BayCom Corp (“BayCom” or the “Company”) (NASDAQ: BCML), the
holding company for United Business Bank (the “Bank” or “UBB”),
announced earnings of $6.0 million, or $0.54 per diluted common
share, for the third quarter of 2024, compared to earnings of $5.6
million, or $0.50 per diluted common share, for the second quarter
of 2024 and $6.6 million, or $0.56 per diluted common share, for
the third quarter of 2023.
Net income for the third quarter of 2024 compared to the second
quarter of 2024 increased $417,000, or 7.4%, primarily as a result
of a $570,000 increase in net interest income and a $1.3 million
increase in noninterest income, partially offset by a $1.1 million
increase in provision for credit losses, a $62,000 increase in
noninterest expense and a $279,000 increase in provision for income
taxes. Net income for the third quarter of 2024 compared to the
third quarter of 2023 decreased $613,000, or 9.2%, primarily as a
result of a $1.9 million decrease in net interest income and a
$571,000 increase in provision for credit losses, partially offset
by a $1.0 million increase in noninterest income, a $445,000
decrease in noninterest expense, and a $366,000 decrease in
provision for income taxes.
Net income for the nine months ended September 30, 2024 compared
to the same period in 2023 decreased $3.5 million, or 16.8%,
primarily as a result of a $6.8 million decrease in net interest
income and a $2.0 million increase in the provision for credit
losses, partially offset by a $2.0 million increase in noninterest
income, a $1.4 million decrease in noninterest expense and a $1.8
million decrease in provision for income taxes.
George Guarini, Founder, President, and Chief Executive Officer
of the Company, stated, "Based on our third quarter 2024 results,
it appears that our net interest margin has stabilized, loan demand
has started to recover, and our credit quality remains strong,
supported by a strong deposit base. During the quarter, we
proactively managed certain problem assets, reducing nonaccrual
loans. Overall, our credit quality is solid, and we have not
identified any systemic credit issues within our loan
portfolio."
Guarini concluded, "Our focus on improving the efficiency ratio
by increasing revenues and streamlining processes is yielding
positive results. In addition, we remain committed to enhancing our
tangible book value and delivering long-term shareholder value
through earnings growth and share repurchases."
Third Quarter Performance Highlights:
- Annualized net interest margin was 3.73% for the current
quarter, compared to 3.69% for the preceding quarter and 4.03% for
the same quarter a year ago.
- Annualized return on average assets was 0.94% for the current
quarter, compared to 0.87% for the preceding quarter and 1.03% for
the same quarter a year ago.
- Assets totaled $2.6 billion at September 30, 2024, June 30,
2024, and September 30, 2023.
- Loans, net of deferred fees, totaled $1.9 billion at both
September 30, 2024 and June 30, 2024, compared to $2.0 billion at
September 30, 2023.
- Nonperforming loans totaled $9.7 million or 0.51% of total
loans, at September 30, 2024, compared to $16.1 million or 0.87% of
total loans, at June 30, 2024, and $14.3 million, or 0.73% of total
loans, at September 30, 2023.
- The allowance for credit losses for loans totaled $18.3
million, or 0.96% of total loans outstanding, at September 30,
2024, compared to $19.0 million, or 1.02% of total loans
outstanding, at June 30, 2024, and $19.8 million, or 1.01% of total
loans outstanding, at September 30, 2023.
- A $1.2 million provision for credit losses was recorded during
the current quarter, compared to a $171,000 provision for credit
losses in the prior quarter and a $674,000 provision for credit
losses in the same quarter a year ago.
- Deposits totaled $2.1 billion at September 30, 2024, compared
to $2.2 billion at both June 30, 2024 and September 30, 2023. At
September 30, 2024, noninterest-bearing deposits totaled $618.3
million, or 28.9% of total deposits, compared to $618.6 million, or
28.4% of total deposits, at June 30, 2024, and $667.3 million, or
30.9% of total deposits, at September 30, 2023.
- The Company repurchased 51,240 shares of common stock at an
average cost of $21.15 per share during the third quarter of 2024,
compared to 204,794 shares of common stock repurchased at an
average cost of $20.17 per share during the second quarter of 2024,
and 239,649 shares of common stock repurchased at an average cost
of $18.86 per share during the third quarter of 2023.
- On August 22, 2024, the Company announced the declaration of a
cash dividend on the Company’s common stock of $0.10 per share,
which was paid on October 10, 2024 to shareholders of record as of
September 19, 2024.
- The Bank remained a “well-capitalized” institution for
regulatory capital purposes at September 30, 2024.
Earnings
Net interest income increased $570,000, or 2.6%, to $22.9
million for the third quarter of 2024 from $22.3 million in the
prior quarter, and decreased $1.9 million, or 7.8%, from $24.8
million in the same quarter a year ago. The increase in net
interest income from the previous quarter reflects an increase in
interest income on loans and a minimal increase in interest income
on investment securities, partially offset by a decrease in
interest income on fed funds sold and interest-bearing balances in
banks and an increase in interest expense on deposits. The decrease
in net interest income from the same quarter in 2023 reflects an
increase in interest expense on deposits and a decrease in interest
income on loans, partially offset by increases in interest income
on federal funds sold and interest-bearing balances in banks,
interest income on investment securities and dividends on FHLB
stock. Average interest-earning assets increased $8.5 million, or
0.35%, and decreased $3.0 million, or 0.12%, for the third quarter
of 2024 compared to the second quarter of 2024 and the third
quarter of 2023, respectively. The average yield earned
(annualized) on interest earning assets for the third quarter of
2024 was 5.45%, compared to 5.37% for the second quarter of 2024
and 5.34% for the third quarter of 2023. The average rate paid
(annualized) on interest-bearing liabilities for the third quarter
of 2024 was 2.62%, compared to 2.54% for the second quarter of
2024, and 2.04% for the third quarter of 2023. The increases in
average yield earned on interest-earning assets and the average
rate paid on interest-bearing liabilities for the third quarter of
2024 compared to the second quarter of 2024 and the same quarter a
year ago reflect rising market interest rates.
Interest income on loans, including fees, increased $1.2
million, or 4.9%, to $26.2 million for the three months ended
September 30, 2024 from $25.0 million for the prior quarter,
primarily due to a $27.2 million increase in the average balance of
loans and a 12 basis point increase in the average loan yield.
Interest income on loans, including fees, decreased $997,000, or
3.7%, for the three months ended September 30, 2024 from $27.2
million for three months ended September 30, 2023, primarily due to
a $105.3 million decrease in the average balance of loans,
partially offset by a 11 basis point increase in the average loan
yield. The average balance of loans was $1.9 billion for both the
third quarter and second quarter of 2024, compared to $2.0 billion
for the third quarter of 2023. The average yield on loans was 5.53%
for the third quarter of 2024, compared to 5.41% for the second
quarter of 2024 and 5.42% for the third quarter of 2023. The
increase in the average yield on loans from the second quarter of
2024 and the third quarter of 2023 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 $114,000 in amortization of
the net discount on acquired loans for the three months ended
September 30, 2024, compared to $124,000, and $372,000 in accretion
of the net discount on acquired loans for the three months ended
June 30, 2024 and September 30, 2023, respectively. The balance of
the net discounts on these acquired loans totaled $449,000,
$540,000, and $419,000 at September 30, 2024, June 30, 2024, and
September 30, 2023, respectively. Interest income included fees
related to prepayment penalties of $12,000 for the three months
ended September 30, 2024, compared to $70,000 and $142,000 for the
three months ended June 30, 2024 and September 30, 2023,
respectively.
Interest income on investment securities increased $212,000, or
9.7%, to $2.4 million for the three months ended September 30,
2024, compared to $2.2 million for the three months ended June 30,
2024, and increased $689,000, or 40.4%, from $1.7 million for the
three months ended September 30, 2023. The average yield on
investment securities increased 10 basis points to 4.60% for the
three months ended September 30, 2024, compared to 4.50% for the
three months ended June 30, 2024, and increased 59 basis points
from 4.01% for the three months ended September 30, 2023. The
increases in average yield were due to higher market interest rates
on newly purchased securities. The average balance of investment
securities totaled $207.0 million for the three months ended
September 30, 2024, compared to $195.1 million and $168.6 million
for the three months ended June 30, 2024 and September 30, 2023,
respectively. In addition, during the third quarter of 2024, we
received $393,000 in cash dividends on our FRB and FHLB stock, down
slightly from $395,000 in the second quarter of 2024 and up from
$376,000 in the third quarter of 2023.
Interest income on federal funds sold and interest-bearing
balances in banks decreased $405,000, or 8.4%, to $4.4 million for
the three months ended September 30, 2024, compared to $4.8 million
for the three months ended June 30, 2024, and increased $893,000,
or 25.4%, from $3.5 million for the three months ended September
30, 2023, as a result of changes in the average yield and average
balance. The average yield on federal funds sold and
interest-bearing balances in banks decreased four basis point to
5.43% for the three months ended September 30, 2024, compared to
5.47% for the three months ended June 30, 2024, and increased five
basis points from 5.38% for the three months ended September 30,
2023. The average balance of federal funds sold and
interest-bearing balance in banks totaled $323.6 million for the
three months ended September 30, 2024, compared to $354.3 million
and $259.6 million for the three months ended June 30, 2024 and
September 30, 2023, respectively. The decrease in average balance
during the current quarter compared to the prior quarter was due to
funding of new loan originations in the current quarter. The
increase in average balance during the current quarter compared to
the same quarter one year ago was due to higher retained cash
balances as a result of lower new loan production during 2023 and
the first half of 2024.
Interest expense for the three months ended September 30, 2024
increased $450,000, or 4.5%, to $10.6 million, compared to $10.1
million for the three months ended June 30, 2024, and increased
$2.5 million, or 31.7%, compared to $8.0 million for the three
months ended September 30, 2023, reflecting higher funding costs
primarily related to increased rates of interest on our deposits
due to higher market rates. The average balance of deposits totaled
$2.1 billion for the third quarter of 2024 and second quarter of
2024, compared to $2.2 billion for the third quarter of 2023. The
average cost of funds for the third quarter of 2024 was 2.62%,
compared to 2.54% for the second quarter of 2024 and 2.04% for the
third quarter of 2023. The increase in the average cost of funds
during the current quarter compared to the prior quarter of 2024
and the third quarter of 2023 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 September 30, 2024 was 1.75%, compared to 1.69%
for the three months ended June 30, 2024, and 1.27% for the three
months ended September 30, 2023. The average balance of
noninterest-bearing deposits decreased $4.6 million, or 0.74%, to
$615.8 million for the three months ended September 30, 2024,
compared to $620.5 million for the three months ended June 30, 2024
and decreased $58.9 million, or 8.7%, compared to $674.8 million
for the three months ended September 30, 2023.
Annualized net interest margin was 3.73% for the third quarter
of 2024, compared to 3.69% for the second quarter of 2024 and 4.03%
for the third quarter of 2023. The average yield on interest
earning assets for the third quarter of 2024 increased eight basis
points and 11 basis points over the average yields for the second
quarter of 2024 and the third quarter of 2023, respectively, while
the average rate paid on interest-bearing liabilities for third
quarter of 2024 increased eight basis points and 58 basis points
over the average rates paid for the second quarter of 2024 and the
third quarter of 2023, respectively. Net interest margin in the
third quarter of 2024 as compared to the second quarter of 2024 was
positively impacted by the average yield on interest earning
assets, and as compared to the third quarter of 2023 was negatively
impacted by increasing funding costs, which outpaced, on a
percentage basis, increasing yields on loans and investment
securities. Accretion of the net discount had minimal to no impact
on the average yield on loans during the third quarter of 2024, the
second quarter of 2024 and the third quarter of 2023.
The Company recorded a $1.2 million provision for credit losses
for the third quarter of 2024, compared to provision for credit
losses of $171,000 and $674,000 for the second quarter of 2024 and
the third quarter of 2023, respectively. The provision for credit
losses in the third quarter of 2024 was mainly driven by increased
quantitative loss rates due to changes in forecasted economic
conditions, replenishment of the allowance due to charge-offs, and
an increase in provision for credit losses for unfunded
commitments. The increase in the provision for credit loss for
unfunded commitments of $390,000, was due to a one new $9.5 million
construction commitment and increased quantitative loss rates. Net
charge-offs totaled $1.5 million during the third quarter of 2024,
which included a $1.0 million complete charge-off on a commercial
non-accrual loan, which was fully reserved for at June 30, 2024, a
$480,000 complete charge-off of a non-accrual commercial real
estate loan, which was sold during the quarter, and a complete
write-down of one non-accrual farmland loan for $88,000, partially
offset by two recoveries totaling $50,000 during the current
quarter. The quantitative reserve was impacted by declines in
forecasted economic conditions for national gross domestic product
and increasing forecasted national unemployment, both of which are
key indicators utilized to estimate credit losses.
Noninterest income for the third quarter of 2024 increased $1.3
million, or 85.1%, to $2.7 million compared to $1.5 million for the
prior quarter of 2024, and increased $1.1 million, or 66.0%,
compared to $1.7 million for the third quarter of 2023. The
increase in noninterest income for the current quarter compared to
the prior quarter of 2024 was primarily due to a $1.7 million
increase in gain on equity securities as a result of positive fair
value adjustments on these securities due to changes in market
conditions, a $164,000 increase in service charges and other fees
and an $85,000 increase in other income and fees, partially offset
by a $287,000 decrease in gain on sale of loans due to no SBA loan
sales in the current quarter, a $324,000 decrease in income on
investment in a Small Business Investment Company (“SBIC”) fund due
to losses in the underlying fund, and a $117,000 decrease in loan
servicing fees and other fees due to lower servicing fee income.
The increase in noninterest income for the current quarter compared
to the same quarter in 2023 was primarily due to a $1.7 million
increase in gain on equity securities, partially offset by a
$478,000 decrease in income on an investment in SBIC fund, a
$107,000 decrease in loan servicing fees and other fees due to
lower loan origination volume, a $75,000 decrease in service
charges and other fees primarily due to fewer customer deposits
placed in Certificate of Deposit Account Registry Service (“CDARS”)
and Insured Cash Sweep (“ICS”) money market product services via
the IntraFi Network and a $28,000 decrease in gain on sale of
loans.
Noninterest expense for the third quarter of 2024 increased
$62,000, or 0.4%, to $16.1 million compared to $16.0 million for
the prior quarter of 2024, and decreased $445,000, or 2.7%,
compared to $16.5 million for the third quarter of 2023. The
increase in noninterest expense for current quarter compared to the
prior quarter of 2024 was primarily due to a $323,000 increase in
data processing expense due to newly implemented services and
vendor data processing invoice credits in the second quarter of
2024, with no similar credits in the current quarter, and a $76,000
increase in occupancy and equipment expense due to higher
depreciation and property maintenance expense, partially offset by
a $73,000 decrease in salaries and employee benefits as a result of
a decrease in the number of full-time equivalent employees, and a
$264,000 decrease in other expense due to increased legal costs and
fraudulent check losses recorded in the second quarter of 2024,
with no similar activity in the current quarter. The decrease in
noninterest expense for the third quarter of 2024 compared to the
third quarter of 2023 was primarily due to a $715,000 decrease in
salaries and employee benefits as a result of decrease in full-time
equivalent employees and lower incentive accruals due to lower loan
production, partially offset by a $199,000 increase in data
processing expense due to newly implemented services and a $76,000
increase in occupancy and equipment expense.
The provision for income taxes increased $279,000, or 14.0%, to
$2.3 million for the third quarter of 2024 compared to $2.0 million
for the second quarter of 2024 and decreased $366,000, or 13.9%,
from $2.6 million for the third quarter of 2023. The effective tax
rate for the third quarter of 2024 was 27.4%, compared to 26.3% for
the prior quarter of 2024 and 28.5% for the third quarter of 2023.
The effective tax rate increased from the prior quarter of 2024 due
to an increase in the gain on equity securities and was lower
compared to the third quarter of 2023 due to higher low-income
housing tax credits during the current quarter.
Loans and Credit Quality
Loans, net of deferred fees, increased $47.9 million from June
30, 2024, and decreased $56.7 million from September 30, 2023, and
totaled $1.9 billion at both September 30, 2024 and June 30, 2024,
compared to $2.0 billion at September 30, 2023. The increase in
loans at September 30, 2024 compared to June 30, 2024 was primarily
due to $85.3 million of new loan originations and $36.8 million of
loan purchases, partially offset by $63.5 million of loan
repayments and $9.3 million in loans sold during the current
quarter.
Nonperforming loans, consisting solely of non-accrual loans,
totaled $9.7 million, or 0.51% of total loans, at September 30,
2024, compared to $16.1 million, or 0.87% of total loans, at June
30, 2024, and $14.3 million, or 0.73% of total loans, at September
30, 2023. The decrease in nonperforming loans from the prior
quarter-end was primarily due to sale of three non-accrual loans
totaling $8.1 million, the pay-off of two non-accrual loans
totaling $460,000, the complete charge-off of one non-accrual loan
of $1.0 million and another totaling $88,000, and to a lesser
extent paydowns on other non-accrual loans, partially offset by two
new loans totaling $3.5 million being placed on non-accrual during
the current quarter.
The portion of nonaccrual loans guaranteed by government
agencies totaled $2.0 million at September 30, 2024, compared to
$2.2 million and $801,000 at June 30, 2024 and September 30, 2023,
respectively. There were no loans 90 days or more past due and
still accruing and in the process of collection at September 30,
2024, June 30, 2024, and September 30, 2023. Accruing loans past
due between 30 and 89 days at September 30, 2024, totaled $4.5
million, compared to $1.5 million at June 30, 2024 and $2.6 million
at September 30, 2023. The $3.0 million increase in accruing loans
past due between 30-89 days at September 30, 2024 compared to June
30, 2024, was primarily due to two commercial real estate loans
totaling $2.9 million, which were less than 30 days past due at
June 30, 2024.
At September 30, 2024, the Company’s allowance for credit losses
for loans was $18.3 million, or 0.96% of total loans, compared to
$19.0 million, or 1.02% of total loans, at June 30, 2024 and $19.8
million, or 1.01% of total loans, at September 30, 2023. We
recorded net charge-offs of $1.5 million for the third quarter of
2024, compared to net charge-offs of $76,000 in the prior quarter
of 2024 and net charge-offs of $25,000 in the third quarter of
2023. The increase in net charge-offs during the third quarter of
2024 compared to the prior quarter of 2024 was primarily due to a
$1.0 million complete charge-off of one commercial non-accrual loan
which was fully reserved for at June 30, 2024, a $480,000
charge-off related to a non-accrual loan sold during the quarter,
and a complete write-down of one non-accrual loan for $88,000,
partially offset by two recoveries totaling $50,000 during the
current quarter, compared to one charge-off of $160,000 and one
recovery of $97,000 during the previous quarter. These actions were
taken due to collateral shortfalls deemed uncollectable. There was
minimal charge-off activity during the third quarter of 2023.
As of September 30, 2024, acquired loans net of their discount
totaled $176.7 million with a remaining net discount on these loans
of $449,000, compared to $186.3 million of acquired loans with a
remaining net discount of $540,000 at June 30, 2024, and $224.4
million of acquired loans with a remaining net discount of $419,000
at September 30, 2023. The change in the net discount from June 30,
2024, was due to payoff activity during the current quarter. 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 September 30, 2024, compared to
$2.2 billion at both June 30, 2024 and September 30, 2023. 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
September 30, 2024, noninterest-bearing deposits totaled $618.3
million, or 28.9% of total deposits, compared to $618.6 million, or
28.4% of total deposits, at June 30, 2024, and $667.3 million, or
30.9% of total deposits, at September 30, 2023.
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 September 30, 2024 and
June 30, 2024, our average deposit account size (excluding public
funds), calculated by dividing period-end deposits by the
population of accounts with balances, was approximately $60,000 and
$59,000, respectively.
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 September 30, 2024,
June 30, 2024 or September 30, 2023. The Bank has Federal Funds
lines with four corresponding banks with an aggregate available
commitment on these lines of $65.0 million at September 30, 2024.
There were no amounts outstanding under these lines at September
30, 2024, June 30, 2024 or September 30, 2023. During the first
quarter of 2024, the Bank was approved for discount window advances
with the FRB of San Francisco secured by certain loan types. At
both September 30, 2024 and June 30, 2024, the Bank had no FRB of
San Francisco advances outstanding.
At September 30, 2024 and June 30, 2024, the Company had
outstanding junior subordinated deferrable interest debentures, net
of fair value adjustments, assumed in connection with its previous
acquisitions totaling $8.6 million, compared to $8.5 million at
September 30, 2023. At September 30, 2024 and June 30, 2024, the
Company had outstanding subordinated debt, net of costs to issue,
totaling $63.7 million, compared to $63.8 million at September 30,
2023, respectively.
At September 30, 2024, June 30, 2024 and September 30, 2023, the
Company had no other borrowings outstanding.
Shareholders’ Equity
Shareholders’ equity totaled $321.7 million at September 30,
2024, compared to $315.3 million at June 30, 2024, and $307.3
million at September 30, 2023. The increase at September 30, 2024
compared to June 30, 2024, reflects $6.0 million of net income
during the current quarter and a $1.9 million decrease in
accumulated other comprehensive loss, net of taxes, partially
offset by repurchases of $1.1 million of common stock and $1.1
million of accrued cash dividends payable. At September 30, 2024,
465,598 shares remained available for future repurchases under the
Company’s current stock repurchase plan.
The increase to shareholders’ equity for activity during the
three months September 30, 2024, as compared to activity during
three months ended September 30, 2023, primarily was due to a $3.3
million decrease in accumulated other comprehensive loss, net of
taxes, partially offset by a $613,000 decrease in net income.
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, Colorado and Nevada. 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: 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 recession or slowed economic growth; changes in the
interest rate environment, including the increases and decreases in
the Federal Reserve benchmark rate and the duration at which such
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 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; 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, including expectations regarding
key growth initiatives and strategic priorities; 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; environmental, social and governance goals; the
effects of climate change, severe weather events, natural
disasters, pandemics, epidemics and other public health crises,
acts of war or terrorism, civil unrest 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
Nine months ended
September 30,
June 30,
September 30,
September 30,
September 30,
2024
2024
2023
2024
2023
Interest income
Loans, including fees
$
26,232
$
25,014
$
27,229
$
76,503
$
80,151
Investment securities
2,393
2,181
1,704
6,530
5,037
Fed funds sold and interest-bearing
balances in banks
4,414
4,819
3,521
13,348
7,910
FHLB dividends
243
247
232
762
616
FRB dividends
144
145
144
433
432
Total interest and dividend income
33,426
32,406
32,830
97,576
94,146
Interest expense
Deposits
9,448
9,002
6,908
26,677
16,489
Subordinated debt
892
891
896
2,676
2,687
Junior subordinated debt
221
218
217
656
623
Total interest expense
10,561
10,111
8,021
30,009
19,799
Net interest income
22,865
22,295
24,809
67,567
74,347
Provision for (reversal of) credit
losses
1,245
171
674
1,668
(311
)
Net interest income after provision for
(reversal of) credit losses
21,620
22,124
24,135
65,899
74,658
Noninterest income
Gain on sale of loans
—
287
28
287
508
Gain (loss) on equity securities
1,420
(321
)
(274
)
1,672
(2,087
)
Service charges and other fees
898
734
973
2,471
2,740
Loan servicing fees and other fees
324
441
431
1,157
1,434
(Loss) income on investment in SBIC
fund
(253
)
71
225
(212
)
939
Other income and fees
356
271
271
915
769
Total noninterest income
2,745
1,483
1,654
6,290
4,303
Noninterest expense
Salaries and employee benefits
9,569
9,642
10,284
29,247
32,065
Occupancy and equipment
2,209
2,133
2,133
6,496
6,134
Data processing
1,973
1,650
1,774
5,376
4,855
Other expense
2,323
2,587
2,328
7,038
6,551
Total noninterest expense
16,074
16,012
16,519
48,157
49,605
Income before provision for income
taxes
8,291
7,595
9,270
24,032
29,356
Provision for income taxes
2,274
1,995
2,640
6,538
8,327
Net income
$
6,017
$
5,600
$
6,630
$
17,494
$
21,029
Net income per common share:
Basic
$
0.54
$
0.50
$
0.56
$
1.55
$
1.72
Diluted
0.54
0.50
0.56
1.55
1.72
Weighted average shares used to compute
net income per common share:
Basic
11,148,482
11,254,233
11,812,583
11,308,901
12,243,506
Diluted
11,148,482
11,254,233
11,812,583
11,308,901
12,243,506
Comprehensive income
Net income
$
6,017
$
5,600
$
6,630
$
17,494
$
21,029
Other comprehensive income (loss):
Change in unrealized gain (loss) on
available-for-sale securities
3,414
710
(1,178
)
4,820
(8,001
)
Deferred tax (expense) benefit
(980
)
(204
)
338
(1,396
)
2,302
Other comprehensive income (loss), net of
tax
2,434
506
(840
)
3,424
(5,699
)
Comprehensive income
$
8,451
$
6,106
$
5,790
$
20,918
$
15,330
BAYCOM CORP
STATEMENTS OF CONDITION
(UNAUDITED)
(Dollars in thousands)
September 30,
June 30,
September 30,
2024
2024
2023
Assets
Cash and due from banks
$
25,666
$
23,278
$
30,444
Federal funds sold and interest-bearing
balances in banks
275,618
367,930
271,490
Cash and cash equivalents
301,284
391,208
301,934
Time deposits in banks
498
747
1,743
Investment securities available-for-sale
("AFS")
193,762
183,633
145,845
Equity securities, at fair value
14,329
12,837
11,639
Federal Home Loan Bank ("FHLB") stock, at
par
11,313
11,313
11,313
Federal Reserve Bank ("FRB") stock, at
par
9,640
9,635
9,621
Loans held for sale
2,252
—
1,274
Loans, net of deferred fees
1,912,105
1,864,172
1,968,804
Allowance for credit losses for loans
(18,310
)
(19,000
)
(19,800
)
Premises and equipment, net
13,777
14,052
13,466
Core deposit intangible
2,999
3,304
4,221
Cash surrender value of bank owned life
insurance policies, net
23,409
23,225
22,698
Right-of-use assets
12,709
12,874
15,220
Goodwill
38,838
38,838
38,838
Interest receivable and other assets
43,735
47,095
47,570
Total Assets
$
2,562,340
$
2,593,933
$
2,574,386
Liabilities and Shareholders’ Equity
Noninterest-bearing deposits
$
618,296
$
618,617
$
667,336
Interest-bearing deposits
Transaction accounts and savings
690,810
725,550
790,089
Premium money market
337,500
302,738
270,675
Time deposits
489,835
528,105
431,344
Total deposits
2,136,441
2,175,010
2,159,444
Junior subordinated deferrable interest
debentures, net
8,625
8,605
8,544
Subordinated debt, net
63,694
63,651
63,839
Salary continuation plans
4,697
4,733
4,886
Lease liabilities
13,660
13,779
16,017
Interest payable and other liabilities
13,542
12,890
14,396
Total Liabilities
2,240,659
2,278,668
2,267,126
Shareholders’ Equity
Common stock, no par value
172,470
173,395
183,499
Accumulated other comprehensive loss, net
of tax
(11,168
)
(13,602
)
(17,260
)
Retained earnings
160,379
155,472
141,021
Total Shareholders’ Equity
321,681
315,265
307,260
Total Liabilities and Shareholders’
Equity
$
2,562,340
$
2,593,933
$
2,574,386
BAYCOM CORP
FINANCIAL HIGHLIGHTS
(UNAUDITED)
(Dollars in thousands, except per
share data)
At and for the three months
ended
At and for the nine months
ended
September 30,
June 30,
September 30,
September 30,
September 30,
Selected Financial Ratios and Other
Data:
2024
2024
2023
2024
2023
Performance Ratios:
Return on average assets (1)
0.94
%
0.87
%
1.03
%
0.91
%
1.10
%
Return on average equity (1)
7.54
7.11
8.55
7.36
8.93
Yield earned on average interest-earning
assets (1)
5.45
5.37
5.34
5.37
5.21
Rate paid on average interest-bearing
liabilities (1)
2.62
2.54
2.04
2.52
1.75
Interest rate spread - average during the
period (1)
2.83
2.83
3.30
2.85
3.46
Net interest margin (1)
3.73
3.69
4.03
3.72
4.12
Loan to deposit ratio
89.50
85.71
91.17
89.50
91.17
Efficiency ratio (2)
62.76
67.34
62.42
65.20
63.07
Charge-offs, net
$
1,544
$
76
$
25
$
4,993
$
400
Per Share Data:
Shares outstanding at end of period
11,130,372
11,172,323
11,673,830
11,130,372
11,673,830
Average diluted shares outstanding
11,148,482
11,254,233
11,812,583
11,308,901
12,243,506
Diluted earnings per share
$
0.54
$
0.50
$
0.56
$
1.55
$
1.72
Book value per share
28.90
28.22
26.32
28.90
26.32
Tangible book value per share (3)
25.14
24.45
22.63
25.14
22.63
Asset Quality Data:
Nonperforming assets to total assets
(4)
0.38
%
0.62
%
0.56
%
Nonperforming loans to total loans (5)
0.51
%
0.87
%
0.73
%
Allowance for credit losses on loans to
nonperforming loans (5)
188.64
%
117.81
%
138.26
%
Allowance for credit losses on loans to
total loans
0.96
%
1.02
%
1.01
%
Classified assets (graded substandard and
doubtful)
$
31,010
$
38,796
$
29,366
Total accruing loans 30‑89 days past
due
4,491
1,468
2,592
Total loans 90 days past due and still
accruing
—
—
—
Capital Ratios:
Tier 1 leverage ratio — Bank (6)
13.23
%
13.62
%
13.26
%
Common equity tier 1 capital ratio — Bank
(6)
16.81
%
17.45
%
17.20
%
Tier 1 capital ratio — Bank (6)
16.81
%
17.45
%
17.20
%
Total capital ratio — Bank (6)
17.76
%
18.42
%
18.23
%
Equity to total assets — end of period
12.55
%
12.15
%
11.94
%
Tangible equity to tangible assets — end
of period (3)
11.10
%
10.70
%
10.44
%
Loans:
Real estate
$
1,725,309
$
1,690,179
$
1,785,640
Non-real estate
176,456
157,335
168,350
Nonaccrual loans
9,707
16,128
14,321
Mark to fair value at acquisition
449
540
419
Total Loans
1,911,921
1,864,182
1,968,730
Net deferred fees on loans
184
(10
)
74
Loans, net of deferred fees
$
1,912,105
$
1,864,172
$
1,968,804
Other Data:
Number of full-service offices
35
35
35
Number of full-time equivalent
employees
336
338
376
(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)
Regulatory capital ratios are for United
Business Bank only.
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)
September 30,
June 30,
September 30,
2024
2024
2023
Tangible Book Value:
Total equity and common shareholders’
equity (GAAP)
$
321,681
$
315,265
$
307,260
less: Goodwill and other intangibles
41,837
42,142
43,059
Tangible equity and common shareholders’
equity (Non-GAAP)
$
279,844
$
273,123
$
264,201
Total assets (GAAP)
$
2,562,340
$
2,593,933
$
2,574,386
less: Goodwill and other intangibles
41,837
42,142
43,059
Total tangible assets (Non-GAAP)
$
2,520,503
$
2,551,791
$
2,531,327
Equity to total assets (GAAP)
12.55
%
12.15
%
11.94
%
Tangible equity to tangible assets
(Non-GAAP)
11.10
%
10.70
%
10.44
%
Book value per share (GAAP)
$
28.90
$
28.22
$
26.32
Tangible book value per share
(Non-GAAP)
$
25.14
$
24.45
$
22.63
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241017893335/en/
BayCom Corp Keary Colwell, 925-476-1800 kcolwell@ubb-us.com
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