| Director and shareholder expenses | 207 | 215 | 219 | 849 | 946 | |||||||||||||||
| Merger and related (income) expenses | — | — | (8 | ) | — | 1,177 | ||||||||||||||
| Core deposit intangible amortization | 80 | 128 | 140 | 389 | 438 | |||||||||||||||
| Litigation settlements, net | — | — | — | — | 5,525 | |||||||||||||||
| Other expense | 1,137 | 1,012 | 748 | 3,775 | 3,401 | |||||||||||||||
| Total noninterest expense | 15,339 | 14,781 | 13,112 | 59,746 | 63,522 | |||||||||||||||
| Income before income taxes | 6,294 | 9,391 | 11,595 | 36,856 | 21,983 | |||||||||||||||
| Income tax expense | 1,882 | 2,835 | 3,121 | 10,946 | 5,870 | |||||||||||||||
| Net income | $ | 4,412 | $ | 6,556 | $ | 8,474 | $ | 25,910 | $ | 16,113 | ||||||||||
| Net income per share - basic | $ | 0.24 | $ | 0.36 | $ | 0.47 | $ | 1.42 | $ | 0.90 | ||||||||||
| Net income per share - diluted | $ | 0.24 | $ | 0.35 | $ | 0.46 | $ | 1.39 | $ | 0.88 | ||||||||||
| Weighted average common share-diluted | 18,727,519 | 18,672,132 | 18,359,781 | 18,656,742 | 18,228,287 | |||||||||||||||
| Pre-tax, pre-provision income (2) | $ | 7,118 | $ | 9,295 | $ | 12,345 | $ | 37,771 | $ | 27,939 | ||||||||||
| (1 | ) | Included (reversal of) provision for unfunded commitments of |
| (2 | ) | Non-GAAP measure. See – GAAP to Non-GAAP reconciliation. |
Southern California Bancorp and Subsidiary
Average Balance Sheets and Yield Analysis
(Unaudited)
| Three Months Ended | ||||||||||||||||||||||||||||||||||||
| December 31, 2023 | September 30, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||||||||
| Average Balance | Income/ Expense | Yield/ Cost | Average Balance | Income/ Expense | Yield/ Cost | Average Balance | Income/ Expense | Yield/ Cost | ||||||||||||||||||||||||||||
| Assets | ($ in thousands) | |||||||||||||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||||||||||||||
| Total loans | $ | 1,954,396 | $ | 29,968 | 6.08 | % | $ | 1,924,384 | $ | 28,977 | 5.97 | % | $ | 1,870,705 | $ | 25,781 | 5.47 | % | ||||||||||||||||||
| Taxable debt securities | 113,375 | 991 | 3.47 | % | 111,254 | 942 | 3.36 | % | 102,205 | 647 | 2.51 | % | ||||||||||||||||||||||||
| Tax-exempt debt securities (1) | 58,644 | 353 | 3.02 | % | 59,630 | 359 | 3.02 | % | 73,166 | 488 | 3.35 | % | ||||||||||||||||||||||||
| Deposits in other financial institutions | 56,313 | 759 | 5.35 | % | 50,367 | 681 | 5.36 | % | 40,781 | 347 | 3.38 | % | ||||||||||||||||||||||||
| Fed funds sold/resale agreements | 9,008 | 125 | 5.51 | % | 20,653 | 283 | 5.44 | % | 68,437 | 636 | 3.69 | % | ||||||||||||||||||||||||
| Restricted stock investments and other bank stock | 16,394 | 373 | 9.03 | % | 16,365 | 242 | 5.87 | % | 14,883 | 244 | 6.50 | % | ||||||||||||||||||||||||
| Total interest-earning assets | 2,208,130 | 32,569 | 5.85 | % | 2,182,653 | 31,484 | 5.72 | % | 2,170,177 | 28,143 | 5.14 | % | ||||||||||||||||||||||||
| Total noninterest-earning assets | 137,193 | 131,288 | 139,205 | |||||||||||||||||||||||||||||||||
| Total assets | $ | 2,345,323 | $ | 2,313,941 | $ | 2,309,382 | ||||||||||||||||||||||||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||
| Interest-bearing NOW accounts | $ | 362,579 | $ | 1,860 | 2.04 | % | $ | 353,714 | $ | 1,706 | 1.91 | % | $ | 215,272 | $ | 121 | 0.22 | % | ||||||||||||||||||
| Money market and savings accounts | 669,391 | 4,746 | 2.81 | % | 675,609 | 4,216 | 2.48 | % | 700,544 | 1,975 | 1.12 | % | ||||||||||||||||||||||||
| Time deposits | 208,700 | 2,331 | 4.43 | % | 183,745 | 1,867 | 4.03 | % | 123,524 | 463 | 1.49 | % | ||||||||||||||||||||||||
| Total interest-bearing deposits | 1,240,670 | 8,937 | 2.86 | % | 1,213,068 | 7,789 | 2.55 | % | 1,039,340 | 2,559 | 0.98 | % | ||||||||||||||||||||||||
| Borrowings: | ||||||||||||||||||||||||||||||||||||
| FHLB advances | 56,380 | 802 | 5.64 | % | 11,731 | 163 | 5.51 | % | 3,696 | 44 | 4.72 | % | ||||||||||||||||||||||||
| Subordinated debt | 17,854 | 271 | 6.02 | % | 17,830 | 271 | 6.03 | % | 17,759 | 271 | 6.05 | % | ||||||||||||||||||||||||
| Total borrowings | 74,234 | 1,073 | 5.73 | % | 29,561 | 434 | 5.82 | % | 21,455 | 315 | 5.82 | % | ||||||||||||||||||||||||
| Total interest-bearing liabilities | 1,314,904 | 10,010 | 3.02 | % | 1,242,629 | 8,223 | 2.63 | % | 1,060,795 | 2,874 | 1.07 | % | ||||||||||||||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||
| Noninterest-bearing deposits (2) | 721,169 | 768,148 | 970,908 | |||||||||||||||||||||||||||||||||
| Other liabilities | 27,178 | 25,722 | 23,199 | |||||||||||||||||||||||||||||||||
| Shareholders’ equity | 282,072 | 277,442 | 254,480 | |||||||||||||||||||||||||||||||||
| Total Liabilities and Shareholders’ Equity | $ | 2,345,323 | $ | 2,313,941 | $ | 2,309,382 | ||||||||||||||||||||||||||||||
| Net interest spread | 2.83 | % | 3.09 | % | 4.07 | % | ||||||||||||||||||||||||||||||
| Net interest income and margin | $ | 22,559 | 4.05 | % | $ | 23,261 | 4.23 | % | $ | 25,269 | 4.62 | % | ||||||||||||||||||||||||
| Cost of deposits | 1.81 | % | 1.56 | % | 0.51 | % | ||||||||||||||||||||||||||||||
| Cost of funds | 1.95 | % | 1.62 | % | 0.56 | % | ||||||||||||||||||||||||||||||
| (1 | ) | Tax-exempt debt securities yields are presented on a tax equivalent basis using a |
| (2 | ) | Average noninterest-bearing deposits represent |
Southern California Bancorp and Subsidiary
Average Balance Sheets and Yield Analysis
(Unaudited)
| Year Ended | ||||||||||||||||||||||||
| December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||
| Average Balance | Income/ Expense | Yield/ Cost | Average Balance | Income/ Expense | Yield/ Cost | |||||||||||||||||||
| Assets | ($ in thousands) | |||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||
| Total loans | $ | 1,918,443 | $ | 113,951 | 5.94 | % | $ | 1,720,560 | $ | 86,366 | 5.02 | % | ||||||||||||
| Taxable debt securities | 107,021 | 3,497 | 3.27 | % | 96,357 | 2,013 | 2.09 | % | ||||||||||||||||
| Tax-exempt debt securities (1) | 65,674 | 1,655 | 3.19 | % | 54,744 | 1,372 | 3.17 | % | ||||||||||||||||
| Deposits in other financial institutions | 46,826 | 2,434 | 5.20 | % | 210,467 | 1,508 | 0.72 | % | ||||||||||||||||
| Fed funds sold/resale agreements | 18,114 | 923 | 5.10 | % | 65,172 | 1,388 | 2.13 | % | ||||||||||||||||
| Restricted stock investments and other bank stock | 15,930 | 1,062 | 6.67 | % | 14,668 | 928 | 6.33 | % | ||||||||||||||||
| Total interest-earning assets | 2,172,008 | 123,522 | 5.69 | % | 2,161,968 | 93,575 | 4.33 | % | ||||||||||||||||
| Total noninterest-earning assets | 134,225 | 139,450 | ||||||||||||||||||||||
| Total assets | $ | 2,306,233 | $ | 2,301,418 | ||||||||||||||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||
| Interest-bearing NOW accounts | $ | 308,537 | $ | 5,161 | 1.67 | % | $ | 211,075 | $ | 312 | 0.15 | % | ||||||||||||
| Money market and savings accounts | 673,176 | 15,000 | 2.23 | % | 690,830 | 3,481 | 0.50 | % | ||||||||||||||||
| Time deposits | 180,219 | 6,704 | 3.72 | % | 100,746 | 797 | 0.79 | % | ||||||||||||||||
| Total interest-bearing deposits | 1,161,932 | 26,865 | 2.31 | % | 1,002,651 | 4,590 | 0.46 | % | ||||||||||||||||
| Borrowings: | ||||||||||||||||||||||||
| FHLB advances | 26,390 | 1,434 | 5.43 | % | 932 | 43 | 4.61 | % | ||||||||||||||||
| Subordinated debt | 17,818 | 1,085 | 6.09 | % | 17,723 | 1,086 | 6.13 | % | ||||||||||||||||
| TruPS | — | — | — | % | 1,239 | 70 | 5.65 | % | ||||||||||||||||
| Total borrowings | 44,208 | 2,519 | 5.70 | % | 19,894 | 1,199 | 6.03 | % | ||||||||||||||||
| Total interest-bearing liabilities | 1,206,140 | 29,384 | 2.44 | % | 1,022,545 | 5,789 | 0.57 | % | ||||||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||||
| Noninterest-bearing deposits (2) | 801,882 | 1,006,795 | ||||||||||||||||||||||
| Other liabilities | 24,865 | 22,024 | ||||||||||||||||||||||
| Shareholders’ equity | 273,346 | 250,054 | ||||||||||||||||||||||
| Total Liabilities and Shareholders’ Equity | $ | 2,306,233 | $ | 2,301,418 | ||||||||||||||||||||
| Net interest spread | 3.25 | % | 3.76 | % | ||||||||||||||||||||
| Net interest income and margin | $ | 94,138 | 4.33 | % | $ | 87,786 | 4.06 | % | ||||||||||||||||
| Cost of deposits | 1.37 | % | 0.23 | % | ||||||||||||||||||||
| Cost of funds | 1.46 | % | 0.29 | % | ||||||||||||||||||||
| (1 | ) | Tax-exempt debt securities yields are presented on a tax equivalent basis using a |
| (2 | ) | Average noninterest-bearing deposits represent |
Southern California Bancorp and Subsidiary
GAAP to Non-GAAP Reconciliation
(Unaudited)
The following tables present a reconciliation of non-GAAP financial measures to GAAP measures for: (1) adjusted net income, (2) efficiency ratio, (3) adjusted efficiency ratio, (4) pre-tax pre-provision income, (5) adjusted pre-tax pre-provision income, (6) average tangible common equity, (7) adjusted return on average assets, (8) adjusted return on average equity, (9) return on average tangible common equity, (10) adjusted return on average tangible common equity, (11) tangible common equity, (12) tangible assets, (13) tangible common equity to tangible asset ratio, and (14) tangible book value per share. We believe the presentation of certain non-GAAP financial measures provides useful information to assess our consolidated financial condition and consolidated results of operations and to assist investors in evaluating our financial results relative to our peers. These non-GAAP financial measures complement our GAAP reporting and are presented below to provide investors and others with information that we use to manage the business each period. Because not all companies use identical calculations, the presentation of these non-GAAP financial measures may not be comparable to other similarly titled measures used by other companies. These non-GAAP measures should be taken together with the corresponding GAAP measures and should not be considered a substitute of the GAAP measures.
| Three Months Ended | Year Ended | |||||||||||||||||||
| December 31, 2023 | September 30, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | ||||||||||||||||
| ($ in thousands) | ||||||||||||||||||||
| Adjusted net income | ||||||||||||||||||||
| Net income | $ | 4,412 | $ | 6,556 | $ | 8,474 | $ | 25,910 | $ | 16,113 | ||||||||||
| (Deduct) add: After-tax merger and related (income) expenses (1) | — | — | (6 | ) | — | 846 | ||||||||||||||
| Add: After-tax litigation settlements, net (1) | — | — | — | — | 3,734 | |||||||||||||||
| Adjusted net income (non-GAAP) | $ | 4,412 | $ | 6,556 | $ | 8,468 | $ | 25,910 | $ | 20,693 | ||||||||||
| Efficiency Ratio | ||||||||||||||||||||
| Noninterest expense | $ | 15,339 | $ | 14,781 | $ | 13,112 | $ | 59,746 | $ | 63,522 | ||||||||||
| (Add) deduct: Merger and related (income) expenses | — | — | (8 | ) | — | 1,177 | ||||||||||||||
| Deduct: Litigation settlements, net | — | — | — | — | 5,300 | |||||||||||||||
| Adjusted noninterest expense | 15,339 | 14,781 | 13,120 | 59,746 | 57,045 | |||||||||||||||
| Net interest income | 22,559 | 23,261 | 25,269 | 94,138 | 87,786 | |||||||||||||||
| Noninterest (loss) income | (102 | ) | 815 | 188 | 3,379 | 3,675 | ||||||||||||||
| Total net interest income and noninterest (loss) income | $ | 22,457 | $ | 24,076 | $ | 25,457 | $ | 97,517 | $ | 91,461 | ||||||||||
| Efficiency ratio (non-GAAP) | 68.3 | % | 61.4 | % | 51.5 | % | 61.3 | % | 69.5 | % | ||||||||||
| Adjusted efficiency ratio (non-GAAP) | 68.3 | % | 61.4 | % | 51.5 | % | 61.3 | % | 62.4 | % | ||||||||||
| Pre-tax pre-provision income | ||||||||||||||||||||
| Net interest income | $ | 22,559 | $ | 23,261 | $ | 25,269 | $ | 94,138 | $ | 87,786 | ||||||||||
| Noninterest (loss) income | (102 | ) | 815 | 188 | 3,379 | 3,675 | ||||||||||||||
| Total net interest income and noninterest (loss) income | 22,457 | 24,076 | 25,457 | 97,517 | 91,461 | |||||||||||||||
| Less: Noninterest expense | 15,339 | 14,781 | 13,112 | 59,746 | 63,522 | |||||||||||||||
| Pre-tax pre-provision income (non-GAAP) | 7,118 | 9,295 | 12,345 | 37,771 | 27,939 | |||||||||||||||
| (Deduct) add: Merger and related (income) expenses | — | — | (8 | ) | — | 1,177 | ||||||||||||||
| Add: Litigation settlements, net | — | — | — | — | 5,300 | |||||||||||||||
| Adjusted pre-tax pre-provision income (non-GAAP) | $ | 7,118 | $ | 9,295 | $ | 12,337 | $ | 37,771 | $ | 34,416 | ||||||||||
| (1 | ) | After-tax merger and related expenses and litigation settlements, net are presented using a |
| Three Months Ended | Year Ended | |||||||||||||||||||
| December 31, 2023 | September 30, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | ||||||||||||||||
| Return on Average Assets, Equity, and Tangible Equity | ||||||||||||||||||||
| Net income | $ | 4,412 | $ | 6,556 | $ | 8,474 | $ | 25,910 | $ | 16,113 | ||||||||||
| Adjusted net income (non-GAAP) | $ | 4,412 | $ | 6,556 | $ | 8,468 | $ | 25,910 | $ | 20,693 | ||||||||||
| Average assets | $ | 2,345,323 | $ | 2,313,941 | $ | 2,309,382 | $ | 2,306,233 | $ | 2,301,418 | ||||||||||
| Average shareholders’ equity | 282,072 | 277,442 | 254,480 | 273,346 | 250,054 | |||||||||||||||
| Less: Average intangible assets | 39,035 | 39,158 | 39,475 | 39,195 | 38,960 | |||||||||||||||
| Average tangible common equity (non-GAAP) | $ | 243,037 | $ | 238,284 | $ | 215,005 | $ | 234,151 | $ | 211,094 | ||||||||||
| Return on average assets | 0.75 | % | 1.12 | % | 1.46 | % | 1.12 | % | 0.70 | % | ||||||||||
| Adjusted return on average assets (non-GAAP) | 0.75 | % | 1.12 | % | 1.45 | % | 1.12 | % | 0.90 | % | ||||||||||
| Return on average equity | 6.21 | % | 9.38 | % | 13.21 | % | 9.48 | % | 6.44 | % | ||||||||||
| Adjusted return on average equity (non-GAAP) | 6.21 | % | 9.38 | % | 13.20 | % | 9.48 | % | 8.28 | % | ||||||||||
| Return on average tangible common equity (non-GAAP) | 7.20 | % | 10.92 | % | 15.64 | % | 11.07 | % | 7.63 | % | ||||||||||
| Adjusted return on average tangible common equity (non-GAAP) | 7.20 | % | 10.92 | % | 15.63 | % | 11.07 | % | 9.80 | % | ||||||||||
| December 31, 2023 | September 30, 2023 | December 31, 2022 | ||||||||||
| ($ in thousands except share and per share data) | ||||||||||||
| Tangible Common Equity Ratio/Tangible Book Value Per Share | ||||||||||||
| Shareholders’ equity | $ | 288,152 | $ | 278,550 | $ | 260,355 | ||||||
| Less: Intangible assets | 38,998 | 39,078 | 39,387 | |||||||||
| Tangible common equity (non-GAAP) | $ | 249,154 | $ | 239,472 | $ | 220,968 | ||||||
| Total assets | $ | 2,360,252 | $ | 2,313,649 | $ | 2,283,927 | ||||||
| Less: Intangible assets | 38,998 | 39,078 | 39,387 | |||||||||
| Tangible assets (non-GAAP) | $ | 2,321,254 | $ | 2,274,571 | $ | 2,244,540 | ||||||
| Equity to asset ratio | 12.21 | % | 12.04 | % | 11.40 | % | ||||||
| Tangible common equity to tangible asset ratio (non-GAAP) | 10.73 | % | 10.53 | % | 9.84 | % | ||||||
| Book value per share | $ | 15.69 | $ | 15.21 | $ | 14.51 | ||||||
| Tangible book value per share (non-GAAP) | $ | 13.56 | $ | 13.08 | $ | 12.32 | ||||||
| Shares outstanding | 18,369,115 | 18,309,282 | 17,940,283 | |||||||||
INVESTOR RELATIONS CONTACT
Kevin Mc Cabe
Bank of Southern California
kmccabe@banksocal.com
818.637.7065
FAQ
What was the net income reported by Southern California Bancorp for Q4 2023?
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