California BanCorp Profits Increased 50% to $2.1 Million, or $0.33 per Share in 3Q17; Earnings Grew 73% to $5.6 Million or $0.90 per share, YTD; Momentum Accelerates with ROAA Up to 1.00% and ROATCE Growing to 10.93% in 3Q17

OAKLAND, Calif., Oct. 26, 2017 (GLOBE NEWSWIRE) -- California BanCorp (OTCQX:CALB) (formerly OTCQX: CABC), the holding company for California Bank of Commerce, a San Francisco Bay Area business bank, today reported that profitability continues to accelerate, fueled by strong loan and deposit growth, a healthy net interest margin and growing operating efficiencies in the third quarter and first nine months of 2017. All financial results are unaudited and past periods have been adjusted to reflect the 5% stock dividend paid in August 2017.

Earnings grew 50% to $2.1 million, or $0.33 per diluted share, in the third quarter compared to $1.4 million, or $0.23 per diluted share, in the third quarter of 2016. Return on average assets (ROAA) improved to 1.00% and return on average tangible common equity (ROTCE) was 10.93% in the third quarter of 2017. Year to date, earnings grew 73% to $5.6 million, or $0.90 per diluted share, from $3.3 million, or $0.55 per diluted share, in the first nine months of 2016.

“We posted record profits in the third quarter of 2017, while making investments in our franchise to expand into new markets in the San Francisco Bay Area,” said Terry A. Peterson, President and CEO. “During the year, we formed a Bank Holding Company, opened a loan production office in Walnut Creek, and hired several of the best bankers in the region to expand our leadership capacity:

  • Bill Del Biaggio, Jr. one of the regions most respected bankers, joined us in October to build our business relationships, particularly in the South Bay Region.
  • Roxann Middleton Burns also joined us in October and will lead the new Emerging Business Division, which includes SBA, Small Business and CRA activities.
  • Anthony Thompson joined us in September and will focus on serving businesses in the East Bay, with particular expertise in nonprofit organizations.
  • Doug Stoveland joined us in June as Chief Risk/Chief Credit Officer and brings extensive leadership experience in credit administration, risk management, strategy, and specialty lending.

“The demand for our customized commercial lending and treasury management solutions continues to accelerate as we become better known by the Greater Bay Area business community. Our executive management team continues to strategically execute our business plan to attract and retain clients in this competitive market,” said Stephen Cortese, Chairman of the Board. “Our third quarter and year-to-date financial performance demonstrates the soundness of our strategy.”

Financial Highlights

Third Quarter 2017 vs. Second Quarter 2017 and Third Quarter of 2016

  • Net income grew 50% to $2.1 million, or $0.33 per share, compared to $1.4 million, or $0.23 per share, in the third quarter a year ago and increased from $1.9 million, or $0.30 per share, earned in the preceding quarter.
  • ROAA improved to 1.00% and ROTCE was 10.93% in the third quarter of 2017.
  • Net interest margin contracted 13 basis points to 4.15%, from 4.28% in the preceding quarter and expanded 3 basis points from 4.12% in the third quarter a year ago. While overall borrowings were down, compared to the prior year, their cost increased. Deposit costs rose during the third quarter, bringing total cost of funds to 0.80% from 0.64% in the second quarter of 2017 and 0.55% a year ago.
  • The efficiency ratio, which measures operating expenses as a percent of revenue, improved to 60.34% from 63.83% in the third quarter a year ago, and was also slightly higher than the 57.25% achieved in the preceding quarter.
  • Net operating expense to average assets declined to 2.18% from 2.29% a year ago.
  • Total assets increased $84.5 million, or 11%, to $853.2 million at quarter-end compared to $768.7 million a year ago.
  • Total loans, net of deferred costs, grew 18% to $719.2 million from $608.5 million a year ago, an increase of $110.7 million. Of the loan growth, 53% were commercial and industrial loans.
  • Total deposits grew by $92.0 million, or 14%, to $748.6 million as of September 30, 2017, compared to $656.6 million a year ago.
  • Noninterest-bearing deposits increased to $292.0 million, up 8% from a year ago, an increase of $21.8 million.
  • Tangible book value per common share increased 10% to $12.04 as of September 30, 2017, compared to $10.90 a year ago.
  • Paid a 5% stock dividend on August 31, 2017. All financial results including past periods have been adjusted to reflect the dividend.

First Nine Months 2017 vs. First Nine Months 2016

  • Net income grew 73% to $5.6 million, or $0.90 per share, during the nine months ended September 30, 2017 compared to $3.3 million, or $0.55 per share, in the like period of 2016.
  • ROAA improved to 0.95% and ROTCE was 10.29% for the first nine months of 2017.
  • The efficiency ratio improved significantly to 59.01% from 66.93% in the nine months ended September 30, 2017, compared to same period a year ago.
  • The ratio of net operating expense to average assets improved to 2.56% in 2017 from 2.90% during the prior year period.

Peer Comparisons

“Our performance metrics continue to improve and compare favorably with the 535 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*
3Q17 2Q17
Return on average assets 1.00% 0.83%
Return on average equity 10.93% 8.38%
Net interest margin 4.15% 3.64%
Efficiency ratio 60.34% 67.33%
Net operating expense/average assets 2.18% 2.04%
Nonperforming loans/loans 0.14% 1.29%
Allowance for loan losses/loans 1.25% 1.22%
Allowance for loan losses/NPAs 887% 73.25%

* 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.

“Our ability to attract the most experienced bankers in the region is a competitive advantage for us,” said Peterson. “We are confident these investments we are making in infrastructure and banking talent will insure our future success.”

The effective tax rate for the third quarter of 2017 was 34.8% compared to 24.3% for the second quarter of 2017 and 38.8% for the third quarter a year ago. The lower tax rate for the second quarter was primarily the result of tax benefits accrued following the exercise of stock options during this period.

Credit Quality

Credit quality remains strong, with nonperforming assets (“NPAs”) to total assets at 0.12% at September 30, 2017, compared to 0.24% at September 30, 2016. Nonperforming loans decreased to $1.0 million at the end of the third quarter, down from $3.0 million at June 30, 2017, and $1.8 million a year ago.

“The loan loss reserve increased by $300,000 for the quarter and by $1.9 million from a year ago, to $9.0 million at September 30, 2017. The ratio of reserves to total loans was 1.25% on September 30, 2017, up from 1.17% at September 30, 2016,” said Chief Credit Officer Doug Stoveland.

Please see our detailed Third Quarter 2017 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
30-Sep-17 30-Jun-17 30-Sep-16 $ %
Interest Income$8,995 $8,606 $7,539 $1,456 19%
Interest Expense (923) (712) (565) (358) 63%
Net Interest Income Before Provision 8,072 7,894 6,974 1,098 16%
Provision to the Loan Loss Reserve (296) (1,263) (457) 161 -35%
Net Interest Income After Provision$7,776 $6,631 $6,517 $1,259 19%
Non-interest Income 786 782 768 18 2%
Non-interest Expense (5,345) (4,967) (5,008) (337) 7%
Income Before Tax Provision 3,217 2,446 2,277 940 41%
Provision for Income Taxes (1,121) (595) (883) (238) 27%
Net Income$2,096 $1,851 $1,394 $702 50%
Preferred Dividends - - - - 0%
Income to Common Shareholders$2,096 $1,851 $1,394 $702 50%
Basic Earnings per Common share$0.33 $0.30 $0.23 $0.101 45%
Weighted Average Shares Outstanding 6,384,149 6,227,482 6,136,099
Return on Average Assets 1.00% 0.94% 0.76%
Return on Average Tangible Common Equity 10.93% 10.22% 8.30%
Merger Expenses$- $- $66
Non-interest Expense to Average Total Assets* 2.56% 2.51% 2.72%
Net Operating Expense to Average Total Assets** 2.18% 2.12% 2.29%
Efficiency Ratio* 60.34% 57.25% 63.83%
*Excludes one-time merger expenses
**Excludes one-time merger expenses and includes non-interest income


CALIFORNIA BANCORP
UNAUDITED SUMMARY FINANCIAL STATEMENTS
INCOME STATEMENT
($ Thousands)
Nine Months Ended Year Over Year Change
30-Sep-17 30-Sep-16 $ %
Interest income$25,427 $21,465 $3,962 18%
Interest expense (2,169) (1,498) (671) 45%
Net interest income before provision 23,258 19,967 3,291 16%
Provision to the Loan Loss Reserve (2,110) (991) (1,119) 113%
Net interest income after provision$21,148 $18,976 $2,172 11%
Non-interest income 2,325 2,084 241 12%
Non-interest expense (15,097) (15,566) 469 -3%
Income before tax provision 8,376 5,494 2,882 52%
Provision for income taxes (2,754) (2,087) (667) 32%
Net income$5,622 $3,407 $2,215 65%
Preferred Dividends - 152 (152) -100%
Income to Common Shareholders$5,622 $3,255 $2,367 73%
Basic Earnings per Common share$0.90 $0.54 $0.353 65%
Weighted average shares outstanding 6,260,391 5,975,966
Return on Average Assets 0.95% 0.67%
Return on Avg. Tangible Common Equity 10.29% 7.16%
Merger Expenses$- $807
Net Operating Expense to Average Total Assets* 2.56% 2.90%
Efficiency Ratio* 59.01% 66.93%
*Excludes one-time merger expenses


CALIFORNIA BANCORP
UNAUDITED SUMMARY FINANCIAL STATEMENTS
BALANCE SHEET
($ Thousands)
Year Over Year Change
Assets30-Sep-17 30-Jun-17 30-Sep-16 $ %
Total Cash and Investments$84,009 $71,088 $128,589 $(44,580) -35%
Loans, net of Deferred Costs/Fees 719,162 702,835 608,459 110,703 18%
Loan Loss Reserve (9,000) (8,700) (7,100) (1,900) 27%
Other 59,009 41,549 38,781 20,228 52%
Total Assets$853,180 $806,772 $768,729 $84,451 11%
Liabilities & Shareholders' Equity
Non-interest Bearing Deposits$292,047 $276,654 $270,230 $21,817 8%
Interest Bearing Deposits 456,576 429,216 386,355 70,221 18%
Total Deposits$748,623 $705,870 $656,585 $92,038 14%
Total Borrowings and Other Liabilities 20,110 19,113 37,278 (17,168) -46%
Total Liabilities$768,733 $724,983 $693,863 $74,870 11%
Shareholder's Equity 84,447 81,789 74,866 9,581 13%
Total Liabilities & Shareholders' Equity$853,180 $806,772 $768,729 $84,451 11%
Common Shares Outstanding 6,394,963 6,341,069 6,165,340 229,623 4%
Tangible Book Value per Common Share$12.04 $11.70 $10.90 $1.13 10%
Year Over Year Change
Average Balances - Period3Q 2017 2Q 2017 3Q 2016 $ %
Total Assets$828,476 $792,739 $729,804 $98,672 14%
Total Loans$702,326 $704,724 $584,264 $118,062 20%
Total Investments$14,133 $14,674 $16,911 $(2,778) -16%
Total Earning Assets$772,019 $740,647 $673,173 $98,846 15%
Total Non-Interest Bearing Deposits$284,174 $264,101 $244,336 $39,838 16%
Total Deposits$725,141 $670,080 $618,544 $106,597 17%
Total Borrowings$15,397 $41,125 $33,921 $(18,524) -55%
Tangible Common Equity$76,094 $72,687 $66,657 $9,437 14%
Average Yields and Cost3Q 2017 2Q 2017 3Q 2016
Net Interest Margin 4.15% 4.28% 4.12%
Yield on Earning Assets 4.62% 4.66% 4.45%
Cost of Interest Bearing Liabilities 0.80% 0.64% 0.55%
End of Period30-Sep-17 30-Jun-17 30-Sep-16
Loan Loss Reserve to Total Loans 1.25% 1.24% 1.17%
Nonperforming loans/loans 0.14% 0.42% 0.30%
NPAs (including accruing TDRs) to Total Assets 0.12% 0.37% 0.24%
Accruing TDRs to Total Assets 0.12% 0.19% 0.14%

Source:California BanCorp