Market Overview

BayCom Corp Reports 2019 First Quarter Earnings of $4.9 Million

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BayCom Corp (the "Company") (NASDAQ: BCML),
the holding company for United Business Bank (the "Bank"), announced
earnings of $4.9 million, or $0.45 per diluted share, for the first
quarter of 2019 compared to earnings of $2.6 million or $0.24 per
diluted share, for the fourth quarter of 2018, and $4.1 million, or
$0.54 per diluted share, for the first quarter of 2018. Earnings for the
first quarter of 2019 increased $2.3 million, or 88.8%, as a result of a
$1.0 million increase in net interest income, $485,000 increase in
non-interest income and a $1.7 million decrease in non-interest expense
compared to the prior quarter. The prior quarter included $2.3 million
in merger related expenses in connection with our acquisition of
Bethlehem Financial Corporation ("BFC"), and its wholly owned bank
subsidiary, MyBank, in November 2018 (the "BFC Acquisition").

Proposed Acquisition of Uniti Financial
Corporation

On December 7, 2018, the Company entered into a definitive agreement
with Uniti Financial Corporation ("UFC"), the holding company for Uniti
Bank, which is headquartered in Buena Park, California. Pursuant to the
merger agreement UFC will merge with and into the Company, with the
Company as the surviving corporation in the merger. Immediately after
the merger, Uniti Bank, a California state-chartered bank and wholly
owned subsidiary of UFC, will merge with and into the Bank, with the
Bank as the surviving bank. The transaction was unanimously approved and
adopted by the Board of Directors of each company and is expected to be
completed in the second calendar quarter of 2019, subject to customary
closing conditions, regulatory approval, and approval of UFC's
shareholders.

Under the terms of the merger agreement, holders of UFC common stock
will receive (i) $2.30 in cash and (ii) 0.07234 shares of Company common
stock for each share of UFC common stock. The aggregate consideration
was valued at approximately $63.9 million based on the closing price of
the Company's common stock of $23.39 on December 7, 2018. The total
value of the transaction will fluctuate until closing based on the value
of the Company's common stock price. Upon consummation of the
transaction, the shareholders of UFC will own approximately 9.3% of the
Company. At March 31, 2019, UFC had approximately $329.3 million in
total assets, $277.0 million in loans, $278.6 million in total deposits
and $48.6 million in shareholders' equity.

George J. Guarini, President and Chief Executive Officer of the Company
stated, "Our pending Uniti Bank acquisition is expected to close in the
second quarter of 2019 and we continue to actively look for new
opportunities to expand our geographical market reach, build market
penetration, add value for our clients and increase earnings per share
for our shareholders."

Mr. Guarini, continued, "We continue to believe in our focus of growth
through strategic acquisitions which expands our market reach and allows
us to retain local lending personnel and credit administration personnel
to manage existing client relationships and participate in the
evaluation of prospective clients. This strategy allows us to continue
to this practice at a measured pace while maintaining discipline in
staying within our credit risk tolerances without sacrificing growth in
our EPS. We believe this approach will allow us to continue to maintain
the reputation we have earned since the day we opened our doors in 2004,
as solid stewards of the Company's capital."

First Quarter Performance Highlights:

  • Assets totaled $1.5 billion at both March 31, 2019 and December 31,
    2018 compared to $1.2 billion at March 31, 2018. The increase from the
    same period in 2018 is due primarily to the BFC Acquisition.
  • Net interest margin was 4.30% for the current quarter, compared to
    4.16% in the preceding quarter and 4.28% in the first quarter a year
    ago.
  • Loans, net of deferred fees, totaled $965.0 million at March 31, 2019,
    compared to $975.3 million at December 31, 2018 and $890.6 million at
    March 31, 2018.
  • Deposits totaled $1.3 billion at both March 31, 2019 and December 31,
    2018, and$1.1 billion at March 31, 2018. Non-interest bearing deposits
    increased to $416.8 million from $398.0 million at December 31, 2018,
    and from $320.1 million at March 31, 2018.
  • Non-accrual loans increased to $3.6 million or 0.37% of total loans as
    of March 31, 2019, compared to $3.1 million or 0.32% of total loans,
    as of December 31, 2018 and to $229,000, or 0.02%, of total loans, at
    March 31, 2018.
  • The Bank remains a "well-capitalized" institution for regulatory
    capital purposes at March 31, 2019.

Earnings

Net interest income increased $1.0 million, or 7.1%, to $14.9 million
for the first quarter of 2019 compared to $13.9 million in the preceding
quarter and increased $2.5 million, or 19.7%, compared to $12.4 million
in the same quarter a year ago. Average interest earning assets
increased $76.1 million, or 5.7%, for the three months ended March 31,
2019 compared to the prior quarter, and increased $223.3 million, or
19.0%, for the three months ended March 31, 2019 compared to the same
period in 2018, largely due to the BFC Acquisition in November 2018,
and, to a lesser extent, the net proceeds received from the issuance of
common stock in our initial public offering in the second quarter of
2018. Interest income on loans for the quarters ended March 31, 2019,
December 31, 2018 and March 31, 2018 included $799,000 million, $892,000
and $1.2 million, respectively, in accretion of the net discount on
acquired loans including the recognition of revenue from purchase credit
impaired loans in excess of discounts. The net discount on these
acquired loans totaled $7.0 million, $7.5 million, and $7.7 million at
March 31, 2019, December 31, 2018 and March 31, 2018, respectively.

The Company's net interest margin was 4.30% for the first quarter of
2019 compared to 4.16% for the preceding quarter and 4.28% for first
quarter 2018. The increase in net interest margin during the first
quarter of 2019 compared to the preceding quarter is the result of a
higher yield on loans and investments primarily due to higher market
rates partially offset by an increase in the cost of interest bearing
liabilities. The average yield on loans is enhanced by the amortization
of acquisition accounting value adjustments on loans acquired in
acquisitions. The average yield on loans including the accretion of the
net discount for the first quarter of 2019 was 5.67% compared to 5.46%
for the fourth quarter of 2018 and 5.57% for the same quarter last year.
The accretion of the net discount on acquired loans increased the yield
on loans by 33 basis points, 38 basis points, and 56 basis points during
the first quarter of 2019, the fourth quarter of 2018, and first quarter
of 2018, respectively. The incremental accretion and the impact on loan
yield will change during any period based on the volume of prepayments,
but it is expected to decrease over time as the balance of the net
discount declines. The average cost of funds for the first quarter of
2019 was 0.70%, up from 0.68% for the fourth quarter of 2018 and 0.59%
for the first quarter of 2018. Increases in the cost of funds reflecting
higher market rates generally were offset by increases in the average
balance of non-interest bearing deposits.

Non-interest income for the first quarter of 2019 totaled $2.1 million,
an increase of $485,000, or 29.7%, compared to $1.6 million in the
previous quarter and an increase of $394,000, or 22.8%, compared to $1.7
million for the same quarter in 2018. The increase in non-interest
income compared to the previous quarter was primarily due to a one-time
increase in other income resulting from an investment in an SBIC fund
partially offset by a decline in the gain on sale of loans during the
first quarter of 2019 compared to the previous quarter and comparable
quarter in 2018. Other fees and service charges increased for the first
quarter of 2019 compared to the same quarter in 2018 as a result of
higher volume from the BFC Acquisition.

Non-interest expense for the first quarter of 2019 totaled $9.7 million,
a decrease of $1.7 million, or 15.1%, compared to $11.5 million for the
fourth quarter of 2018, and an increase of $1.6 million, or 20.0%,
compared to $8.1 million for the same quarter in 2018. Non-interest
expenses for the fourth quarter of 2018 included $2.3 million of BFC
Acquisition related expenses comprised of $536,000 in salaries and
benefits, $1.3 million in data processing expenses, $130,000 in
professional fees and $369,000 in all other expenses. Excluding the BFC
Acquisition related expenses non-interest expenses increased $598,000,
or 6.5%, due to higher data processing of $257,000, core deposit
intangible amortization of $85,000, occupancy costs of $70,000 and all
other operating costs of $186,000 primarily related to the addition of
the five New Mexico branches. The increase in non-interest expense for
the first quarter of 2019 compared to the same period last year was
primarily due to increases in data processing expenses, and salary and
benefit expenses related to the BFC Acquisition as well as professional
fees to ensure compliance with various public company requirements.

The provision for income taxes was $2.0 million for the quarter ended
March 31, 2019, compared to $1.2 million for the quarter ended December
31, 2018 and $1.7 million for the quarter ended March 31, 2018. The
higher income tax provision in the first quarter of 2019 compared to the
prior quarter was primarily due higher taxable income.

Loans and Credit Quality

Loans, net of deferred fees, decreased $10.4 million, or 1.1%, to $965.0
million at March 31, 2019, from $975.3 million at December 31, 2018 and
increased $74.4 million, or 8.4%, from $890.6 million at March 31, 2018
primarily due to the BFC Acquisition. Loan originations for quarter
ended March 31, 2019 totaled $20.7 million compared to $28.0 million
during the fourth quarter of 2018 and $29.2 million during the first
quarter 2018. Loan originations in the first quarter of 2019 were spread
throughout our markets with the majority focused in San Mateo, Alameda
Counties in California and Bernalillo County in New Mexico, with
commercial and residential real estate secured loans accounting for the
majority of the originations during the quarter.

Non-accrual loans totaled $3.6 million, or 0.37% of total loans, at
March 31, 2019, compared to $3.1 million, or 0.32% of total loans, at
December 31, 2018, and $229,000, or 0.02% of total loans, at March 31,
2018. The increase in non-accrual loans from a year ago related to the
migration of several unrelated loans to non-accrual status including one
loan totaling $1.9 million to a long-standing borrower of the Bank. At
March 31, 2019 and December 31, 2018, $2.3 million of our non-accrual
loans were guaranteed by government agencies. At March 31, 2019,
accruing loans past due 30 to 89 days totaled $8.7 million compared to
$3.4 million at December 31, 2018 and $1.4 million at March 31, 2018.
The increase in past due 30 to 89 days at March 31, 2019 primarily
related to two loans totaling $6.3 million that were less than 60 days
past due and have since been brought current. There were no accruing
loans past due more than 90 days, at March 31, 2019, December 31, 2018,
or March 31, 2018.

At March 31, 2019, our allowance for loan losses was $5.4 million, or
0.56% of total loans, compared to $5.1 million, or 0.53% of total loans,
at December 31, 2018 and $4.6 million, or 0.52% of total loans, at March
31, 2018. The allowance for loan losses plus the net discount recorded
on acquired loans totaled $12.4 million, representing 1.28% of total
loans at March 31, 2019 compared to $12.7 million or 1.30% of total
loans at December 31, 2018 and $12.3 million or 1.36% of total loans at
March 31, 2018. Included in the carrying value of loans are net
discounts on acquired loans as they are carried at their estimated fair
value on the date on which they were acquired. As of March 31, 2019,
acquired loans, net of their discounts, totaled $379.6 million compared
to $392.8 million at December 31, 2018 and $378.1 million at March 31,
2018. The provision for loan losses recorded in the first quarter of
2019 totaled $277,000 compared to the prior quarter provision of
$264,000 and $254,000 for same quarter last year. At March 31, 2019,
December 31, 2018 and March 31, 2018, our allowance for loan losses
specific reserves totaled $10,000. Net charge-offs in the first quarter
2019 totaled $12,000 compared to a net charge-off of $624,000 in the
previous quarter and net recovery of $131,000 during the same quarter in
2018.

Deposits and Borrowings

Deposits totaled $1.3 billion at March 31, 2019 and December 31, 2018
compared to $1.1 billion at March 31, 2018. The increase in deposits
from the same quarter a year ago was primarily attributable to the
$135.4 million of deposits acquired in connection with the BFC
Acquisition in November 2018. Non-interest bearing deposits totaled
$416.8 million, or 33.3% of total deposits, at March 31, 2019 compared
to $398.0 million, or 31.6% of total deposits, at December 31, 2018, and
$320.1 million, or 29.1% of total deposits, at March 31, 2018.

At March 31, 2019 and December 31, 2018, borrowings totaled $8.2 million
compared to $11.4 million at March 31, 2018. During the second quarter
2018, we repaid $6.0 million in long-term secured borrowings out of the
net proceeds from our initial public offering. Our borrowings at March
31, 2019 relate to junior subordinated debentures assumed in connection
with our acquisition of First ULB Corp. in April 2017 and the BFC
Acquisition in November 2018.

Shareholders' Equity

Shareholders' equity totaled $206.4 million at March 31, 2019 up from
$200.8 million at December 31, 2018, and $122.6 million at March 31,
2018. The increase in shareholders' equity at March 31, 2019 compared to
December 31, 2018 was primarily due to net income of $4.9 million,
$120,000 in stock-based compensation, and a $597,000 increase in other
comprehensive income representing unrealized gains on investments
securities, net of tax. The year over year increase in shareholder
equity also included, in addition to net income, the common stock issued
in our initial public offering in May 2018 of $66.0 million, net of
expenses and underwriting commissions.

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 a member of FDIC. The Company is traded on the NASDAQ 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. 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.

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: expected revenues, cost
savings, synergies and other benefits from the proposed merger of the
Company and UFC and the recent merger of the Company and BFC might not
be realized within the expected time frames or at all and costs or
difficulties relating to integration matters, including but not limited
to customer and employee retention, might be greater than expected; the
requisite shareholder and regulatory approvals and other closing
conditions for the UFC Merger may be delayed or may not be obtained or
the merger agreement may be terminated; business disruption may occur
following or in connection with the UFC Merger; the Company's or UFC's
businesses may experience disruptions due to transaction-related
uncertainty or other factors making it more difficult to maintain
relationships with employees, customers, other business partners or
governmental entities; the possibility that the proposed merger is more
expensive to complete than anticipated, including as a result of
unexpected factors or events; the diversion of managements' attention
from ongoing business operations and opportunities as a result of the
UFC Merger or otherwise; future acquisitions by the Company of other
depository institutions or lines of business; changes in general
economic conditions and conditions within the securities market;
legislative and regulatory changes; 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;
increased competitive pressures; changes in management's business
strategies; and other factors described in the Company's latest Annual
Report on Form 10-K and Quarterly Reports on Form 10-Q and other filings
with the Securities and Exchange Commission("SEC") that 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 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.

 
BAYCOM CORP
STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
  (Dollars in thousands, except earnings per share data)
Three months ended
March 31,   December 31,   March 31,

2019

2018

2018

Interest income
Interest income - non-real estate $ 1,611 $ 1,577 $ 1,399
Interest income - real estate 11,140 10,253 9,654
Interest on investment securities 818 775
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