Private Bancorp of America, Inc. Announces Strong Net Income and Earnings Per Share for Second Quarter 2023

Rhea-AI Summary

Private Bancorp of America, Inc. and CalPrivate Bank reported record net income of $15.5 million for Q2 2023, up 73% from the previous quarter and 253% from Q2 2022. Diluted earnings per share also increased by 71% and 249% respectively. Loans held-for-investment increased by 5.8% to $1.7 billion. Core deposits grew by 5.3% to $1.5 billion. Total deposits rose by 7.3% to $1.7 billion. Net interest margin was 4.73% for Q2 2023. Tangible book value per share increased by $2.52 to $28.82.

Positive

• Net income for Q2 2023 increased by 73% from the previous quarter and 253% from Q2 2022.
• Diluted earnings per share for Q2 2023 increased by 71% from the previous quarter and 249% from Q2 2022.
• Loans held-for-investment increased by 5.8% to $1.7 billion.
• Core deposits grew by 5.3% to $1.5 billion.
• Total deposits rose by 7.3% to $1.7 billion.
• Net interest margin was 4.73% for Q2 2023.
• Tangible book value per share increased by $2.52 to $28.82.

Negative

• None.

Second Quarter 2023 Highlights

• Net income for the second quarter of 2023 of $15.5 million, up 73% from the prior quarter and 253% from the second quarter of 2022
• Net diluted earnings per share for the second quarter of 2023 of $2.69, up 71% from the prior quarter and 249% from the second quarter of 2022
• Excluding the impact of the two loan recoveries and settlement of related legal fees described below, net income for the second quarter of 2023 was $8.3 million or $1.43 per diluted share (see non-GAAP reconciliation in the accompanying financial tables of this press release)
• Loans held-for-investment (“HFI”) totaled $1.7 billion as of June 30, 2023, an increase of $95 million or 5.8% from March 31, 2023 and $129 million or 8.2% from December 31, 2022
• The provision for loan losses for the second quarter of 2023 was a net reversal of $7.1 million, compared to a charge of $73 thousand for the prior quarter and a charge of $659 thousand for the second quarter of 2022. The net reversal in the second quarter of 2023 includes a recovery of $7.7 million for the settlement of a lawsuit against ANI Development, LLC/Gina Champion-Cain and Chicago Title (parent company, Fidelity National Financial) related to a previously charged-off loan, as well as a recovery of $902 thousand for a loan that was acquired as part of a merger in 2013
• Core deposits were $1.5 billion as of June 30, 2023, an increase of $81 million or 5.3% from March 31, 2023. The increase was comprised of $18 million in noninterest-bearing deposits and $63 million in interest-bearing deposits, which includes fully insured balances in the Intrafi ICS and CDARS deposit programs. Noninterest-bearing deposits represent 42.9% of core deposits
• Total deposits were $1.7 billion as of June 30, 2023, an increase of $115 million or 7.3% from March 31, 2023. Federal Home Loan Bank advances declined by $126 million as a consequence of strong deposit growth
• Uninsured deposits, net of collateralized and fiduciary deposit accounts, represent 51% of total deposits as of June 30, 2023
• As of June 30, 2023, total available liquidity was $1.5 billion or 174% of uninsured deposits, net of collateralized and fiduciary deposit accounts. Total available liquidity is comprised of $225 million of on-balance sheet liquidity (cash and investment securities) and $1.3 billion of unused borrowing capacity
• Net interest margin was 4.73% for the second quarter of 2023, as compared to 4.90% for the prior quarter and 4.61% for the second quarter of 2022
• Total cost of deposits was 1.59% for the second quarter of 2023, an increase from 1.23% for the prior quarter and 0.79% in the fourth quarter of 2022. The spot rate for deposits was 1.67% as of June 30, 2023, compared to 1.31% at March 31, 2023. Total cost of funding sources was 1.82% for the second quarter of 2023, an increase from 1.39% in the prior quarter and 0.86% in the fourth quarter of 2022
• Tangible book value per share was $28.82 as of June 30, 2023, an increase of $2.52 since March 31, 2023 as a result of strong earnings, partially offset by the impact of adopting CECL. The overall impact of the two loan recoveries and settlement of related legal fees noted above was approximately $1.26 per share. Tangible book value per share increased 27% year-over-year.

LA JOLLA, Calif., July 21, 2023 (GLOBE NEWSWIRE) -- Private Bancorp of America, Inc. (OTCQX:PBAM), (“Company”) and CalPrivate Bank (“Bank”) announced unaudited financial results for the second fiscal quarter ended June 30, 2023. The Company reported record net income of $15.5 million, or $2.69 per diluted share, for the second quarter of 2023 compared to $4.4 million, or $0.77 per diluted share, for the second quarter of 2022. The quarter ended June 30, 2023 included loan recoveries of $8.6 million and a $1.6 million benefit from legal fees waived or collected related to the settlement of the ANI loan lawsuit (see non-GAAP reconciliation in the accompanying financial tables of this press release).

Rick Sowers, President and CEO of the Company and the Bank stated, “We are very pleased with the results of the second quarter and our continued growth of the balance sheet and solid net interest margin. Our Team continues to deliver exceptional service and quality relationship building while being opportunistic in new Client and Team member acquisition. Our focus remains on maintaining credit quality through active portfolio management, managing our variable expenses and making investments that build long-term value for shareholders.”

Sowers added, “We benefited during the quarter from two loan recoveries, including reaching a settlement with the Receiver for ANI Investments Champion-Cain for our previously reported loan charge-off related to fraud in which the Company recovered $7.7 million plus certain rights to future recoveries from a guarantor of the loan. This recovery amount represents 80% of the original principal charge-off and is net of the participant bank’s share. We are happy to have this behind us.”

“The Company continues to exhibit successful customer acquisition activity as shown by the growth in loans and deposits despite a rising 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 second quarter of 2023 totaled $22.7 million, an increase of $540 thousand or 2.4% from the prior quarter and an increase of $4.7 million or 26.3% from the second quarter of 2022. The increase from the prior quarter was driven primarily by an increase of $2.8 million in interest income, which resulted from a 5.1% increase in average earning assets and 21 basis point increase in yield on earning assets. Partially offsetting this was an increase of $2.3 million in interest expense, which resulted primarily from a 60 basis point increase in the cost of interest-bearing liabilities.

Net Interest Margin

The net interest margin for the second quarter of 2023 was 4.73% compared to 4.90% for the prior quarter and 4.61% in the second quarter of 2022. The 17 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 6.40% for the second quarter of 2023 compared with 6.19% for the prior quarter and the cost of interest-bearing liabilities was 2.90% for the second quarter of 2023 compared to 2.30% in the prior quarter. The cost of total deposits was 1.24% for the second quarter of 2023 compared to 0.86% in the prior quarter.

Provision for Loan Losses

The provision for loan losses for the second quarter of 2023 was a net reversal of $7.1 million compared to a charge of $73 thousand in the prior quarter. 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 $1.1 million for the second quarter of 2023, a decrease from $1.5 million in the prior quarter and $1.4 million in the second quarter of 2022. The change from the prior quarter as well as the second quarter of 2022 was primarily due to lower gain on sale of SBA 7a loans. SBA loan sales for the second quarter of 2023 were $2.6 million with a 9.7% average trade premium resulting in a net gain on sale of $171 thousand, compared with $5.1 million with a 11.2% average trade premium resulting in a net gain on sale of $474 thousand in the prior quarter. Management sees continued softness in the market for SBA 7a loans.

Noninterest Expense

Noninterest expense was $8.8 million for the second quarter of 2023, a decrease from $11.6 million in the prior quarter and $12.6 million in the second quarter of 2022. The decrease from the prior quarter was primarily due to a $1.6 million benefit in professional services (legal expense specifically) 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. In addition, compensation and benefits expense declined by $841 thousand partially due to accrual adjustments for incentive and bonus compensation. Other expenses also declined by $563 thousand primarily due to a $629 thousand reversal of provision for the reserve for unfunded commitments. The efficiency ratio was 37.0% for the second quarter of 2023 compared to 48.9% in the prior quarter and 64.9% in the second quarter of 2022. The decrease in the efficiency ratio for the second quarter of 2023 was due primarily to the aforementioned expense variances.

The Company remains committed to making investments in the business, including technology, marketing, and staffing. Historically high inflation 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 $6.6 million for the second quarter of 2023, compared to $3.0 million for the prior quarter. The effective tax rate for the second quarter of 2023 was 29.7% compared to 25.2% in the prior quarter and 28.7% in the second quarter of 2022. The effective tax rate for the first quarter of 2023 was lower mainly due to discrete tax benefits related to exercised stock options.

STATEMENT OF FINANCIAL CONDITION

As of June 30, 2023, total assets were $2.0 billion, an increase of $10 million since the prior quarter and $122 million since December 31, 2022. The increase in assets from the prior quarter was primarily due to higher loans receivable, mostly offset by a decrease in cash. Loans HFI totaled $1.7 billion as of June 30, 2023, an increase of $95 million or 5.8% since March 31, 2023. Total deposits were $1.7 billion as of June 30, 2023, an increase of $115 million since March 31, 2023. The strong growth in deposits provided funding for loan growth and also enabled the Company to decrease wholesale borrowings (Federal Home Loan Bank advances) by $126 million since March 31, 2023. During the quarter, core deposits increased by $81 million, which was comprised of $18 million in noninterest-bearing deposits and $63 million in interest-bearing deposits (including balances in the Intrafi ICS and CDARS programs). As of June 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 $14.1 million (pre-tax) compared to a loss of $12.8 million as of March 31, 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 June 30, 2023, the allowance for loan losses was $22.6 million or 1.32% of loans HFI, compared to 1.30% as of March 31, 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 there were no loan delinquencies as of June 30, 2023. As described above, the quarter ended June 30, 2023 results included loan recoveries of $8.7 million. The reserve for unfunded commitments was $2.2 million as of June 30, 2023, compared to $2.8 million as of March 31, 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 June 30, 2023, there are no doubtful credits and classified assets were $11.9 million, down from $14.6 million as of March 31, 2023. Total classified assets as of June 30, 2023, consisted of 11 loans, of which 6 loans totaling $7.3 million were secured by real estate with a weighted average LTV of 58.5%. The remaining 5 loans included 4 SBA loans with a balance of $2.1 million, which includes 2 loans that are 75% guaranteed and 2 loans that are 90% guaranteed by the SBA.

Capital Ratios (1)

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

	June 30, 2023 (1)		March 31, 2023
CalPrivate Bank
Tier I leverage ratio	9.75%		9.44%
Tier I risk-based capital ratio	10.78%		10.37%
Total risk-based capital ratio	12.03%		11.62%

(1) June 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)
	June 30, 2023				March 31, 2023				June 30, 2022
Assets
Cash and due from banks	$	23,273			$	13,347			$	15,694
Interest-bearing deposits in other financial institutions		27,566				73,420				43,857
Interest-bearing deposits at Federal Reserve Bank		85,020				125,045				29,241
Total cash and due from banks		135,859				211,812				88,792
Interest-bearing time deposits with other institutions		7,661				7,661				6,157
Investment securities available for sale		94,574				103,790				113,565
Loan held for sale		1,982				465				4,460
Total loans held-for-investment		1,717,705				1,623,028				1,379,519
Allowance for loan losses		(22,588	)			(21,135	)			(17,776	)
Net loans		1,695,117				1,601,893				1,361,743
Federal Home Loan Bank stock, at cost		8,915				7,020				7,020
Right of use asset		2,525				2,889				3,037
Premises and equipment, net		1,539				1,744				2,640
Servicing assets, net		2,875				3,057				3,515
Accrued interest receivable		6,118				5,674				3,855
Other assets		19,572				20,623				17,318
Total assets	$	1,976,737			$	1,966,628			$	1,612,102
Liabilities and Shareholders' Equity
Liabilities
Noninterest bearing	$	657,980			$	639,664			$	747,006
Interest Bearing		1,041,192				944,102				693,646
Total deposits		1,699,172				1,583,766				1,440,652
FHLB borrowings		66,000				192,000				10,000
Other borrowings		17,958				17,956				17,950
Accrued interest payable and other liabilities		26,396				20,592				13,305
Total liabilities		1,809,526				1,814,314				1,481,907
Shareholders' equity
Common stock		73,379				73,254				71,516
Additional paid-in capital		3,405				3,289				3,368
Retained earnings		100,281				84,751				64,036
Accumulated other comprehensive (loss) income, net		(9,854	)			(8,980	)			(8,725	)
Total shareholders' equity		167,211				152,314				130,195
Total liabilities and shareholders' equity	$	1,976,737			$	1,966,628			$	1,612,102

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
		June 30, 2023				March 31, 2023				June 30, 2022				June 30, 2023				June 30, 2022
Interest Income
Loans		$	28,270			$	26,228			$	17,931			$	54,498			$	35,177
Investment securities			560				580				571				1,140				972
Deposits in other financial institutions			1,933				1,150				204				3,083				339
Total interest income			30,763				27,958				18,706				58,721				36,488
Interest Expense
Deposits			6,581				4,924				410				11,505				737
Borrowings			1,474				866				313				2,340				626
Total interest expense			8,055				5,790				723				13,845				1,363
Net interest income			22,708				22,168				17,983				44,876				35,125
Provision (reversal) for loan losses			(7,149	)			73				659				(7,076	)			802
Net interest income after provision for loan losses			29,857				22,095				17,324				51,952				34,323
Noninterest income:
Service charges on deposit accounts			310				348				299				658				580
Net gain on sale of loans			171				474				768				645				3,239
Other noninterest income			573				643				375				1,216				732
Total noninterest income			1,054				1,465				1,442				2,519				4,551
Noninterest expense:
Compensation and employee benefits			7,189				8,030				7,374				15,219				14,687
Occupancy and equipment			795				806				808				1,601				1,531
Data processing			878				944				824				1,822				1,476
Professional services			(836	)			438				1,835				(398	)			2,750
Other expenses			776				1,339				1,759				2,115				2,998
Total noninterest expense			8,802				11,557				12,600				20,359				23,442
Income before provision for income taxes			22,109				12,003				6,166				34,112				15,432
Provision for income taxes			6,575				3,029				1,769				9,604				4,517
Net income		$	15,534			$	8,974			$	4,397			$	24,508			$	10,915
Net income available to common shareholders		$	15,407			$	8,923			$	4,347			$	24,345			$	10,794
Earnings per share
Basic earnings per share		$	2.72			$	1.59			$	0.78			$	4.32			$	1.94
Diluted earnings per share		$	2.69			$	1.57			$	0.77			$	4.25			$	1.91
Average shares outstanding			5,654,435				5,608,193				5,543,065				5,631,442				5,555,662
Diluted average shares outstanding			5,726,522				5,673,394				5,639,282				5,722,645				5,652,071

PRIVATE BANCORP OF AMERICA, INC.
Consolidated average balance sheet, interest, yield and rates
(Unaudited)
(Dollars in thousands)
		For the three months ended
		June 30, 2023											March 31, 2023											June 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		$	140,939			$	1,933			5.50	%		$	123,159			$	1,150			3.79	%		$	100,017			$	204			0.82	%
Investment securities			110,332				560			2.03	%			112,694				580			2.06	%			125,550				571			1.82	%
Loans, including LHFS			1,675,790				28,270			6.77	%			1,597,236				26,228			6.66	%			1,339,095				17,931			5.37	%
Total interest-earning assets			1,927,061				30,763			6.40	%			1,833,089				27,958			6.19	%			1,564,662				18,706			4.80	%
Noninterest-earning assets			32,741											24,905											27,614
Total Assets		$	1,959,802										$	1,857,994										$	1,592,276
Interest-Bearing Liabilities
Interest bearing DDA, excluding brokered			99,334				364			1.47	%			100,640				343			1.38	%			87,682				53			0.24	%
Savings & MMA, excluding brokered			645,219				3,570			2.22	%			619,316				2,378			1.56	%			492,048				215			0.18	%
Time deposits, excluding brokered			101,241				719			2.85	%			83,032				456			2.23	%			67,184				111			0.66	%
Total deposits, excluding brokered			845,794				4,653			2.21	%			802,988				3,177			1.60	%			646,914				379			0.23	%
Total brokered deposits			155,577				1,928			4.97	%			151,993				1,747			4.66	%			15,006				31			0.83	%
Total Interest-Bearing Deposits			1,001,371				6,581			2.64	%			954,981				4,924			2.09	%			661,920				410			0.25	%
FHLB advances			96,626				1,202			4.99	%			48,711				594			4.95	%			10,000				42			1.68	%
Other borrowings			17,971				272			6.07	%			17,976				272			6.14	%			17,948				271			6.06	%
Total Interest-Bearing Liabilities			114,597				1,474			2.90	%			66,687				866			2.30	%			27,948				313			0.42	%
Noninterest-bearing deposits			655,169				-							669,796				-							757,728				-
Total Funding Sources			1,771,137				8,055			1.82	%			1,691,464				5,790			1.39	%			1,447,596				723			0.20	%
Noninterest-bearing liabilities			26,492											19,752											11,891
Shareholders' equity			162,173											146,778											132,789
Total Liabilities and Shareholders' Equity		$	1,959,802										$	1,857,994										$	1,592,276
Net interest income/spread						$	22,708			4.58	%						$	22,168			4.80	%						$	17,983			4.60	%
Net interest margin										4.73	%										4.90	%										4.61	%

PRIVATE BANCORP OF AMERICA, INC.
Consolidated average balance sheet, interest, yield and rates
(Unaudited)
(Dollars in thousands)
		Year to Date
		June 30, 2023											June 30, 2022
		Average Balance				Interest				Average Yield/Rate			Average Balance				Interest				Average Yield/Rate
Interest-Earnings Assets:
Deposits in other financial institutions		$	132,124			$	3,083			4.71	%		$	108,413			$	339			0.63	%
Investment securities			111,506				1,140			2.04	%			117,447				972			1.66	%
Loans			1,636,730				54,498			6.71	%			1,304,089				35,177			5.44	%
Total interest-earning assets			1,880,360				58,721			6.30	%			1,529,949				36,488			4.81	%
Noninterest-earning assets			28,819											24,572
Total Assets		$	1,909,179										$	1,554,521
Interest-Bearing Liabilities
Interest bearing DDA, excluding brokered			99,983				707			1.43	%			83,145				68			0.16	%
Savings & MMA, excluding brokered			632,340				5,948			1.90	%			494,344				402			0.16	%
Time deposits, excluding brokered			92,187				1,175			2.57	%			67,851				226			0.67	%
Total deposits, excluding brokered			824,510				7,830			1.92	%			645,340				696			0.22	%
Total brokered deposits			153,794				3,675			4.82	%			15,005				41			0.55	%
Total Interest-Bearing Deposits			978,304				11,505			0.68	%			660,345				737			0.27	%
FHLB advances			72,801				1,796			4.97	%			10,000				83			1.67	%
Other borrowings			17,974				544			6.10	%			17,949				543			6.10	%
Total Interest-Bearing Liabilities			90,775				2,340			2.61	%			27,949				626			0.40	%
Noninterest-bearing deposits			662,442											720,504
Total Funding Sources			1,731,521				13,845			1.61	%			1,408,798				1,363			0.20	%
Noninterest-bearing liabilities			23,140											13,085
Shareholders' equity			154,518											132,638
Total Liabilities and Shareholders' Equity		$	1,909,179										$	1,554,521
Net interest income/spread						$	44,876			4.69	%						$	35,125			4.61	%
Net interest margin										4.81	%										4.63	%

PRIVATE BANCORP OF AMERICA, INC.
Condensed Balance Sheets
(Unaudited)
(Dollars in thousands, except per share amounts)
	Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022				Jun 30, 2022
Assets
Cash and due from banks	$	135,859			$	211,812			$	128,642			$	102,173			$	88,792
Interest-bearing time deposits with other institutions		7,661				7,661				7,923				6,157				6,157
Investment securities		94,574				103,790				104,652				107,332				113,565
Loans held for sale		1,982				465				7,061				7,789				4,460
Total loans held-for-investment		1,717,705				1,623,028				1,588,248				1,487,098				1,379,519
Allowance for loan losses		(22,588	)			(21,135	)			(19,152	)			(19,092	)			(17,776	)
Net loans		1,695,117				1,601,893				1,569,096				1,468,006				1,361,743
Right of use asset		2,525				2,889				3,265				2,669				3,037
Premises and equipment, net		1,539				1,744				1,742				2,040				2,640
Other assets and interest receivable		37,480				36,374				32,499				30,735				31,708
Total assets	$	1,976,737			$	1,966,628			$	1,854,880			$	1,726,901			$	1,612,102
Liabilities and Shareholders' Equity
Liabilities
Noninterest Bearing	$	657,980			$	639,664			$	691,392			$	763,227			$	747,006
Interest Bearing		1,041,192				944,102				983,730				767,371				693,646
Total Deposits		1,699,172				1,583,766				1,675,122				1,530,598				1,440,652
Borrowings		83,958				209,956				17,954				47,952				27,950
Accrued interest payable and other liabilities		26,396				20,592				18,480				13,417				13,305
Total liabilities		1,809,526				1,814,314				1,711,556				1,591,967				1,481,907
Shareholders' equity
Common stock		73,379				73,254				72,221				71,671				71,516
Additional paid-in capital		3,405				3,289				3,353				3,568				3,368
Retained earnings		100,281				84,751				77,810				70,386				64,036
Accumulated other comprehensive (loss) income		(9,854	)			(8,980	)			(10,060	)			(10,691	)			(8,725	)
Total shareholders' equity		167,211				152,314				143,324				134,934				130,195
Total liabilities and shareholders' equity	$	1,976,737			$	1,966,628			$	1,854,880			$	1,726,901			$	1,612,102
Book value per common share	$	29.32			$	26.83			$	25.60			$	24.12			$	23.31
Tangible book value per common share (1)	$	28.82			$	26.30			$	25.06			$	23.49			$	22.68
Shares outstanding		5,702,637				5,676,017				5,599,025				5,594,380				5,584,465
(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
	Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022				Jun 30, 2022
Interest income	$	30,763			$	27,958			$	26,065			$	21,978			$	18,706
Interest expense		8,055				5,790				3,469				1,375				723
Net interest income		22,708				22,168				22,596				20,603				17,983
Provision (reversal) for loan losses		(7,149	)			73				60				1,316				659
Net interest income after provision for loan losses		29,857				22,095				22,536				19,287				17,324
Noninterest income		1,054				1,465				1,084				1,405				1,442
Compensation and employee benefits		7,189				8,030				8,482				7,261				7,374
Occupancy and equipment		795				806				820				756				808
Data processing		878				944				942				993				824
Professional services		(836	)			438				1,018				1,493				1,835
Other expenses		776				1,339				1,813				1,224				1,759
Total noninterest expense		8,802				11,557				13,075				11,727				12,600
Income before provision for income taxes		22,109				12,003				10,545				8,965				6,166
Income taxes		6,575				3,029				3,102				2,614				1,769
Net income	$	15,534			$	8,974			$	7,443			$	6,351			$	4,397
Net income available to common shareholders	$	15,407			$	8,923			$	7,394			$	6,306			$	4,347
Earnings per share
Basic earnings per share	$	2.72			$	1.59			$	1.33			$	1.13			$	0.78
Diluted earnings per share	$	2.69			$	1.57			$	1.31			$	1.12			$	0.77
Average shares outstanding		5,654,435				5,608,193				5,551,376				5,549,480				5,543,065
Diluted average shares outstanding		5,726,522				5,673,394				5,645,355				5,640,841				5,639,282
	Performance Ratios
	Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022				Jun 30, 2022
ROAA		3.18	%			1.96	%			1.68	%			1.51	%			1.11	%
ROAE		38.42	%			24.80	%			20.89	%			17.41	%			13.28	%
ROATCE (1)		39.14	%			25.32	%			21.41	%			17.84	%			13.64	%
Net interest margin		4.73	%			4.90	%			5.17	%			4.99	%			4.61	%
Net interest spread		4.58	%			4.80	%			5.11	%			4.96	%			4.60	%
Efficiency ratio (1)		37.04	%			48.90	%			55.22	%			53.29	%			64.86	%
Noninterest expense / average assets		1.80	%			2.52	%			2.95	%			2.79	%			2.95	%
(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
	Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022				Jun 30, 2022
Total assets	$	1,959,802			$	1,857,994			$	1,759,204			$	1,665,491			$	1,592,276
Earning assets	$	1,927,061			$	1,833,089			$	1,733,577			$	1,638,026			$	1,564,662
Total loans, including loans held for sale	$	1,675,790			$	1,597,236			$	1,527,863			$	1,438,489			$	1,339,095
Total deposits	$	1,656,540			$	1,624,777			$	1,574,002			$	1,482,739			$	1,419,648
Total shareholders' equity	$	162,173			$	146,778			$	141,330			$	144,727			$	132,789
	Loan Balances by Type
	(Dollars in thousands)
	Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022				Jun 30, 2022
Real estate - investor owned	$	481,518			$	472,315			$	476,404			$	403,950			$	390,628
Real estate - owner occupied		468,234				418,788				394,365				382,689				359,270
Real estate - multifamily		150,003				141,783				130,901				136,841				121,693
Real estate - single family		119,762				121,760				118,502				107,728				94,212
Commercial business		421,717				401,277				405,919				394,369				362,410
Land and construction		73,665				64,571				56,153				55,418				44,856
Consumer		2,806				2,534				6,004				6,103				6,450
Total loans held for investment	$	1,717,705			$	1,623,028			$	1,588,248			$	1,487,098			$	1,379,519
	Deposits by Type
	(Dollars in thousands)
	Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022				Jun 30, 2022
Noninterest-bearing DDA	$	657,980			$	639,664			$	691,392			$	763,227			$	747,006
Interest-bearing DDA, excluding brokered		101,064				99,988				109,130				95,677				93,405
Savings & MMA, excluding brokered		670,195				637,031				614,991				576,395				518,139
Time deposits, excluding brokered		105,757				77,052				54,887				56,341				67,096
Total deposits, excluding brokered		1,534,996				1,453,735				1,470,400				1,491,640				1,425,646
Total brokered deposits		164,176				130,031				204,722				38,958				15,006
Total deposits	$	1,699,172			$	1,583,766			$	1,675,122			$	1,530,598			$	1,440,652

PRIVATE BANCORP OF AMERICA, INC.
(Unaudited)
	Rollforward of Allowance for Credit Losses
	(Dollars in thousands)
	For the three months ended
	Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022				Jun 30, 2022
Allowance for loan losses:
Beginning balance	$	21,135			$	19,152			$	19,092			$	17,776			$	17,117
Impact of CECL adoption		-				1,910				-				-				-
Provision for loan losses		(7,149	)			73				60				1,316				659
Net (charge-offs) recoveries		8,602				-				-				-				-
Ending balance		22,588				21,135				19,152				19,092				17,776
Reserve for unfunded commitments (1)		2,172				2,802				1,718				1,674				1,635
Total allowance for credit losses	$	24,760			$	23,937			$	20,870			$	20,766			$	19,411
(1) Includes $974 thousand related to the impact of CECL adoption on January 1, 2023.
	Asset Quality
	(Dollars in thousands)
	Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022				Jun 30, 2022
Total loans held-for-investment	$	1,717,705			$	1,623,028			$	1,588,248			$	1,487,098			$	1,379,519
Allowance for loan losses	$	(22,588	)		$	(21,135	)		$	(19,152	)		$	(19,092	)		$	(17,776	)
30-89 day past due loans	$	-			$	-			$	-			$	-			$	-
90+ day past due loans	$	-			$	-			$	-			$	-			$	-
Nonaccrual loans	$	3,354			$	4,384			$	3,880			$	4,593			$	1,453
NPAs / Assets		0.17	%			0.22	%			0.21	%			0.27	%			0.09	%
NPLs / Total loans held-for-investment & OREO		0.20	%			0.27	%			0.24	%			0.31	%			0.11	%
Net quarterly charge-offs (recoveries)	$	(8,602	)		$	-			$	-			$	-			$	-
Net charge-offs (recoveries) /avg loans (annualized)		(2.05	)%			0.00	%			0.00	%			0.00	%			0.00	%
Allowance for loan losses to loans HFI		1.32	%			1.30	%			1.21	%			1.28	%			1.29	%
Allowance for loan losses to nonaccrual loans		673.46	%			482.09	%			493.61	%			415.68	%			1,223.4	%

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
		Jun 30, 2023				Mar 31, 2023				Jun 30, 2022				Jun 30, 2023				Jun 30, 2022
Adjusted income before provision for income taxes
Income before provision for income taxes		$	22,109			$	12,003			$	6,166			$	34,112			$	15,432
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)		$	11,780			$	12,003			$	6,166			$	23,783			$	15,432
Adjusted net income
Net income		$	15,534			$	8,974			$	4,397			$	24,508			$	10,915
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)		$	8,258			$	8,974			$	4,397			$	17,232			$	10,915
Adjusted diluted earnings per share ("Adjusted EPS")
Diluted earnings per share		$	2.69			$	1.57			$	0.77			$	4.25			$	1.91
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)		$	1.43			$	1.57			$	0.77			$	2.99			$	1.91
Diluted average shares outstanding			5,726,522				5,673,394				5,639,282				5,722,645				5,652,071
(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 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
	Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022				Jun 30, 2022
Efficiency Ratio
Noninterest expense	$	8,802			$	11,557			$	13,075			$	11,727			$	12,600
Net interest income		22,708				22,168				22,596				20,603				17,983
Noninterest income		1,054				1,465				1,084				1,405				1,442
Total net interest income and noninterest income		23,762				23,633				23,680				22,008				19,425
Efficiency ratio (non-GAAP)		37.04	%			48.90	%			55.22	%			53.29	%			64.86	%
Adjusted Efficiency Ratio
Noninterest expense	$	8,802			$	11,557			$	13,075			$	11,727			$	12,600
Settlement of legal fees related to ANI litigation		1,635				-				-				-				-
Adjusted noninterest expense (non-GAAP)		10,437				11,557				13,075				11,727				12,600
Total net interest income and noninterest income		23,762				23,633				23,680				22,008				19,425
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)		23,678				23,633				23,680				22,008				19,425
Adjusted Efficiency ratio (non-GAAP)		44.08	%			48.90	%			55.22	%			53.29	%			64.86	%
Pretax pre-provision net revenue
Net interest income	$	22,708			$	22,168			$	22,596			$	20,603			$	17,983
Noninterest income		1,054				1,465				1,084				1,405				1,442
Total net interest income and noninterest income		23,762				23,633				23,680				22,008				19,425
Less: Noninterest expense		8,802				11,557				13,075				11,727				12,600
Pretax pre-provision net revenue (non-GAAP)	$	14,960			$	12,076			$	10,605			$	10,281			$	6,825
Return and Adjusted Return on Average Assets, Average Equity, Average Tangible Equity
Net income	$	15,534			$	8,974			$	7,443			$	6,351			$	4,397
Adjusted net income (non-GAAP) (1)		8,258				8,974				7,443				6,351				4,397
Average assets		1,959,802				1,857,994				1,759,204				1,665,491				1,592,276
Average shareholders' equity		162,173				146,778				141,330				144,727				132,789
Less: Average intangible assets		2,975				3,026				3,385				3,599				3,490
Average tangible common equity (non-GAAP)		159,198				143,752				137,945				141,128				129,299
Return on average assets		3.18	%			1.96	%			1.68	%			1.51	%			1.11	%
Adjusted return on average assets (non-GAAP) (1)		1.69	%			1.96	%			1.68	%			1.51	%			1.11	%
Return on average equity		38.42	%			24.80	%			20.89	%			17.41	%			13.28	%
Adjusted return on average equity (non-GAAP) (1)		20.42	%			24.80	%			20.89	%			17.41	%			13.28	%
Return on average tangible common equity (non-GAAP)		39.14	%			25.32	%			21.41	%			17.85	%			13.64	%
Adjusted return on average tangible common equity (non-GAAP) (1)		20.81	%			25.32	%			21.41	%			17.85	%			13.64	%
Tangible book value per share
Total equity		167,211				152,314				143,324				134,934				130,195
Less: Total intangible assets		2,875				3,057				3,007				3,502				3,515
Total tangible equity		164,336				149,257				140,317				131,432				126,680
Shares outstanding		5,702,637				5,676,017				5,599,025				5,594,380				5,584,465
Tangible book value per share (non-GAAP)	$	28.82			$	26.30			$	25.06			$	23.49			$	22.68
(1) A reconciliation of net income to adjusted net income is provided on page 15.

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
	Jun 30, 2023				Jun 30, 2022
Efficiency Ratio
Noninterest expense	$	20,359			$	23,442
Net interest income		44,876				35,125
Noninterest income		2,519				4,551
Total net interest income and noninterest income		47,395				39,676
Efficiency ratio (non-GAAP)		43.0	%			59.1	%
Adjusted Efficiency Ratio
Noninterest expense	$	20,359			$	23,442
Settlement of legal fees related to ANI litigation		1,635				-
Adjusted noninterest expense (non-GAAP)		21,994				23,442
Total net interest income and noninterest income		47,395				39,676
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)		47,311				39,676
Adjusted Efficiency ratio (non-GAAP)		46.49	%			59.08	%
Pretax pre-provision net revenue
Net interest income	$	44,876			$	35,125
Noninterest income		2,519				4,551
Total net interest income and noninterest income		47,395				39,676
Less: Noninterest expense		20,359				23,442
Pretax pre-provision net revenue (non-GAAP)	$	27,036			$	16,234
Return and Adjusted Return on Average Assets, Average Equity, Average Tangible Equity
Net income	$	24,508			$	10,915
Adjusted net income (non-GAAP) (1)		17,232				10,915
Average assets		1,909,179				1,554,521
Average shareholders' equity		154,518				132,638
Less: Average intangible assets		2,973				3,435
Average tangible common equity		151,545				129,203
Return on average assets		2.59	%			1.42	%
Adjusted return on average assets (non-GAAP) (1)		1.82	%			1.42	%
Return on average equity		31.98	%			16.59	%
Adjusted return on average equity (non-GAAP) (1)		22.49	%			16.59	%
Return on average tangible common equity (non-GAAP)		32.61	%			17.04	%
Adjusted return on average tangible common equity (non-GAAP) (1)		22.93	%			17.04	%
(1) A reconciliation of net income to adjusted net income is provided on page 15.

FAQ

What was the net income for Q2 2023?

The net income for Q2 2023 was $15.5 million.

How much did diluted earnings per share increase in Q2 2023?

Diluted earnings per share increased by 71% to $2.69.

What was the increase in loans held-for-investment?

Loans held-for-investment increased by 5.8% to $1.7 billion.

What was the growth in core deposits?

Core deposits grew by 5.3% to $1.5 billion.

What was the increase in total deposits?

Total deposits rose by 7.3% to $1.7 billion.

What was the net interest margin for Q2 2023?

The net interest margin was 4.73% for Q2 2023.

What was the tangible book value per share as of June 30, 2023?

The tangible book value per share was $28.82 as of June 30, 2023.