BayCom Corp (“BayCom” or the “Company”) (NASDAQ: BCML), the
holding company for United Business Bank (the “Bank” or “UBB”),
announced earnings of $7.2 million, or $0.59 per diluted common
share, for the second quarter of 2023, compared to earnings of $7.2
million, or $0.57 per diluted common share, for the first quarter
of 2023 and $3.9 million, or $0.29 per diluted common share, for
the second quarter of 2022.
Net income for the second quarter of 2023 compared to the first
quarter of 2023 increased $15,000, or 0.2%, primarily as a result
of a $1.5 million decrease in provision for credit losses,
reflecting a $1.3 million reversal of the allowance for credit
losses for the current quarter compared to a $275,000 provision for
credit losses during the first quarter of 2023, partially offset by
a $976,000 decrease in net interest income and a $475,000 decrease
in noninterest income. Net income for the second quarter of 2023
compared to the second quarter 2022 increased $3.3 million, or
84.5%, primarily as a result of $1.1 million increase in net
interest income, a $3.9 million decrease in provision for credit
losses, a $906,000 increase in noninterest income, partially offset
by a $1.3 million increase in noninterest expense and a $1.3
million increase in provision for income taxes.
Net income for the six months ended June 30, 2023 compared to
the same period in 2022 increased $5.3 million, or 57.6%, primarily
as a result of a $4.0 million increase in net interest income, a
$3.6 million decrease in provision for credit losses, reflecting a
$985,000 reversal of the allowance for credit losses for the six
months ended June 30, 2023 compared to a $2.6 million provision for
credit losses for the same period in 2022, and a $445,000 decrease
in noninterest expense, partially offset by a $164,000 decrease in
noninterest income and a $2.7 million increase in provision for
income taxes.
George Guarini, Founder, President and Chief Executive Officer,
commented, “Our second quarter 2023 financial results are
encouraging despite challenges facing the banking sector. Like
other banks, we are seeing pressure on our net interest margin due
to rising deposit costs; however, our credit quality and liquidity
remain strong. Our office portfolio currently represents
approximately 7% of total loans but, more importantly, has a
weighted average loan to value of 52%, a strong debt coverage ratio
and is performing well.”
Guarini concluded, “Our financial metrics reveal higher return
on average equity, increased deposits and liquidity, and a decline
in loan delinquencies over the prior quarter. Additionally, we have
continued to build tangible book value through earnings and the
repurchase of our shares at well below our tangible book value.
Lastly, we believe that merger and acquisition opportunities may
increase as banks recognize the benefits of consolidation in the
current operating environment.”
Second Quarter Performance Highlights:
- Annualized net interest margin was 4.02% for the current
quarter, compared to 4.26% in the preceding quarter and 3.59% in
the same quarter a year ago.
- Annualized return on average assets was 1.13% for the current
quarter, compared to 1.14% in the preceding quarter and 0.57% in
the same quarter a year ago.
- Assets totaled $2.6 billion at both June 30, 2023 and March 31,
2023, compared to $2.7 billion at June 30, 2022.
- Loans, net of deferred fees, totaled $2.0 billion at June 30,
2023, March 31, 2023, and June 30, 2022.
- Nonperforming loans totaled $12.8 million or 0.64% of total
loans at June 30, 2023, compared to $13.1 million or 0.64% of total
loans at March 31, 2023, and $10.7 million or 0.53% of total loans
at June 30, 2022.
- The allowance for credit losses for loans totaled $19.1
million, or 0.95% of total loans outstanding, at June 30, 2023,
compared to $20.4 million, or 1.00% of total loans outstanding, at
March 31, 2023, and $17.8 million, or 0.89% of total loans
outstanding, at June 30, 2022. The Company adopted the Current
Expected Credit Losses ("CECL") standard as of January 1, 2023,
which resulted in a one-time adjustment to the allowance for credit
losses for loans by $1.5 million (which included the
reclassification of the net credit discount on acquired purchased
credit impaired loans totaling $845,000) and an allowance for
unfunded credit commitments of $45,000, and an after-tax decrease
to opening retained earnings of $491,000 during the first quarter
of 2023.
- A $1.3 million reversal of the allowance for credit losses for
loans was recorded during the current quarter compared to a
$275,000 and $7,000 provision for credit losses for loans in the
prior quarter and the same quarter a year ago, respectively.
- Deposits totaled $2.1 billion at both June 30, 2023 and March
31, 2023, compared to $2.3 billion at June 30, 2022. At June 30,
2023, noninterest bearing deposits totaled $664.1 million, or 30.9%
of total deposits, compared to $705.9 million, or 33.2% of total
deposits at March 31, 2023, and $789.3 million, or 35.0% of total
deposits, at June 30, 2022.
- The Company repurchased 543,955 shares of common stock at an
average cost of $16.71 per share during the second quarter of 2023,
compared to 422,877 shares repurchased at an average cost of $19.08
per share during the first quarter of 2023, and 205,044 shares
repurchased at an average cost of $21.69 per share during the
second quarter of 2022.
- On May 18, 2023, the Company announced the declaration of a
cash dividend on the Company’s common stock of $0.10 per share,
paid on July 14, 2023 to stockholders of record as of June 16,
2023.
- The Bank remained a “well-capitalized” institution for
regulatory capital purposes at June 30, 2023.
Earnings
Net interest income decreased $976,000, or 3.9%, to $24.3
million for the second quarter of 2023 from $25.3 million in the
prior quarter and increased $1.1 million, or 4.8%, from $23.2
million in the same quarter a year ago. The decrease in net
interest income from the first quarter of 2023 reflects higher
funding costs related to increased rates of interest on our
deposits and junior subordinated debt due to higher market rates.
The increase in net interest income from the same quarter in 2022
reflects increases in interest income on loans, cash and cash
equivalents and, to a lesser extent, investment securities,
including dividends on FRB and FHLB stock, partially offset by
higher funding costs related to increased rates of interest on our
deposits and junior subordinated debt. Average interest-earning
assets increased $28.2 million, or 1.1%, and decreased $171.6
million, or 6.28% for the three months ended June 30, 2023 compared
to the first quarter of 2023 and the second quarter of 2022,
respectively. Average yield (annualized) on interest earning assets
for the second quarter of 2023 was 5.18%, compared to 5.07% for the
first quarter of 2023 and 3.97% for the second quarter of 2022. The
increase in average yields on interest-earning assets during the
current quarter reflects increases in market interest rates due to
recent increases in the target range for federal funds, including a
75 basis point increase during the first six months of 2023, to a
range of 5.00% to 5.25%. The average rate paid on interest-bearing
liabilities for second quarter of 2023 was 1.82 %, compared to
1.35% for the first quarter of 2023, and 0.62% for the second
quarter of 2022.
Interest income on loans, including fees, increased $412,000, or
1.6%, to $26.7 million for the three months ended June 30, 2023
compared to the three months ended March 31, 2023, primarily due to
a $37.1 million increase in the average loan balance and a 4 basis
point increase in the average loan yield. Interest income on loans,
including fees, increased $3.7 million, or 16.0%, for the three
months ended June 30, 2023 compared to the three months ended June
30, 2022 primarily due to a 66 basis point increase in the average
loan yield and a $31.7 million increase in the average loan
balance. The average loan balance totaled $2.0 billion for the
second quarter of 2023, first quarter of 2023 and the same quarter
a year ago. The average yield on loans was 5.28% for the second
quarter of 2023, compared to 5.24% for the first quarter of 2023
and 4.62% for the second quarter of 2022. The increase in the
average yield on loans from the first quarter of 2023 and the
second quarter of 2022 was due to the impact of increased rates on
variable rate loans as well as new loans being originated at higher
market interest rates. This increase was partially offset by a
$92,000 decrease in accretion of the net discount on acquired loans
and a $91,000 decrease in Paycheck Protection Program (“PPP”) loan
fees recognized when compared to the first quarter of 2023, and a
$1.3 million decrease in accretion of the net discount on acquired
loans and a $351,000 decrease in PPP loan fees recognized when
compared to the second quarter of 2022.
Interest income on loans included $5,000, $97,000, and $198,000
in accretion of the net discount on acquired loans for the three
months ended June 30, 2023, March 31, 2023, and June 30, 2022,
respectively. The balance of the net discounts on these acquired
loans totaled $331,000, $371,000, and $481,000 at June 30, 2023,
March 31, 2023, and June 30, 2022, respectively. Interest income
included minimal fees earned related to PPP loans in the quarter
ended June 30, 2023, compared to $91,000 in the first quarter of
2023, and $351,000 in the second quarter of 2022. Interest income
also included fees related to prepayment penalties of $48,000 in
the quarter ended June 30, 2023, compared to $269,000 in the first
quarter of 2023, and $487,000 in the second quarter of 2022.
Interest income on investment securities increased $53,000, or
3.2%, to $1.7 million for the three months ended June 30, 2023
compared to $1.6 million for the three months ended March 31, 2023,
and increased $162,000, or 10.6%, from $1.5 million for the three
months ended June 30, 2022. Average yield on investment securities
increased 47 basis points to 3.99% for the three months ended June
30, 2023, compared to 3.52% for the three months ended March 31,
2023, and increased 77 basis points from 3.21% for the three months
ended June 30, 2022. The average balance on investment securities
totaled $170.1 million for the three months ended June 30, 2023,
compared to $189.0 million and $191.7 million for the three months
ended March 31, 2023 and June 30, 2022, respectively.
Interest income on federal funds sold and interest-bearing
balances in banks increased $731,000, or 40.0%, to $2.6 million for
the three months ended June 30, 2023, compared to $1.8 million for
the three months ended March 31, 2023, and increased $1.8 million,
or 217.7%, from $806,000 for the three months ended June 30, 2022
as a result of an increase in the average yield. The average yield
on federal funds sold and interest-bearing balances in banks
increased 58 basis points to 5.14% for the three months ended June
30, 2023, compared to 4.56% for the three months ended March 31,
2023, and increased 430 basis points from 0.84% for the three
months ended June 30, 2022. The average balance of federal funds
sold and interest-bearing balance in banks totaled $199.9 million
for the three months ended June 30, 2023, compared to $162.8
million and $383.8 million for the three months ended March 31,
2023 and June 30, 2022, respectively. In addition, during the
second quarter of 2023, we received $340,000 in cash dividends on
our FRB and FHLB stock, up 2.4% from $332,000 in the first quarter
of 2023 and up 25.9% from $270,000 in the second quarter in
2022.
Interest expense increased $2.2 million, or 45.4%, to $7.0
million for the three months ended June 30, 2023, compared to $4.8
million for the three months ended March 31, 2023, and increased
$4.5 million, or 184.6%, compared to $2.5 million for the three
months ended June 30, 2022, reflecting higher funding costs related
to increased market rates of interest on our deposits and junior
subordinated debt. Average balance of deposits totaled $2.1 billion
for both the second quarter of 2023 and the first quarter of 2023,
compared to $2.3 billion for the second quarter of 2022. The
average cost of funds for the second quarter of 2023 was 1.82%,
compared to 1.35% for first quarter of 2023 and 0.62% for the
second quarter in 2022. The increase in the average cost of funds
during the current quarter compared to the prior quarter was due to
higher interest rates paid on money market and time deposits due to
increased competition and pricing pressures and a change in deposit
mix due to shift of deposits from noninterest bearing accounts to
higher costing money market and time deposits. The average cost of
total deposits for the three months ended June 30, 2023 was 1.10%,
compared to 0.71% for the three months ended March 31, 2023, and
0.25% for the three months ended June 30, 2022. The average balance
of noninterest bearing deposits decreased $64.5 million, or 8.7%,
to $677.5 million for the three months ended June 30, 2023,
compared to $742.0 million for the three months ended March 31,
2023 and decreased $111.4 million, or 14.1%, compared to $788.9
million for the three months ended June 30, 2022. Interest expense
on junior subordinated debt was $203,000 for both the three months
ended June 30, 2023 and the three months ended March 31, 2023, up
$99,000, or 95.2%, from $104,000 for the three months ended June
30, 2022, due to higher market rates.
Annualized net interest margin was 4.02% for the second quarter
of 2023, compared to 4.26% for the first quarter of 2023 and 3.59%
for second quarter of 2022. The average yield on interest earning
assets for the second quarter of 2023 increased 11 basis points and
121 basis points over the average yields for the first of 2023 and
the second quarter of 2022, respectively, while the average rate
paid on interest-bearing liabilities for second quarter of 2023
increased 47 basis points and 120 basis points over the average
rates paid for the first quarter of 2023 and the second quarter of
2022, respectively. Net interest margin in the second quarter of
2023 was negatively impacted by higher funding costs outpacing
increasing yields on loans, investment securities and fed funds
sold and interest bearing-balances in banks.
The average yield on PPP loans, including the recognition of
deferred PPP loan fees, was 1.00%, resulting in a minimal negative
impact to the net interest margin during the second quarter of
2023, compared to an average yield of 5.98%, with positive impact
to net interest margin of two basis points, during the prior
quarter of 2023, and an average yield of 2.55%, with a positive
impact to the net interest margin of seven basis points during the
same quarter in 2022. Accretion of the net discount on acquired
loans did not affect the average yield on loans during the second
quarter of 2023, compared to increases of seven basis points during
the prior quarter of 2023 and six basis points during the same
quarter of 2022. At June 30, 2023, there was a total of $4.9
million of PPP loans outstanding, with a minimal amount of
unrecognized deferred fees and costs.
Based on our review of the allowance for credit losses for loans
at June 30, 2023, the Company recorded a $1.3 million reversal of
the allowance for credit losses for loans for the second quarter of
2023, compared to a $275,000 provision for credit losses and a $2.6
million provision for loan losses in the prior quarter of 2023 and
the same quarter in 2022, respectively. The reversal of the
allowance for credit losses for loans in the second quarter of 2023
was primarily due to improvements in forecasted economic
conditions, specifically, national gross domestic product and
national unemployment, indicators utilized to estimate credit
losses and, to a lesser extent, a decrease in outstanding loan
balances and $60,000 in net charge-offs during the second quarter
of 2023.
Noninterest income for the second quarter of 2023 decreased
$475,000, or 30.4%, to $1.1 million compared to $1.6 million in the
prior quarter of 2023 and increased $906,000, or 503.3%, compared
to $180,000 for the same quarter in 2022. The decrease in
noninterest income for the current quarter compared to the prior
quarter of 2023 was primarily due to a $344,000 decrease in gain on
sale of SBA loans (guaranteed portion), generally due to a decrease
in the volume of these loans sold during the current quarter, and a
$264,000 decrease in income from our investment in a Small Business
Investment Company (“SBIC”) fund, partially offset by a $183,000
increase in loan servicing fees and other fees. The increase in
noninterest income for the current quarter compared to the same
quarter in 2022 was primarily due to a $924,000 lower decline in
fair value adjustments on equity securities, a $204,000 increase in
loan servicing fees and other fees and a $164,000 increase in
service charges and other fees, partially offset by a $231,000
decrease in gain on sale of loans due to a decrease in the volume
of premiums observed on SBA loans (guaranteed portion) sold and a
$141,000 decrease in other income and fees.
Noninterest expense for the second quarter of 2023 increased
$28,000, or 0.2%, to $16.6 million compared to $16.5 million for
the prior quarter of 2023 and increased $1.4 million, or 8.9%,
compared to $15.2 million for the same quarter in 2022. The
increase in noninterest expense for the second quarter of 2023
compared to the prior quarter of 2023 was primarily due to a
$221,000 increase in other noninterest expense due to a $216,000
increase in FDIC insurance assessments and $151,000 increase in
data processing expense due to a decline in pricing credits
offered. These increases were partially offset by a $291,000
decrease in salaries and employee benefits expense as a result of
decline in other benefits expense and a $53,000 decrease in
occupancy and equipment expense due to lower depreciation and
property maintenance expense. The increase in noninterest expense
for the second quarter of 2023 compared to the second quarter of
2022 was primarily due to a $1.5 million increase in salary and
employee benefits expense due to a reduction in deferred loan
origination expenses and higher salary expenses due to wage
increases and increase in full-time equivalent employees and a
$54,000 increase in occupancy and equipment expense, partially
offset by a $125,000 decrease in other noninterest expense due to
lower deposit intangible amortization and a $50,000 decrease in
data processing expense due to higher core systems costs.
The provision for income taxes increased $41,000, or 1.5%, to
$2.9 million for the second quarter of 2023 compared to $2.8
million for the prior quarter of 2023 and increased $1.3 million,
or 78.2%, to $1.6 million compared to the same quarter in 2022. The
effective tax rate for the second quarter of 2023 was 28.4%,
compared to 28.2% for the prior quarter of 2023, and 29.1% for the
same quarter in 2022. The effective tax rate was lower for the
second quarter of 2023 compared to the same quarter in 2022 due to
higher capitalization of non-deductible merger related costs during
the second quarter of 2022.
Loans and Credit Quality
Loans, net of deferred fees, decreased $31.2 million from the
prior quarter-end and totaled $2.0 billion at both June 30, 2023,
and March 31, 2023, and increased $8.3 million compared to $2.0
billion at June 30, 2022. The decrease in loans at June 30, 2023
compared to March 31, 2023 primarily was due to $34.3 million of
new loan originations, which was more than offset by $65.1 million
of loan repayments, including $997,000 in PPP loan repayments. At
June 30, 2023, there was a total of $4.9 million PPP loans
outstanding compared to $5.9 million at March 31, 2023, and $68.8
million at June 30, 2022.
Nonperforming loans, consisting of non-accrual loans and
accruing loans 90 days or more past due, totaled $12.8 million or
0.64% of total loans at June 30, 2023, compared to $13.1 million or
0.64% of total loans at March 31, 2023, and $10.7 million or 0.53%
of total loans at June 30, 2022. The decrease in nonperforming
loans from the prior quarter-end was primarily due to the renewal
of one loan during the current quarter totaling $934,000, which was
90 days or more past due and in the process of collection at March
31, 2023, and the charge-off of one non-accrual loan totaling
$125,000 during the current quarter. The portion of nonaccrual
loans guaranteed by government agencies totaled $801,000, $818,000
and $780,000 at June 30, 2023, March 31, 2023 and June 31, 2022,
respectively. There were no loans, one loan totaling $934,000, and
one loan totaling $255,000, 90 days or more past due and still
accruing and in the process of collection at June 30, 2023, March
31, 2023, and June 30, 2022 respectively. Accruing loans past due
between 30 and 89 days at June 30, 2023, were $1.6 million,
compared to $12.4 million at March 31, 2023, and $6.8 million at
June 30, 2022. The decrease in accruing loans past due between
30-89 days from the prior quarter-end was primarily due to timing
of borrower payments.
At June 30, 2023, the Company’s allowance for credit losses for
loans was $19.1 million, or 0.95% of total loans, compared to $20.4
million, or 1.0% of total loans, at March 31, 2023 and $17.8
million, or 0.89% of total loans, at June 30, 2022. We recorded net
charge-offs of $60,000 for the second quarter of 2023, compared to
net charge-offs of $315,000 in the prior quarter of 2023 and net
charge-offs of $2.5 million in the same quarter of 2022.
In accordance with acquisition accounting, acquired loans were
recorded at their estimated fair value, which resulted in a net
discount to the loans’ contractual amounts. Credit discounts are
included in the determination of fair value and as a result, no
allowance for credit losses is recorded for acquired loans at the
acquisition date. However, the allowance for credit losses includes
an estimate for credit deterioration of acquired loans that occurs
after the date of acquisition, which is included in the loan loss
provision in the period that the deterioration occurred. The
discount recorded on the acquired loans is not reflected in the
allowance for credit losses on loans or the related allowance
coverage ratios. As of June 30, 2023, acquired loans net of their
discount totaled $234.7 million with a remaining net discount on
these loans of $331,000, compared to $247.9 million of acquired
loans with a remaining net discount of $371,000 at March 31, 2023,
and $330.3 million of acquired loans with a remaining net discount
of $481,000 at June 30, 2022. The net discount includes a credit
discount based on estimated losses in the acquired loans partially
offset by a premium, if any, based market interest rates on the
date of acquisition.
Deposits and Borrowings
Deposits totaled $2.1 billion at both June 30, 2023, and March
31, 2023, compared to $2.3 billion at June 30, 2022. The deposit
mix shifted, in part, due to interest rate sensitive clients moving
a portion of their non-operating deposit balances from lower
costing deposits, including noninterest bearing deposits, into
higher costs money market and time deposits. At June 30, 2023,
noninterest bearing deposits totaled $664.1 million, or 30.9% of
total deposits, compared to $705.9 million, or 33.2% of total
deposits at March 31, 2023, and $789.3 million, or 35.0% of total
deposits at June 30, 2022.
Our business, balance sheet and depositor profile differ
substantially from the banking institutions that have been the
focus of the recent bank failures. We consider our deposit base to
be seasoned, stable and well-diversified, and we do not have any
significant industry concentrations among our non-insured deposits.
We also offer an insured cash sweep product (ICS) that allows
customers to insure deposits above FDIC insurance limits. At June
30, 2023, our average deposit account size (excluding public
funds), calculated by dividing period-end deposits by the
population of accounts with balances, was approximately
$58,000.
At both June 30, 2023 and March 31, 2023, the Company had
outstanding junior subordinated debt, net of fair value
adjustments, related to junior subordinated deferrable interest
debentures assumed in connection with its previous acquisitions
totaling $8.5 million, compared to $8.4 million at June 30, 2022.
At both June 30, 2023 and March 31, 2023, the Company also had
outstanding subordinated debt, net of costs to issue, totaling
$63.8 million, compared to $63.6 million at June 30, 2022.
At June 30, 2023, March 31, 2023 and June 30, 2022, the Company
had no other borrowings outstanding.
Shareholders’ Equity
Shareholders’ equity totaled $307.0 million at June 30, 2023,
compared to $313.5 million at March 31, 2023, and $320.6 million at
June 30, 2022. The decrease at June 30, 2023 reflects repurchases
of $9.1 million of common stock, $1.2 million of accrued cash
dividends payable and a $3.6 million increase in accumulated other
comprehensive loss, net of taxes, during the current quarter,
partially offset by $7.2 million of net income during the current
quarter. In addition, shareholder’s equity was negatively impacted
by the adoption of CECL in the first quarter of 2023, which
resulted in an after-tax decrease to opening retained earnings of
$491,000. At June 30, 2023, 133,960 shares remained available for
future purchases under the Company’s current stock repurchase
plan.
About BayCom Corp
The Company, through its wholly owned operating subsidiary,
United Business Bank, offers a full-range of loans, including SBA,
CalCAP, FSA and USDA guaranteed loans, and deposit products and
services to businesses and their affiliates in California,
Washington, New Mexico and Colorado. The Bank is an Equal Housing
Lender and a member of FDIC. The Company’s common stock is listed
on the NASDAQ Global Select Market under the symbol “BCML”. For
more information, go to www.unitedbusinessbank.com.
Forward-Looking Statements
This release, as well as other public or shareholder
communications by the Company, may contain forward-looking
statements, including, but not limited to, (i) statements regarding
the financial condition, results of operations and business of the
Company, (ii) statements about the Company’s plans, objectives,
expectations and intentions and other statements that are not
historical facts and (iii) other statements identified by the words
or phrases “will likely result,” “are expected to,” “will
continue,” “is anticipated,” “estimate,” “project,” “intends” or
similar expressions that are intended to identify “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements are not historical
facts but instead are based on current beliefs and expectations of
the Company’s management and are inherently subject to significant
business, economic and competitive uncertainties and contingencies,
many of which are beyond the Company’s control. In addition, these
forward-looking statements are subject to assumptions with respect
to future business strategies and decisions that are subject to
change.
There are a number of factors that could cause future results to
differ materially from historical performance and these
forward-looking statements. Factors which could cause actual
results to differ materially from the results anticipated or
implied by our forward-looking statements include, but are not
limited to: potential adverse impacts to economic conditions in our
local market areas, other markets where the Company has lending
relationships, or other aspects of the Company’s business
operations or financial markets, including, without limitation, as
a result of employment levels, labor shortages and the effects of
inflation, a potential recession or slowed economic growth caused
by increasing political instability from acts of war including
Russia’s invasion of Ukraine, as well as supply chain disruptions;
higher inflation and current and future monetary policies of the
Federal Reserve in response thereto; the impact of bank failures or
adverse developments at other banks and related negative press
about the banking industry in general on investor and depositor
sentiment; review of the Company’s accounting, accounting policies
and internal control over financial reporting; risks and
uncertainties related to the recent restatement of certain of our
historical consolidated financial statements; the subsequent
discovery of additional adjustments to the Company’s previously
issued financial statements; expected revenues, cost savings,
synergies and other benefits from our recent acquisition of Pacific
Enterprise Bancorp might not be realized within the expected time
frames or at all and costs or difficulties relating to integration
matters, including but not limited to customer and employee
retention, might be greater than expected; future acquisitions by
the Company of other depository institutions or lines of business;
fluctuations in interest rates; the risks of lending and investing
activities, including changes in the level and direction of loan
delinquencies and write-offs and changes in estimates of the
adequacy of the allowance for credit losses; the Company's ability
to access cost-effective funding; fluctuations in real estate
values and both residential and commercial real estate market
conditions; demand for loans and deposits in the Company's market
area; increased competitive pressures; changes in management’s
business strategies; and other factors described in the Company’s
latest Annual Report on Form 10-K and Quarterly Reports on Form
10-Q and other filings with the Securities and Exchange Commission
(“SEC”) that are available on our website at
www.unitedbusinessbank.com and on the SEC's website at
www.sec.gov.
The factors listed above could materially affect the Company’s
financial performance and could cause the Company’s actual results
for future periods to differ materially from any opinions or
statements expressed with respect to future periods in any current
statements.
The Company does not undertake - and specifically declines any
obligation - to publicly release the result of any revisions, that
may be made to any forward-looking statements to reflect events or
circumstances after the date of such statements or to reflect the
occurrence of anticipated or unanticipated events whether as a
result of new information, future events or otherwise, except as
may be required by law or NASDAQ rules. When considering
forward-looking statements, you should keep in mind these risks and
uncertainties. You should not place undue reliance on any
forward-looking statement, which speaks only as of the date
made.
BAYCOM CORP
STATEMENTS OF COMPREHENSIVE
INCOME (UNAUDITED)
(In thousands, except per share
data)
Three months ended
Six months ended
June 30,
March 31,
June 30,
June 30,
June 30,
2023
2023
2022
2023
2022
(As Restated)
(As Restated)
(As Restated)
Interest income
Loans, including fees
$
26,667
$
26,255
$
22,984
$
52,922
$
45,911
Investment securities
1,693
1,640
1,531
3,333
2,928
Fed funds sold and interest-bearing
balances in banks
2,560
1,829
806
4,389
1,017
FHLB dividends
196
188
158
384
307
FRB dividends
144
144
140
288
261
Total interest and dividend income
31,260
30,056
25,619
61,316
50,424
Interest expense
Deposits
5,881
3,700
1,453
9,581
2,923
Subordinated debt
895
896
895
1,791
1,791
Junior subordinated debt
203
203
104
406
190
Total interest expense
6,979
4,799
2,452
11,778
4,904
Net interest income
24,281
25,257
23,167
49,538
45,520
(Reversal of) provision for credit
losses
(1,260
)
275
2,623
(985
)
2,630
Net interest income after (reversal of)
provision for credit losses
25,541
24,982
20,544
50,523
42,890
Noninterest income
Gain on sale of loans
68
412
299
480
1,436
Loss on equity securities
(917
)
(896
)
(1,841
)
(1,813
)
(3,609
)
Service charges and other fees
882
885
718
1,767
1,348
Loan servicing fees and other fees
593
410
607
1,003
1,181
Income (loss) on investment in SBIC
fund
225
489
21
714
218
Bargain purchase gain
—
—
—
—
1,665
Other income and fees
235
261
376
496
572
Total noninterest income
1,086
1,561
180
2,647
2,811
Noninterest expense
Salaries and employee benefits
10,745
11,036
9,277
21,781
19,587
Occupancy and equipment
1,974
2,027
1,920
4,001
4,346
Data processing
1,616
1,465
1,666
3,081
3,939
Other expense
2,222
2,001
2,347
4,223
5,659
Total noninterest expense
16,557
16,529
15,210
33,086
33,531
Income before provision for income
taxes
10,070
10,014
5,514
20,084
12,170
Provision for income taxes
2,864
2,823
1,607
5,687
3,034
Net income
$
7,206
$
7,191
$
3,907
$
14,397
$
9,136
Net income per common share:
Basic
$
0.59
$
0.57
$
0.29
$
1.16
$
0.70
Diluted
0.59
0.57
0.29
1.16
0.70
Weighted average shares used to compute
net income per common share:
Basic
12,228,206
12,699,476
13,575,995
12,462,539
13,114,054
Diluted
12,228,206
12,699,476
13,575,995
12,462,539
13,114,054
Comprehensive income
Net income
$
7,206
$
7,191
$
3,907
$
14,397
$
9,136
Other comprehensive loss:
Change in unrealized loss on
available-for-sale securities
(4,999
)
(1,821
)
(4,372
)
(6,820
)
(12,365
)
Deferred tax benefit
1,437
524
1,258
(1,960
)
3,558
Other comprehensive loss, net of tax
(3,562
)
(1,297
)
(3,114
)
(8,780
)
(8,807
)
Comprehensive income
$
3,644
$
5,894
$
793
$
5,617
$
329
BAYCOM CORP
STATEMENTS OF CONDITION
(UNAUDITED)
(In thousands)
June 30,
March 31,
June 30,
2023
2023
2022
(As Restated)
(As Restated)
Assets
Cash and due from banks
$
36,637
$
28,850
$
35,233
Federal funds sold and interest-bearing
balances in banks
213,562
168,688
319,281
Cash and cash equivalents
250,199
197,538
354,514
Time deposits in banks
1,992
2,241
2,839
Investment securities available-for-sale
(AFS)
146,506
152,427
162,490
Equity securities
11,912
12,834
14,810
Federal Home Loan Bank ("FHLB") stock, at
par
11,313
10,679
10,679
Federal Reserve Bank ("FRB") stock, at
par
9,616
9,609
9,588
Loans, net of deferred fees
2,013,307
2,044,536
2,005,004
Allowance for credit losses for loans
(19,100
)
(20,400
)
(17,800
)
Premises and equipment, net
13,039
13,008
13,920
Other real estate owned ("OREO")
—
21
21
Core deposit intangible
4,527
4,832
6,234
Cash surrender value of bank owned life
insurance policies, net
22,528
22,359
21,891
Right-of-use assets
15,270
15,706
12,243
Goodwill
38,838
38,838
38,838
Interest receivable and other assets
47,539
43,832
42,758
Total Assets
$
2,567,486
$
2,548,060
$
2,678,029
Liabilities and Shareholders’ Equity
Noninterest bearing deposits
$
664,096
$
705,941
$
789,293
Interest bearing deposits
Transaction accounts and savings
775,117
799,484
1,025,004
Premium money market
248,730
232,404
145,077
Time deposits
459,123
389,940
295,454
Total deposits
2,147,066
2,127,769
2,254,828
Junior subordinated deferrable interest
debentures, net
8,524
8,504
8,443
Subordinated debt, net
63,796
63,754
63,627
Salary continuation plans
4,955
4,921
4,617
Lease liabilities
15,947
16,329
12,761
Interest payable and other liabilities
20,184
13,311
13,198
Total Liabilities
2,260,472
2,234,588
2,357,474
Shareholders’ Equity
Common stock, no par value
187,866
196,772
216,366
Accumulated other comprehensive loss, net
of tax
(16,420
)
(12,858
)
(6,641
)
Retained earnings
135,568
129,558
110,830
Total shareholders’ equity
307,014
313,472
320,555
Total Liabilities and Shareholders’
Equity
$
2,567,486
$
2,548,060
$
2,678,029
BAYCOM CORP
FINANCIAL HIGHLIGHTS
(UNAUDITED)
(In thousands, except per share
data)
At and for the three months
ended
At and for the six months
ended
June 30,
March 31,
June 30,
June 30,
June 30,
Selected Financial Ratios and Other
Data:
2023
2023
2022
2023
2022
(As Restated)
(As Restated)
(As Restated)
Performance Ratios:
Return on average assets (1)
1.13
%
1.14
%
0.57
%
1.13
%
0.68
%
Return on average equity (1)
9.22
9.02
4.81
9.12
5.80
Yield on earning assets (1)
5.18
5.07
3.97
5.15
4.00
Rate paid on average interest-bearing
liabilities
1.82
1.35
0.62
1.60
0.63
Interest rate spread - average during the
period
3.36
3.72
3.35
3.55
3.37
Net interest margin (1)
4.02
4.26
3.59
4.16
3.61
Loan to deposit ratio
93.77
96.09
88.92
93.77
88.92
Efficiency ratio (2)
65.27
61.63
65.15
63.40
69.38
Charge-offs, net
$
60
$
315
$
2,523
$
375
$
2,530
Per Share Data:
Shares outstanding at end of period
11,900,022
12,443,977
13,471,363
11,900,022
13,471,363
Average diluted shares outstanding
12,228,206
12,699,476
13,575,995
12,462,539
13,114,054
Diluted earnings per share
$
0.59
$
0.57
$
0.29
$
1.16
$
0.70
Book value per share
25.80
25.19
23.80
25.82
23.80
Tangible book value per share (3)
22.16
21.68
20.45
22.16
20.45
Asset Quality Data:
Nonperforming assets to total assets
(4)
0.50
%
0.51
%
0.40
%
Nonperforming loans to total loans (5)
0.64
%
0.64
%
0.53
%
Allowance for credit losses on loans to
nonperforming loans (5)
148.86
%
155.84
%
166.98
%
Allowance for credit losses on loans to
total loans
0.95
%
1.00
%
0.89
%
Classified assets (graded substandard and
doubtful)
$
21,546
$
20,863
$
24,640
Total accruing loans 30‑89 days past
due
1,623
12,353
6,817
Total loans 90 days past due and still
accruing
—
—
255
Capital Ratios (6):
Tier 1 leverage ratio — Bank
13.05
%
13.26
%
12.30
%
Common equity tier 1 — Bank
16.60
%
16.40
%
16.29
%
Tier 1 capital ratio — Bank
16.60
%
16.40
%
16.29
%
Total capital ratio — Bank
17.59
%
17.43
%
17.19
%
Equity to total assets — end of period
11.97
%
12.30
%
11.97
%
Tangible equity to tangible assets — end
of period (3)
10.46
%
10.77
%
10.46
%
Loans:
Real estate
$
1,816,355
$
1,825,633
$
1,723,751
Non-real estate
183,780
205,458
271,660
Nonaccrual loans
12,831
13,090
10,405
Mark to fair value at acquisition
331
371
(481
)
Total Loans
2,013,297
2,044,552
2,005,335
Net deferred fees on loans (7)
10
(16
)
(331
)
Loans, net of deferred fees
$
2,013,307
$
2,044,536
$
2,005,004
Other Data:
Number of full-service offices
34
34
34
Number of full-time equivalent
employees
383
366
359
(1)
Annualized.
(2)
Total noninterest expense as a percentage
of net interest income and total noninterest income.
(3)
Represents a non-GAAP financial measure.
See “Non-GAAP Financial Measures” below.
(4)
Nonperforming assets consist of nonaccrual
loans, accruing loans that are 90 days or more past due, and other
real estate owned.
(5)
Nonperforming loans consist of nonaccrual
loans and accruing loans that are 90 days or more past due.
(6)
Capital ratios are for United Business
Bank only.
(7)
Deferred fees include $2,800, $94,000 and
$388,000 as of June 30, 2023, December 31, 2022, and June 30, 2022,
respectively, in fees related to PPP loans.
Non-GAAP Financial Measures:
In addition to results presented in accordance with generally
accepted accounting principles utilized in the United States
(“GAAP”), this earnings release contains the tangible book value
per share, a non-GAAP financial measure. Tangible book value per
share is calculated by dividing tangible common shareholders’
equity by the number of common shares outstanding at the end of the
period. Tangible common shareholders’ equity excludes intangible
assets from shareholders’ equity. For this financial measure, the
Company’s intangible assets are goodwill and core deposit
intangibles. The Company believes that this measure is consistent
with the capital treatment by our bank regulatory agencies, which
excludes intangible assets from the calculation of risk-based
capital ratios, and presents this measure to facilitate comparison
of the quality and composition of the Company’s capital over time
in comparison to its peers. Non-GAAP financial measures have
inherent limitations, are not required to be uniformly applied, and
are not audited. Further, these non-GAAP financial measure should
not be considered in isolation or as a substitute for the
comparable financial measures determined in accordance with GAAP
and may not be comparable to similarly titled measures reported by
other companies.
Reconciliation of the GAAP and non-GAAP financial measures is
presented below:
Non-GAAP Measures
(In thousands, except per share
data)
June 30,
March 31,
June 30,
2023
2023
2022
Tangible Book Value:
Total common shareholders’ equity
(GAAP)
$
307,014
$
313,472
$
320,555
less: Goodwill and other intangibles
43,365
43,670
45,072
Tangible common shareholders’ equity
(Non-GAAP)
$
263,649
$
269,802
$
275,483
Total assets (GAAP)
$
2,567,486
$
2,548,060
$
2,678,029
less: Goodwill and other intangibles
43,365
43,670
45,072
Total tangible assets (Non-GAAP)
$
2,524,121
$
2,504,390
$
2,632,957
Equity to total assets (GAAP)
11.96
%
12.30
%
11.97
%
Tangible equity to tangible assets
(Non-GAAP)
10.45
%
10.77
%
10.46
%
Book value per share (GAAP)
$
25.80
$
25.19
$
23.80
Tangible book value per share
(Non-GAAP)
$
22.16
$
21.68
$
20.45
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230726522525/en/
BayCom Corp Keary Colwell, 925-476-1800
kcolwell@ubb-us.com
BayCom (NASDAQ:BCML)
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