California BanCorp Reports Financial Results for the Third Quarter and Nine Months Ended September 30, 2022

Rhea-AI Summary

California BanCorp (NASDAQ: CALB) reported robust financial results for Q3 2022, with net income reaching $5.5 million, up 30% from Q2 and 72% year-over-year. Diluted earnings per share (EPS) rose to $0.66, compared to $0.51 in Q2 2022 and $0.39 in Q3 2021. Total revenue for the quarter was $19.8 million, reflecting a 13% increase from Q2. Loan growth was strong, with a 23% annualized increase, while net interest margin expanded by 29 basis points. Despite a positive outlook, the company is preparing for a potential economic slowdown.

Positive

• Net income for Q3 2022 rose to $5.5 million, a 30% increase from Q2.
• Diluted EPS increased to $0.66, compared to $0.51 in Q2 2022.
• Total revenue for Q3 was $19.8 million, up 13% from Q2.
• 23% annualized growth in total loans.
• Net interest margin expanded by 29 basis points.

Negative

• Provision for loan losses increased by $3.2 million due to portfolio growth.
• Anticipation of moderated loan growth and margin expansion in the near-term.

OAKLAND, Calif., Oct. 27, 2022 (GLOBE NEWSWIRE) -- California BanCorp (NASDAQ: CALB), whose subsidiary is California Bank of Commerce, announced today its financial results for the third quarter and nine months ended September 30, 2022.

The Company reported net income of $5.5 million for the third quarter of 2022, representing an increase of $1.3 million, or 30%, compared to $4.2 million for the second quarter of 2022 and an increase of $2.3 million, or 72%, compared to $3.2 million in the third quarter of 2021. For the nine months ended September 30, 2022, net income was $13.4 million, representing an increase of $3.2 million, or 32%, compared to $10.2 million for the same period in 2021.    

Diluted earnings per share of $0.66 for the third quarter of 2022 compared to $0.51 for the second quarter of 2022 and $0.39 for the third quarter of 2021.   For the nine months ended September 30, 2022, diluted earnings per share of $1.60 compared to $1.23 for the same period in 2021.

“The consistent progress we have made on executing our strategic plan to generate profitable growth resulted in further improvement in our level of profitability and enabled the Company to reach a significant milestone with our return on average assets exceeding 1.00% in the third quarter,” said Steven Shelton, Chief Executive Officer of California BanCorp. “We continue to add new clients each quarter and generate strong, quality balance sheet growth including a further increase in our noninterest-bearing deposits and 23% annualized growth in total loans, which is driving a significant increase in revenue that enabled us to realize more operating leverage and a higher level of efficiencies. With the diverse lending platform we have built, we are seeing well balanced loan production, which combined with an increase in line utilization, resulted in growth in both our commercial and commercial real estate portfolios during the third quarter. Our high level of asset sensitivity and effective management of our deposit costs resulted in our net interest margin expanding by 29 basis points in the third quarter, which was another contributor to our increased profitability. While we continue to see healthy economic conditions in our markets, given the potential for a material slowdown and our conservative approach to risk management, we are becoming more selective in our new loan production. It is likely that this will result in a moderation in our level of loan growth and margin expansion in the near-term, although we believe we are well positioned to continue generating strong financial results for our shareholders while effectively managing through a more challenging operating environment.”

“Our strong financial performance and effective balance sheet management resulted in further growth in tangible book value per share, which increased 3.4% during the third quarter,” said Thomas A. Sa, President, Chief Financial Officer and Chief Operating Officer of California BanCorp. “Over the past few years, we have maintained conservative underwriting criteria as we have grown our loan portfolio and generated the higher level of revenue that has led to our increasing profitability. As a result, we continue to see very low levels of problem loans and expect to maintain strong asset quality even if we see a deterioration in economic conditions.”

Financial Highlights:

Profitability - three months ended September 30, 2022 compared to June 30, 2022

• Net income of $5.5 million and $0.66 per diluted share, compared to $4.2 million and $0.51 per share, respectively.
• Revenue of $19.8 million increased $2.2 million, or 13%, compared to $17.6 million for the second quarter of 2022.
• Net fees from Paycheck Protection Program (“PPP”) loans contributed $278,000 to net interest income, compared to $667,000 for the second quarter of 2022.
• Provision for loan losses of $800,000 decreased $125,000, or 14%, primarily as a result of continued adjustments in the qualitative reserve assessment in response to general macroeconomic changes, partially offset by growth in the commercial and real estate other loan portfolios.
• Non-interest income of $1.5 million increased $90,000, or 6%, primarily due to service charges and other fees related to loan and deposit growth.
• Non-interest expense, excluding capitalized loan origination costs, of $12.3 million increased $427,000, or 4%, compared to $11.9 million for the second quarter of 2022, primarily as a result of increased salary and benefit expense related to the continued growth of the Company.

Profitability - nine months ended September 30, 2022 compared to September 30, 2021

• Net income of $13.4 million and $1.60 per diluted share, compared to $10.2 million and $1.23 per diluted share, respectively.
• Revenue of $54.5 million increased $10.6 million, or 24%, compared to $43.9 million in the prior year.
• Net fees from PPP loans contributed $1.7 million to net interest income, compared to $4.8 million in the prior year.
• Provision for loan losses increased $3.2 million primarily due to growth in the loan portfolio combined with a release of reserves in 2021 as a result of the continued assessment of qualitative reserves regarding the general macroeconomic changes related to COVID-19 as it pertained to our overall loan portfolio.
• Non-interest income of $5.4 million increased $2.2 million, or 70%, primarily due to a gain recognized on the sale of a portion of our solar loan portfolio during the first quarter of 2022 combined with an increase in service charges and other fees resulting from growth in the Company’s client base.
• Non-interest expense, excluding capitalized loan origination costs, of $36.1 million compared to $34.4 million for the same period in the prior year, reflecting the Company’s investment in infrastructure to support the continued growth of the Company.

Financial Position – September 30, 2022 compared to June 30, 2022

• Total assets increased by $163.1 million, or 9%, to $2.05 billion.
• Total gross loans increased by $87.5 million, or 6%, to $1.59 billion.
• Total deposits increased by $156.9 million, or 10%, to $1.71 billion.
• Total borrowings at September 30, 2022 remained unchanged from June 30, 2022.
• Tangible book value per share of $18.80 increased by $0.62, or 3%.
  

Net Interest Income and Margin:

Net interest income for the quarter ended September 30, 2022 was $18.3 million, an increase of $2.1 million, or 13%, from $16.2 million for the three months ended June 30, 2022, and an increase of $4.5 million, or 33%, from $13.8 million for the quarter ended September 30, 2021. The increase in net interest income compared to the second quarter of 2022 was primarily attributable to growth of the loan portfolio and an increase in net interest margin related to the rising interest rate environment. Compared to the third quarter of 2021, the increase in net interest income resulted from a more favorable mix of earning assets, partially offset by a reduction in the amortization of net fees received on PPP loans.

Net interest income for the nine months ended September 30, 2022 was $49.1 million, an increase of $8.3 million, or 20%, over $40.8 million for the nine months ended September 30, 2021. The increase in net interest income was primarily attributable to an increase in interest income as the result of a more favorable mix of earning assets combined with higher yields on those assets.

The Company’s net interest margin for the third quarter of 2022 was 3.94%, compared to 3.65% for the second quarter of 2022 and 2.87% for the same period in 2021. The increase in margin compared to the prior quarter and the third quarter of 2021 was primarily due to growth in the loan portfolio and increased yields on earning assets, partially offset by an increase in the cost of deposits and other borrowings combined with a reduction of net fees recognized on PPP loans.

The Company’s net interest margin for the nine months ended September 30, 2022 was 3.60%, compared to 2.92% for the same period in 2021.   The increase in margin compared to prior year was primarily due to a more favorable mix of higher yielding earning assets, partially offset by higher borrowing costs.

Non-Interest Income:

The Company’s non-interest income for the quarters ended September 30, 2022, June 30, 2022, and September 30, 2021 was $1.5 million, $1.4, million and $1.3 million, respectively. The increase in non-interest income from the prior periods was primarily due to an increase in service charges and other fee income related to loan and deposit growth.

For the nine months ended September 30, 2022, non-interest income of $5.4 million compared to $3.2 million for the same period of 2021. The increase in non-interest income from prior year was the result of an increase in service charges and loan related fees and a gain recognized on the sale of a portion of our solar loan portfolio.

Net interest income and non-interest income comprised total revenue of $19.8 million, $17.6 million, and $15.1 million for the quarters ended September 30, 2022, June 30, 2022, and September 30, 2021, respectively. Total revenue for the nine months ended September 30, 2022 and 2021 was $54.5 million and $43.9 million, respectively.

Non-Interest Expense:

The Company’s non-interest expense for the quarters ended September 30, 2022, June 30, 2022, and September 30, 2021 was $11.2 million, $10.8 million, and $10.5 million, respectively. The increase in non-interest expense from the prior periods was primarily due to an increase in salaries and benefits related to investments to support the continued growth of the business. Excluding capitalized loan origination costs, non-interest expense for the third quarter of 2022, the second quarter of 2022 and the third quarter of 2021 was $12.3 million, $11.9 million, and $11.7 million, respectively.

Non-interest expense of $33.0 million for the nine months ended September 30, 2022 compared to $30.4 million for the same period of 2021. Excluding capitalized loan origination costs, non-interest expense was $36.1 million for the nine months ended September 30, 2022 and $34.4 million for the same period in 2021 which reflects the Company’s investment in infrastructure to support the continued growth of the Company.

The Company’s efficiency ratio, the ratio of non-interest expense to revenues, was 56.52%, 61.41%, and 69.42% for the quarters ended September 30, 2022, June 30, 2022, and September 30, 2021, respectively. For the nine months ended September 30, 2022 and 2021, the Company’s efficiency ratio was 60.44% and 69.25%, respectively.

Balance Sheet:

Total assets of $2.05 billion as of September 30, 2022, represented an increase of $163.1 million, or 9%, compared to $1.89 billion at June 30, 2022 and remained consistent with total assets of $2.05 million at September 30, 2021. The increase in total assets from the prior quarter was primarily due to continued loan growth, combined with increased liquidity related to brokered deposits. Compared to the same period in the prior year, the Company had strong loan growth in the commercial and real estate other portfolios, which was offset by decreased liquidity resulting from the outflow of deposits related to forgiveness of PPP loans.  

Total gross loans increased by $87.5 million, or 6%, to $1.59 billion at September 30, 2022, from $1.50 billion at June 30, 2022 and increased by $285.9 million, or 22%, compared to $1.30 billion at September 30, 2021.

During the third quarter of 2022, commercial and real estate other loans increased by $53.6 million and $30.4 million, respectively, due to organic growth. Year-over-year, commercial and real estate other loans increased by $215.0 million and $160.7 million, respectively, also due to organic growth. These increases were partially offset by a decrease in SBA loans of $98.5 million primarily due to PPP loan forgiveness.

As a result of the CARES Act PPP, which was launched in April 2020 and re-launched in January 2021, the Company funded approximately $491.3 million in loans. Approximately $487.5 million of those balances have been granted forgiveness by the SBA as of September 30, 2022.

Total deposits increased by $156.9 million, or 10%, to $1.71 billion at September 30, 2022 from $1.55 billion at June 30, 2022, and decreased by $33.0 million, or 2%, from $1.74 billion at September 30, 2021. The increase in total deposits from the end of the second quarter of 2022 was primarily due to an increase in non-interest bearing demand deposits of $43.3 million and time deposits of $152.9 million, partially offset by a decrease in interest-bearing demand deposits of $10.3 million and money market and savings deposits of $28.9 million.

Compared to the same period last year, the decrease in total deposits was primarily concentrated in non-interest bearing demand deposits and money market and savings deposits as a result of outflows related to forgiveness of PPP loans, offset by an increase in time deposits. Non-interest bearing deposits, primarily commercial business operating accounts, represented 44.4% of total deposits at September 30, 2022, compared to 46.1% at June 30, 2022 and 46.7% at September 30, 2021.

As of September 30, 2022, the Company had outstanding borrowings, excluding junior subordinated debt securities, of $100.0 million, and remained unchanged from the outstanding borrowings as of June 30, 2022. The Company had outstanding borrowings of $79.5 million at September 30, 2021.

Asset Quality:

The provision for credit losses decreased to $800,000 for the third quarter of 2022 compared to $925,000 for the second quarter of 2022, and increased from $300,000 for the third quarter of 2021. The Company had a loan charge-off of $202,000, or 0.01% of gross loans, and no loan recoveries during the third quarter of 2022.   The Company did not have any loan charge-offs or recoveries during the second quarter of 2022 and had a loan recovery of $31,000 during the third quarter of 2021.

Non-performing assets (“NPAs”) to total assets were 0.01% at September 30, 2022, compared to 0.03% at June 30, 2022 and 0.06% at September 30, 2021, with non-performing loans of $182,000, $549,000 and $1.2 million, respectively, on those dates.

The allowance for loan losses was $16.6 million, or 1.04% of total loans, at September 30, 2022, compared to $16.0 million, or 1.06% of total loans, at June 30, 2022 and $13.6 million, or 1.04% of total loans at September 30, 2021.   

Capital Adequacy:

At September 30, 2022, shareholders’ equity totaled $164.1 million compared to $158.7 million at June 30, 2022 and $147.2 million one year ago. Additionally, at September 30, 2022, the Company’s total risk-based capital ratio and its leverage ratio were 11.57% and 8.21%, respectively; both of which were above the regulatory standards of 10.00% and 5.00%, respectively, for “well-capitalized” institutions.

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, call us at (510) 457-3751, or visit us at www.californiabankofcommerce.com.

Contacts:

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

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

Use of Non-GAAP Financial Information:

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

Forward-Looking Information:

Statements in this news release regarding expectations and beliefs about future financial performance and financial condition, as well as trends in the Company’s business and markets are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements often include words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "project," "outlook," or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could," or "may." The forward-looking statements in this news release are based on current information and on assumptions that the Company makes about future events and circumstances that are subject to a number of risks and uncertainties that are often difficult to predict and beyond the Company’s control. As a result of those risks and uncertainties, the Company’s actual financial results in the future could differ, possibly materially, from those expressed in or implied by the forward-looking statements contained in this news release and could cause the Company to make changes to future plans. Those risks and uncertainties include, but are not limited to, the risk of incurring loan losses, which is an inherent risk of the banking business; the risk that the Company will not be able to continue its internal growth rate; uncertainties related to the coronavirus pandemic; the impact of higher inflation rates; 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, loan demand, interest income and interest rate margins and, therefore, the Company’s future operating results; risks associated with changes in income tax laws and regulations; and risks associated with seeking new client relationships and maintaining existing client relationships. Readers of this news release are encouraged to review the additional information regarding these and other risks and uncertainties to which our business is subject that are contained in our Annual Report on Form 10-K for the year ended December 31, 2021 which is on file with the Securities and Exchange Commission (the “SEC”). Additional information will be set forth in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, which we expect to file with the SEC during the fourth quarter of 2022, 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:		Q3 2022				Q2 2022				$				%				Q3 2021				$			%
Interest income		$	21,168			$	17,706			$	3,462			20	%			$	15,539			$	5,629		36	%
Interest expense			2,805				1,483				1,322			89	%				1,698				1,107		65	%
Net interest income			18,363				16,223				2,140			13	%				13,841				4,522		33	%
Provision for loan losses			800				925				(125	)		-14	%				300				500		167	%
Net interest income after
provision for loan losses			17,563				15,298				2,265			15	%				13,541				4,022		30	%
Non-interest income			1,484				1,394				90			6	%				1,302				182		14	%
Non-interest expense			11,217				10,819				398			4	%				10,513				704		7	%
Income before income taxes			7,830				5,873				1,957			33	%				4,330				3,500		81	%
Income tax expense			2,308				1,629				679			42	%				1,114				1,194		107	%
Net income		$	5,522			$	4,244			$	1,278			30	%			$	3,216			$	2,306		72	%
Diluted earnings per share		$	0.66			$	0.51			$	0.15			29	%			$	0.39			$	0.27		69	%
Net interest margin			3.94	%			3.65	%		+29 Basis Points									2.87	%		+107 Basis Points
Efficiency ratio			56.52	%			61.41	%		-489 Basis Points									69.42	%		-1290 Basis Points
										Change
YEAR-TO-DATE HIGHLIGHTS:		Q3 2022				Q3 2021				$				%
Interest income		$	54,798			$	45,750			$	9,048			20	%
Interest expense			5,686				4,987				699			14	%
Net interest income			49,112				40,763				8,349			20	%
Provision for loan losses			2,675				(500	)			3,175			635	%
Net interest income after
provision for loan losses			46,437				41,263				5,174			13	%
Non-interest income			5,412				3,179				2,233			70	%
Non-interest expense			32,952				30,428				2,524			8	%
Income before income taxes			18,897				14,014				4,883			35	%
Income tax expense			5,458				3,827				1,631			43	%
Net income		$	13,439			$	10,187			$	3,252			32	%
Diluted earnings per share		$	1.60			$	1.23			$	0.37			30	%
Net interest margin			3.60	%			2.92	%		+68 Basis Points
Efficiency ratio			60.44	%			69.25	%		-881 Basis Points

CALIFORNIA BANCORP AND SUBSIDIARY
SELECTED FINANCIAL INFORMATION (UNAUDITED) - FINANCIAL POSITION
(Dollars in Thousands, Except Per Share Data)
										Change												Change
PERIOD-END HIGHLIGHTS:		Q3 2022				Q2 2022				$				%				Q3 2021				$				%
Total assets		$	2,048,501			$	1,885,352			$	163,149			9	%			$	2,049,079			$	(578	)		-0	%
Gross loans			1,587,901				1,500,379				87,522			6	%				1,301,972				285,929			22	%
Deposits			1,709,078				1,552,139				156,939			10	%				1,742,054				(32,976	)		-2	%
Tangible equity			156,575				151,251				5,324			4	%				139,715				16,860			12	%
Tangible book value per share		$	18.80			$	18.19			$	0.62			3	%			$	16.93			$	1.87			11	%
Tangible equity / total assets			7.64	%			8.02	%		-38 Basis Points									6.82	%		+82 Basis Points
Gross loans / total deposits			92.91	%			96.67	%		-376 Basis Points									74.74	%		+1817 Basis Points
Noninterest-bearing deposits /
total deposits			44.39	%			46.09	%		-170 Basis Points									45.39	%		-100 Basis Points
QUARTERLY AVERAGE										Change												Change
HIGHLIGHTS:		Q3 2022				Q2 2022				$				%				Q3 2021				$				%
Total assets		$	1,930,227			$	1,864,196			$	66,031			4	%			$	1,985,894			$	(55,667	)		-3	%
Total earning assets			1,849,242				1,783,017				66,225			4	%				1,912,697				(63,455	)		-3	%
Gross loans			1,523,442				1,464,922				58,520			4	%				1,316,080				207,362			16	%
Deposits			1,592,096				1,567,412				24,684			2	%				1,718,525				(126,429	)		-7	%
Tangible equity			155,448				150,176				5,272			4	%				138,833				16,615			12	%
Tangible equity / total assets			8.05	%			8.06	%		-1 Basis Points									6.99	%		+106 Basis Points
Gross loans / total deposits			95.69	%			93.46	%		+223 Basis Points									76.58	%		+1911 Basis Points
Noninterest-bearing deposits /
total deposits			46.41	%			46.86	%		-45 Basis Points									45.17	%		+124 Basis Points
YEAR-TO-DATE AVERAGE										Change
HIGHLIGHTS:		Q3 2022				Q3 2021				$				%
Total assets		$	1,907,661			$	1,940,035			$	(32,374	)		-2	%
Total earning assets			1,826,172				1,864,166				(37,994	)		-2	%
Gross loans			1,453,741				1,382,074				71,667			5	%
Deposits			1,603,620				1,632,257				(28,637	)		-2	%
Tangible equity			150,587				134,771				15,816			12	%
Tangible equity / total assets			7.89	%			6.95	%		+94 Basis Points
Gross loans / total deposits			90.65	%			84.67	%		+598 Basis Points
Noninterest-bearing deposits /
total deposits			46.04	%			44.82	%		+122 Basis Points

CALIFORNIA BANCORP AND SUBSIDIARY
SELECTED INTERIM FINANCIAL INFORMATION (UNAUDITED) - ASSET QUALITY
(Dollars in Thousands)
ALLOWANCE FOR LOAN LOSSES:		09/30/22				06/30/22				03/31/22				12/31/21				09/30/21
Balance, beginning of period		$	15,957			$	15,032			$	14,081			$	13,571			$	13,240
Provision for loan losses, quarterly			800				925				950				504				300
Charge-offs, quarterly			(202	)			-				-				-				-
Recoveries, quarterly			-				-				1				6				31
Balance, end of period		$	16,555			$	15,957			$	15,032			$	14,081			$	13,571
NONPERFORMING ASSETS:		09/30/22				06/30/22				03/31/22				12/31/21				09/30/21
Loans accounted for on a non-accrual basis		$	182			$	549			$	549			$	232			$	1,233
Loans with principal or interest contractually
past due 90 days or more and still accruing
interest			-				-				-				-				-
Nonperforming loans		$	182			$	549			$	549			$	232			$	1,233
Other real estate owned			-				-				-				-				-
Nonperforming assets		$	182			$	549			$	549			$	232			$	1,233
Loans restructured and in compliance with
modified terms			-				-				-				-				-
Nonperforming assets and restructured loans		$	182			$	549			$	549			$	232			$	1,233
Nonperforming loans by asset type:
Commercial		$	-			$	-			$	-			$	-			$	-
Real estate other			-				-				-				-				1,000
Real estate construction and land			-				-				-				-				-
SBA			182				549				549				232				233
Other			-				-				-				-				-
Nonperforming loans		$	182			$	549			$	549			$	232			$	1,233
ASSET QUALITY:		09/30/22				06/30/22				03/31/22				12/31/21				09/30/21
Allowance for loan losses / gross loans			1.04	%			1.06	%			1.07	%			1.02	%			1.04	%
Allowance for loan losses / nonperforming loans			9096.15	%			2906.56	%			2738.07	%			6069.40	%			1100.65	%
Nonperforming assets / total assets			0.01	%			0.03	%			0.03	%			0.01	%			0.06	%
Nonperforming loans / gross loans			0.01	%			0.04	%			0.04	%			0.02	%			0.09	%
Net quarterly charge-offs / gross loans			0.01	%			0.00	%			-0.00	%			-0.00	%			-0.00	%

CALIFORNIA BANCORP AND SUBSIDIARY
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in Thousands, Except Per Share Data)
		Three months ended												Nine months ended
		09/30/22				06/30/22				09/30/21				09/30/22				09/30/21
INTEREST INCOME
Loans		$	19,084			$	16,298			$	14,870			$	50,268			$	44,157
Federal funds sold			867				280				199				1,283				371
Investment securities			1,217				1,128				470				3,247				1,222
Total interest income			21,168				17,706				15,539				54,798				45,750
INTEREST EXPENSE
Deposits			1,672				796				1,152				3,274				3,481
Other			1,133				687				546				2,412				1,506
Total interest expense			2,805				1,483				1,698				5,686				4,987
Net interest income			18,363				16,223				13,841				49,112				40,763
Provision for loan losses			800				925				300				2,675				(500	)
Net interest income after provision
for loan losses			17,563				15,298				13,541				46,437				41,263
NON-INTEREST INCOME
Service charges and other fees			1,237				1,134				905				3,260				2,184
Gain on sale of loans			-				-				-				1,393				-
Other non-interest income			247				260				397				759				995
Total non-interest income			1,484				1,394				1,302				5,412				3,179
NON-INTEREST EXPENSE
Salaries and benefits			7,415				7,146				6,920				21,654				19,661
Premises and equipment			1,275				1,267				1,372				3,844				3,778
Other			2,527				2,406				2,221				7,454				6,989
Total non-interest expense			11,217				10,819				10,513				32,952				30,428
Income before income taxes			7,830				5,873				4,330				18,897				14,014
Income taxes			2,308				1,629				1,114				5,458				3,827
NET INCOME		$	5,522			$	4,244			$	3,216			$	13,439			$	10,187
EARNINGS PER SHARE
Basic earnings per share		$	0.66			$	0.51			$	0.39			$	1.62			$	1.24
Diluted earnings per share		$	0.66			$	0.51			$	0.39			$	1.60			$	1.23
Average common shares outstanding			8,322,529				8,295,014				8,244,154				8,298,269				8,211,907
Average common and equivalent
shares outstanding			8,405,669				8,395,701				8,310,799				8,394,439				8,283,683
PERFORMANCE MEASURES
Return on average assets			1.13	%			0.91	%			0.64	%			0.94	%			0.70	%
Return on average equity			13.45	%			10.80	%			8.72	%			11.37	%			9.57	%
Return on average tangible equity			14.09	%			11.34	%			9.19	%			11.93	%			10.11	%
Efficiency ratio			56.52	%			61.41	%			69.42	%			60.44	%			69.25	%

CALIFORNIA BANCORP AND SUBSIDIARY
INTERIM CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in Thousands)
		09/30/22				06/30/22				03/31/22				12/31/21				09/30/21
ASSETS
Cash and due from banks		$	24,709			$	20,378			$	18,228			$	4,539			$	22,424
Federal funds sold			216,345				138,057				206,305				465,917				578,626
Investment securities			157,531				165,309				171,764				103,278				82,108
Loans:
Commercial			643,131				589,562				522,808				474,281				428,169
Real estate other			824,867				794,504				741,651				697,212				664,202
Real estate construction and land			71,523				63,189				51,204				43,194				41,312
SBA			8,565				13,310				44,040				81,403				107,096
Other			39,815				39,814				40,771				80,559				61,193
Loans, gross			1,587,901				1,500,379				1,400,474				1,376,649				1,301,972
Unamortized net deferred loan costs (fees)			1,902				2,570				2,434				1,688				760
Allowance for loan losses			(16,555	)			(15,957	)			(15,032	)			(14,081	)			(13,571	)
Loans, net			1,573,248				1,486,992				1,387,876				1,364,256				1,289,161
Premises and equipment, net			3,382				3,736				4,047				4,405				4,227
Bank owned life insurance			24,955				24,788				24,614				24,412				24,247
Goodwill and core deposit intangible			7,483				7,493				7,503				7,513				7,524
Accrued interest receivable and other assets			40,848				38,599				39,258				40,676				40,762
Total assets		$	2,048,501			$	1,885,352			$	1,859,595			$	2,014,996			$	2,049,079
LIABILITIES
Deposits:
Demand noninterest-bearing		$	758,716			$	715,432			$	746,673			$	771,205			$	790,646
Demand interest-bearing			35,183				45,511				36,419				37,250				39,679
Money market and savings			597,244				626,156				686,781				717,480				750,112
Time			317,935				165,040				130,649				154,203				161,617
Total deposits			1,709,078				1,552,139				1,600,522				1,680,138				1,742,054
Junior subordinated debt securities			54,117				54,097				54,063				54,028				59,009
Other borrowings			100,000				100,000				32,166				106,387				79,536
Accrued interest payable and other liabilities			21,248				20,372				18,273				23,689				21,241
Total liabilities			1,884,443				1,726,608				1,705,024				1,864,242				1,901,840
SHAREHOLDERS' EQUITY
Common stock			110,786				110,289				109,815				109,473				109,009
Retained earnings			54,628				49,106				44,862				41,189				38,008
Accumulated other comprehensive (loss)			(1,356	)			(651	)			(106	)			92				222
Total shareholders' equity			164,058				158,744				154,571				150,754				147,239
Total liabilities and shareholders' equity		$	2,048,501			$	1,885,352			$	1,859,595			$	2,014,996			$	2,049,079
			-				-				-				-				-
CAPITAL ADEQUACY
Tier I leverage ratio			8.21	%			8.27	%			7.84	%			7.23	%			7.29	%
Tier I risk-based capital ratio			7.98	%			8.09	%			8.49	%			8.62	%			9.17	%
Total risk-based capital ratio			11.57	%			11.84	%			12.49	%			12.75	%			13.92	%
Total equity/ total assets			8.01	%			8.42	%			8.31	%			7.48	%			7.19	%
Book value per share		$	19.70			$	19.09			$	18.69			$	18.24			$	17.85
Common shares outstanding			8,327,781				8,317,161				8,270,901				8,264,300				8,250,109

CALIFORNIA BANCORP AND SUBSIDIARY
INTERIM CONSOLIDATED AVERAGE BALANCE SHEET AND YIELD DATA (UNAUDITED)
(Dollars in Thousands)
		Three months ended September 30,									Three months ended June 30,
		2022									2022
					Yields			Interest						Yields			Interest
		Average			or			Income/			Average			or			Income/
		Balance			Rates			Expense			Balance			Rates			Expense
ASSETS
Interest earning assets:
Loans (1)		$	1,523,442		4.97	%		$	19,084		$	1,464,922		4.46	%		$	16,298
Federal funds sold			162,314		2.12	%			867			145,329		0.77	%			280
Investment securities			163,486		2.95	%			1,217			172,766		2.62	%			1,128
Total interest earning assets			1,849,242		4.54	%			21,168			1,783,017		3.98	%			17,706
Noninterest-earning assets:
Cash and due from banks			20,153									19,735
All other assets (2)			60,832									61,444
TOTAL		$	1,930,227								$	1,864,196
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Deposits:
Demand		$	40,044		0.08	%		$	8		$	42,380		0.08	%		$	8
Money market and savings			600,100		0.62	%			938			636,692		0.37	%			582
Time			213,001		1.35	%			726			153,859		0.54	%			206
Other			154,101		2.92	%			1,133			119,970		2.30	%			687
Total interest-bearing liabilities			1,007,246		1.10	%			2,805			952,901		0.62	%			1,483
Noninterest-bearing liabilities:
Demand deposits			738,951									734,481
Accrued expenses and
other liabilities			21,094									19,139
Shareholders' equity			162,936									157,675
TOTAL		$	1,930,227								$	1,864,196
Net interest income and margin (3)					3.94	%		$	18,363					3.65	%		$	16,223
(1) Nonperforming loans are included in average loan balances. No adjustment has been made for these loans in the calculation of yields. Interest income on loans includes amortization of net deferred loan fees of $100,000 and $83,000, respectively.
(2) Other noninterest-earning assets includes the allowance for loan losses of $16.0 million and $15.0 million, respectively.
(3) Net interest margin is net interest income divided by total interest-earning assets.

CALIFORNIA BANCORP AND SUBSIDIARY
INTERIM CONSOLIDATED AVERAGE BALANCE SHEET AND YIELD DATA (UNAUDITED)
(Dollars in Thousands)
		Three months ended September 30,
		2022									2021
					Yields			Interest						Yields			Interest
		Average			or			Income/			Average			or			Income/
		Balance			Rates			Expense			Balance			Rates			Expense
ASSETS
Interest earning assets:
Loans (1)		$	1,523,442		4.97	%		$	19,084		$	1,316,080		4.48	%		$	14,870
Federal funds sold			162,314		2.12	%			867			530,806		0.15	%			199
Investment securities			163,486		2.95	%			1,217			65,811		2.83	%			470
Total interest earning assets			1,849,242		4.54	%			21,168			1,912,697		3.22	%			15,539
Noninterest-earning assets:
Cash and due from banks			20,153									18,627
All other assets (2)			60,832									54,570
TOTAL		$	1,930,227								$	1,985,894
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Deposits:
Demand		$	40,044		0.08	%		$	8		$	36,696		0.09	%		$	8
Money market and savings			600,100		0.62	%			938			735,785		0.52	%			961
Time			213,001		1.35	%			726			169,849		0.43	%			183
Other			154,101		2.92	%			1,133			102,287		2.12	%			546
Total interest-bearing liabilities			1,007,246		1.10	%			2,805			1,044,617		0.64	%			1,698
Noninterest-bearing liabilities:
Demand deposits			738,951									776,195
Accrued expenses and
other liabilities			21,094									18,719
Shareholders' equity			162,936									146,363
TOTAL		$	1,930,227								$	1,985,894
Net interest income and margin (3)					3.94	%		$	18,363					2.87	%		$	13,841
(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 fees of $100,000 and $1.0 million, respectively.
(2) Other noninterest-earning assets includes the allowance for loan losses of $16.0 million and $13.3 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)
		Nine months ended September 30,
		2022									2021
					Yields			Interest						Yields			Interest
		Average			or			Income/			Average			or			Income/
		Balance			Rates			Expense			Balance			Rates			Expense
ASSETS
Interest earning assets:
Loans (1)		$	1,453,741		4.62	%		$	50,268		$	1,382,074		4.27	%		$	44,157
Federal funds sold			217,008		0.79	%			1,283			422,050		0.12	%			371
Investment securities			155,423		2.79	%			3,247			60,042		2.72	%			1,222
Total interest earning assets			1,826,172		4.01	%			54,798			1,864,166		3.28	%			45,750
Noninterest-earning assets:
Cash and due from banks			19,550									17,223
All other assets (2)			61,939									58,646
TOTAL		$	1,907,661								$	1,940,035
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Deposits:
Demand		$	40,214		0.08	%			25		$	35,031		0.11	%		$	29
Money market and savings			652,849		0.45	%			2,185			684,995		0.56	%			2,858
Time			172,284		0.83	%			1,064			180,572		0.44	%			594
Other			125,108		2.58	%			2,412			144,501		1.39	%			1,506
Total interest-bearing liabilities			990,455		0.77	%			5,686			1,045,099		0.64	%			4,987
Noninterest-bearing liabilities:
Demand deposits			738,273									731,659
Accrued expenses and
other liabilities			20,848									20,966
Shareholders' equity			158,085									142,311
TOTAL		$	1,907,661								$	1,940,035
Net interest income and margin (3)					3.60	%		$	49,112					2.92	%		$	40,763
(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 fees of $501,000 and $3.3 million, respectively.
(2) Other noninterest-earning assets includes the allowance for loan losses of $15.0 million and $14.0 million, respectively.
(3) Net interest margin is net interest income divided by total interest-earning assets.

CALIFORNIA BANCORP AND SUBSIDIARY
INTERIM CONSOLIDATED NON GAAP DATA (UNAUDITED)
(Dollars in Thousands)
REVENUE:		Q3 2022			Q2 2022			Q1 2022			Q4 2021			Q3 2021
Net interest income		$	18,363		$	16,223		$	14,526		$	13,967		$	13,841
Non-interest income			1,484			1,394			2,534			994			1,302
Total revenue		$	19,847		$	17,617		$	17,060		$	14,961		$	15,143
PPP RELATED DEFERRED FEES											Amortization			Deferred
AND COSTS:		Deferred Balance at Origination									of Deferred			Balance
		2021 Program			2020 Program			Total			Balance			Remaining
PPP fees		$	4,479		$	9,086		$	13,565		$	13,505		$	60
PPP capitalized loan origination costs			540			2,451			2,991			2,985			6
Net PPP fees		$	3,939		$	6,635		$	10,574		$	10,520		$	54
IMPACT OF PPP ACTIVITY REFLECTED		Amortization of Deferred Balance
IN NET INTEREST INCOME:		Q3 2022			Q2 2022			Q1 2022			Q4 2021			Q3 2021
PPP fees		$	293		$	769		$	1,014		$	817		$	1,909
PPP capitalized loan origination costs			15			102			223			109			348
Net PPP fees		$	278		$	667		$	791		$	708		$	1,561
NON-INTEREST EXPENSE:		Q3 2022			Q2 2022			Q1 2022			Q4 2021			Q3 2021
Total non-interest expense		$	11,217		$	10,819		$	10,916		$	10,009		$	10,513
Total capitalized loan origination costs			1,102			1,073			984			1,601			1,197
Total operating expenses, before capitalization
of loan origination costs		$	12,319		$	11,892		$	11,900		$	11,610		$	11,710
GROSS LOANS:		09/30/22			06/30/22			03/31/22			12/31/21			09/30/21
Gross loans		$	1,587,901		$	1,500,379		$	1,400,474		$	1,376,649		$	1,301,972
PPP loans			3,797			7,843			36,905			72,527			97,451
Gross loans, excluding PPP loans		$	1,584,104		$	1,492,536		$	1,363,569		$	1,304,122		$	1,204,521

FAQ

What were California BanCorp's Q3 2022 earnings results for CALB?

California BanCorp reported Q3 2022 net income of $5.5 million and diluted EPS of $0.66.

How much did total revenue increase in Q3 2022 for CALB?

Total revenue for Q3 2022 was $19.8 million, a 13% increase from Q2.

What is the loan growth percentage reported for CALB in Q3 2022?

California BanCorp experienced a 23% annualized growth in total loans for Q3 2022.

What is the net interest margin expansion for CALB in Q3 2022?

The net interest margin for Q3 2022 expanded by 29 basis points.

What is the outlook for California BanCorp regarding loan growth?

California BanCorp expects a moderation in loan growth and margin expansion due to potential economic slowdown.