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.
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.
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.
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.
|(Dollars in thousands except income per share amounts)|
|March 31, 2018||December 31, 2017||March 31, 2017|
|Net income (loss)||$||4,069||$||(839||)||$||1,418|
|Diluted earnings (loss) per common share||$||0.54||$||(0.12||)||$||0.26|
|Return on average assets||1.31||%||-0.3||%||0.83||%|
|Return on average equity||13.41||%||-2.9||%||7.17||%|
|Net Interest margin||4.27||%||3.96||%||4.02||%|
|Net charge-offs/(recoveries) to average loans||-0.01||%||0.00||%||0.00||%|
|At Period End|
|Loans held for sale||-||3,245||4,383|
|Mark to market on acquired loans||(7,656||)||(8,697||)||(4,717||)|
|Classified assets (Graded substandard and doubtful)||$||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||%|
|Book value per share||$||16.32||$||15.82||$||14.54|
|Tangible book value per share||14.34||13.81||14.41|
|Tangible common equity to tangible assets||8.78||%||8.41||%||11.32||%|
|Total risk-based capital ratio-Bank||13.73||%||12.94||%||14.32||%|
|Full-time equivalent employees||158||158||107|
|BALANCE SHEET (UNAUDITED)|
|(Dollars in thousands)|
|March 31, 2018||December 31, 2017||March 31, 2017|
|Cash and due from banks||$||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|
|Interest receivable and other assets||12,377||14,062||14,005|
|Liabilities and Shareholders' Equity|
|Trust Preferred Subordinated Debt Debentures, net||5,402||5,387||-|
|Interest payable and other liabilities||9,091||11,467||7,865|
|Common stock, no par value||81,739||81,594||47,632|
|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||$||697,398|
|STATEMENTS OF INCOME AND COMPREHENSIVE INCOME|
|(Dollars in thousands, except for per share data)|
|Three Months Ended|
|March 31,||December 31,||March 31,|
|Interest income - Non RE||$||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 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|
|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|
|Total non-interest income||1,726||1,418||736|
|Salaries and benefits||4,914||5,303||3,082|
|Core deposit premium amortization||289||277||83|
|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||)||$||1,418|
|Net income (loss) per common share:|
|Weighted average shares used to compute net income (loss) per common share:|
|Net income (loss)||$||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|
Keary Colwell, 925-476-1800
Source: BayCom Corp