Private Bancorp of America, Inc. Announces Strong Net Income and Earnings Per Share and Exceeds $2 Billion in Assets in the Third Quarter 2023

Rhea-AI Summary

Private Bancorp of America, Inc. reports net income of $8.5 million for the third quarter of 2023

Positive

• Net income increased by 33.7% compared to the third quarter of 2022
• Loans held-for-investment increased by 2.7% since June 30, 2023
• Total deposits increased by 4.1% since June 30, 2023
• Total available liquidity is $1.5 billion or 179% of uninsured deposits
• Net interest margin was 4.67% for the third quarter of 2023
• Tangible book value per share increased by 28.6% year-over-year

Negative

• Core deposits decreased by 0.8% since June 30, 2023
• Net interest margin decreased by 0.06% compared to the prior quarter
• Total cost of deposits increased to 1.92% for the third quarter of 2023
• Net unrealized loss on the investment securities portfolio increased to $15.8 million

Third Quarter 2023 Highlights

• Net income for the third quarter of 2023 of $8.5 million, up from $8.3 million⁽¹⁾ (as adjusted) in the prior quarter and up from  $6.4 million in the third quarter of 2022. Net income for the third quarter of 2023 represents a return on average assets of 1.68% and a return on average tangible common equity of 19.74%
• Diluted earnings per share for the third quarter of 2023 of $1.47, up from $1.43⁽¹⁾ (as adjusted) in the prior quarter and up from $1.12 in the third quarter of 2022
• Loans held-for-investment (“HFI”) totaled $1.76 billion as of September 30, 2023, an increase of $47.1 million or 2.7% from June 30, 2023 and $176.6 million or 11.1% from December 31, 2022
• Provision for credit losses for the third quarter of 2023 of $0.5 million, compared to net reversal of $7.1 million for the prior quarter and a provision of $1.3 million for the third quarter of 2022. The provision for the third quarter of 2023 primarily relates to a $1.25 million specific reserve for a loan placed on nonaccrual status during the quarter, partially offset by a $520 thousand release of reserve for unfunded commitments that was reclassified from noninterest expense
• Total deposits were $1.77 billion as of September 30, 2023, an increase of $70.5 million or 4.1% from June 30, 2023. Federal Home Loan Bank advances increased by $16.0 million as a consequence of funding loan growth. Core deposits were $1.52 billion as of September 30, 2023, a decrease of $12.3 million or 0.8% from June 30, 2023
• As of September 30, 2023, total available liquidity was $1.5 billion or 179% of uninsured deposits, net of collateralized and fiduciary deposit accounts. Total available liquidity is comprised of $274 million of on-balance sheet liquidity (cash and investment securities) and $1.2 billion of unused borrowing capacity
• Net interest margin was 4.67% for the third quarter of 2023, as compared to 4.73% for the prior quarter and 4.99% for the third quarter of 2022
• Total cost of deposits was 1.92% for the third quarter of 2023, an increase from 1.59% for the prior quarter and 0.27% in the third quarter of 2022. The spot rate for total deposits was 2.18% as of September 30, 2023, compared to 1.67% at June 30, 2023. Total cost of funding sources was 2.12% for the third quarter of 2023, an increase from 1.82% in the prior quarter and 0.36% in the third quarter of 2022
• Tangible book value per share was $30.20 as of September 30, 2023, an increase of $1.38 since June 30, 2023 as a result of strong earnings. Tangible book value per share increased 28.6% year-over-year

LA JOLLA, Calif., Oct. 20, 2023 (GLOBE NEWSWIRE) -- Private Bancorp of America, Inc. (OTCQX:PBAM), (“Company”) and CalPrivate Bank (“Bank”) announced unaudited financial results for the third fiscal quarter ended September 30, 2023. The Company reported net income of $8.5 million, or $1.47 per diluted share, for the third quarter of 2023, which represents a 33.7% increase from $6.4 million, or $1.12 per diluted share, for the third quarter of 2022. 

Rick Sowers, President and CEO of the Company and the Bank stated, “We are very pleased with the results of the third quarter and our continued growth of the balance sheet coupled with strong earnings and net interest margin. Loan demand remains soft but both our Commercial & Private Banking as well as our SBA Lending Teams remain active in the market. Competition for deposits is intense so we are focused on providing exceptional Client service and taking advantage of market disruptions to obtain new Clients who can benefit from our Distinctly Different Service model.”

Sowers added, “We look at this market as an opportunity for CalPrivate Bank as we hire exceptional bankers and make investments in product strategy and innovation to serve the needs of our Clients not only now, but into the future. Credit trends remain solid but we have increased our portfolio management activities to reflect the current economic and interest rate environment.”

“The Company continues to exhibit successful customer acquisition activity despite a challenging interest rate environment. Additionally, the Company continues to invest in people and infrastructure, including strong risk management, needed to support the continued growth of the CalPrivate franchise,” said Selwyn Isakow, Chairman of the Board of the Company and the Bank.

STATEMENT OF INCOME

Net Interest Income

Net interest income for the third quarter of 2023 totaled $23.3 million, an increase of $0.5 million or 2.4% from the prior quarter and an increase of $2.7 million or 12.9% from the third quarter of 2022. The increase from the prior quarter was driven primarily by an increase of $2.1 million in interest income, which resulted from a 2.6% increase in average earning assets and 20 basis point increase in yield on earning assets. Partially offsetting this was an increase of $1.6 million in interest expense, which resulted primarily from a 34 basis point increase in the cost of interest-bearing liabilities.

Net Interest Margin

Net interest margin for the third quarter of 2023 was 4.67% compared to 4.73% for the prior quarter and 4.99% in the third quarter of 2022. The 6 basis point decrease in net interest margin from the prior quarter was due primarily to higher rates paid on funding sources, partially offset by higher rates on new loan originations and variable rate loans and investment securities. The yield on earning assets was 6.60% for the third quarter of 2023 compared with 6.40% for the prior quarter and the cost of interest-bearing liabilities was 3.24% for the third quarter of 2023 compared to 2.90% in the prior quarter. The cost of total deposits was 1.92% for the third quarter of 2023 compared to 1.59% in the prior quarter. The cost of core deposits, which excludes brokered deposits, was 1.49% in the third quarter of 2023 compared to 1.24% in the prior quarter.

Provision for Credit Losses

The provision for credit losses for the third quarter of 2023 was $0.5 million, compared to a net reversal of $7.1 million in the prior quarter and a provision of $1.3 million for the third quarter of 2022. The provision for the third quarter of 2023 primarily relates to a $1.25 million specific reserve for a loan placed on nonaccrual status during the quarter, partially offset by a $520 thousand release of reserve for unfunded commitments that was reclassified from noninterest expense. The net reversal in the second quarter of 2023 reflects recoveries of $8.6 million partially offset by provision expense of $1.5 million for loan growth. For more details, please refer to the “Asset Quality” section below.

Noninterest Income

Noninterest income was $1.2 million for the third quarter of 2023, an increase from $1.1 million in the prior quarter and compared to $1.4 million in the third quarter of 2022. The change from the prior quarter as well as the third quarter of 2022 was primarily due to varying levels of gain on sale of SBA 7a loans. SBA loan sales for the third quarter of 2023 were $7.2 million with a 9.47% average trade premium resulting in a net gain on sale of $466 thousand, compared with $2.6 million with a 9.70% average trade premium resulting in a net gain on sale of $171 thousand in the prior quarter. Management expects continued softness in the market for SBA 7a loans.

Noninterest Expense

Noninterest expense was $11.8 million for the third quarter of 2023, an increase from $8.8 million in the prior quarter and $11.7 million in the third quarter of 2022. The increase from the prior quarter was primarily due to a $1.6 million benefit in professional services (legal expense specifically) in the second quarter resulting from legal fees waived as well as legal costs reimbursed by the participant bank in relation to the settled lawsuit with ANI Development, LLC/Gina Champion-Cain and Chicago Title. Additionally, other expenses increased by $1.1 million primarily due to a $520 thousand reclassification adjustment of the reversal of reserve for unfunded commitments which is now recorded in the provision (reversal) for credit losses line of the income statement as well as higher expenses for regulatory assessments. The efficiency ratio was 48.51% for the third quarter of 2023 compared to 37.04% in the prior quarter and 53.29% in the third quarter of 2022. The increase in the efficiency ratio from the prior quarter was due primarily to the aforementioned expense variances.

The Company remains committed to making investments in the business, including technology, marketing, and staffing. Inflationary pressures and low unemployment continue to have an impact on rising wages as well as increased costs related to third party service providers, which we proactively monitor and manage.

Provision for Income Tax Expense

Provision for income tax expense was $3.6 million for the third quarter of 2023, compared to $6.6 million for the prior quarter. The effective tax rate for the third quarter of 2023 was 29.8% compared to 29.7% in the prior quarter and 29.2% in the third quarter of 2022.

STATEMENT OF FINANCIAL CONDITION

As of September 30, 2023, total assets were $2.07 billion, an increase of $97.5 million since the prior quarter and $219.3 million since December 31, 2022. The increase in assets from the prior quarter was primarily due to higher cash balances and loans receivable.  Total cash and due from banks was $198.3 million as of September 30, 2023, an increase of $62.5 million, or 46.0%, since June 30, 2023, primarily due to the timing of the settlement of $52 million of brokered certificates of deposit obtained at the end of September 2023 and subsequently used to pay off Federal Home Loan Bank Advances in early October 2023.  Loans HFI totaled $1.76 billion as of September 30, 2023, an increase of $47.1 million or 2.7% since June 30, 2023. Total deposits were $1.77 billion as of September 30, 2023, an increase of $70.5 million since June 30, 2023. The growth in loans was also funded by wholesale borrowings (Federal Home Loan Bank advances), which increased by $16.0 million since June 30, 2023. During the quarter, core deposits decreased by $12.3 million, which was driven by a $63.0 million decrease in noninterest-bearing core deposits, partially offset by a $50.6 million increase in interest-bearing core deposits (including balances in the Intrafi ICS and CDARS programs). Noninterest-bearing deposits represent 39.1% of total core deposits. Uninsured deposits, net of collateralized and fiduciary deposit accounts, represent 47.7% of total deposits as of September 30, 2023. As of September 30, 2023, the net unrealized loss on the available-for-sale (“AFS”) investment securities portfolio, which is comprised mostly of US Treasury and Government Agency debt, was $15.8 million (pre-tax) compared to a loss of $14.1 million as of June 30, 2023. The average duration of the Bank’s AFS portfolio is 3.9 years. The Company has no held-to-maturity securities.

Asset Quality

As of September 30, 2023, the allowance for loan losses was $23.8 million or 1.35% of loans HFI, compared to 1.32% as of June 30, 2023 and 1.21% at December 31, 2022. The increase in the coverage ratio from December 31, 2022 primarily resulted from the adoption of CECL. The Company continues to have strong credit metrics and its nonperforming assets are 0.25% of total assets as of September 30, 2023. The reserve for unfunded commitments was $2.0 million as of September 30, 2023, compared to $2.2 million as of June 30, 2023 and the change was due to a decrease in commitment balances available. Given the credit quality of the loan portfolio, management believes we are sufficiently reserved.

As of September 30, 2023, there are no doubtful credits and classified assets were $11.0 million, down from $11.9 million as of June 30, 2023. Total classified assets as of September 30, 2023, consisted of 9 loans, of which 6 loans totaling $7.2 million were secured by real estate with a weighted average LTV of 58.5%. The remaining 3 loans were commercial and industrial loans, two of which were SBA loans with a balance of $1.4 million, which includes one loan that is 75% guaranteed and one loan that is 90% guaranteed by the SBA, and the third was a $2.5 million unsecured loan with a specific reserve of $1.3 million.

Capital Ratios ⁽²⁾

The Bank’s capital ratios were in excess of the levels established for “well capitalized” institutions and are as follows:

	September 30, 2023 (2)	June 30, 2023
CalPrivate Bank
Tier I leverage ratio	9.98%	9.75%
Tier I risk-based capital ratio	11.03%	10.77%
Total risk-based capital ratio	12.28%	12.02%
(2) September 30, 2023 capital ratios are preliminary and subject to change.

About Private Bancorp of America, Inc.

Private Bancorp of America, Inc. (OTCQX: PBAM), is the holding company for CalPrivate Bank. CalPrivate Bank provides a Distinctly Different banking experience through unparalleled service and creative funding solutions to high-net-worth individuals, professionals, locally owned businesses, and real estate entrepreneurs. Customers are serviced through offices in Coronado, San Diego, La Jolla, Newport Beach, El Segundo and Beverly Hills as well as efficient electronic banking offerings. The Bank also offers various portfolio and government guaranteed lending programs, including SBA and cross-border Export-Import Bank programs. CalPrivate Bank is an SBA Preferred Lender and a Bauer Financial 5-star rated bank.

CalPrivate Bank’s website is www.calprivate.bank.

Non-GAAP Financial Measures

This press release contains certain non-GAAP financial measures in addition to results presented in accordance with GAAP, including adjusted income before provision for income taxes, adjusted net income, adjusted diluted earnings per share (“Adjusted EPS”), efficiency ratio, adjusted efficiency ratio, pretax pre-provision net revenue, average tangible common equity, adjusted return on average assets, return on average tangible common equity and adjusted return on average tangible common equity. The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company's results of operations and financial condition and to enhance investors’ overall understanding of such results of operations and financial condition, permit investors to effectively analyze financial trends of our business activities, and enhance comparability with peers across the financial services sector. These non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures prepared in accordance with GAAP and should be read in conjunction with the Company’s GAAP financial information. A reconciliation of the most comparable GAAP financial measures to non-GAAP financial measures is included in the accompanying financial tables.

Investor Relations Contacts

Rick Sowers
President and Chief Executive Officer
Private Bancorp of America, Inc., and CalPrivate Bank
(424) 303-4894

Cory Stewart
Executive Vice President and Chief Financial Officer
Private Bancorp of America, Inc., and CalPrivate Bank
(206) 293-3669

Safe Harbor Paragraph

This communication contains expressions of expectations, both implied and explicit, that are “forward-looking statements” within the meaning of such term in the Private Securities Litigation Reform Act of 1995.  We caution you that a number of important factors could cause actual results to differ materially from those in the forward-looking statements, especially given the current turmoil in the banking and financial markets. These factors include the effects of depositors withdrawing funds unexpectedly, counterparties being unable to provide liquidity sources that we believe should be available, loan losses, economic conditions and competition in the geographic and business areas in which Private Bancorp of America, Inc. operates, including competition in lending and deposit acquisition, the unpredictability of fee income from participation in SBA loan programs, the effects of bank failures, liquidations and mergers in our markets and nationally, our ability to successfully integrate and develop business through the addition of new personnel, whether our efforts to expand loan, product and service offerings will prove profitable, system failures and data security, whether we can effectively secure and implement new technology solutions, inflation, fluctuations in interest rates, legislation and governmental regulation. You should not place undue reliance on forward-looking statements, and we undertake no obligation to update those statements whether as a result of changes in underlying factors, new information, future events or otherwise. These factors could cause actual results to differ materially from what we anticipate or project. You should not place undue reliance on any such forward-looking statement, which speaks only as of the date on which it was made. Although we in good faith believe the assumptions and bases supporting our forward-looking statements to be reasonable there can be no assurance that those assumptions and bases will prove accurate.

PRIVATE BANCORP OF AMERICA, INC. CONSOLIDATED BALANCE SHEET (Unaudited) (Dollars in thousands)
		Sep 30, 2023				Jun 30, 2023				Sep 30, 2022
Assets
Cash and due from banks		$	20,013			$	23,273			$	13,506
Interest-bearing deposits in other financial institutions			20,508				27,566				44,776
Interest-bearing deposits at Federal Reserve Bank			157,807				85,020				43,891
Total cash and due from banks			198,328				135,859				102,173
Interest-bearing time deposits with other institutions			1,500				7,661				6,157
Investment securities available for sale			86,648				94,574				107,332
Loans held for sale			4,071				1,982				7,789
Total loans held-for-investment			1,764,846				1,717,705				1,487,098
Allowance for loan losses			(23,789	)			(22,588	)			(19,092	)
Loans held-for-investment, net of allowance			1,741,057				1,695,117				1,468,006
Federal Home Loan Bank stock, at cost			8,915				8,915				7,020
Right of use asset			2,827				2,525				2,669
Premises and equipment, net			1,447				1,539				2,040
Servicing assets, net			2,449				2,875				3,502
Accrued interest receivable			6,877				6,118				4,262
Other assets			20,100				19,572				15,951
Total assets		$	2,074,219			$	1,976,737			$	1,726,901
Liabilities and Shareholders' Equity
Liabilities
Noninterest bearing		$	595,023			$	657,980			$	763,227
Interest Bearing			1,174,664				1,041,192				767,371
Total deposits			1,769,687				1,699,172				1,530,598
FHLB borrowings			82,000				66,000				30,000
Other borrowings			17,959				17,958				17,952
Accrued interest payable and other liabilities			29,894				26,396				13,417
Total liabilities			1,899,540				1,809,526				1,591,967
Shareholders' equity
Common stock			73,416				73,379				71,671
Additional paid-in capital			3,584				3,405				3,568
Retained earnings			108,757				100,281				70,386
Accumulated other comprehensive (loss) income, net			(11,078	)			(9,854	)			(10,691	)
Total shareholders' equity			174,679				167,211				134,934
Total liabilities and shareholders' equity		$	2,074,219			$	1,976,737			$	1,726,901

PRIVATE BANCORP OF AMERICA, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in thousands, except per share amounts)
		For the three months ended												Year to Date
		Sep 30, 2023				Jun 30, 2023				Sep 30, 2022				Sep 30, 2023				Sep 30, 2022
Interest Income
Loans		$	30,568			$	28,270			$	21,028			$	85,066			$	56,205
Investment securities			562				560				578				1,702				1,550
Deposits in other financial institutions			1,748				1,933				372				4,831				711
Total interest income			32,878				30,763				21,978				91,599				58,466
Interest Expense
Deposits			8,210				6,581				1,011				19,715				1,748
Borrowings			1,413				1,474				364				3,753				991
Total interest expense			9,623				8,055				1,375				23,468				2,739
Net interest income			23,255				22,708				20,603				68,131				55,727
Provision (reversal) for credit losses			471				(7,149	)			1,316				(6,605	)			2,118
Net interest income after provision for credit losses			22,784				29,857				19,287				74,736				53,609
Noninterest income:
Service charges on deposit accounts			313				310				306				971				887
Net gain on sale of loans			466				171				647				1,111				3,886
Other noninterest income			380				573				452				1,596				1,184
Total noninterest income			1,159				1,054				1,405				3,678				5,957
Noninterest expense:
Compensation and employee benefits			7,512				7,189				7,261				22,731				21,948
Occupancy and equipment			781				795				756				2,382				2,287
Data processing			1,064				878				993				2,886				2,469
Professional services			564				(836	)			1,493				166				4,243
Other expenses			1,922				776				1,224				4,037				4,222
Total noninterest expense			11,843				8,802				11,727				32,202				35,169
Income before provision for income taxes			12,100				22,109				8,965				46,212				24,397
Provision for income taxes			3,611				6,575				2,614				13,215				7,131
Net income		$	8,489			$	15,534			$	6,351			$	32,997			$	17,266
Net income available to common shareholders		$	8,422			$	15,407			$	6,306			$	32,763			$	17,115
Earnings per share
Basic earnings per share		$	1.49			$	2.72			$	1.14			$	5.81			$	3.08
Diluted earnings per share		$	1.47			$	2.69			$	1.12			$	5.75			$	3.03
Average shares outstanding			5,658,340				5,654,435				5,549,480				5,640,764				5,559,122
Diluted average shares outstanding			5,709,994				5,726,522				5,640,841				5,697,911				5,657,117

PRIVATE BANCORP OF AMERICA, INC. Consolidated average balance sheet, interest, yield and rates (Unaudited) (Dollars in thousands)
		For the three months ended
		Sep 30, 2023												Jun 30, 2023												Sep 30, 2022
		Average Balance				Interest				Average Yield/Rate				Average Balance				Interest				Average Yield/Rate				Average Balance				Interest				Average Yield/Rate
Interest-Earnings Assets
Deposits in other financial institutions		$	130,583			$	1,748				5.31	%		$	140,939			$	1,933				5.50	%		$	77,353			$	372				1.91	%
Investment securities			101,313				562				2.22	%			110,332				560				2.03	%			122,184				578				1.89	%
Loans, including LHFS			1,745,113				30,568				6.95	%			1,675,790				28,270				6.77	%			1,438,489				21,028				5.80	%
Total interest-earning assets			1,977,009				32,878				6.60	%			1,927,061				30,763				6.40	%			1,638,026				21,978				5.32	%
Noninterest-earning assets			28,188												32,741												27,465
Total Assets		$	2,005,197											$	1,959,802											$	1,665,491
Interest-Bearing Liabilities
Interest bearing DDA, excluding brokered			99,243				402				1.61	%			99,334				364				1.47	%			92,769				166				0.71	%
Savings & MMA, excluding brokered			657,453				4,248				2.56	%			645,219				3,570				2.22	%			533,902				602				0.45	%
Time deposits, excluding brokered			114,437				933				3.23	%			101,241				719				2.85	%			68,832				144				0.83	%
Total deposits, excluding brokered			871,133				5,583				2.54	%			845,794				4,653				2.21	%			695,503				912				0.52	%
Total brokered deposits			202,644				2,627				5.14	%			155,577				1,928				4.97	%			16,069				99				2.44	%
Total Interest-Bearing Deposits			1,073,777				8,210				3.03	%			1,001,371				6,581				2.64	%			711,572				1,011				0.56	%
FHLB advances			87,190				1,142				5.20	%			96,626				1,202				4.99	%			15,299				92				2.39	%
Other borrowings			17,958				271				5.99	%			17,971				272				6.07	%			17,951				272				6.06	%
Total Interest-Bearing Liabilities			1,178,925				9,623				3.24	%			1,115,968				8,055				2.90	%			33,250				364				4.34	%
Noninterest-bearing deposits			625,115												655,169				-								771,167
Total Funding Sources			1,804,040				9,623				2.12	%			1,771,137				8,055				1.82	%			1,515,989				1,375				0.36	%
Noninterest-bearing liabilities			27,810												26,492												4,775
Shareholders' equity			173,347												162,173												144,727
Total Liabilities and Shareholders' Equity		$	2,005,197											$	1,959,802											$	1,665,491
Net interest income/spread						$	23,255				4.48	%						$	22,708				4.58	%						$	20,603				4.96	%
Net interest margin											4.67	%											4.73	%											4.99	%

PRIVATE BANCORP OF AMERICA, INC. Consolidated average balance sheet, interest, yield and rates (Unaudited) (Dollars in thousands)
		Year to Date
		Sep 30, 2023												Sep 30, 2022
		Average Balance				Interest				Average Yield/Rate				Average Balance				Interest				Average Yield/Rate
Interest-Earnings Assets:
Deposits in other financial institutions		$	131,621			$	4,831				4.91	%		$	97,946			$	711				0.97	%
Investment securities			108,071				1,702				2.10	%			119,042				1,550				1.74	%
Loans			1,673,254				85,066				6.80	%			1,349,382				56,205				5.57	%
Total interest-earning assets			1,912,946				91,599				6.40	%			1,566,370				58,466				4.99	%
Noninterest-earning assets			28,581												25,751
Total Assets		$	1,941,527											$	1,592,121
Interest-Bearing Liabilities
Interest bearing DDA, excluding brokered			99,734				1,109				1.49	%			86,388				235				0.36	%
Savings & MMA, excluding brokered			640,803				10,196				2.13	%			507,675				1,004				0.26	%
Time deposits, excluding brokered			99,685				2,108				2.83	%			68,182				371				0.73	%
Total deposits, excluding brokered			840,222				13,413				2.13	%			662,245				1,610				0.33	%
Total brokered deposits			170,256				6,302				4.95	%			15,364				138				1.20	%
Total Interest-Bearing Deposits			1,010,478				19,715				2.61	%			677,609				1,748				0.34	%
FHLB advances			77,651				2,938				5.06	%			11,786				175				1.99	%
Other borrowings			17,969				815				6.06	%			17,949				816				6.08	%
Total Interest-Bearing Liabilities			1,106,098				23,468				2.84	%			29,735				991				4.46	%
Noninterest-bearing deposits			649,863												737,578
Total Funding Sources			1,755,961				23,468				1.79	%			1,444,921				2,739				0.25	%
Noninterest-bearing liabilities			24,718												12,955
Shareholders' equity			160,848												134,245
Total Liabilities and Shareholders' Equity		$	1,941,527											$	1,592,121
Net interest income/spread						$	68,131				4.61	%						$	55,727				4.74	%
Net interest margin											4.76	%											4.76	%

PRIVATE BANCORP OF AMERICA, INC. Condensed Balance Sheets (Unaudited) (Dollars in thousands, except per share amounts)
		Sep 30, 2023				Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022
Assets
Cash and due from banks		$	198,328			$	135,859			$	211,812			$	128,642			$	102,173
Interest-bearing time deposits with other institutions			1,500				7,661				7,661				7,923				6,157
Investment securities			86,648				94,574				103,790				104,652				107,332
Loans held for sale			4,071				1,982				465				7,061				7,789
Total loans held-for-investment			1,764,846				1,717,705				1,623,028				1,588,248				1,487,098
Allowance for loan losses			(23,789	)			(22,588	)			(21,135	)			(19,152	)			(19,092	)
Loans held-for-investment, net of allowance			1,741,057				1,695,117				1,601,893				1,569,096				1,468,006
Right of use asset			2,827				2,525				2,889				3,265				2,669
Premises and equipment, net			1,447				1,539				1,744				1,742				2,040
Other assets and interest receivable			38,341				37,480				36,374				32,499				30,735
Total assets		$	2,074,219			$	1,976,737			$	1,966,628			$	1,854,880			$	1,726,901
Liabilities and Shareholders' Equity
Liabilities
Noninterest Bearing		$	595,023			$	657,980			$	639,664			$	691,392			$	763,227
Interest Bearing			1,174,664				1,041,192				944,102				983,730				767,371
Total Deposits			1,769,687				1,699,172				1,583,766				1,675,122				1,530,598
Borrowings			99,959				83,958				209,956				17,954				47,952
Accrued interest payable and other liabilities			29,894				26,396				20,592				18,480				13,417
Total liabilities			1,899,540				1,809,526				1,814,314				1,711,556				1,591,967
Shareholders' equity
Common stock			73,416				73,379				73,254				72,221				71,671
Additional paid-in capital			3,584				3,405				3,289				3,353				3,568
Retained earnings			108,757				100,281				84,751				77,810				70,386
Accumulated other comprehensive (loss) income			(11,078	)			(9,854	)			(8,980	)			(10,060	)			(10,691	)
Total shareholders' equity			174,679				167,211				152,314				143,324				134,934
Total liabilities and shareholders' equity		$	2,074,219			$	1,976,737			$	1,966,628			$	1,854,880			$	1,726,901
Book value per common share		$	30.63			$	29.32			$	26.83			$	25.60			$	24.12
Tangible book value per common share (1)		$	30.20			$	28.82			$	26.30			$	25.06			$	23.49
Shares outstanding			5,703,350				5,702,637				5,676,017				5,599,025				5,594,380
(1) Non-GAAP measure. See GAAP to non-GAAP Reconciliation table.

PRIVATE BANCORP OF AMERICA, INC. Condensed Statements of Income (Unaudited) (Dollars in thousands, except per share amounts)
	For the three months ended
	Sep 30, 2023				Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022
Interest income	$	32,878			$	30,763			$	27,958			$	26,065			$	21,978
Interest expense		9,623				8,055				5,790				3,469				1,375
Net interest income		23,255				22,708				22,168				22,596				20,603
Provision (reversal) for credit losses		471				(7,149	)			73				60				1,316
Net interest income after provision for credit losses		22,784				29,857				22,095				22,536				19,287
Noninterest income		1,159				1,054				1,465				1,084				1,405
Compensation and employee benefits		7,512				7,189				8,030				8,482				7,261
Occupancy and equipment		781				795				806				820				756
Data processing		1,064				878				944				942				993
Professional services		564				(836	)			438				1,018				1,493
Other expenses		1,922				776				1,339				1,813				1,224
Total noninterest expense		11,843				8,802				11,557				13,075				11,727
Income before provision for income taxes		12,100				22,109				12,003				10,545				8,965
Income taxes		3,611				6,575				3,029				3,102				2,614
Net income	$	8,489			$	15,534			$	8,974			$	7,443			$	6,351
Net income available to common shareholders	$	8,422			$	15,407			$	8,923			$	7,394			$	6,306
Earnings per share
Basic earnings per share	$	1.49			$	2.72			$	1.59			$	1.33			$	1.13
Diluted earnings per share	$	1.47			$	2.69			$	1.57			$	1.31			$	1.12
Average shares outstanding		5,658,340				5,654,435				5,608,193				5,551,376				5,549,480
Diluted average shares outstanding		5,709,994				5,726,522				5,673,394				5,645,355				5,640,841

	Performance Ratios
	Sep 30, 2023				Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022
ROAA		1.68	%			3.18	%			1.96	%			1.68	%			1.51	%
ROAE		19.43	%			38.42	%			24.80	%			20.89	%			17.41	%
ROATCE (1)		19.74	%			39.14	%			25.32	%			21.41	%			17.84	%
Net interest margin		4.67	%			4.73	%			4.90	%			5.17	%			4.99	%
Net interest spread		4.48	%			4.58	%			4.80	%			5.11	%			4.96	%
Efficiency ratio (1)		48.51	%			37.04	%			48.90	%			55.22	%			53.29	%
Noninterest expense / average assets		2.34	%			1.80	%			2.52	%			2.95	%			2.79	%
(1) Non-GAAP measure. See GAAP to non-GAAP Reconciliation table.

PRIVATE BANCORP OF AMERICA, INC. (Unaudited)
		Selected Quarterly Average Balances
		(Dollars in thousands)
		For the three months ended
		Sep 30, 2023				Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022
Total assets		$	2,005,197			$	1,959,802			$	1,857,994			$	1,759,204			$	1,665,491
Earning assets		$	1,977,009			$	1,927,061			$	1,833,089			$	1,733,577			$	1,638,026
Total loans, including loans held for sale		$	1,745,113			$	1,675,790			$	1,597,236			$	1,527,863			$	1,438,489
Total deposits		$	1,698,892			$	1,656,540			$	1,624,777			$	1,574,002			$	1,482,739
Total shareholders' equity		$	173,347			$	162,173			$	146,778			$	141,330			$	144,727

		Loan Balances by Type
		(Dollars in thousands)
		Sep 30, 2023				Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022
Real estate - investor owned		$	495,450			$	481,518			$	472,315			$	476,404			$	403,950
Real estate - owner occupied			495,909				468,234				418,788				394,365				382,689
Real estate - multifamily			159,447				150,003				141,783				130,901				136,841
Real estate - single family			116,197				119,762				121,760				118,502				107,728
Commercial business			435,183				421,717				401,277				405,919				394,369
Land and construction			59,591				73,665				64,571				56,153				55,418
Consumer			3,069				2,806				2,534				6,004				6,103
Total loans held for investment		$	1,764,846			$	1,717,705			$	1,623,028			$	1,588,248			$	1,487,098

		Deposits by Type
		(Dollars in thousands)
		Sep 30, 2023				Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022
Noninterest-bearing DDA		$	595,023			$	657,980			$	639,664			$	691,392			$	763,227
Interest-bearing DDA, excluding brokered			108,508				101,064				99,988				109,130				95,677
Savings & MMA, excluding brokered			696,499				670,195				637,031				614,991				576,395
Time deposits, excluding brokered			122,622				105,757				77,052				54,887				56,341
Total deposits, excluding brokered			1,522,652				1,534,996				1,453,735				1,470,400				1,491,640
Total brokered deposits			247,035				164,176				130,031				204,722				38,958
Total deposits		$	1,769,687			$	1,699,172			$	1,583,766			$	1,675,122			$	1,530,598

PRIVATE BANCORP OF AMERICA, INC. (Unaudited)
		Rollforward of Allowance for Credit Losses
		(Dollars in thousands)
		For the three months ended
		Sep 30, 2023				Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022
Allowance for loan losses:
Beginning balance		$	22,588			$	21,135			$	19,152			$	19,092			$	17,776
Impact of CECL adoption			-				-				1,910				-				-
Provision for loan losses			1,194				(7,149	)			73				60				1,316
Net (charge-offs) recoveries			7				8,602				-				-				-
Ending balance			23,789				22,588				21,135				19,152				19,092
Reserve for unfunded commitments (1)			1,969				2,172				2,802				1,718				1,674
Total allowance for credit losses		$	25,758			$	24,760			$	23,937			$	20,870			$	20,766
(1) Includes $974 thousand related to the impact of CECL adoption on January 1, 2023.

		Asset Quality
		(Dollars in thousands)
		Sep 30, 2023				Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022
Total loans held-for-investment		$	1,764,846			$	1,717,705			$	1,623,028			$	1,588,248			$	1,487,098
Allowance for loan losses		$	(23,789	)		$	(22,588	)		$	(21,135	)		$	(19,152	)		$	(19,092	)
30-89 day past due loans and still accruing		$	-			$	-			$	-			$	-			$	-
90+ day past due loans and still accruing		$	-			$	-			$	-			$	-			$	-
Nonaccrual loans		$	5,105			$	3,354			$	4,384			$	3,880			$	4,593
NPAs / Assets			0.25	%			0.17	%			0.22	%			0.21	%			0.27	%
NPLs / Total loans held-for-investment & OREO			0.29	%			0.20	%			0.27	%			0.24	%			0.31	%
Net quarterly charge-offs (recoveries)		$	(7	)		$	(8,602	)		$	-			$	-			$	-
Net charge-offs (recoveries) /avg loans (annualized)			0.00	%			(2.05	)%			0.00	%			0.00	%			0.00	%
Allowance for loan losses to loans HFI			1.35	%			1.32	%			1.30	%			1.21	%			1.28	%
Allowance for loan losses to nonaccrual loans			465.99	%			673.46	%			482.09	%			493.61	%			415.68	%

PRIVATE BANCORP OF AMERICA, INC. (Unaudited)
The following tables present a reconciliation of non-GAAP financial measures to GAAP measures for:  adjusted income before provision for income taxes, adjusted net income and adjusted EPS. 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.
	GAAP to Non-GAAP Reconciliation
	(Dollars in thousands, except per share amounts)
		For the three months ended												Year to Date
		Sep 30, 2023				Jun 30, 2023				Sep 30, 2022				Sep 30, 2023				Sep 30, 2022
Adjusted income before provision for income taxes
Income before provision for income taxes		$	12,100			$	22,109			$	8,965			$	46,212			$	24,397
ANI recovery (1)			-				(7,708	)			-				(7,708	)			-
Settlement of legal fees related to ANI litigation (2)			-				(1,635	)			-				(1,635	)			-
Recovery of principal and interest on a loan acquired with credit deterioration as part of a business combination (3)			-				(986	)			-				(986	)			-
Adjusted income before provision for income taxes (non-GAAP)		$	12,100			$	11,780			$	8,965			$	35,883			$	24,397
Adjusted net income
Net income		$	8,489			$	15,534			$	6,351			$	32,997			$	17,266
ANI recovery, net of tax (1)(4)			-				(5,430	)			-				(5,430	)			-
Settlement of legal fees related to ANI litigation, net of tax (2)(4)			-				(1,152	)			-				(1,152	)			-
Recovery of principal and interest on a loan  acquired with credit deterioration as part of a business combination, net of tax(3)(4)			-				(694	)			-				(694	)			-
Adjusted net income (non-GAAP)		$	8,489			$	8,258			$	6,351			$	25,721			$	17,266
Adjusted diluted earnings per share ("Adjusted EPS")
Diluted earnings per share		$	1.47			$	2.69			$	1.12			$	5.75			$	3.03
ANI recovery, net of tax (1)(4)			-				(0.94	)			-				(0.94	)			-
Settlement of legal fees related to ANI litigation, net of tax (2)(4)			-				(0.20	)			-				(0.20	)			-
Recovery of principal and interest on a loan previously acquired with credit deterioration as part of a business combination, net of tax(3)(4)			-				(0.12	)			-				(0.12	)			-
Adjusted EPS (non-GAAP)		$	1.47			$	1.43			$	1.12			$	4.49			$	3.03
Diluted average shares outstanding			5,709,994				5,726,522				5,640,841				5,697,911				5,657,117
(1) In the second quarter of 2023, the Company reached a settlement with the Receiver for ANI Investments and Gina Champion-Cain in which the Company recovered $7.7 million (or approximately $0.94 per diluted share after tax) plus certain rights to future recoveries from a guarantor of the charged off loan. This recovery amount represents 80% of the original principal charge-off and is net of the participant bank’s share.
(2) In the second quarter of 2023, in conjunction with the resolution of the ANI litigation, the Company was reimbursed $0.6 million of legal costs by the participant bank.  In addition, $0.5 million of previously invoiced legal fees were waived at settlement of the litigation.
(3) In the second quarter of 2023, the Company received $1.0 million related to a loan that was originated and written off by San Diego Private Bank ("SDPB") prior to SDPB merging with the Company in 2013.   Accordingly, the Company recorded an allowance recovery of $0.9 million for the amount that would have been written off at the time of the merger under CECL and $0.1 million of interest income for recovered interest.
(4) Net of tax effect of 29.6%, which is comprised of 21.0% for the statutory Federal tax rate plus 8.6% for state franchise taxes, net of Federal benefits.

PRIVATE BANCORP OF AMERICA, INC. (Unaudited)
The following tables present a reconciliation of non-GAAP financial measures to GAAP measures for: efficiency ratio, adjusted efficiency ratio, pretax pre-provision net revenue, average tangible common equity, adjusted return on average assets, return on average tangible common equity and adjusted return on average tangible common equity. 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.
		GAAP to Non-GAAP Reconciliation
		(Dollars in thousands)
		For the three months ended
		Sep 30, 2023				Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022
Efficiency Ratio
Noninterest expense		$	11,843			$	8,802			$	11,557			$	13,075			$	11,727
Net interest income			23,255				22,708				22,168				22,596				20,603
Noninterest income			1,159				1,054				1,465				1,084				1,405
Total net interest income and noninterest income			24,414				23,762				23,633				23,680				22,008
Efficiency ratio (non-GAAP)			48.51	%			37.04	%			48.90	%			55.22	%			53.29	%
Adjusted Efficiency Ratio
Noninterest expense		$	11,843			$	8,802			$	11,557			$	13,075			$	11,727
Settlement of legal fees related to ANI litigation			-				1,635				-				-				-
Adjusted noninterest expense (non-GAAP)			11,843				10,437				11,557				13,075				11,727
Total net interest income and noninterest income			24,414				23,762				23,633				23,680				22,008
Recovery of  interest on a loan acquired with credit deterioration as part of a business combination			-				(84	)			-				-				-
Adjusted total net interest income and noninterest income (non-GAAP)			24,414				23,678				23,633				23,680				22,008
Adjusted Efficiency ratio (non-GAAP)			48.51	%			44.08	%			48.90	%			55.22	%			53.29	%
Pretax pre-provision net revenue
Net interest income		$	23,255			$	22,708			$	22,168			$	22,596			$	20,603
Noninterest income			1,159				1,054				1,465				1,084				1,405
Total net interest income and noninterest income			24,414				23,762				23,633				23,680				22,008
Less: Noninterest expense			11,843				8,802				11,557				13,075				11,727
Pretax pre-provision net revenue (non-GAAP)		$	12,571			$	14,960			$	12,076			$	10,605			$	10,281
Return and Adjusted Return on Average Assets, Average Equity, Average Tangible Equity
Net income		$	8,489			$	15,534			$	8,974			$	7,443			$	6,351
Adjusted net income (non-GAAP) (1)			8,489				8,258				8,974				7,443				6,351
Average assets			2,005,197				1,959,802				1,857,994				1,759,204				1,665,491
Average shareholders' equity			173,347				162,173				146,778				141,330				144,727
Less: Average intangible assets			2,709				2,975				3,026				3,385				3,599
Average tangible common equity (non-GAAP)			170,638				159,198				143,752				137,945				141,128
Return on average assets			1.68	%			3.18	%			1.96	%			1.68	%			1.51	%
Adjusted return on average assets (non-GAAP) (1)			1.68	%			1.69	%			1.96	%			1.68	%			1.51	%
Return on average equity			19.43	%			38.42	%			24.80	%			20.89	%			17.41	%
Adjusted return on average equity (non-GAAP) (1)			19.43	%			20.42	%			24.80	%			20.89	%			17.41	%
Return on average tangible common equity (non-GAAP)			19.74	%			39.14	%			25.32	%			21.41	%			17.85	%
Adjusted return on average tangible common equity (non-GAAP) (1)			19.74	%			20.81	%			25.32	%			21.41	%			17.85	%
Tangible book value per share
Total equity			174,679				167,211				152,314				143,324				134,934
Less: Total intangible assets			2,449				2,875				3,057				3,007				3,502
Total tangible equity			172,230				164,336				149,257				140,317				131,432
Shares outstanding			5,703,350				5,702,637				5,676,017				5,599,025				5,594,380
Tangible book value per share (non-GAAP)		$	30.20			$	28.82			$	26.30			$	25.06			$	23.49
(1) A reconciliation of net income to adjusted net income is provided on page 13.

PRIVATE BANCORP OF AMERICA, INC. (Unaudited)
The following tables present a reconciliation of non-GAAP financial measures to GAAP measures for: efficiency ratio, adjusted efficiency ratio, pretax pre-provision net revenue, average tangible common equity, adjusted return on average assets, return on average tangible common equity and adjusted return on average tangible common equity. 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.
		GAAP to Non-GAAP Reconciliation
		(Dollars in thousands)
		Year to Date
		Sep 30, 2023				Sep 30, 2022
Efficiency Ratio
Noninterest expense		$	32,202			$	35,169
Net interest income			68,131				55,727
Noninterest income			3,678				5,957
Total net interest income and noninterest income			71,809				61,684
Efficiency ratio (non-GAAP)			44.84	%			57.01	%
Adjusted Efficiency Ratio
Noninterest expense		$	32,202			$	35,169
Settlement of legal fees related to ANI litigation			1,635				-
Adjusted noninterest expense (non-GAAP)			33,837				35,169
Total net interest income and noninterest income			71,809				61,684
Recovery of  interest on a loan acquired with credit deterioration as part of a business combination			(84	)			-
Adjusted total net interest income and noninterest income (non-GAAP)			71,725				61,684
Adjusted Efficiency ratio (non-GAAP)			47.18	%			57.01	%
Pretax pre-provision net revenue
Net interest income		$	68,131			$	55,727
Noninterest income			3,678				5,957
Total net interest income and noninterest income			71,809				61,684
Less: Noninterest expense			32,202				35,169
Pretax pre-provision net revenue (non-GAAP)		$	39,607			$	26,515
Return and Adjusted Return on Average Assets, Average Equity, Average Tangible Equity
Net income		$	32,997			$	17,266
Adjusted net income (non-GAAP) (1)			25,721				17,266
Average assets			1,941,527				1,592,121
Average shareholders' equity			160,848				134,245
Less: Average intangible assets			2,879				2,903
Average tangible common equity			157,969				131,342
Return on average assets			2.27	%			1.45	%
Adjusted return on average assets (non-GAAP) (1)			1.77	%			1.45	%
Return on average equity			27.43	%			17.20	%
Adjusted return on average equity (non-GAAP) (1)			21.38	%			17.20	%
Return on average tangible common equity (non-GAAP)			27.93	%			17.58	%
Adjusted return on average tangible common equity (non-GAAP) (1)			21.77	%			17.58	%
(1) A reconciliation of net income to adjusted net income is provided on page 13.

FAQ

What was the net income for the third quarter of 2023?

The net income for the third quarter of 2023 was $8.5 million.

How much did loans held-for-investment increase since June 30, 2023?

Loans held-for-investment increased by $47.1 million or 2.7% since June 30, 2023.

What is the total available liquidity?

The total available liquidity is $1.5 billion or 179% of uninsured deposits.

What was the net interest margin for the third quarter of 2023?

The net interest margin was 4.67% for the third quarter of 2023.

How much did tangible book value per share increase year-over-year?

Tangible book value per share increased by 28.6% year-over-year.