BayCom Corp (“BayCom” or the “Company”) (NASDAQ: BCML), the
holding company for United Business Bank (the “Bank” or “UBB”),
announced earnings of $6.4 million, or $0.55 per diluted common
share, for the fourth quarter of 2023, compared to earnings of $6.6
million, or $0.56 per diluted common share, for the third quarter
of 2023 and $7.6 million, or $0.59 per diluted common share, for
the fourth quarter of 2022.
Net income for the fourth quarter of 2023 compared to the third
quarter of 2023 decreased $234,000 or 3.5%, primarily as a result
of a $1.3 million decrease in net interest income and a $1.7
million increase in provision for credit losses, partially offset
by a $1.0 million increase in noninterest income, a $1.4 million
decrease in noninterest expense and a $233,000 decrease in
provision for income taxes. Net income for the fourth quarter of
2023 compared to the fourth quarter of 2022 decreased $1.2 million
or 16.1%, primarily as a result of a $2.9 million decrease in net
interest income and a $1.7 million increase in provision for credit
losses, partially offset by a $1.8 million increase in noninterest
income, a $1.2 million decrease in noninterest expense and a
$419,000 decrease in provision for income taxes.
Net income for the year ended December 31, 2023 compared to the
year ended December 31, 2022 increased $3.7 million or 15.6%,
primarily as a result of a $1.2 million increase in net interest
income, a $2.4 million decrease in provision for credit losses, a
$876,000 increase in noninterest income and a $1.3 million decrease
in noninterest expenses, partially offset by a $2.0 million
increase in provision for income taxes.
George Guarini, President and Chief Executive Officer,
commented, “Our financial results for the fourth quarter and full
year 2023 underperformed our expectations. 2023 presented
challenges on various fronts, including increased deposit costs,
reduced loan demand and some specific credit quality deterioration.
Despite these challenges, our earnings improved over 2022. Overall,
our financial condition remains strong, with no observed systemic
credit weakness, and our earnings remain stable.”
Guarini concluded, “While we do not anticipate market conditions
improving in the first half of 2024, we are optimistic that the
second half of 2024 will be a turning point in loan demand and
merger and acquisition opportunities. We remain committed to
repurchasing our shares and paying cash dividends to our
shareholders with the goal of consistently enhancing value for both
our clients and shareholders.”
Fourth Quarter Performance Highlights:
- Annualized net interest margin was 3.86% for the current
quarter, compared to 4.03% in the preceding quarter and 4.40% in
the same quarter a year ago.
- Annualized return on average assets was 1.00% for the current
quarter, compared to 1.03% in the preceding quarter and 1.21% in
the same quarter a year ago.
- Assets totaled $2.6 billion at both December 31, 2023 and
September 30, 2023, compared to $2.5 billion at December 31,
2022.
- Loans, net of deferred fees, totaled $1.9 billion at December
31, 2023, compared to $2.0 billion at both September 30, 2023 and
December 31, 2022.
- Nonperforming loans totaled $13.0 million or 0.67% of total
loans at December 31, 2023, compared to $14.3 million or 0.73% of
total loans at September 30, 2023, and $15.2 million or 0.75% of
total loans at December 31, 2022.
- The allowance for credit losses for loans totaled $22.0
million, or 1.14% of total loans outstanding, at December 31, 2023,
compared to $19.8 million, or 1.01% of total loans outstanding, at
September 30, 2023, and $18.9 million, or 0.94% of total loans
outstanding, at December 31, 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 of $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 $2.3 million provision for credit losses was recorded during
the current quarter, compared to provisions for credit losses of
$674,000 and $617,000 in the prior quarter and the same quarter a
year ago, respectively.
- Deposits totaled $2.1 billion at December 31, 2023, compared to
$2.2 billion at September 30, 2023 and $2.1 billion at December 31,
2022. At December 31, 2023, noninterest-bearing deposits totaled
$646.3 million, or 30.3% of total deposits, compared to $667.3
million, or 30.9% of total deposits, at September 30, 2023, and
$773.3 million, or 37.1% of total deposits, at December 31,
2022.
- The Company repurchased 122,559 shares of common stock at an
average cost of $19.91 per share during the fourth quarter of 2023,
compared to 239,649 shares of common stock repurchased at an
average cost of $18.86 per share during the third quarter of 2023,
and 236,985 shares of common stock repurchased at an average cost
of $18.60 per share during the fourth quarter of 2022.
- On November 28, 2023, the Company announced the declaration of
a cash dividend on the Company’s common stock of $0.10 per share,
which was paid on January 12, 2024 to stockholders of record as of
December 14, 2023.
- The Bank remained a “well-capitalized” institution for
regulatory capital purposes at December 31, 2023.
Earnings
Net interest income decreased $1.3 million, or 5.2%, to $23.5
million for the fourth quarter of 2023 from $24.8 million in the
prior quarter, and decreased $2.9 million, or 11.1%, from $26.5
million in the same quarter a year ago. The decrease in net
interest income from the previous quarter reflects a decrease in
interest income on loans and an increase in interest expense on
deposits, partially offset by increases in interest income on
investment securities and federal funds sold and interest-bearing
balances in banks. The decrease in net interest income from the
same quarter in 2022 reflects an increase in interest expense on
deposits, partially offset by increases in interest income on
loans, federal funds sold and interest-bearing balances in banks,
and investment securities. Average interest-earning assets
decreased $30.4 million, or 1.2%, and increased $34.2 million, or
1.36%, for the fourth quarter of 2023 compared to the third quarter
of 2023 and the fourth quarter of 2022, respectively. The average
yield earned (annualized) on interest earning assets for the fourth
quarter of 2023 was 5.29%, compared to 5.34% for the third quarter
of 2023 and 4.91% for the fourth quarter of 2022. The average rate
paid (annualized) on interest-bearing liabilities for fourth
quarter of 2023 was 2.21%, compared to 2.04% for the third quarter
of 2023, and 0.89% for the fourth quarter of 2022. The increases in
average yield earned on interest-earning assets and the average
rate paid on interest-bearing liabilities during the current
quarter reflect rising market interest rates, including a 100
basis-point increase in the target range for federal funds at the
end of 2023, reaching a range of 5.25% to 5.50%.
Interest income on loans, including fees, decreased $1.1
million, or 3.9%, from the prior quarter to $26.2 million for the
three months ended December 31, 2023, compared to $27.2 million for
the three months ended September 30, 2023, primarily due to a nine
basis point decrease in the average loan yield and a $45.3 million
decrease in the average balance of loans. Interest income on loans,
including fees, increased $365,000, or 1.4%, for the three months
ended December 31, 2023 from $25.8 million for three months ended
December 31, 2022, primarily due to a 21 basis point increase in
the average loan yield, partially offset by a $54.8 million
decrease in the average balance of loans. The average balance of
loans was $1.9 billion for the fourth quarter of 2023, compared to
$2.0 billion for both the third quarter of 2023 and the same
quarter a year ago. The average yield on loans was 5.33% for the
fourth quarter of 2023, compared to 5.42% for the third quarter of
2023 and 5.12% for the fourth quarter of 2022. The decrease in the
average yield on loans from the third quarter of 2023 was due in
part to reversal of interest on new non-accrual loans during the
fourth quarter of 2023. The increase in the average yield on loans
from the fourth 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.
Interest income on loans included $29,000, $372,000, and
$218,000 in accretion of the net discount on acquired loans for the
three months ended December 31, 2023, September 30, 2023, and
December 31, 2022, respectively. The balance of the net discounts
on these acquired loans totaled $354,000, $419,000, and $522,000 at
December 31, 2023, September 30, 2023, and December 31, 2022,
respectively. Interest income included minimal fees earned related
to Paycheck Protection Program (“PPP”) loans in the quarters ended
December 31, 2023 and September 30, 2023, and $133,000 during the
quarter ended December 31, 2022. Interest income also included fees
related to prepayment penalties of $27,000 in the quarter ended
December 31, 2023, compared to $142,000 in the third quarter of
2023, and $335,000 in the fourth quarter of 2022. Interest income
during the fourth quarter of 2023 also included a one-time $150,000
downward adjustment to interest income related participation
payments on acquired loans, negatively impacting the average yield
on loans by three basis points during the period.
Interest income on investment securities increased $252,000, or
14.8%, to $1.9 million for the three months ended December 31,
2023, compared to $1.7 million for the three months ended September
30, 2023, and increased $354,000, or 22.1%, from $1.6 million for
the three months ended December 31, 2022. The average yield on
investment securities increased 28 basis points to 4.29% for the
three months ended December 31, 2023, compared to 4.01% for the
three months ended September 30, 2023, and increased 90 basis
points from 3.39% for the three months ended December 31, 2022. The
average balance of investment securities totaled $181.0 million for
the three months ended December 31, 2023, compared to $168.6
million and $187.5 million for the three months ended September 30,
2023 and December 31, 2022, respectively. In addition, during the
fourth quarter of 2023, we received $390,000 in cash dividends on
our FRB and FHLB stock, up 3.7% from $376,000 in the third quarter
of 2023 and up 2.9% from $379,000 in the fourth quarter of
2022.
Interest income on federal funds sold and interest-bearing
balances in banks increased $158,000, or 4.5%, to $3.7 million for
the three months ended December 31, 2023, compared to $3.5 million
for the three months ended September 30, 2023, and increased $2.0
million, or 113.6%, from $1.7 million for the three months ended
December 31, 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 eight basis points to 5.46% for the
three months ended December 31, 2023, compared to 5.38% for the
three months ended September 30, 2023, and increased 161 basis
points from 3.85% for the three months ended December 31, 2022. The
average balance of federal funds sold and interest-bearing balance
in banks totaled $267.3 million for the three months ended December
31, 2023, compared to $259.6 million and $177.4 million for the
three months ended September 30, 2023 and December 31, 2022,
respectively.
Interest expense increased $644,000, or 8.0%, to $8.7 million
for the three months ended December 31, 2023, compared to $8.0
million for the three months ended September 30, 2023, and
increased $5.6 million, or 185.5%, compared to $3.0 million for the
three months ended December 31, 2022, reflecting higher funding
costs primarily related to increased market rates of interest on
our deposits. The average balance of deposits totaled $2.1 billion
for the fourth quarter of 2023 compared to $2.2 billion for the
third quarter of 2023, and $2.1 billion for the fourth quarter of
2022. The average cost of funds for the fourth quarter of 2023 was
2.21%, compared to 2.04% for the third quarter of 2023 and 0.89%
for the fourth quarter of 2022. The increase in the average cost of
funds during the current quarter compared to the prior quarter of
2023 and the fourth quarter of 2022 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 a shift of deposits from noninterest-bearing accounts to higher
costing money market and time deposits. The average cost of
deposits for the three months ended December 31, 2023 was 1.40%,
compared to 1.27% for the three months ended September 30, 2023,
and 0.37% for the three months ended December 31, 2022. The average
balance of noninterest-bearing deposits decreased $18.7 million, or
2.78%, to $656.0 million for the three months ended December 31,
2023, compared to $674.8 million for the three months ended
September 30, 2023 and decreased $153.2 million, or 18.9%, compared
to $809.2 million for the three months ended December 31, 2022.
Annualized net interest margin was 3.86% for the fourth quarter
of 2023, compared to 4.03% for the third quarter of 2023 and 4.40%
for fourth quarter of 2022. The average yield on interest earning
assets for the fourth quarter of 2023 decreased five basis points
and increased 38 basis points over the average yields for the third
quarter of 2023 and the fourth quarter of 2022, respectively, while
the average rate paid on interest-bearing liabilities for fourth
quarter of 2023 increased 17 basis points and 132 basis points over
the average rates paid for the third quarter of 2023 and the fourth
quarter of 2022, respectively. Net interest margin in the fourth
quarter of 2023 was negatively impacted by increasing funding
costs, which outpaced on a percentage basis, increasing yields on
investment securities, fed funds sold and interest-bearing balances
in banks, and decreasing yields on loans and accretion of the net
discount.
The average yield on PPP loans, including the recognition of
deferred PPP loan fees, was 1.00% during the fourth and third
quarters of 2023, resulting in a minimal negative impact to the net
interest margin, compared to an average yield of 2.30% during the
fourth quarter of 2022 resulting in a positive impact to the net
interest margin of three basis points.
Accretion of the net discount had a minimal impact on the
average yield on loans during the fourth quarter of 2023, compared
to eight and 11 basis point increases in the average yield on loans
during the prior quarter of 2023 and the fourth quarter of 2022,
respectively. At December 31, 2023, there was a total of $3.8
million of PPP loans outstanding, with a minimal amount of
unrecognized deferred fees and costs.
The Company recorded a $2.3 million provision for credit losses
for the fourth quarter of 2023, compared to provisions of $674,000
and $617,000 for the prior quarter of 2023 and fourth quarter of
2022, respectively. The provision for credit losses in the fourth
quarter of 2023 was mainly driven by a $2.6 million increase in the
reserve for individually evaluated loans. This reserve increase was
related to one commercial real estate loan and one multifamily
loan. Based on updated appraisals received during the fourth
quarter of 2023, the underlying collateral values of these loans
experienced declines due to property specific factors and
conditions. However, this was partially offset by decreases in
outstanding loan balances, leading to lower quantitative and
qualitative reserves. Additionally, there were net charges-offs
totaling $150,000 during the fourth quarter of 2023. No changes
were made to the qualitative risk factor conclusions during the
fourth quarter of 2023. The quantitative reserve was impacted by
declines in forecasted economic conditions, specifically national
unemployment, partially offset by improvements in forecasted
national gross domestic product, both of which are key indicators
utilized to estimate credit losses.
During the quarter ended September 30, 2023, the Company
determined that a certificate of deposit-secured line of credit
loan made to a revocable living trust (the “Trust” or the
“Borrower”) was impaired as a result of the sole trustee and
beneficiary of the Trust filing for personal bankruptcy in July
2023. At June 30, 2023, the loan had an outstanding balance of $5.0
million and was secured by a $4.0 million certificate of deposit
held at the Bank. An additional $1.0 million in cash collateral
securing the loan had previously been released by the Bank into a
third-party escrow account at the request of the Borrower to be
used as a refundable retainer in connection with a separate
transaction by the Borrower. The loan matured on July 16, 2023, and
the Bank received notification that the sole trustee and
beneficiary of the Trust filed for personal bankruptcy on July 18,
2023. After receiving this notification, the Bank used the $4.0
million certificate of deposit held at the Bank to offset amounts
owed on the loan and contacted the third-party escrow agent for the
return of the additional $1.0 million of collateral. The Bank was
advised by the escrow agent that the previously escrowed funds had
been released by the escrow agent, which was done without the
Bank’s consent and contrary to the written escrow instructions. The
Bank has initiated legal action against the Borrower, the
Borrower’s related parties and the escrow agent to recover the
previously escrowed collateral. The results of the legal action and
the Bank’s ability to recover the previously escrowed collateral
are currently uncertain. The loan continues to be fully reserved
for as of December 31, 2023.
Noninterest income for the fourth quarter of 2023 increased $1.0
million, or 61.8%, to $2.7 million compared to $1.7 million in the
prior quarter of 2023, and increased $1.8 million, or 196.0%,
compared to $904,000 for the fourth quarter of 2022. The increase
in noninterest income for the current quarter compared to the prior
quarter of 2023 was primarily due to a $1.2 million increase in
gain on equity securities as a result of improvement in fair value
adjustments on these securities, partially offset by a $143,000
decrease in service charges and other fees and a $67,000 decrease
in income on investment in a Small Business Investment Company
(“SBIC”) fund. The increase in noninterest income for the current
quarter compared to the same quarter in 2022 was primarily due to a
$1.5 million increase in gain on equity securities and a $383,000
increase in income on investment in SBIC fund, partially offset by
a $112,000 decrease in service charges and other fees, a $61,000
decrease in loan servicing fees and other fees and a $33,000
decrease in gain on sale of loans.
Noninterest expense for the fourth quarter of 2023 decreased
$1.4 million, or 8.7%, to $15.1 million compared to $16.5 million
for the prior quarter of 2023, and decreased $1.2 million, or 7.6%,
compared to $16.3 million for the fourth quarter of 2022. The
decrease in noninterest expense for current quarter compared to the
prior quarter of 2023 was primarily due to a $1.3 million decrease
in salaries and employee benefits as a result of an adjustment to
bonus accruals, a $109,000 decrease in occupancy and equipment
expense, partially offset by a $19,000 increase in other expense.
The decrease in noninterest expense for the fourth quarter of 2023
compared to the fourth quarter of 2022 was primarily due to a $1.8
million decrease in salaries and employee benefits as a result of
an adjustment to bonus accruals and decrease in full-time
equivalent employees, partially offset by wage increases during
2023. This decrease was partially offset by a $300,000 increase in
data processing expense relating to enhancements to the Bank’s
network, a $231,000 increase in other expense due to increased FDIC
insurance costs and professional fees, and a $28,000 increase in
occupancy and equipment expense.
The provision for income taxes decreased $233,000, or 8.8%, to
$2.4 million for the fourth quarter of 2023 compared to $2.6
million for the third quarter of 2023 and decreased $419,000, or
14.8%, from $2.8 million for the fourth quarter of 2022. The
effective tax rate for the fourth quarter of 2023 was 27.3%,
compared to 28.5% for the prior quarter of 2023 and 27.0% for the
fourth quarter of 2022. The effective tax rate was lower for the
fourth quarter of 2023 compared to the fourth quarter of 2022 due
to accruals for non-deductible compensation expenses.
Loans and Credit Quality
Loans, net of deferred fees, decreased $41.0 million and $93.3
million from September 30, 2023 and December 31, 2022,
respectively, and totaled $1.9 billion at December 31, 2023,
compared to $2.0 billion at both September 30, 2023 and December
31, 2022. The decrease in loans from September 30, 2023 primarily
was due to $56.5 million of loan repayments, including $578,000 in
PPP loan repayments, partially offset by $16.9 million of new loan
originations during the current quarter. At December 31, 2023,
there were $3.8 million in PPP loans outstanding compared to $4.3
million at September 30, 2023, and $11.1 million at December 31,
2022.
Nonperforming loans, consisting of non-accrual loans and, at
December 31, 2022, accruing loans 90 days or more past due, totaled
$13.0 million or 0.67% of total loans at December 31, 2023,
compared to $14.3 million or 0.73% of total loans at September 30,
2023, and $15.2 million or 0.75% of total loans at December 31,
2022. The decrease in nonperforming loans from the prior
quarter-end was primarily due to the pay-off of three loans,
consisting of two loans to one borrower totaling $1.2 million and a
third loan with a balance of $247,000, and a charge-off of one
non-accrual loan for $128,000, partially offset by three new loans
placed on non-accrual during the current quarter totaling
$406,000.
The portion of nonaccrual loans guaranteed by government
agencies totaled $740,000 at December 31, 2023, compared to
$801,000 and $839,000 at September 30, 2023 and December 31, 2022,
respectively. There were no loans 90 days or more past due and
still accruing and in the process of collection at either December
31, 2023 or September 30, 2023, compared to one accruing loan (an
SBA-guaranteed PPP loan), with a balance of $934,000, which was 90
days or more past due and in the process of forgiveness at December
31, 2022. Accruing loans past due between 30 and 89 days at
December 31, 2023, were $4.8 million, compared to $2.6 million at
September 30, 2023, and $1.5 million at December 31, 2022. The
increase in accruing loans past due between 30-89 days at current
period-end from September 30, 2023 and December 31, 2022, was
primarily due to timing of borrower payments.
At December 31, 2023, the Company’s allowance for credit losses
for loans was $22.0 million, or 1.14% of total loans, compared to
$19.8 million, or 1.01% of total loans, at September 30, 2023 and
$18.9 million, or 0.94% of total loans, at December 31, 2022. We
recorded net charge-offs of $150,000 for the fourth quarter of
2023, compared to net charge-offs of $25,000 in the prior quarter
of 2023 and net recoveries of $233,000 in the fourth quarter of
2022.
As of December 31, 2023, acquired loans net of their discount
totaled $215.2 million with a remaining net discount on these loans
of $354,000, compared to $224.4 million of acquired loans with a
remaining net discount of $419,000 at September 30, 2023, and
$257.9 million of acquired loans with a remaining net discount of
$522,000 at December 31, 2022. The net discount includes a credit
discount based on estimated losses on the acquired loans, partially
offset by a premium, if any, based on market interest rates on the
date of acquisition.
Deposits and Borrowings
Deposits totaled $2.1 billion at December 31, 2023, compared to
$2.2 billion at September 30, 2023 and $2.1 billion at December 31,
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 costing money market and time deposits. At
December 31, 2023, noninterest-bearing deposits totaled $646.3
million, or 30.3% of total deposits, compared to $667.3 million, or
30.9% of total deposits at September 30, 2023, and $773.3 million,
or 37.1% of total deposits at December 31, 2022.
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 December 31, 2023, our
average deposit account size (excluding public funds), calculated
by dividing period-end deposits by the population of accounts with
balances, was approximately $58,700.
The Bank has an approved secured borrowing facility with the
FHLB of San Francisco for up to 25% of total assets for a term not
to exceed five years under a blanket lien of certain types of
loans, with no FHLB advances outstanding at December 31, 2023,
September 30, 2023 or December 31, 2022. The Bank has Federal Funds
lines with four corresponding banks with an aggregate available
commitment on these lines of $65.0 million at December 31, 2023.
There were no amounts outstanding under these lines at December 31,
2023, September 30, 2023 or December 31, 2022. During the fourth
quarter of 2023, the Bank was approved for discount window advances
with the FRB of San Francisco secured by certain types of loans. At
December 31, 2023 the Bank had no FRB advances outstanding.
At December 31, 2023, September 30, 2023 and December 31, 2022,
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. At December 31, 2023, the
Company also had outstanding subordinated debt, net of costs to
issue, totaling $63.9 million, compared to $63.8 million and $63.7
million at September 30, 2023 and December 31, 2022,
respectively.
At December 31, 2023, September 30, 2023 and December 31, 2022,
the Company had no other borrowings outstanding.
Shareholders’ Equity
Shareholders’ equity totaled $312.9 million at December 31,
2023, compared to $307.3 million at September 30, 2023, and $317.1
million at December 31, 2022. The increase at December 31, 2023
compared to September 30, 2023, reflects $6.4 million of net income
during the current quarter and a $2.7 million decrease in
accumulated other comprehensive loss net of taxes, partially offset
by repurchases of $2.4 million of common stock and $1.2 million of
accrued cash dividends payable during the current quarter. At
December 31, 2023, 359,752 shares remained available for future
purchases under the Company’s current stock repurchase plan.
The decrease in shareholders’ equity at December 31, 2023,
compared to December 31, 2022, primarily was due to the repurchase
of $24.1 million of Company common stock, cash dividends paid and
accrued of $4.8 million, and a $3.0 million increase in accumulated
other comprehensive loss, net of taxes, partially offset by $27.4
million of net income earned during the year ended December 31,
2023.
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; changes
in the interest rate environment, including the past increases in
the Federal Reserve benchmark rate and duration at which such
increased interest rate levels are maintained, which could
adversely affect our revenues and expenses, the values of our
assets and obligations, and the availability and cost of capital
and liquidity; the impact of continuing high inflation and the
current and future monetary policies of the Federal Reserve in
response thereto; the effects of any federal government shutdown;
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; 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; disruptions, security breaches,
or other adverse events, failures or interruptions in, or attacks
on, our information technology systems or on the third-party
vendors who perform critical processing functions for us; the
effects of climate change, severe weather events, natural
disasters, pandemics, epidemics and other public health crises,
acts of war or terrorism, and other external events on our
business; and other factors described in the Company’s latest
Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and
other reports filed with or furnished to the Securities and
Exchange Commission (“SEC”), which 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)
(Dollars in thousands, except per
share data)
Three months ended
Year ended
December 31,
September 30,
December 31,
December 31,
December 31,
2023
2023
2022
2023
2022
(As Restated)
(As Restated)
Interest income
Loans, including fees
$
26,166
$
27,229
$
25,801
$
106,316
$
95,722
Investment securities
1,956
1,704
1,602
6,993
6,085
Fed funds sold and interest-bearing
balances in banks
3,680
3,521
1,722
11,589
4,025
FHLB dividends
245
232
217
862
684
FRB dividends
145
144
162
577
549
Total interest and dividend income
32,192
32,830
29,504
126,337
107,065
Interest expense
Deposits
7,551
6,908
1,963
24,040
6,273
Subordinated debt
896
896
895
3,582
3,582
Junior subordinated debt
218
217
177
841
496
Total interest expense
8,665
8,021
3,035
28,463
10,351
Net interest income
23,527
24,809
26,469
97,874
96,714
Provision for credit losses
2,325
674
617
2,015
4,441
Net interest income after provision for
credit losses
21,202
24,135
25,852
95,859
92,273
Noninterest income
Gain on sale of loans
—
28
33
508
2,747
Gain (loss) on equity securities
946
(274
)
(602
)
(1,141
)
(4,573
)
Service charges and other fees
830
973
942
3,570
3,107
Loan servicing fees and other fees
445
431
506
1,879
2,176
Income on investment in SBIC fund
158
225
(225
)
1,097
(70
)
Bargain purchase gain
—
—
—
—
1,665
Other income and fees
298
271
250
1,064
1,048
Total noninterest income
2,677
1,654
904
6,977
6,100
Noninterest expense
Salaries and employee benefits
8,936
10,284
10,729
41,001
40,480
Occupancy and equipment
2,024
2,133
1,996
8,158
8,384
Data processing
1,767
1,774
1,467
6,622
6,969
Other expense
2,347
2,328
2,116
8,897
10,102
Total noninterest expense
15,074
16,519
16,308
64,678
65,935
Income before provision for income
taxes
8,805
9,270
10,448
38,158
32,438
Provision for income taxes
2,407
2,640
2,826
10,733
8,708
Net income
$
6,398
$
6,630
$
7,622
$
27,425
$
23,730
Net income per common share:
Basic
$
0.55
$
0.56
$
0.59
$
2.27
$
1.81
Diluted
0.55
0.56
0.59
2.27
1.81
Weighted average shares used to compute
net income per common share:
Basic
11,571,796
11,812,583
12,960,723
12,074,198
13,124,179
Diluted
11,571,796
11,812,583
12,960,723
12,074,198
13,124,179
Comprehensive income
Net income
$
6,398
$
6,630
$
7,622
$
27,425
$
23,730
Other comprehensive gain (loss):
Change in unrealized gain (loss) on
available-for-sale securities
3,746
(1,178
)
(75
)
(4,255
)
(19,275
)
Deferred tax (expense) benefit
(1,078
)
338
23
1,224
5,548
Other comprehensive gain (loss), net of
tax
2,668
(840
)
(52
)
(3,031
)
(13,727
)
Comprehensive income
$
9,066
$
5,790
$
7,570
$
24,394
$
10,003
BAYCOM CORP
STATEMENTS OF CONDITION
(UNAUDITED)
(Dollars in thousands)
December 31,
September 30,
December 31,
2023
2023
2022
(As Restated)
Assets
Cash and due from banks
$
17,901
$
30,444
$
26,980
Federal funds sold and interest-bearing
balances in banks
289,638
271,490
149,835
Cash and cash equivalents
307,539
301,934
176,815
Time deposits in banks
1,245
1,743
2,241
Investment securities available-for-sale
("AFS")
163,152
145,845
154,004
Equity securities
12,585
11,639
13,757
Federal Home Loan Bank ("FHLB") stock, at
par
11,313
11,313
10,679
Federal Reserve Bank ("FRB") stock, at
par
9,626
9,621
9,602
Loans held for sale
—
1,274
2,380
Loans, net of deferred fees
1,927,829
1,968,804
2,021,124
Allowance for credit losses for loans
(22,000
)
(19,800
)
(18,900
)
Premises and equipment, net
13,734
13,466
13,278
Other real estate owned ("OREO")
—
—
21
Core deposit intangible
3,915
4,221
5,201
Cash surrender value of bank owned life
insurance policies, net
22,867
22,698
22,193
Right-of-use assets
13,939
15,220
16,569
Goodwill
38,838
38,838
38,838
Interest receivable and other assets
47,378
47,570
45,532
Total Assets
$
2,551,960
$
2,574,386
$
2,513,334
Liabilities and Shareholders’ Equity
Noninterest-bearing deposits
$
646,278
$
667,336
$
773,274
Interest-bearing deposits
Transaction accounts and savings
745,712
790,089
837,289
Premium money market
263,516
270,675
181,567
Time deposits
477,244
431,344
293,349
Total deposits
2,132,750
2,159,444
2,085,479
Junior subordinated deferrable interest
debentures, net
8,565
8,544
8,484
Subordinated debt, net
63,881
63,839
63,711
Salary continuation plans
4,552
4,886
4,840
Lease liabilities
14,752
16,017
17,138
Interest payable and other liabilities
14,591
14,396
16,533
Total Liabilities
2,239,091
2,267,126
2,196,185
Shareholders’ Equity
Common stock, no par value
181,200
183,499
204,588
Accumulated other comprehensive loss, net
of tax
(14,592
)
(17,260
)
(11,561
)
Retained earnings
146,261
141,021
124,122
Total shareholders’ equity
312,869
307,260
317,149
Total Liabilities and Shareholders’
Equity
$
2,551,960
$
2,574,386
$
2,513,334
BAYCOM CORP
FINANCIAL HIGHLIGHTS
(UNAUDITED)
(Dollars in thousands, except per
share data)
At and for the three months
ended
At and for the year ended
December 31,
September 30,
December 31,
December 31,
December 31,
Selected Financial Ratios and Other
Data:
2023
2023
2022
2023
2022
(As Restated)
(As Restated)
Performance Ratios:
Return on average assets (1)
1.00
%
1.03
%
1.21
%
1.07
%
0.91
%
Return on average equity (1)
8.26
8.55
9.60
8.76
7.47
Yield earned on average interest-earning
assets (1)
5.29
5.34
4.91
5.23
4.31
Rate paid on average interest-bearing
liabilities (1)
2.21
2.04
0.89
1.87
0.70
Interest rate spread - average during the
period (1)
3.08
3.30
4.02
3.36
3.61
Net interest margin (1)
3.86
4.03
4.40
4.05
3.90
Loan to deposit ratio
90.39
91.17
96.91
90.39
96.91
Efficiency ratio (2)
57.53
62.42
59.58
61.69
64.13
Charge-offs (recoveries), net
$
150
$
25
$
(233
)
$
550
$
3,241
Per Share Data:
Shares outstanding at end of period
11,551,271
11,673,830
12,838,462
11,551,271
12,838,462
Average diluted shares outstanding
11,571,796
11,812,583
12,960,723
12,074,198
13,124,179
Diluted earnings per share
$
0.55
$
0.56
$
0.59
$
2.27
$
1.81
Book value per share
27.09
26.32
24.70
27.09
24.70
Tangible book value per share (3)
23.38
22.63
21.27
23.38
21.27
Asset Quality Data:
Nonperforming assets to total assets
(4)
0.51
%
0.56
%
0.61
%
Nonperforming loans to total loans (5)
0.67
%
0.73
%
0.75
%
Allowance for credit losses on loans to
nonperforming loans (5)
169.53
%
138.26
%
124.16
%
Allowance for credit losses on loans to
total loans
1.14
%
1.01
%
0.94
%
Classified assets (graded substandard and
doubtful)
$
30,801
$
29,366
$
20,355
Total accruing loans 30‑89 days past
due
4,773
2,592
1,497
Total loans 90 days past due and still
accruing
—
—
934
Capital Ratios (6):
Tier 1 leverage ratio — Bank
13.08
%
13.26
%
13.64
%
Common equity tier 1 — Bank
16.94
%
17.20
%
16.42
%
Tier 1 capital ratio — Bank
16.94
%
17.20
%
16.42
%
Total capital ratio — Bank
18.08
%
18.23
%
17.36
%
Equity to total assets — end of period
12.26
%
11.94
%
12.62
%
Tangible equity to tangible assets — end
of period (3)
10.76
%
10.44
%
11.06
%
Loans:
Real estate
$
1,752,626
$
1,785,640
$
1,806,187
Non-real estate
161,816
168,350
201,252
Nonaccrual loans
12,977
14,321
14,289
Mark to fair value at acquisition
354
419
(522
)
Total Loans
1,927,773
1,968,730
2,021,206
Net deferred fees on loans (7)
56
74
(82
)
Loans, net of deferred fees
$
1,927,829
$
1,968,804
$
2,021,124
Other Data:
Number of full-service offices
35
35
34
Number of full-time equivalent
employees
358
376
374
(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 $2,400, $2,600 and
$94,000 as of December 31, 2023, September 30, 2023, and December
31, 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 tangible book value per
share and tangible equity to tangible assets, both of which are
non-GAAP financial measures. 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 equity and tangible common shareholders’ equity exclude
intangible assets from shareholders’ equity, and tangible assets
exclude intangible assets from total assets. For these financial
measures, the Company’s intangible assets are goodwill and core
deposit intangibles. The Company believes that these measures are
consistent with the capital treatment by our bank regulatory
agencies, which excludes intangible assets from the calculation of
risk-based capital ratios, and presents these measures 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 measures 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
(Dollars in thousands, except per
share data)
December 31,
September 30,
December 31,
2023
2023
2022
Tangible Book Value:
Total equity and common shareholders’
equity (GAAP)
$
312,869
$
307,260
$
317,149
less: Goodwill and other intangibles
42,753
43,059
44,039
Tangible equity and common shareholders’
equity (Non-GAAP)
$
270,116
$
264,201
$
273,110
Total assets (GAAP)
$
2,551,960
$
2,574,386
$
2,513,334
less: Goodwill and other intangibles
42,753
43,059
44,039
Total tangible assets (Non-GAAP)
$
2,509,207
$
2,531,327
$
2,469,295
Equity to total assets (GAAP)
12.26
%
11.94
%
12.62
%
Tangible equity to tangible assets
(Non-GAAP)
10.76
%
10.44
%
11.06
%
Book value per share (GAAP)
$
27.09
$
26.32
$
24.70
Tangible book value per share
(Non-GAAP)
$
23.38
$
22.63
$
21.27
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240125585345/en/
BayCom Corp Keary Colwell, 925-476-1800
kcolwell@ubb-us.com
BayCom (NASDAQ:BCML)
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