Press Release

California BanCorp Earnings Grew 15% to $1.9 Million, or $0.30 per share, in 1Q18, Fueled by 10% Growth in Loans and 20% Growth in Deposits YOY

Company Release - 4/30/2018 9:00 AM ET

OAKLAND, Calif., April 30, 2018 (GLOBE NEWSWIRE) -- California BanCorp (OTCQX:CALB), the Holding Company for California Bank of Commerce, a San Francisco Bay Area business bank, today reported continuing strong balance sheet growth and profitability, with a return on average assets (ROAA) of 0.89% and a return on average equity (ROAE) of 9.90% in the first quarter of 2018.  Earnings grew 15% to $1.9 million, or $0.30 per share, in the first quarter compared to $1.7 million, or $0.27 per share, in the first quarter of 2017.  Financial results are unaudited and prior periods have been adjusted to reflect the 5% stock dividend paid in August 2017.

“We started 2018 with a record first quarter and our momentum continues to build.  Year over year Loan growth of 10% and deposit growth of 20% generated strong top-line and bottom line results,” said Terry A. Peterson, President and CEO.  “While our investment in experienced bankers and best of breed technology and infrastructure increased overhead costs in the quarter, we are already seeing the positive result of those investments.”

“Impacting our Q1 earnings were non-recurring expenses of $416,000 for a strategic initiative that did not materialize,” said Steve Cortese, Chairman of the Board.  “Without these one-time non-recurring expenses, our financial results would have further benefited our record Q1 earnings.”

Financial Highlights

First Quarter 2018 vs. Fourth Quarter 2017 and First Quarter of 2017

  • Net income was $1.9 million or $0.30 per share, compared to $1.7 million, or $0.27 per share, in the first quarter a year ago. Net interest margin increased 17 basis points to 4.12%, from 3.95% in the preceding quarter, primarily due to the higher yield on earning assets, while contracting 14 basis point from 4.26% from the first quarter a year ago.  
  • During the first quarter, total cost of funds rose to 0.89% from 0.82% in the fourth quarter of 2017 and from 0.54% in the first quarter a year ago.
  • The efficiency ratio, which measures operating expenses as a percent of revenue, increased to 68.49% from 59.46% in the first quarter a year ago, and was also slightly higher than the 64.68% achieved in the preceding quarter, reflecting investments in hiring new experienced relationship bankers and non-recurring expenses of $416k from strategic initiatives.
  • Net operating expense to average assets increased to 2.50% from 2.19% a year ago.
  • Total assets increased 19%, to $909.3 million at quarter-end compared to $762.9 million a year ago.
  • Total loans, net of deferred costs, grew 10% to $742.3 million from $677.2 million a year ago, an increase of $65.2 million.  Of the loan growth, 84% were commercial and industrial loans, increasing total commercial loans to $146.4 million or 45% of total loans. Owner occupied commercial real estate loans plus Commercial and Industrial loans would together represent roughly 65% of total loans, further demonstrating our Business Banking focus.
  • Total deposits grew 20%, to $798.9 million as of March 31, 2018, compared to $667.3 million a year ago. 
  • Non-interest-bearing deposits increased to $321.2 million, up 11% from a year ago, an increase of $33.1 million.
  • Tangible book value per common share increased 7% to $12.23 as of March 31, 2018, compared to $11.47 a year ago.

Peer Comparisons

“Our performance metrics continue to gain momentum and compare favorably with the 518 banks included in the SNL Micro Cap Bank Index on almost every measurable value,” said Peterson.

       
PERFORMANCE RATIOS:

 
 CALB SNL US Micro
Cap Bank Index*
  
  1Q18 4Q17  
Return on average assets 0.89%       0.42% 
Return on average equity 9.90% 4.18% 
Net interest margin 4.12% 3.72% 
Efficiency ratio 68.49% 68.26% 
Net operating expense/average assets 2.50% 2.15% 
Non-performing loans/loans 0.54% 1.19% 
Allowance for loan losses/loans 1.29% 1.16% 
Allowance for loan losses/NPAs 238% 73.38% 
      

* SNL Micro Cap U.S. Bank: Includes all publicly traded (NYSE, NYSE MKT, NASDAQ, OTC) Banks in SNL's coverage universe with less than $250M Total Common Market Capitalization as of most recent pricing data.

The effective tax rate for first quarter of 2018 was 29.1% compared to 38.3% for first quarter of 2017.  “The lower tax rate for the quarter was due to the enactment of the Tax Cuts and Jobs Act,” said Randall Greenfield, Chief Financial Officer.

Credit Quality

Credit quality remains strong, with non-performing assets (“NPAs”) to total assets at 0.44% at March 31, 2018, compared to 0.28% at March 31, 2017.  Non-performing loans increased to $4.0 million at the end of the first quarter, up from $2.2 million at December 31, 2017, and $2.1 million a year ago.  

“The loan loss reserve increased by $260,000 for the quarter and by $1.5 million from a year ago, to $9.6 million at March 31, 2018.  The ratio of reserves to total loans was 1.29% on March 31, 2018, up from 1.20% at March 31, 2017,” said Doug Stoveland, Chief Credit Officer.

“We are pleased to post another record breaking quarter for both earnings and total loans and deposits,” said Chairman Cortese.  “We continue to execute on our strategic initiative to safely grow our company while adding to our shareholders investment value.”

Please see our detailed First Quarter 2018 Unaudited Summary Financial Statements for more information.

About California BanCorp

California BanCorp, the parent company for California Bank of Commerce, offers a broad range of commercial banking services to closely held businesses and professionals located throughout the San Francisco Bay Area. The stock trades on the OTCQX marketplace under the symbol CALB (formerly CABC). For more information on California BanCorp, call us at (510) 457-3751, or visit us at www.californiabankofcommerce.com.

California BanCorp
Terry A. Peterson, (510) 457-3751
President and CEO
tpeterson@bankcbc.com

Randall D. Greenfield, (510) 457-3769
EVP and Chief Financial Officer
rgreenfield@bankcbc.com

Source: California BanCorp

           
 CALIFORNIA BANCORP
 UNAUDITED SUMMARY FINANCIAL STATEMENTS
  
 INCOME STATEMENT
 ($ Thousands)
           
  Three Months Ended Year Over Year Change
  31-Mar-18 31-Dec-17 31-Mar-17 $ %
 Interest Income$  9,502  $  9,266  $  7,826  $  1,676  21%
 Interest Expense   (1,070)    (990)    (534)    (536) 100%
    Net Interest Income Before Provision   8,432     8,276     7,292     1,140  16%
 Provision to the Loan Loss Reserve   (260)    (284)    (550)    290  -53%
   Net Interest Income After Provision$  8,172  $  7,992  $  6,742  $  1,430  21%
           
 Non-interest Income   1,040     766     756     284  38%
 Non-interest Expense   (6,487)    (5,848)    (4,785)    (1,702) 36%
    Income Before Tax Provision   2,725     2,910     2,713     12  0%
 Provision for Income Taxes   (792)    (2,905)    (1,038)    246  -24%
    Net Income $  1,933  $  5  $  1,675  $  258  15%
           
           
 Basic Earnings per Common share$  0.30  $  0.00  $  0.27  $  0.03  10%
           
 Weighted Average Shares Outstanding   6,508,999     6,412,054     6,227,470     
           
 Return on Average Assets 0.89%  0.00%  0.91%    
 Return on Average Tangible Common Equity 9.90%  0.03%  9.66%    
           
           
 Non-interest Expense to Average Total Assets 2.98%  2.61%  2.60%    
 Net Operating Expense to Average Total Assets 2.50%  2.27%  2.19%    
 Efficiency Ratio 68.49%  64.68%  59.46%    
                 


            
 CALIFORNIA BANCORP 
 UNAUDITED SUMMARY FINANCIAL STATEMENTS 
   
 BALANCE SHEET 
 ($ Thousands) 
            
        Year Over Year Change 
 Assets31-Mar-18 31-Dec-17 31-Mar-17 $ % 
 Total Cash and Investments$  136,809  $  102,154  $  54,930  $  81,879  149% 
 Loans, net of Deferred Costs/Fees   742,373     732,765     677,183     65,190  10% 
    Loan Loss Reserve   (9,600)    (9,300)    (8,100)    (1,500) 19% 
 Other    39,766     40,851     38,932     834  2% 
    Total Assets$  909,348  $  866,470  $  762,945  $  146,403  19% 
            
 Liabilities & Shareholders' Equity          
 Non-interest Bearing Deposits$  321,214  $  314,516  $  288,153  $  33,061  11% 
 Interest Bearing Deposits   477,694     445,857     379,195     98,499  26% 
    Total Deposits$  798,908  $  760,373  $  667,348  $  131,560  20% 
 Total Borrowings and Other Liabilities   22,577     21,354     17,222     5,355  31% 
    Total Liabilities$  821,485  $  781,727  $  684,570  $  136,915  20% 
            
 Shareholder's Equity   87,863     84,743     78,375     9,488  12% 
 Total Liabilities & Shareholders' Equity$  909,348  $  866,470  $  762,945  $  146,403  19% 
            
 Common Shares Outstanding   6,560,445     6,416,295     6,169,277     391,168  6% 
 Tangible Book Value per Common Share$  12.23  $  12.10  $  11.47  $  0.77  7% 
            
        Year Over Year Change 
 Average Balances - Period1Q 2018 4Q 2017 1Q 2017 $ % 
 Total Assets$  882,386  $  888,403  $  746,126  $  136,260  18% 
 Total Loans$  729,781  $  714,695  $  643,431  $  86,350  13% 
 Total Investments$  12,736  $  13,377  $  15,287  $  (2,551) -17% 
 Total Earning Assets$  830,522  $  832,326  $  693,927  $  136,595  20% 
 Total Non-Interest Bearing Deposits$  304,551  $  318,955  $  261,662  $  42,889  16% 
 Total Deposits$  775,625  $  781,715  $  641,259  $  134,366  21% 
 Total Borrowings$  16,078  $  16,009  $  23,508  $  (7,430) -32% 
 Tangible Common Equity$  79,188  $  78,287  $  70,333  $  8,855  13% 
            
            
 Average Yields and Cost1Q 2018 4Q 2017 1Q 2017     
 Net Interest Margin 4.12%  3.95%  4.26%     
 Yield on Earning Assets 4.64%  4.42%  4.57%     
 Cost of Interest Bearing Liabilities 0.89%  0.82%  0.54%     
            
 End of Period31-Mar-18 31-Dec-17 31-Mar-17     
 Loan Loss Reserve to Total Loans 1.29%  1.27%  1.20%     
            
 Nonperforming loans/loans 0.54%  0.30%  0.31%     
 NPAs (including accruing TDRs) to Total Assets 0.44%  0.25%  0.27%     
 Accruing TDRs to Total Assets 0.15%  0.20%  0.18%     
                  

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Source: California BanCorp
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