California BanCorp Reports Financial Results for the Fourth Quarter and Twelve Months Ended December 31, 2023

Rhea-AI Summary

California BanCorp (CALB) reported net income of $5.3 million for Q4 2023, a slight decrease from Q3 2023 and a significant decrease from Q4 2022. For the twelve months ended December 31, 2023, net income was $21.6 million, a 2% increase from the same period in 2022. Diluted earnings per share were $0.63 for Q4 2023, compared to $0.64 for Q3 2023 and $0.91 for Q4 2022. The company's balance sheet remained relatively flat with the prior quarter, but it experienced a decrease in total deposits and gross loans. Despite this, the company's capital ratios remain healthy, and it is well positioned to continue delivering strong financial performance in 2024.

Positive

• None.

Negative

• Decrease in net income for Q4 2023 compared to Q4 2022
• Decrease in total deposits and gross loans
• Decrease in non-interest income from prior year

Insights

Financial Analyst

The reported financial results from California BanCorp indicate a mixed performance with a slight year-over-year increase in net income and diluted earnings per share for the twelve months ended December 31, 2023. However, the quarter-over-quarter and year-over-year comparisons for Q4 show a decline in net income and earnings per share. This could suggest a deceleration in profitability which may concern investors, particularly as the company cites a challenging banking industry environment. The increased net interest income for the year, despite a decrease in non-interest income, points to a reliance on traditional banking activities for revenue generation.

From a balance sheet perspective, the modest increase in total assets and the decrease in total gross loans and total deposits year-over-year could indicate a conservative approach to lending and potentially reduced demand for loans. The increase in other borrowings in Q4 2023 compared to Q3 2023 is notable and may reflect a strategic decision to manage liquidity or fund operations in a tighter economic context. The capital ratios remaining well above regulatory standards for 'well-capitalized' institutions provide a buffer against potential losses and suggest a strong capital position.

Market Research Analyst

Analyzing the broader market implications, California BanCorp's performance reflects broader economic trends where banks are facing margin pressures due to increased costs of deposits and potentially higher interest rates. The company's net interest margin decrease year-over-year for Q4, but an overall increase for the twelve-month period, shows resilience in managing earnings assets despite these pressures. The bank's strategy to focus on full banking relationships and commercial lending opportunities could be a response to the competitive dynamics in the banking sector, where smaller banks can differentiate through personalized service and responsiveness.

The CEO's comments on the banking industry's stabilization and the shift of deposit relationships from larger banks to smaller commercial banks like California BanCorp could indicate a strategic opportunity. This trend may result in increased market share for community banks. However, the challenge will be to convert these opportunities into sustainable growth and profitability without compromising asset quality, as evidenced by the slight increase in non-performing assets.

Economist

From an economic standpoint, the banking sector's health is often seen as a bellwether for the broader economy. California BanCorp's report of a 'challenging year' and a 'conservative approach to new loan production' could be reflective of a cautious economic outlook, with potential implications for credit growth and business investment. The company's ability to maintain a return on assets above 1% is a positive indicator of efficiency in asset utilization, which is crucial in a low-growth environment.

The bank's focus on building full banking relationships and its strong deposit pipeline suggest a strategy to bolster its funding base and mitigate risks associated with economic downturns. The increase in tangible book value per share indicates a strengthening of the bank's intrinsic value, which could be reassuring to shareholders in the face of economic uncertainties. However, the bank will need to navigate the impact of macroeconomic factors, such as inflation and interest rate changes, on its operations and profitability.

OAKLAND, Calif., Jan. 30, 2024 (GLOBE NEWSWIRE) -- California BanCorp (NASDAQ: CALB) (the “Company”), whose subsidiary is California Bank of Commerce, announced today its financial results for the fourth quarter and twelve months ended December 31, 2023.

The Company reported net income of $5.3 million for the fourth quarter of 2023, compared to $5.4 million for the third quarter of 2023 and $7.7 million for the fourth quarter of 2022. For the twelve months ended December 31, 2023, net income was $21.6 million, representing an increase of $525,000, or 2%, compared to $21.1 million for the same period in 2022.

Diluted earnings per share were $0.63 for the fourth quarter of 2023, compared to $0.64 for the third quarter of 2023 and $0.91 for the fourth quarter of 2022. For the twelve months ended December 31, 2023, diluted earnings per share were $2.56, compared to $2.51 for the same period in 2022.

“Despite a challenging year for the banking industry, we generated a record level of earnings in 2023, which reflects the strength of the franchise we have built and our ability to perform well in a variety of economic conditions,” said Steven Shelton, Chief Executive Officer of California BanCorp. “While maintaining our conservative approach to new loan production and prudent balance sheet management, we continued to deliver strong financial performance in the fourth quarter with our return on assets remaining above 1%. As expected, our balance sheet remained relatively flat with the prior quarter, although we continue to have success in adding new full banking relationships that provide operating deposit accounts that have helped to offset seasonal outflows from existing clients and high-quality commercial lending opportunities that have offset the level of payoffs that we are seeing in the portfolio.”

“Given the strength of our balance sheet, with a high level of capital, liquidity, and reserves, along with a conservatively underwritten loan portfolio, we believe we are well positioned to continue delivering strong financial performance in 2024 even if the macroeconomic environment remains challenging. As the banking industry has stabilized, we are seeing more businesses looking to move their deposit relationships from the larger banks to a smaller commercial bank that provides a higher level of responsiveness and service. This is creating opportunities for us to add attractive new client relationships given the strong balance sheet, robust treasury management solutions, and superior level of service that we can provide. We have a strong deposit pipeline that we believe should result in continued growth in our client roster during 2024, further improvement in our level of profitability in the years ahead, and an increase in the value of our franchise,” said Mr. Shelton.

Financial Highlights:

Profitability - three months ended December 31, 2023 compared to September 30, 2023

• Net income of $5.3 million and $0.63 per diluted share, compared to $5.4 million and $0.64 per diluted share, respectively.
• Revenue was $19.9 million for both the fourth and third quarters of 2023.
• Net interest income was $18.6 million for both the fourth and third quarters of 2023.
• Provision for credit losses of $181,000 decreased $133,000, or 42%, from $314,000 for the third quarter of 2023.
• Non-interest income was $1.3 million for both the fourth and third quarters of 2023.
• Non-interest expense, excluding capitalized loan origination costs, of $13.0 million increased $523,000, or 4%, compared to $12.5 million for the third quarter of 2023.

Profitability - twelve months ended December 31, 2023 compared to December 31, 2022

• Net income of $21.6 million and $2.56 per diluted share, compared to $21.1 million and $2.51 per diluted share, respectively.
• Revenue of $79.4 million increased $1.1 million, or 1%, compared to $78.3 million in the prior year.
• Net interest income of $74.6 million increased $3.6 million, or 5%, compared to $71.0 million for the same period in the prior year.
• Provision for credit losses of $1.3 million decreased $2.5 million, or 66%, from $3.8 million for the twelve months ended December 31, 2022.
• Non-interest income of $4.9 million decreased $2.5 million, or 34%, from $7.4 million for the same period in the prior year.
• Non-interest expense, excluding capitalized loan origination costs, of $50.4 million decreased $1.6 million, or 3%, compared to $48.8 million for the twelve months ended December 31, 2022.

Financial Position – December 31, 2023 compared to September 30, 2023

• Total assets increased by $2.0 million, or 0%, to $1.99 billion.
• Total gross loans decreased by $13.6 million, or 1%, to $1.56 billion; average total gross loans increased by $20.3 million to $1.57 billion.
• Total deposits decreased by $81.8 million, or 5%, to $1.63 billion; average total deposits decreased by $18.8 million to $1.70 billion.
• Other borrowings were $75.0 million at December 31, 2023 compared to no balances outstanding at September 30, 2023.
• Capital ratios remain healthy with a tier I leverage ratio of 9.61%, tier I capital ratio of 9.53% and total risk-based capital ratio of 13.16%.
• Book value per share of $23.38 increased by $0.74, or 3%.
• Tangible book value per share of $22.50 increased by $0.74, or 3%.

Net Interest Income and Margin:

Net interest income for the quarters ended December 31, 2023 and September 30, 2023 was $18.6 million, compared to $21.9 million for the three months ended December 31, 2022. Net interest income for the twelve months ended December 31, 2023 was $74.6 million, an increase of $3.6 million, or 5% over $71.0 million for the twelve months ended December 31, 2022. The decrease in net interest income for the quarters ended December 31, 2023 and September 30, 2023 compared to the fourth quarter of 2022 was primarily due to an increase in the cost of interest-bearing deposits. The increase in net interest income for the year ended December 31, 2023 compared to the year ended December 31, 2022 was primarily attributable to an increase in interest income as the result of a more favorable mix of earning assets combined with higher yields on those assets.

The Company’s net interest margin for the fourth quarter of 2023 was 3.88%, compared to 3.86% for the third quarter of 2023 and 4.32% for the same period in 2022. The decrease in margin from the same period last year was primarily the result of an increase in the cost of deposits, partially offset by a more favorable mix of earning assets with higher yields.

The Company’s net interest margin for the twelve months ended December 31, 2023 was 3.92% compared to 3.79% for the same period in 2022. The increase in margin compared to prior year was primarily due to loan growth and increased yields on earnings assets, partially offset by an increase in the cost of deposits and other borrowings.

Non-Interest Income:

The Company’s non-interest income for the quarters ended December 31, 2023, September 30, 2023, and December 31, 2022 was $1.3 million, $1.3 million and $2.0 million, respectively. For the twelve months ended December 31, 2023, non-interest income of $4.9 million compared to $7.4 million for the same period of 2022. The decrease in non-interest income from prior year was the result of a decrease in service charges and loan related fees combined with a $1.4 million gain recognized in the first quarter of 2022 on the sale of a portion of our solar loan portfolio.

Net interest income and non-interest income comprised total revenue of $19.9 million, $19.9 million, and $23.8 million for the quarters ended December 31, 2023, September 30, 2023, and December 31, 2022, respectively. Total revenue for the twelve months ended December 31, 2023 and 2022 was $79.4 million and $78.3 million, respectively.

Non-Interest Expense:

The Company’s non-interest expense for the quarters ended December 31, 2023, September 30, 2023, and December 31, 2022 was $12.2 million, $11.9 million, and $11.7 million, respectively. The increase in non-interest expense from the third quarter of 2023 and fourth quarter of 2022 was primarily due to an increase in salaries and benefits combined with an increase in premises and equipment, partially offset by a decrease in data processing expense. Excluding capitalized loan origination costs, non-interest expense for the fourth quarter of 2023, the third quarter of 2023 and the fourth quarter of 2022 was $13.0 million, $12.5 million, and $12.7 million, respectively.

Non-interest expense of $47.5 million for the twelve months ended December 31, 2023 increased by $2.8 million, or 6%, compared to $44.7 million for the same period of 2022. Excluding capitalized loan origination costs, non-interest expense was $50.4 million for the twelve months ended December 31, 2023 and $48.8 million for the same period in 2022 which reflects investment in infrastructure to support the growth of the Company.

The Company’s efficiency ratio, the ratio of non-interest expense to revenues, was 61.36%, 59.64%, and 49.17% for the quarters ended December 31, 2023, September 30, 2023, and December 31, 2022, respectively. For the twelve months ended December 31, 2023 and 2022, the Company’s efficiency ratio was 59.82% and 57.01%, respectively.

Balance Sheet:

Total assets of $1.99 billion as of December 31, 2023, represented an increase of $2.0 million, or 0%, compared to $1.98 billion at September 30, 2023 and a decrease of $56.3 million, or 3%, compared to $2.04 billion at December 31, 2022. Compared to the same period in the prior year, total assets decreased primarily due to conservative new loan production during 2023 and decreased liquidity as a result of a reduction in total deposits, partially offset by an increase in short-term borrowings.

Total gross loans decreased by $13.6 million, or 1%, to $1.56 billion at December 31, 2023, from $1.57 billion at September 30, 2023 and decreased by $33.9 million, or 2%, compared to $1.59 billion at December 31, 2022. During the fourth quarter of 2023, the reduction in gross loans was primarily the result of commercial loans decreasing by $16.6 million, or 1%, partially offset by an increase in construction and land loans of $4.2 million, or 10%. Compared to the same period in the prior year, the reduction in gross loans was primarily the result of construction and land loans decreasing by $19.5 million, or 31%, due to the completion of a large construction project.

Total deposits decreased by $81.8 million, or 5%, to $1.63 billion at December 31, 2023 from $1.71 billion at September 30, 2023, and decreased by $166.5 million, or 9%, from $1.79 billion at December 31, 2022. The decrease in total deposits from the end of the third quarter of 2023 was primarily due to a decrease in demand deposits of $31.2 million, or 4%, a decrease in money market and savings accounts of $41.1 million, of 6%, and a decrease in time deposits of $9.5 million, or 3%. Noninterest-bearing deposits, primarily commercial business operating accounts, represented 40.4% of total deposits at December 31, 2023, compared to 40.2% at September 30, 2023 and 45.3% at December 31, 2022.

At December 31, 2023, the Company had $75.0 million in outstanding borrowings, excluding junior subordinated debt securities, compared to no outstanding borrowings at September 30, 2023 and December 31, 2022.

Asset Quality:

The provision for credit losses on loans decreased to $87,000 for the fourth quarter of 2023 compared to $121,000 for the third quarter of 2023, and $1.1 million for the fourth quarter of 2022. The Company had loan recoveries of $20,000 during the fourth quarter of 2023, loan charge-offs of $156,000 and recoveries of $234,000 during the third quarter of 2023, and loan charge-offs of $650,000 and no recoveries during the fourth quarter of 2022.

Non-performing assets (“NPAs”) to total assets were 0.19% at December 31, 2023, 0.06% at September 30, 2023 and 0.06% at December 31, 2022, with non-performing loans of $3.8 million, $1.2 million and $1.3 million, respectively, on those dates. The increase in non-performing loans during the fourth quarter of 2023 was due to one loan relationship within our commercial portfolio. The borrower is currently in the process of liquidating its assets and the Company does not anticipate a loss associated with this loan as of December 31, 2023.

The allowance for credit losses on loans increased by $107,000 to $16.0 million, or 1.03% of total loans, at December 31, 2023, compared to $15.9 million, or 1.01% of total loans, at September 30, 2023 and $17.0 million, or 1.07% of total loans, at December 31, 2022. On January 1, 2023, the Company adopted the new current expected credit losses (CECL) standard. The Company’s allowance for credit losses on loans was 0.95% upon adoption on January 1, 2023 compared to 1.07% at December 31, 2022.

The allowance for credit losses on unfunded loan commitments increased by $120,000 to $2.2 million, or 0.32% of total unfunded loan commitments, at December 31, 2023, compared to $2.1 million, or 0.32% of total unfunded loan commitments, at September 30, 2023 and $430,000, or 0.07% of total unfunded loan commitments at December 31, 2022. The Company’s allowance for credit losses on unfunded loan commitments was 0.28% upon the adoption of CECL on January 1, 2023 compared to 0.07% at December 31, 2022.

Capital Adequacy:

At December 31, 2023, shareholders’ equity totaled $196.5 million compared to $190.1 million at September 30, 2023 and $172.3 million one year ago. As a result, the Company’s total risk-based capital ratio, tier I capital ratio and tier I leverage ratio of 13.16%, 9.53%, and 9.61%, respectively, were all above the regulatory standards for “well-capitalized” institutions of 10.00%, 8.00% and 5.00% respectively.

“With our strong financial performance and prudent balance sheet management, we continued to increase our capital ratios and tangible book value per share, and during 2023, our tangible book value per share increased 14%,” said Thomas A. Sa, President, Chief Financial Officer and Chief Operating Officer of California BanCorp. “With our high level of capital, we are well positioned to continue growing our franchise and creating long-term value for shareholders.”

About California BanCorp:

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

Contacts:

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

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

Use of Non-GAAP Financial Information:

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

Forward-Looking Statements:

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 future performance or financial results 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; the impacts of the failure of other depository institutions on investor and depositor sentiments and preferences; the Company’s ability to manage its liquidity; risks associated with changes in income tax laws and regulations; and risks associated with seeking new client relationships and maintaining existing client relationships. Readers of this news release are encouraged to review the additional information regarding these and other risks and uncertainties to which our business is subject that are contained in our Annual Report on Form 10-K for the year ended December 31, 2022 which is on file with the Securities and Exchange Commission (the “SEC”). Additional information will be set forth in our Annual Report on Form 10-K for the year ended December 31, 2023, which we expect to file with the SEC during the first quarter of 2024, and readers of this release are urged to review the additional information that will be contained in that report.

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

FINANCIAL TABLES FOLLOW

CALIFORNIA BANCORP AND SUBSIDIARY
SELECTED FINANCIAL INFORMATION (UNAUDITED) - PROFITABILITY
(Dollars in Thousands, Except Per Share Data)
									Change												Change
QUARTERLY HIGHLIGHTS:	Q4 2023				Q3 2023				$				%				Q4 2022				$				%
Interest income	$	28,405			$	28,094			$	311			1	%			$	27,480			$	925			3	%
Interest expense		9,831				9,516				315			3	%				5,620				4,211			75	%
Net interest income		18,574				18,578				(4	)		-0	%				21,860				(3,286	)		-15	%
Provision for credit losses		181				314				(133	)		-42	%				1,100				(919	)		-84	%
Net interest income after provision for credit losses		18,393				18,264				129			1	%				20,760				(2,367	)		-11	%
Non-interest income		1,339				1,294				45			3	%				1,962				(623	)		-32	%
Non-interest expense		12,218				11,851				367			3	%				11,713				505			4	%
Income before income taxes		7,514				7,707				(193	)		-3	%				11,009				(3,495	)		-32	%
Income tax expense		2,173				2,306				(133	)		-6	%				3,340				(1,167	)		-35	%
Net income	$	5,341			$	5,401			$	(60	)		-1	%			$	7,669			$	(2,328	)		-30	%
Diluted earnings per share	$	0.63			$	0.64			$	(0.01	)		-2	%			$	0.91			$	(0.28	)		-31	%
Net interest margin		3.88	%			3.86	%		+2 Basis Points									4.32	%		-44 Basis Points
Efficiency ratio		61.36	%			59.64	%		+172 Basis Points									49.17	%		+1219 Basis Points
									Change
YEAR-TO-DATE HIGHLIGHTS:	2023				2022				$				%
Interest income	$	109,210			$	82,278			$	26,932			33	%
Interest expense		34,655				11,306				23,349			207	%
Net interest income		74,555				70,972				3,583			5	%
Provision for credit losses		1,297				3,775				(2,478	)		-66	%
Net interest income after provision for credit losses		73,258				67,197				6,061			9	%
Non-interest income		4,875				7,374				(2,499	)		-34	%
Non-interest expense		47,515				44,665				2,850			6	%
Income before income taxes		30,618				29,906				712			2	%
Income tax expense		8,985				8,798				187			2	%
Net income	$	21,633			$	21,108			$	525			2	%
Diluted earnings per share	$	2.56			$	2.51			$	0.05			2	%
Net interest margin		3.92	%			3.79	%		+13 Basis Points
Efficiency ratio		59.82	%			57.01	%		+281 Basis Points

CALIFORNIA BANCORP AND SUBSIDIARY
SELECTED FINANCIAL INFORMATION (UNAUDITED) - FINANCIAL POSITION
(Dollars in Thousands, Except Per Share Data)
									Change												Change
PERIOD-END HIGHLIGHTS:	Q4 2023				Q3 2023				$				%				Q4 2022				$				%
Total assets	$	1,985,905			$	1,983,917			$	1,988			0	%			$	2,042,215			$	(56,310	)		-3	%
Gross loans		1,559,533				1,573,115				(13,582	)		-1	%				1,593,421				(33,888	)		-2	%
Deposits		1,625,244				1,707,081				(81,837	)		-5	%				1,791,740				(166,496	)		-9	%
Tangible equity		189,029				182,673				6,356			3	%				164,782				24,247			15	%
Tangible book value per share	$	22.50			$	21.76			$	0.74			3	%			$	19.78			$	2.72			14	%
Tangible equity / tangible assets		9.55	%			9.24	%		+31 Basis Points									8.10	%		+145 Basis Points
Gross loans / total deposits		95.96	%			92.15	%		+381 Basis Points									88.93	%		+703 Basis Points
Noninterest-bearing deposits / total deposits		40.44	%			40.23	%		+21 Basis Points									45.30	%		-486 Basis Points
QUARTERLY AVERAGE									Change												Change
HIGHLIGHTS:	Q4 2023				Q3 2023				$				%				Q4 2022				$				%
Total assets	$	1,984,337			$	1,993,147			$	(8,810	)		-0	%			$	2,088,206			$	(103,869	)		-5	%
Total earning assets		1,896,954				1,910,755				(13,801	)		-1	%				2,007,243				(110,289	)		-5	%
Gross loans		1,571,994				1,551,708				20,286			1	%				1,621,322				(49,328	)		-3	%
Deposits		1,700,625				1,719,416				(18,791	)		-1	%				1,785,693				(85,068	)		-5	%
Tangible equity		187,399				181,384				6,015			3	%				161,919				25,480			16	%
Tangible equity / tangible assets		9.48	%			9.13	%		+35 Basis Points									7.78	%		+170 Basis Points
Gross loans / total deposits		92.44	%			90.25	%		+219 Basis Points									90.80	%		+164 Basis Points
Noninterest-bearing deposits / total deposits		41.46	%			41.59	%		-13 Basis Points									44.47	%		-301 Basis Points
YEAR-TO-DATE AVERAGE									Change
HIGHLIGHTS:	Q4 2023				Q4 2022				$				%
Total assets	$	1,983,964			$	1,953,168			$	30,796			2	%
Total earning assets		1,900,678				1,871,813				28,865			2	%
Gross loans		1,570,810				1,495,981				74,829			5	%
Deposits		1,701,046				1,649,512				51,534			3	%
Tangible equity		178,562				153,443				25,119			16	%
Tangible equity / tangible assets		9.03	%			7.89	%		+114 Basis Points
Gross loans / total deposits		92.34	%			90.69	%		+165 Basis Points
Noninterest-bearing deposits / total deposits		42.14	%			45.61	%		-347 Basis Points

CALIFORNIA BANCORP AND SUBSIDIARY
SELECTED INTERIM FINANCIAL INFORMATION (UNAUDITED) - ASSET QUALITY
(Dollars in Thousands)
ALLOWANCE FOR CREDIT LOSSES (LOANS):	12/31/23				09/30/23				06/30/23				03/31/23				12/31/22
Balance, beginning of period	$	15,921			$	15,722			$	15,382			$	17,005			$	16,555
CECL adjustment		-				-				-				(1,840	)			-
Provision for credit losses, quarterly		87				121				340				464				1,100
Charge-offs, quarterly		-				(156	)			-				(247	)			(650	)
Recoveries, quarterly		20				234				-				-				-
Balance, end of period	$	16,028			$	15,921			$	15,722			$	15,382			$	17,005
NONPERFORMING ASSETS:	12/31/23				09/30/23				06/30/23				03/31/23				12/31/22
Loans accounted for on a non-accrual basis	$	3,781			$	1,236			$	181			$	222			$	1,250
Loans with principal or interest contractually past due 90 days or more and still accruing interest		-				-				-				-				-
Nonperforming loans	$	3,781			$	1,236			$	181			$	222			$	1,250
Other real estate owned		-				-				-				-				-
Nonperforming assets	$	3,781			$	1,236			$	181			$	222			$	1,250
Nonperforming loans by asset type:
Commercial	$	3,728			$	1,183			$	-			$	-			$	1,028
Real estate other		-				-				-				-				-
Real estate construction and land		-				-				-				-				-
SBA		53				53				181				222				222
Other		-				-				-				-				-
Nonperforming loans	$	3,781			$	1,236			$	181			$	222			$	1,250
ASSET QUALITY:	12/31/23				09/30/23				06/30/23				03/31/23				12/31/22
Allowance for credit losses (loans) / gross loans		1.03	%			1.01	%			0.99	%			0.95	%			1.07	%
Allowance for credit losses (loans) / nonperforming loans		423.91	%			1288.11	%			8686.19	%			6928.83	%			1360.40	%
Nonperforming assets / total assets		0.19	%			0.06	%			0.01	%			0.01	%			0.06	%
Nonperforming loans / gross loans		0.24	%			0.08	%			0.01	%			0.01	%			0.08	%
Net quarterly charge-offs / gross loans		-0.00	%			-0.00	%			0.00	%			0.02	%			0.04	%

CALIFORNIA BANCORP AND SUBSIDIARY
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in Thousands, Except Per Share Data)
	Three months ended												Twelve months ended
	12/31/23				09/30/23				12/31/22				12/31/23				12/31/22
INTEREST INCOME
Loans	$	24,523			$	23,804			$	23,972			$	94,275			$	74,240
Federal funds sold		2,386				2,814				2,236				9,198				3,519
Investment securities		1,496				1,476				1,272				5,737				4,519
Total interest income		28,405				28,094				27,480				109,210				82,278
INTEREST EXPENSE
Deposits		9,234				8,961				4,536				31,710				7,810
Other		597				555				1,084				2,945				3,496
Total interest expense		9,831				9,516				5,620				34,655				11,306
Net interest income		18,574				18,578				21,860				74,555				70,972
Provision for credit losses		181				314				1,100				1,297				3,775
Net interest income after provision for credit losses		18,393				18,264				20,760				73,258				67,197
NON-INTEREST INCOME
Service charges and other fees		1,055				1,003				1,653				3,788				4,913
Gain on sale of loans		-				-				-				-				1,393
Other non-interest income		284				291				309				1,087				1,068
Total non-interest income		1,339				1,294				1,962				4,875				7,374
NON-INTEREST EXPENSE
Salaries and benefits		8,449				8,238				7,443				32,394				29,097
Premises and equipment		1,554				1,155				1,249				5,057				5,093
Other		2,215				2,458				3,021				10,064				10,475
Total non-interest expense		12,218				11,851				11,713				47,515				44,665
Income before income taxes		7,514				7,707				11,009				30,618				29,906
Income taxes		2,173				2,306				3,340				8,985				8,798
NET INCOME	$	5,341			$	5,401			$	7,669			$	21,633			$	21,108
EARNINGS PER SHARE
Basic earnings per share	$	0.64			$	0.64			$	0.92			$	2.58			$	2.54
Diluted earnings per share	$	0.63			$	0.64			$	0.91			$	2.56			$	2.51
Average common shares outstanding		8,398,497				8,390,138				8,330,145				8,374,614				8,306,282
Average common and equivalent shares outstanding		8,525,420				8,455,917				8,463,738				8,453,423				8,404,317
PERFORMANCE MEASURES
Return on average assets		1.07	%			1.08	%			1.46	%			1.09	%			1.08	%
Return on average equity		10.88	%			11.35	%			17.96	%			11.63	%			13.12	%
Return on average tangible equity		11.31	%			11.81	%			18.79	%			12.12	%			13.76	%
Efficiency ratio		61.36	%			59.64	%			49.17	%			59.82	%			57.01	%

CALIFORNIA BANCORP AND SUBSIDIARY
INTERIM CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in Thousands)
	12/31/23				09/30/23				06/30/23				03/31/23				12/31/22
ASSETS
Cash and due from banks	$	27,520			$	17,128			$	19,763			$	15,121			$	16,686
Federal funds sold		184,834				181,854				187,904				198,804				215,696
Investment securities		145,401				149,244				151,129				153,769				155,878
Loans:
Commercial		626,615				633,902				622,270				656,519				634,535
Real estate other		849,306				858,611				856,344				853,431				848,241
Real estate construction and land		44,186				40,003				60,595				63,928				63,730
SBA		4,032				4,415				4,936				5,610				7,220
Other		35,394				36,184				39,486				37,775				39,695
Loans, gross		1,559,533				1,573,115				1,583,631				1,617,263				1,593,421
Unamortized net deferred loan costs (fees)		1,107				1,312				1,637				1,765				2,040
Allowance for credit losses		(16,028	)			(15,921	)			(15,722	)			(15,382	)			(17,005	)
Loans, net		1,544,612				1,558,506				1,569,546				1,603,646				1,578,456
Premises and equipment, net		2,207				2,432				2,625				2,848				3,072
Bank owned life insurance		25,878				25,697				25,519				25,334				25,127
Goodwill and core deposit intangible		7,432				7,442				7,452				7,462				7,472
Accrued interest receivable and other assets		48,021				41,614				41,708				43,790				39,828
Total assets	$	1,985,905			$	1,983,917			$	2,005,646			$	2,050,774			$	2,042,215
LIABILITIES
Deposits:
Demand noninterest-bearing	$	657,302			$	686,723			$	742,160			$	740,650			$	811,671
Demand interest-bearing		26,715				28,533				29,324				30,798				37,815
Money market and savings		631,015				672,119				633,620				616,864				671,016
Time		310,212				319,706				333,192				329,298				271,238
Total deposits		1,625,244				1,707,081				1,738,296				1,717,610				1,791,740
Junior subordinated debt securities		54,291				54,256				54,221				54,186				54,152
Other borrowings		75,000				-				-				75,000				-
Accrued interest payable and other liabilities		34,909				32,465				28,894				25,417				24,069
Total liabilities		1,789,444				1,793,802				1,821,411				1,872,213				1,869,961
SHAREHOLDERS' EQUITY
Common stock		113,227				112,656				112,167				111,609				111,257
Retained earnings		84,165				78,824				73,423				68,082				62,297
Accumulated other comprehensive loss		(931	)			(1,365	)			(1,355	)			(1,130	)			(1,300	)
Total shareholders' equity		196,461				190,115				184,235				178,561				172,254
Total liabilities and shareholders' equity	$	1,985,905			$	1,983,917			$	2,005,646			$	2,050,774			$	2,042,215
																		-
CAPITAL ADEQUACY
Tier I leverage ratio		9.61	%			9.27	%			9.01	%			8.76	%			7.98	%
Tier I risk-based capital ratio		9.53	%			9.34	%			9.07	%			8.54	%			8.23	%
Total risk-based capital ratio		13.16	%			13.00	%			12.73	%			12.08	%			11.77	%
Total equity/ total assets		9.89	%			9.58	%			9.19	%			8.71	%			8.43	%
Book value per share	$	23.38			$	22.64			$	21.98			$	21.37			$	20.67
Common shares outstanding		8,402,482				8,395,483				8,383,772				8,355,378				8,332,479

CALIFORNIA BANCORP AND SUBSIDIARY
INTERIM CONSOLIDATED AVERAGE BALANCE SHEET AND YIELD DATA (UNAUDITED)
(Dollars in Thousands)
	Three months ended December 31,										Three months ended September 30,
	2023										2023
					Yields			Interest							Yields			Interest
	Average				or			Income/			Average				or			Income/
	Balance				Rates			Expense			Balance				Rates			Expense
ASSETS
Interest earning assets:
Loans (1)	$	1,571,994			6.19	%		$	24,523		$	1,551,708			6.09	%		$	23,804
Federal funds sold		177,331			5.34	%			2,386			208,725			5.35	%			2,814
Investment securities		147,629			4.02	%			1,496			150,322			3.90	%			1,476
Total interest earning assets		1,896,954			5.94	%			28,405			1,910,755			5.83	%			28,094
Noninterest-earning assets:
Cash and due from banks		20,310										20,351
All other assets (2)		67,073										62,041
TOTAL	$	1,984,337									$	1,993,147
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Deposits:
Demand	$	28,678			0.29	%			21		$	28,766			0.33	%			24
Money market and savings		638,623			3.02	%			4,857			642,909			2.95	%			4,775
Time		328,270			5.26	%			4,356			332,662			4.96	%			4,162
Other		56,715			4.18	%			597			54,235			4.06	%			555
Total interest-bearing liabilities		1,052,286			3.71	%			9,831			1,058,572			3.57	%			9,516
Noninterest-bearing liabilities:
Demand deposits		705,054										715,079
Accrued expenses and other liabilities		32,161										30,665
Shareholders' equity		194,836										188,831
TOTAL	$	1,984,337									$	1,993,147
Net interest income and margin (3)					3.88	%		$	18,574						3.86	%		$	18,578
(1) Nonperforming loans are included in average loan balances. No adjustment has been made for these loans in the calculation of yields. Interest income on loans includes amortization of net deferred loan costs of $53,000 and $82,000, respectively.
(2) Other noninterest-earning assets includes the allowance for credit losses of $15.9 million and $15.8 million, respectively.
(3) Net interest margin is net interest income divided by total interest-earning assets.

CALIFORNIA BANCORP AND SUBSIDIARY
INTERIM CONSOLIDATED AVERAGE BALANCE SHEET AND YIELD DATA (UNAUDITED)
(Dollars in Thousands)
	Three months ended December 31,
	2023									2022
	Average Balance			Yields or Rates			Interest Income/Expense			Average Balance			Yields or Rates			Interest Income/Expense
ASSETS
Interest earning assets:
Loans (1)	$	1,571,994		6.19	%		$	24,523		$	1,621,322		5.87	%		$	23,972
Federal funds sold		177,331		5.34	%			2,386			229,209		3.87	%			2,236
Investment securities		147,629		4.02	%			1,496			156,712		3.22	%			1,272
Total interest earning assets		1,896,954		5.94	%			28,405			2,007,243		5.43	%			27,480
Noninterest-earning assets:
Cash and due from banks		20,310									20,692
All other assets (2)		67,073									60,271
TOTAL	$	1,984,337								$	2,088,206
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Deposits:
Demand	$	28,678		0.29	%			21		$	39,582		0.06	%		$	6
Money market and savings		638,623		3.02	%			4,857			647,213		1.45	%			2,359
Time		328,270		5.26	%			4,356			304,784		2.83	%			2,171
Other		56,715		4.18	%			597			110,650		3.89	%			1,084
Total interest-bearing liabilities		1,052,286		3.71	%			9,831			1,102,229		2.02	%			5,620
Noninterest-bearing liabilities:
Demand deposits		705,054									794,114
Accrued expenses and other liabilities		32,161									22,467
Shareholders' equity		194,836									169,396
TOTAL	$	1,984,337								$	2,088,206
Net interest income and margin (3)				3.88	%		$	18,574					4.32	%		$	21,860
(1) Nonperforming loans are included in average loan balances. No adjustment has been made for these loans in the calculation of yields. Interest income on loans includes amortization of net deferred loan (costs) fees of $(53,000) and $1.0 million, respectively.
(2) Other noninterest-earning assets includes the allowance for credit losses of $15.9 million and $16.5 million, respectively.
(3) Net interest margin is net interest income divided by total interest-earning assets.

CALIFORNIA BANCORP AND SUBSIDIARY
INTERIM CONSOLIDATED AVERAGE BALANCE SHEET AND YIELD DATA (UNAUDITED)
(Dollars in Thousands)
	Twelve months ended December 31,
	2023										2022
	Average Balance				Yields or Rates			Interest Income/Expense			Average Balance			Yields or Rates			Interest Income/Expense
ASSETS
Interest earning assets:
Loans (1)	$	1,570,810			6.00	%		$	94,275		$	1,495,981		4.96	%		$	74,240
Federal funds sold		178,540			5.15	%			9,198			220,084		1.60	%			3,519
Investment securities		151,328			3.79	%			5,737			155,748		2.90	%			4,519
Total interest earning assets		1,900,678			5.75	%			109,210			1,871,813		4.40	%			82,278
Noninterest-earning assets:
Cash and due from banks		19,500										19,838
All other assets (2)		63,786										61,517
TOTAL	$	1,983,964									$	1,953,168
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Deposits:
Demand	$	30,436			0.21	%			64		$	40,054		0.08	%			31
Money market and savings		629,419			2.63	%			16,529			651,429		0.70	%			4,544
Time		324,439			4.66	%			15,117			205,681		1.57	%			3,235
Other		67,984			4.33	%			2,945			121,464		2.88	%			3,496
Total interest-bearing liabilities		1,052,278			3.29	%			34,655			1,018,628		1.11	%			11,306
Noninterest-bearing liabilities:
Demand deposits		716,752										752,348
Accrued expenses and other liabilities		28,920										21,256
Shareholders' equity		186,014										160,936
TOTAL	$	1,983,964									$	1,953,168
Net interest income and margin (3)					3.92	%		$	74,555					3.79	%		$	70,972
(1) Nonperforming loans are included in average loan balances. No adjustment has been made for these loans in the calculation of yields. Interest income on loans includes amortization of net deferred loan (costs) fees of $(535,000) and $1.5 million, respectively.
(2) Other noninterest-earning assets includes the allowance for loan losses of $16.0 million and $15.4 million, respectively.
(3) Net interest margin is net interest income divided by total interest-earning assets.

CALIFORNIA BANCORP AND SUBSIDIARY
INTERIM CONSOLIDATED NON GAAP DATA (UNAUDITED)
(Dollars in Thousands, Except Per Share Data)
REVENUE:	Three months ended									Twelve months ended
	12/31/23			09/30/23			12/31/22			12/31/23			12/31/22
Net interest income	$	18,574		$	18,578		$	21,860		$	74,555		$	70,972
Non-interest income		1,339			1,294			1,962			4,875			7,374
Total revenue	$	19,913		$	19,872		$	23,822		$	79,430		$	78,346
NON-INTEREST EXPENSE:	Three months ended									Twelve months ended
	12/31/23			09/30/23			12/31/22			12/31/23			12/31/22
Total non-interest expense	$	12,218		$	11,851		$	11,713		$	47,515		$	44,665
Total capitalized loan origination costs		824			668			960			2,837			4,119
Total operating expenses, before capitalization of loan origination costs	$	13,042		$	12,519		$	12,673		$	50,352		$	48,784
TANGIBLE ASSETS:	12/31/23			09/30/23			06/30/23			03/31/23			12/31/22
Total assets	$	1,985,905		$	1,983,917		$	2,005,646		$	2,050,774		$	2,042,215
Goodwill and core deposit intangibles		7,432			7,442			7,452			7,462			7,472
Tangible assets	$	1,978,473		$	1,976,475		$	1,998,194		$	2,043,312		$	2,034,743
TANGIBLE EQUITY:	12/31/23			09/30/23			06/30/23			03/31/23			12/31/22
Total shareholders' equity	$	196,461		$	190,115		$	184,235		$	178,561		$	172,254
Goodwill and core deposit intangibles		7,432			7,442			7,452			7,462			7,472
Tangible equity	$	189,029		$	182,673		$	176,783		$	171,099		$	164,782
BOOK VALUE PER SHARE:
Total shareholders' equity	$	196,461		$	190,115		$	184,235		$	178,561		$	172,254
Common shares outstanding		8,402,482			8,395,483			8,383,772			8,355,378			8,332,479
Total shareholders' equity / common shares outstanding	$	23.38		$	22.64		$	21.98		$	21.37		$	20.67
TANGIBLE BOOK VALUE PER SHARE:
Tangible equity	$	189,029		$	182,673		$	176,783		$	171,099		$	164,782
Common shares outstanding		8,402,482			8,395,483			8,383,772			8,355,378			8,332,479
Tangible equity / common shares outstanding	$	22.50		$	21.76		$	21.09		$	20.48		$	19.78

FAQ

What was California BanCorp's net income for Q4 2023?

California BanCorp reported net income of $5.3 million for Q4 2023.

What was the diluted earnings per share for Q4 2023?

The diluted earnings per share for Q4 2023 were $0.63.

What were the total assets as of December 31, 2023?

Total assets were $1.99 billion as of December 31, 2023.

What are California BanCorp's capital ratios at December 31, 2023?

The total risk-based capital ratio, tier I capital ratio, and tier I leverage ratio were 13.16%, 9.53%, and 9.61%, respectively, all above the regulatory standards for 'well-capitalized' institutions.

What was the change in non-interest income for the twelve months ended December 31, 2023 compared to 2022?

Non-interest income of $4.9 million for the twelve months ended December 31, 2023 compared to $7.4 million for the same period of 2022.

What was the change in total deposits from September 30, 2023, to December 31, 2023?

Total deposits decreased by $81.8 million, or 5%, to $1.63 billion at December 31, 2023 from $1.71 billion at September 30, 2023.

What was the change in total gross loans from September 30, 2023, to December 31, 2023?

Total gross loans decreased by $13.6 million, or 1%, to $1.56 billion at December 31, 2023, from $1.57 billion at September 30, 2023.

What was the company's efficiency ratio for the quarters ended December 31, 2023, September 30, 2023, and December 31, 2022?

The company's efficiency ratio was 61.36%, 59.64%, and 49.17% for the quarters ended December 31, 2023, September 30, 2023, and December 31, 2022, respectively.

What was the change in the provision for credit losses on loans from Q3 2023 to Q4 2023?

The provision for credit losses on loans decreased to $87,000 for the fourth quarter of 2023 compared to $121,000 for the third quarter of 2023.

What was the change in the allowance for credit losses on loans from December 31, 2022, to December 31, 2023?

The allowance for credit losses on loans increased by $107,000 to $16.0 million, or 1.03% of total loans, at December 31, 2023, compared to $15.9 million, or 1.01% of total loans, at September 30, 2023 and $17.0 million, or 1.07% of total loans, at December 31, 2022.