OAKLAND, Calif., Oct. 26, 2017 (GLOBE NEWSWIRE) -- California BanCorp CALB 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 | ||||||||||||||||||
| Assets | 30-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 - Period | 3Q 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 Cost | 3Q 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 Period | 30-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 | % | ||||||||||||
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