BayCom Corp Reports 2018 First Quarter Earnings of $4.1 Million

WALNUT CREEK, Calif., April 11, 2018 (GLOBE NEWSWIRE) -- BayCom Corp (the “Company”), (OTCBB:BCML), the holding company for United Business Bank (the “Bank”), announced earnings of $4.1 million or $0.54 per diluted share for the first quarter of 2018 compared to net loss of $839 thousand or $0.12 per diluted share for the fourth quarter of 2017 and $1.4 million or $0.26 per diluted share for the first quarter of 2017. The net increase during the first quarter of 2018 compared to the prior quarters was primarily due to increases in net interest income and other non-interest income. The increases in net interest income and non-interest income for the first quarter of 2018 compared to the first quarter of 2017, was partially offset by an increase in non-interest expense. The net loss during the fourth quarter of 2017 was primarily the result of a $2.7 million, or $0.37 per diluted share income tax adjustment due to a revaluation adjustment of the Company’s deferred tax asset as result of the passage of the Tax Cuts and Jobs Act (the “Tax Act”). The fourth quarter of 2017 results were also impacted by $1.2 million of acquisition-related expenses related to the Plaza Bank acquisition, which, net of tax benefit, reduced net income by $0.11 per diluted share.

George J. Guarini, President and Chief Executive Officer of the Company stated, “All of our hard work in 2017 has us poised for an exceptional 2018. Our first quarter 2018 operating results validate our growth strategies and credit culture. We are looking for new opportunities to continue to expand our geographical market reach, build market penetration, and add value for our clients and earnings per share growth for our shareholders.”

First Quarter 2018 Performance Highlights:

  • Total assets decreased slightly in the first quarter of 2018 to $1.24 billion at March 31, 2018, compared to $1.25 billion at December 31, 2017. Total assets increased by $544.4 million, or 78.1%, when compared to total assets of $697.4 million at March 31, 2017.
  • Loans, net of allowance and deferred fees, totaled $886.2 million at March 31, 2018, compared to $890.1 million at December 31, 2017 and $531.4 million at March 31, 2017.
  • Deposits totaled $1.1 billion at March 31, 2018 and $1.1 billion at December 31, 2017 and increased from $610.0 million at March 31, 2017. Non-interest bearing deposits represented 29.1% of total deposits at March 31, 2018 compared to 29.6% at December 31, 2017, and 23.4% at March 31, 2017.
  • Non-accrual loans represented 0.03% of total loans as of March 31, 2018, compared to 0.02% and 0.19% of total loans as of December 31, 2017 and March 31, 2017, respectively.
  • The Bank remains a “well-capitalized” institution for regulatory capital purposes at March 31, 2018.

Loans and Credit Quality

Total loans decreased $3.5 million, or 0.4%, to $891.3 million at March 31, 2018, from $894.8 million at December 31, 2017 and increased $355.8 million, or 66.4%, from $535.5 million at March 31, 2017. The decrease during the first quarter of 2018 compared to the prior quarter was the result of loans sold and prepayments on loans in excess of new loan originations. Two acquisitions made by the Company in 2017 increased loans by $481.4 million since March 31, 2017 which was partially offset by loans sold and principal repayments. Loan originations in the first quarter of 2018 were spread throughout our markets with the majority focused in Solano, Contra Costa and San Mateo Counties, with commercial and residential real estate secured loans accounting for the majority of the originations during the quarter. Loan originations for quarter ended March 31, 2018 totaled $29.2 million compared to $31.6 million during the fourth quarter of 2017 and $43.5 million during the first quarter of 2017.

Non-accrual loans totaled $229 thousand, or 0.03% of total loans, at March 31, 2018, compared to $179 thousand, or 0.02% of total loans, at December 31, 2017 and $992 thousand, or 0.19% of total loans, at March 31, 2017. The decrease in non-accrual loans from a year ago primarily relates to repayments on delinquent loans. At March 31, 2018, accruing loans past due 30 to 89 days totaled $1.1 million, compared to $1.9 million delinquent loans at December 31, 2017 and no delinquent loans at March 31, 2017.

At March 31, 2018, our allowance for loan losses was $4.6 million, or 0.52% of total loans compared to $4.2 million, or 0.47% of total loans at December 31, 2017, and $3.9 million, or 0.73% of total loans at March 31, 2017. The allowance for loan losses plus the discount on acquired loans totaled $12.3 million, representing 1.36% of total loans at March 31, 2018 compared to $12.9 million, representing 1.45% of total loans at December 31, 2017. Included in the carrying value of loans are net discounts on acquired loans which may reduce the need for an allowance for loan losses on these loans, because they are carried at their estimated fair value on the date on which they were acquired. As of March 31, 2018, acquired loans net of their discounts totaled $378.1 million compared to $400.0 million at December 31, 2017. The provision for loan losses recorded in the first quarter of 2018 totaled $254 thousand compared to $177 thousand for the fourth quarter of 2017 and $143 thousand for the same quarter in 2017. The higher provision was primarily as a result of an increase in specific reserves on certain loans.

Deposits and Borrowings

Deposits totaled of $1.1 billion at March 31, 2018 and $1.1 billion at December 31, 2017, and $610.0 million at March 31, 2017. The increase in deposits from the same quarter a year ago was primarily attributable to the $482.2 million of deposits acquired in connection with our two bank acquisitions in 2017, and to a lesser extent, organic growth. Non-interest bearing deposits totaled $320.1 million, or 29.1% of total deposits compared $327.3 million, or 29.6%, at December 31, 2017 and $142.4 million, or 23.4%, at March 31, 2017.

At March 31, 2018 and December 31, 2017, borrowings totaled $11.4 million, which included $6.0 million in long-term secured borrowings and $5.4 million, net carrying value, of junior subordinated debentures issued in connection with the sale of trust preferred securities that were acquired through our acquisition of First ULB Corp. The Company had no borrowings at March 31, 2017.

Shareholder Equity

Total shareholders’ equity increased to $122.6 million at March 31, 2018, from $118.6 million at December 31, 2017. The increase in shareholders’ equity from the fourth quarter of 2017 was primarily due to our net income of $4.1 million.

Earnings

Net interest income, before provision for loan losses, increased slightly to $12.4 million, compared to $11.8 million in the preceding quarter primarily due to an increase in the accretion of purchase accounting adjustments on acquired loans. First quarter 2018 net interest income, before provision for loan losses, increased $5.9 million, or 91.5%, compared to $6.5 million for the same period of 2017, primarily due to the 80.0% increase in average earning assets of $523.8 million, largely due to our two bank acquisitions in 2017. Interest income on loans for the quarters ended March 31, 2018 and December 31, 2017 included $1.2 million and $983 thousand, respectively, in accretion of purchase accounting fair value adjustments on acquired loans including the recognition of revenue from purchase credit impaired loans in excess of discounts, compared to $557 thousand for the quarter ended March 31, 2017. The net discount on these purchased loans was $7.7 million, $8.7 million, and $4.7 million at March 31, 2018, December 31, 2017, and March 31, 2017, respectively. The average yield earned on loans for the quarter ended March 31, 2018 was 4.91%, compared to 4.95% for the preceding quarter and up two basis points from 4.89% for the quarter ended March 31, 2017.

The Company’s net interest margin was 4.27% for the first quarter of 2018 compared to a net interest margin of 3.96% in the preceding quarter, and 4.02% in the first quarter a year ago. Net interest margin is enhanced by the amortization of acquisition accounting discounts on loans acquired in the acquisitions. Accretion of acquisition accounting discounts on loans and the recognition of revenue from purchase credit impaired loans in excess of discounts increased our net interest margin by 41 basis points, 40 basis points and 36 basis points during the first quarter of 2018, the fourth quarter of 2017 and the first quarter of 2017, respectively. The increase in net interest margin during the first quarter of 2018 compared to the first quarter a year earlier primarily also reflects a lower cost of funds as explained below, and a higher yield on cash and investments.

Non-interest income for the first quarter of 2018 increased $307 thousand, or 21.6%, to $1.7 million, compared to $1.4 million for the prior quarter and increased $990 thousand, or 134.5%, from $736 thousand in the same quarter in 2017. The increase compared to the prior quarter primarily relates to higher gain on sale of loans and higher loan fee income. The increase in the first quarter of March 31, 2018 compared to the same period in 2017 primarily relates to increases in all categories of non-interest income over the last year. Our acquisitions and organic growth significantly increased the loan and deposit portfolios and number of loans and accounts serviced which increased all categories of non-interest income.

Non-interest expense for the first quarter 2018 totaled $8.1 million, a decrease of $1.3 million, or 13.6%, compared to the fourth quarter of 2017, an increase of $3.5 million from the first quarter of 2017. The fourth quarter of 2017 included $1.2 million in acquisition related expenses. The first quarter of 2018 was higher than the same quarter in 2017 primarily due to increased operating expenses resulting from our acquisitions and organic growth in 2017, including an increase in salary and benefits associated with the increased number of employees, an increase in occupancy expense associated with additional branch offices and an increase in data processing charges as a result of higher transaction volume.

About BayCom Corp

The Company, through its wholly owned operating subsidiary, United Business Bank, offers a full-range of loans, including SBA, FSA and USDA guaranteed loans, and deposit products and services to businesses and its affiliates in California, Washington and New Mexico. The Bank also offers business escrow services and facilitates tax free exchanges through its Bankers Exchange Division. The Bank is an Equal Housing Lender and member FDIC. The Company is traded Over the Counter Bulletin Board 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 released 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. These forward-looking statements 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.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: the expected cost savings, synergies and other financial benefits from acquisition or disposition transactions might not be realized within the expected time frames or at all and costs or difficulties relating to integration matters might be greater than expected; changes in economic conditions; legislative changes; changes in policies by regulatory agencies; 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 loan 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; competition; changes in management’s business strategies; changes in the regulatory and tax environments in which the Company operates, including the impact of the "Tax Cuts and Jobs Act" (the "TCA") on the Company's deferred tax asset, and the anticipated impact of the TCA on the Company's future earnings.

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 which 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. 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.

FINANCIAL HIGHLIGHTS
(Dollars in thousands except income per share amounts)
March 31, 2018December 31, 2017March 31, 2017
(unaudited)(unaudited)(unaudited)
Quarter-To-Date
Net income (loss)$ 4,069 $ (839)$ 1,418
Diluted earnings (loss) per common share$ 0.54 $ (0.12)$ 0.26
Return on average assets 1.31% -0.3% 0.83%
Return on average equity 13.41% -2.9% 7.17%
Efficiency ratio 57.46% 71.04% 64.23%
Net Interest margin 4.27% 3.96% 4.02%
Net charge-offs/(recoveries)$ (131)$ (23)$ (7)
Net charge-offs/(recoveries) to average loans -0.01% 0.00% 0.00%
At Period End
Total assets$ 1,241,833 $ 1,245,794 $ 697,398
Loans:
Real estate$ 792,956 $ 780,354 $ 461,299
Non-real estate 105,756 119,712 73,571
Loans held for sale - 3,245 4,383
Non-accrual loans 229 179 992
Mark to market on acquired loans (7,656) (8,697) (4,717)
Total Loans$ 891,285 $ 894,793 $ 535,528
Classified assets (Graded substandard and doubtful)$ 8,705 $ 7,017 $ 8,645
Total accruing loans 30-89 days past due 1,112 1,875 -
Allowance for loan losses 0.52% 0.47% 0.73%
Allowance for loan losses to non-accrual loans 2008.73% 2354.75% 395.67%
Non-accrual loans to total loans 0.03% 0.02% 0.19%
Total deposits$ 1,098,773 $ 1,104,305 $ 609,953
Loan-to-deposit ratio 81.12% 81.03% 87.80%
Shareholders' equity 122,567 $ 118,635 $ 79,580
Shares outstanding 7,512,227 7,496,995 5,489,293
Book value per share$ 16.32 $ 15.82 $ 14.54
Tangible book value per share 14.34 13.81 14.41
Tangible common equity to tangible assets 8.78% 8.41% 11.32%
Total risk-based capital ratio-Bank 13.73% 12.94% 14.32%
Full-time equivalent employees 158 158 107

BALANCE SHEET (UNAUDITED)
(Dollars in thousands)
March 31, 2018 December 31, 2017March 31, 2017
Assets
Cash and due from banks $ 255,467 $ 249,853$ 125,532
Investments, including Bank Owned Life Insurance policies 64,633 68,234 24,691
Loans, net of allowance for loan losses and deferred fees 886,229 890,109 531,442
Bank premises and equipment, net 8,279 8,399 1,009
Core deposit premium 4,483 4,772 719
Goodwill 10,365 10,365 -
Interest receivable and other assets 12,377 14,062 14,005
Total assets $ 1,241,833 $ 1,245,794$ 697,398
Liabilities and Shareholders' Equity
Liabilities
Deposits
Non-interest bearing $ 320,104 $ 327,309$ 142,437
Interest bearing
MMA/NOW/SVG 409,533 405,952 125,059
Premium MM 149,562 142,238 178,198
Time Deposits 219,574 228,806 164,259
Total deposits 1,098,773 1,104,305 609,953
Other borrowings 6,000 6,000 -
Trust Preferred Subordinated Debt Debentures, net 5,402 5,387 -
Interest payable and other liabilities 9,091 11,467 7,865
Total liabilities 1,119,266 1,127,159 617,818
Shareholders' Equity
Common stock, no par value 81,739 81,594 47,632
Retained earnings 40,897 36,828 31,850
Accumulated other comprehensive (loss) income (69) 213 97
Total shareholders' equity 122,567 118,635 79,580
Total liabilities and shareholders' equity $ 1,241,833 $ 1,245,794$ 697,398


STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollars in thousands, except for per share data)
Three Months Ended
March 31,December 31,March 31,
2018 2017 2017
(unaudited)(unaudited)(unaudited)
Interest income
Interest income - Non RE$ 1,399 $ 1,488 $ 974
Interest income - RE 9,674 9,398 5,475
Interest on investment securities 364 194 52
Interest on Federal funds sold and other bank deposits 907 939 344
Mark to market accretion 1,208 984 557
Total interest income 13,552 13,003 7,402
Interest expense
Interest on transaction accounts 453 475 451
Interest on time deposits 526 555 467
Interest on borrowings 159 152 -
Total interest expense 1,138 1,182 918
Net interest income 12,414 11,821 6,484
Provision for loan losses 254 117 143
Net interest income after provision for loan losses 12,160 11,704 6,341
Non-interest income
Loan fee income 245 106 57
Service charge income 87 90 48
Other fees and service charges 359 338 95
Gain on sale of loans 651 461 400
Other income 384 423 136
Total non-interest income 1,726 1,418 736
Non-interest expense
Salaries and benefits 4,914 5,303 3,082
Occupancy 975 936 569
Professional 341 468 130
Insurance 158 152 78
Data processing 708 1,487 360
Office 383 367 167
Marketing 211 183 55
Core deposit premium amortization 289 277 83
Loan expenses 41 87 51
Other miscellaneous 103 145 62
Total non-interest expense 8,125 9,405 4,637
Income before provision for income taxes 5,761 3,717 2,440
Provision for income taxes 1,694 4,556 1,022
Net income (loss)$ 4,069 $ (839)$ 1,418
Net income (loss) per common share:
Basic $ 0.54 $ (0.12)$ 0.26
Diluted$ 0.54 $ (0.12)$ 0.26
Weighted average shares used to compute net income (loss) per common share:
Basic 7,512,227 7,198,024 5,397,930
Diluted 7,512,227 7,198,024 5,411,554
Comprehensive income:
Net income (loss)$ 4,069 $ (839)$ 1,416
Other comprehensive (loss) income
Change in net unrealized gain (loss) on available-for-sale securities (400) 19 6
Deferred tax (expense) benefit 118 (8) 3
Other comprehensive (loss) income, net of tax (282) 11 9
Comprehensive income (loss)$ 3,787 $ (828)$ 1,425

BayCom Corp
Keary Colwell, 925-476-1800
kcolwell@ubb-us.com
Source: BayCom Corp


Source:BayCom Corp