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BayCom Corp Reports 2022 Fourth Quarter Earnings of $8.1 Million

BayCom Corp (“BayCom” or the “Company”) (NASDAQ: BCML), the holding company for United Business Bank (the “Bank” or “UBB”), announced earnings of $8.1 million, or $0.62 per diluted common share, for the fourth quarter of 2022, compared to earnings of $7.2 million, or $0.54 per diluted common share, for the third quarter of 2022 and $5.4 million, or $0.51 per diluted common share, for the fourth quarter of 2021. For the year ended December 31, 2022, the Company announced earnings of $27.0 million, or $2.06 per diluted common share, compared to $20.7 million, or $1.90 per diluted common share, for the year ended December 31, 2021.

Net income for the fourth quarter of 2022 compared to the prior quarter increased $824,000, or 11.4%, primarily as a result of a $1.7 million increase in net interest income and a $577,000 decrease in provision for loan losses, partially offset by a $1.2 million decrease in noninterest income and a $212,000 increase in noninterest expense. Net income for the fourth quarter of 2022 compared to the fourth quarter of 2021 increased $2.6 million, or 48.1%, primarily as a result of a $7.3 million increase in net interest income, partially offset by a $121,000 increase in provision for loan losses, a $1.1 million decrease in noninterest income, a $2.6 million increase in noninterest expense and a $920,000 increase in provision for income taxes.

Net income increased $6.3 million, or 30.5%, to $27.0 million for the year ended December 31, 2022 compared to $20.7 million in 2021, primarily as a result of a $23.9 million increase in net interest income, partially offset by a $4.0 million increase in provision for loan losses, a $589,000 decrease in noninterest income, a $10.8 million increase in noninterest expense and a $2.2 million increase in provision for income taxes. Included in noninterest income for the year ended December 31, 2022 was $1.6 million in bargain purchase gain related to our acquisition of Pacific Enterprise Bancorp (“PEB”) and its wholly owned operating subsidiary, Pacific Enterprise Bank, during the first quarter of 2022, that was not present during the prior year.

George Guarini, President and Chief Executive Officer, commented, “We are pleased that our financial results for the fourth quarter and full year 2022 are in line with our expectations. Despite the developing rate pressure on deposits, our return on average assets and our net interest margin improved during the year as a result of our loan growth and overall asset sensitivity. The Federal Reserve has indicated that it expects to continue to increase interest rates in 2023, which should continue to contribute to future earnings. In addition, we are seeing lower marketplace premiums on SBA Loans which gives us the opportunity to hold these loans on the balance sheet supplementing loan growth.”

Guarini concluded, “While market conditions may not be very conducive for merger and acquisition activity, we continue to look for selective merger partners. In addition to focusing on achieving our financial metrics, we are continuing to repurchase our shares and pay cash dividends to our shareholders. Our goal continues to be to consistently add value for our clients and shareholders.”

Fourth Quarter Performance Highlights:

  • Annualized net interest margin was 4.40% for the current quarter, compared to 3.99% in the preceding quarter and 3.41% in the same quarter a year ago.
  • Annualized return on average assets was 1.28% for the current quarter, compared to 1.11% in the preceding quarter and 0.92% in the same quarter a year ago.
  • Assets totaled $2.5 billion at both December 31, 2022 and September 30, 2022, compared to $2.4 billion at December 31, 2021.
  • Loans, net of deferred fees, totaled $2.0 billion at both December 31, 2022 and September 30, 2022, and totaled $1.7 billion at December 31, 2021.
  • Nonperforming loans totaled $15.2 million or 0.75 % of total loans at December 31, 2022, compared to $19.7 million or 0.99% of total loans at September 30, 2022, and $6.9 million or 0.41% of total loans at December 31, 2021.
  • The allowance for loan losses totaled $18.9 million, or 0.94% of total loans outstanding, at December 31, 2022, compared to $18.1 million, or 0.90% of total loans outstanding, at September 30, 2022, and $17.7 million, or 1.06% of total loans outstanding, at December 31, 2021. A $617,000 provision for loan losses was recorded during the current quarter compared to a $1.2 million provision for loan losses in the prior quarter, and a $496,000 provision for loan losses in the same quarter a year ago.
  • Deposits totaled $2.1 billion at both December 31, 2022, and September 30, 2022, compared to $2.0 billion at December 31, 2021. At December 31, 2022, noninterest bearing deposits totaled $773.3 million, or 37.1% of total deposits, compared to $813.5 million, or 38.5% of total deposits at September 30, 2022, and $710.1 million, or 35.8% of total deposits at December 31, 2021.
  • The Company repurchased 236,985 shares of common stock at an average cost of $18.60 per share during the fourth quarter of 2022, compared to 406,534 shares repurchased at an average cost of $19.14 per share during the third quarter of 2022, and 5,125 shares repurchased at an average cost of $18.31 per share during the fourth quarter of 2021.
  • On November 16, 2022, the Company announced the declaration of a cash dividend on the Company’s common stock of $0.05 per share, paid on January 13, 2023 to stockholders of record as of December 16, 2022.
  • The Bank remained “well-capitalized” institution for regulatory capital purposes at December 31, 2022.

Earnings

Net interest income increased $1.7 million or 7.1%, to $26.5 million for the fourth quarter of 2022 from $24.7 million in the prior quarter and increased $7.3 million, or 37.9%, from $19.2 million in the same quarter a year ago. The increase in net interest income between the periods reflects increases in interest income on loans, cash and cash equivalents and, to a lesser extent, investment securities, including dividend on FRB and FHLB stock, partially offset by higher funding costs related to increased market rates of interest on our deposits and junior subordinated debt. Average interest-earning assets decreased $73.2 million, or 3.0%, and increased $150.7 million, or 6.7% for the three months ended December 31, 2022 compared to the third quarter of 2022 and the fourth quarter of 2021, respectively. Average yield on interest earning assets for the fourth quarter of 2022 was 4.91%, compared to 4.38% for the third quarter of 2022 and 3.79% the fourth quarter of 2021. The increase in average yields on interest-earning assets during the current quarter reflects increases in market interest rates due to recent increases in the target range for federal funds, including a 125 basis points increase during the fourth quarter of 2022, to a range of 4.25% to 4.50%. The average rate paid on interest bearing liabilities for fourth quarter of 2022 was 0.89%, compared to 0.66% for the third quarter of 2022, and 0.64% for the fourth quarter of 2021.

Interest income on loans, including fees, increased $1.8 million, or 7.5%, to $25.8 million for the fourth quarter of 2022 compared to the prior quarter primarily due to a 39 basis point increase in the average loan yield. Interest income on loans, including fees, increased $6.1 million, or 30.6%, during the fourth quarter of 2022 compared to the fourth quarter of 2021 primarily due to a $352.7 million increase in the average loan balance and a 37 basis point increase in the average loan yield. The average loan balance totaled $2.0 billion for both the fourth quarter of 2022 and third quarter of 2022, compared to $1.6 billion for the same quarter a year ago. The average yield on loans was 5.12%, compared to 4.73% for the third quarter of 2022 and 4.75% for the fourth quarter of 2021. The increase in the average yield on loans from the prior quarter was due to the impact of increased rates on variable rate loans as well as new loans being originated at higher interest rates and by a $155,000 increase in accretion of the net discount on acquired loans, partially offset by a $28,000 decrease in PPP loan fees recognized when compared to the prior quarter.

Interest income on loans included $218,000, $63,000, and $409,000 in accretion of the net discount on acquired loans and revenue from purchase credit impaired loans in excess of discounts for the quarters ended December 31, 2022, September 30, 2022, and December 31, 2021, respectively. The balance of the net discounts on these acquired loans totaled $522,000, $480,000, and $2.1 million at December 31, 2022, September 30, 2022, and December 31, 2021, respectively. Interest income included $133,000 in fees earned related to PPP loans in the quarter ended December 31, 2022, compared to $161,000 in the prior quarter 2022 and $1.9 million in the same quarter 2021. Interest income also included fees related to prepayment penalties of $335,000 in the quarter ended December 31, 2022, compared to $195,000 in the prior quarter 2022, and $439,000 in the same quarter in 2021. As of December 31, 2022, total unrecognized fees on PPP loans were $94,000.

Interest income on investment securities available-for-sale increased $57,000 to $1.6 million for the three months ended December 31, 2022, compared to the three months ended September 30, 2022, and increased $424,000, or 36.0%, from $1.2 million for the three months ended December 31, 2021. The increase in the current quarter compared to the same quarter in 2021 was due to the increase in market interest rates which resulted in a 32 basis point increase in the average yield on investment securities available-for-sale to 3.39% for the three months ended December 31, 2022 from 3.07% for the three months ended December 31, 2021. The average balance on investments securities available-for-sale totaled $187.5 million for the three months ended December 31, 2022, compared to $188.7 million and $152.3 million for the three months ended September 30, 2022 and December 31, 2021, respectively.

Interest income on federal funds sold and interest-bearing balances in banks increased $435,000, or 33.8%, to $1.7 million for the three months ended December 31, 2022, compared to $1.3 million for the three months ended September 30, 2022, and increased $1.5 million, or 820.8%, from $186,000 for the three months ended December 31, 2021 as a result of an increase in the average yield. The average yield on federal funds sold and interest-bearing balances in banks increased 167 basis point to 3.85% for the three months ended December 31, 2022, compared to 2.18% for the three months ended September 30, 2022, and increased 367 basis point from 0.18% for the three months ended December 31, 2021. The average balance of federal funds sold and interest-bearing balance in banks totaled $177.4 million for the three months ended December 31, 2022, compared to $234.6 million and $418.8 million for the three months ended September 30, 2022 and December 31, 2021, respectively. In addition, during the fourth quarter of 2022, we received $379,000 in cash dividends on our FRB and FHLB stock, up 32.5% from $286,000 in the prior quarter and up 43.0% from $265,000 in the fourth quarter in 2021.

Interest expense increased $623,000, or 25.8%, to $3.0 million for the three months ended December 31, 2022, compared to $2.4 million for the three months ended September 30, 2022, and increased $854,000, or 39.2%, compared to $2.2 million for the same quarter in 2021, primarily as a result of an increase in the average cost of deposits. Average balance of deposits totaled $2.1 billion for the fourth quarter of 2022, compared to $2.2 billion for the third quarter of 2022 and $2.0 billion for the same quarter in 2021. The average cost of funds for the fourth quarter of 2022 was 0.89% compared to 0.66% for third quarter of 2022 and 0.64% for the same quarter in 2021. The increase in the average cost of funds during the current quarter compared to the prior quarter was due to higher interest rates paid on money market and time deposits due to increased competition and pricing pressures resulting from higher market interest rates generally. The average cost of total deposits for the three months ended December 31, 2022 was 0.37%, compared to 0.25% for the three months ended September 30, 2022, and 0.24% for the three months ended December 31, 2021. The average balance of noninterest bearing deposits increased $7.4 million, or 0.91%, to $809.2 million for the three months ended December 31, 2022, compared to $801.9 million for the three months ended September 30, 2022 and $738.6 million for the three months ended December 31, 2021. In addition, interest expense on junior subordinated debt increased $92,000, or 110.0%, to $176,000 for the three months ended December 31, 2022, compared to $84,000 for the same quarter in 2021 as a result of higher market rates.

Annualized net interest margin was 4.40% for the fourth quarter of 2022, compared to 3.99% for the preceding quarter and 3.41% for fourth quarter of 2021 as a result of our asset sensitive balance sheet. The average yield on interest earning assets for the fourth quarter of 2022 increased 53 basis point and 112 basis point over the average yields for the third quarter of 2022 and the fourth quarter of 2021, while the average rate paid on interest bearing liabilities for fourth quarter of 2022 increase 23 basis points and 25 basis points over the average rates paid for the third quarter of 2022 and the fourth quarter of 2021, respectively. Net interest margin was positively impacted by rising interest rates during the quarter which produced higher yields on loans, investment securities and fed funds sold and interest bearing-balances in banks.

The average yield on PPP loans including the recognition of deferred PPP loan fees was 2.30%, resulting in a positive impact to the net interest margin of three basis points during the fourth quarter of 2022, compared to an average yield of 2.28% with a positive impact to the net interest margin of three basis points during the prior quarter 2022, and compared to an average yield of 8.95% with a positive impact to the net interest margin of 23 basis points during the same quarter in 2021. The accretion of the net discount on acquired loans increased the average yield on loans by 11 basis points during the fourth quarter of 2022, compared to one basis point during the prior quarter 2022, and 15 basis points during the same quarter in 2021. The incremental accretion and the impact on loan yield will change during any period based on the volume of prepayments, but is expected to decrease over time as the balance of the net discount declines.

Based on our review of the allowance for loan losses at December 31, 2022, the Company recorded a $617,000 provision for loan losses for the fourth quarter of 2022, compared to a $1.2 million provision for loan losses and a $496,000 provision for loan losses in the prior quarter 2022 and the same quarter in 2021, respectively. The provision for loan losses in the fourth quarter of 2022 was primarily due to new loan production and, to a lesser extent, a deterioration in forecasted economic conditions and indicators utilized to estimate loan losses, partially offset by $233,000 in net recoveries during the fourth quarter of 2022.

Noninterest income for the fourth quarter of 2022 decreased $1.2 million, or 45.0%, to $1.5 million compared to $2.7 million in the prior quarter 2022 and decreased $1.1 million, or 41.3%, compared to $2.6 million for the same quarter in 2021. The decrease in noninterest income for the current quarter compared to the prior quarter 2022 was due to a $1.2 million decrease in gain on sale of SBA loans (guaranteed portion), primarily due to a decrease in the volume of these loans sold during the current quarter, and a $162,000 decrease in income from our investment in a Small Business Investment Company (“SBIC”) fund, partially offset by a $125,000 increase in servicing charges and other fees. The decrease in noninterest income for the current quarter compared to the same quarter in 2021 was primarily due to a $1.1 million decrease in gain on sale of loans due to a decrease in the volume and premiums observed on SBA loans (guaranteed portion) sold and a $478,000 decrease in SBIC income, partially offset by a $358,000 increase in servicing charges and other fees.

Noninterest expense for the fourth quarter of 2022 increased $212,000, or 1.3%, to $16.3 million compared to $16.1 million for the prior quarter 2022 and increased $2.6 million, or 18.6%, compared to $13.8 million for the same quarter in 2021. The increase in noninterest expense for the current quarter compared to the prior quarter 2022 was primarily due to a $565,000 increase in salaries and employee benefits as a result of increases in salaries and wages in 2022 due to upward market pressure on wages in 2022 and year-end accrual adjustments related to other employee benefits. The increase was partially offset by a $47,000 decrease in occupancy and equipment expenses, a $95,000 decrease in data processing fees and a $211,000 decrease in other noninterest expense. Noninterest expenses for the fourth quarter of 2022 increased compared to the same quarter in 2021 primarily due to $2.1 million increase in salaries and employee benefits as a result of an increase in the number of full-time equivalent employees, reflecting our acquisition of Pacific Enterprise Bancorp (“PEB”) and its bank subsidiary, Pacific Enterprise Bank, in February, 2022, coupled with retention incentives and salary adjustments due to upward market pressure on wages in 2022. The increase was also a result of increases in occupancy and equipment expense of $222,000, data processing fees of $137,000 and other noninterest expenses of $68,000.

The provision for income taxes was $3.0 million for both the fourth quarter 2022 and third quarter of 2022 and increased $920,000 compared to $2.1 million for the fourth quarter of 2021 primarily due to increased pre-tax income. The effective tax rate for the fourth quarter of 2022 was 27.1%, compared to 29.0% for the prior quarter 2022, and 27.7% for the same quarter in 2021. The effective tax rate was lower for the fourth quarter of 2022 compared to the prior quarter 2022 due to year-end true-up adjustments related to non-taxable interest income on tax exempt municipal securities.

Loans and Credit Quality

Loans, net of deferred fees, increased $26.2 million to $2.0 billion at December 31, 2022, compared to September 30, 2022, and increased $356.2 million compared to $1.7 billion at December 31, 2021. The increase in loans at December 31, 2022 compared to September 30, 2022 primarily was due to $127.3 million of new loan originations, partially offset by $101.3 million of loan repayments, including $24.3 million in PPP loan repayments. At December 31, 2022, there was a total of 51 PPP loans outstanding totaling $11.1 million, compared to 138 loans totaling $35.4 million at September 30, 2022.

Nonperforming loans, consisting of non-accrual loans and accruing loans that are 90 days or more past due, totaled $15.2 million or 0.75% of total loans at December 31, 2022, compared to $19.7 million or 0.99% of total loans at September 30, 2022, and $6.9 million or 0.41% of total loans at December 31, 2021. The decrease in nonperforming loans from the prior quarter was primarily due to repayment of $3.3 million in accruing SBA guaranteed PPP loans which were 90 days or more past due and in the process of forgiveness at September 30, 2022, and repayment of a $1.7 million participation interest in a shared national credit, which was restructured as a TDR and placed on non-accrual during the first quarter of 2022. The portion of nonaccrual loans guaranteed by government agencies totaled $839,000, $862,000, and $822,000 at December 31, 2022, September 30, 2022, and December 31, 2021, respectively. There was one loan totaling $934,000 that was 90 days or more past due, still accruing and in the process of collection at December 31, 2022, compared to $3.3 million in accruing SBA guaranteed PPP loans which were 90 days or more past due and in the process of forgiveness at September 30, 2022. Accruing loans past due between 30 and 89 days at December 31, 2022, were $1.5 million, compared to $5.3 million at September 30, 2022, and $3.8 million at December 31, 2021.

At December 31, 2022, the Company’s allowance for loan losses was $18.9 million, or 0.94% of total loans, compared to $18.1 million, or 0.90% of total loans, at September 30, 2022 and $17.7 million, or 1.06% of total loans, at December 31, 2021. The decrease in the allowance for loan losses as a percentage of total loans outstanding at December 31, 2022, as compared to December 31, 2021, was due to the Company’s acquisition of PEB and related acquisition accounting as acquired loans were recorded at their estimate fair value at acquisition and no allowance for loan losses was recorded. We recorded net recoveries of $233,000 for the fourth quarter of 2022, compared to net charge-offs of $944,000 in the prior quarter 2022 and net charge-offs of $95,000 in the same quarter in 2021.

In accordance with acquisition accounting, loans acquired from acquisitions were recorded at their estimated fair value, which resulted in a net discount to the loans contractual amounts. Credit discounts are included in the determination of fair value and as a result, no allowance for loan losses is recorded for acquired loans at the acquisition date. However, the allowance for loan loss includes an estimate for credit deterioration of acquired loans that occurs after the date of acquisition, which is included in the loan loss provision in the period that the deterioration occurred. The discount recorded on the acquired loans is not reflected in the allowance for loan losses or related allowance coverage ratios. As of December 31, 2022, acquired loans net of their discount totaled $257.9 million with a remaining net discount on these loans of $522,000, compared to $299.4 million of acquired loans with a remaining net discount of $480,000 at September 30, 2022, and $53.4 million of acquired loans with a remaining net discount of $2.1 million at December 31, 2021. The net discount includes a credit discount based on estimated losses in the acquired loans partially offset a premium, if any, based market interest rates on the date of acquisition.

Deposits and Borrowings

Deposits totaled $2.1 billion at both December 31, 2022, and September 30, 2022, and $2.0 billion at December 31, 2021. At December 31, 2022, noninterest bearing deposits totaled $773.3 million, or 37.1% of total deposits, compared to $813.5 million, or 38.5% of total deposits at September 30, 2022, and $710.1 million, or 35.8% of total deposits at December 31, 2021.

At both December 31, 2022 and September 30, 2022, the Company had outstanding junior subordinated debt, net of marked-to-market adjustments, related to junior subordinated deferrable interest debentures assumed in connection with its previous acquisitions totaling $8.5 million, compared to $8.4 million at December 31, 2021. At both December 31, 2022 and September 30, 2022, the Company also had outstanding subordinated debt, net of costs to issue, totaling $63.7 million compared to $63.5 million at December 31, 2021.

At December 31, 2022, September 30, 2022 and December 31, 2021, the Company had no other borrowings outstanding.

Shareholders’ Equity

Shareholders’ equity totaled $317.1 million at December 31, 2022, compared to $314.4 million at September 30, 2022, and $262.6 million at December 31, 2021. The increase from the prior period of 2022 reflects net income earned during the quarter, offset by repurchases of $4.2 million of common stock and $644,000 of accrued cash dividends payable for the quarter. In addition, shareholder’s equity was adversely impacted by increased unrealized losses on available for sale securities reflecting the increase in market interest rates during the current quarter, resulting in a $481,000 increase in accumulated other comprehensive loss, net of tax. At December 31, 2022, 480,773 shares remained available for future purchases under the current stock repurchase plan.

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 its affiliates in California, Washington, New Mexico and Colorado. 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.

There are a number of important 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 caused by increasing political instability from acts of war including Russia’s invasion of Ukraine, as well as increasing prices and supply chain disruptions, and any governmental or societal responses to new COVID-19 variants; expected revenues, cost savings, synergies and other benefits from our recent acquisition of PEB 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; future acquisitions by the Company of other depository institutions or lines of business; future acquisitions by the Company of other depository institutions or lines of business; fluctuations in interest rates, including the effects of inflation; 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 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,

 

2022

 

2022

 

2021

 

2022

 

2021

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

$

25,801

 

 

$

24,010

 

 

$

19,751

 

 

$

95,722

 

 

$

76,099

 

Investment securities

 

1,602

 

 

 

1,555

 

 

 

1,179

 

 

 

6,085

 

 

 

3,893

 

Fed funds sold and interest-bearing balances in banks

 

1,722

 

 

 

1,286

 

 

 

186

 

 

 

4,025

 

 

 

665

 

FHLB dividends

 

217

 

 

 

160

 

 

 

148

 

 

 

684

 

 

 

494

 

FRB dividends

 

162

 

 

 

126

 

 

 

117

 

 

 

549

 

 

 

458

 

Total interest and dividend income

 

29,504

 

 

 

27,137

 

 

 

21,381

 

 

 

107,065

 

 

 

81,609

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

1,963

 

 

 

1,387

 

 

 

1,201

 

 

 

6,273

 

 

 

4,875

 

Subordinated debt

 

896

 

 

 

896

 

 

 

896

 

 

 

3,582

 

 

 

3,582

 

Junior subordinated debt

 

176

 

 

 

129

 

 

 

84

 

 

 

496

 

 

 

345

 

Total interest expense

 

3,035

 

 

 

2,412

 

 

 

2,181

 

 

 

10,351

 

 

 

8,802

 

Net interest income

 

26,469

 

 

 

24,725

 

 

 

19,200

 

 

 

96,714

 

 

 

72,807

 

Provision for loan losses

 

617

 

 

 

1,194

 

 

 

496

 

 

 

4,441

 

 

 

466

 

Net interest income after provision for loan losses

 

25,852

 

 

 

23,531

 

 

 

18,704

 

 

 

92,273

 

 

 

72,341

 

Noninterest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of loans

 

33

 

 

 

1,278

 

 

 

1,090

 

 

 

2,747

 

 

 

4,795

 

Service charges and other fees

 

942

 

 

 

817

 

 

 

584

 

 

 

3,107

 

 

 

2,403

 

Loan servicing fees and other fees

 

507

 

 

 

488

 

 

 

410

 

 

 

2,176

 

 

 

1,833

 

(Loss) income on investment in SBIC fund

 

(225

)

 

 

(63

)

 

 

253

 

 

 

(70

)

 

 

1,274

 

Bargain purchase gain

 

 

 

 

 

 

 

 

 

 

1,665

 

 

 

 

Other income and fees

 

252

 

 

 

224

 

 

 

232

 

 

 

1,048

 

 

 

963

 

Total noninterest income

 

1,509

 

 

 

2,744

 

 

 

2,569

 

 

 

10,673

 

 

 

11,268

 

Noninterest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

10,729

 

 

 

10,164

 

 

 

8,603

 

 

 

40,480

 

 

 

33,761

 

Occupancy and equipment

 

1,996

 

 

 

2,043

 

 

 

1,774

 

 

 

8,384

 

 

 

7,384

 

Data processing

 

1,467

 

 

 

1,562

 

 

 

1,330

 

 

 

6,969

 

 

 

5,565

 

Other expense

 

2,116

 

 

 

2,327

 

 

 

2,048

 

 

 

10,102

 

 

 

8,419

 

Total noninterest expense

 

16,308

 

 

 

16,096

 

 

 

13,755

 

 

 

65,935

 

 

 

55,129

 

Income before provision for income taxes

 

11,052

 

 

 

10,179

 

 

 

7,518

 

 

 

37,011

 

 

 

28,480

 

Provision for income taxes

 

3,000

 

 

 

2,950

 

 

 

2,080

 

 

 

10,024

 

 

 

7,789

 

Net income

$

8,047

 

 

$

7,229

 

 

$

5,438

 

 

$

26,987

 

 

$

20,691

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.62

 

 

$

0.54

 

 

$

0.51

 

 

$

2.06

 

 

$

1.90

 

Diluted

 

0.62

 

 

 

0.54

 

 

 

0.51

 

 

 

2.06

 

 

 

1.90

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares used to compute net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

12,960,723

 

 

 

13,307,555

 

 

 

10,683,702

 

 

 

13,124,179

 

 

 

10,882,344

 

Diluted

 

12,960,723

 

 

 

13,307,555

 

 

 

10,683,702

 

 

 

13,124,179

 

 

 

10,882,344

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

8,047

 

 

$

7,229

 

 

$

5,438

 

 

$

26,987

 

 

$

20,691

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized loss on available-for-sale securities

 

(677

)

 

 

(7,198

)

 

 

(458

)

 

 

(23,848

)

 

 

(740

)

Deferred tax benefit

 

196

 

 

 

2,071

 

 

 

132

 

 

 

6,864

 

 

 

209

 

Other comprehensive loss, net of tax

 

(481

)

 

 

(5,127

)

 

 

(326

)

 

 

(16,984

)

 

 

(531

)

Comprehensive income

$

7,566

 

$

2,102

 

$

5,112

 

$

10,003

 

$

20,160

 

BAYCOM CORP

STATEMENTS OF CONDITION (UNAUDITED)

At December 31, 2022, September 30, 2022, December 31, 2021

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

September 30,

 

December 31,

 

 

2022

 

2022

 

2021

Assets

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

26,980

 

 

$

32,206

 

 

$

21,178

 

Federal funds sold and interest-bearing balances in banks

 

 

149,835

 

 

 

192,475

 

 

 

358,509

 

Cash and cash equivalents

 

 

176,815

 

 

 

224,681

 

 

 

379,687

 

Time deposits in banks

 

 

2,241

 

 

 

2,490

 

 

 

3,585

 

Investment securities available-for-sale

 

 

167,761

 

 

 

167,213

 

 

 

174,435

 

Federal Home Loan Bank ("FHLB") stock, at par

 

 

10,679

 

 

 

10,679

 

 

 

8,385

 

Federal Reserve Bank ("FRB") stock, at par

 

 

9,602

 

 

 

9,595

 

 

 

7,650

 

Loans held for sale

 

 

2,380

 

 

 

3,491

 

 

 

6,470

 

Loans, net of deferred fees

 

 

2,021,124

 

 

 

1,994,966

 

 

 

1,664,890

 

Allowance for loans losses

 

 

(18,900

)

 

 

(18,050

)

 

 

(17,700

)

Premises and equipment, net

 

 

13,278

 

 

 

13,697

 

 

 

14,370

 

Other real estate owned ("OREO")

 

 

21

 

 

 

21

 

 

 

21

 

Core deposit intangible

 

 

5,201

 

 

 

5,718

 

 

 

6,489

 

Cash surrender value of bank owned life insurance policies, net

 

 

22,193

 

 

 

22,043

 

 

 

21,590

 

Right-of-use assets

 

 

16,569

 

 

 

15,875

 

 

 

12,127

 

Goodwill

 

 

38,838

 

 

 

38,838

 

 

 

38,838

 

Interest receivable and other assets

 

 

45,532

 

 

 

43,241

 

 

 

29,860

 

Total Assets

 

$

2,513,334

 

 

$

2,534,498

 

 

$

2,350,697

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

Noninterest bearing deposits

 

$

773,274

 

 

$

813,510

 

 

$

710,137

 

Interest bearing deposits

 

 

 

 

 

 

 

 

 

Transaction accounts and savings

 

 

837,289

 

 

 

937,076

 

 

 

916,379

 

Premium money market

 

 

181,567

 

 

 

140,377

 

 

 

136,563

 

Time deposits

 

 

293,349

 

 

 

224,488

 

 

 

222,160

 

Total deposits

 

 

2,085,479

 

 

 

2,115,451

 

 

 

1,985,239

 

Junior subordinated deferrable interest debentures, net

 

 

8,484

 

 

 

8,464

 

 

 

8,403

 

Subordinated debt, net

 

 

63,711

 

 

 

63,669

 

 

 

63,542

 

Salary continuation plans

 

 

4,840

 

 

 

4,724

 

 

 

4,393

 

Lease liabilities

 

 

17,138

 

 

 

16,411

 

 

 

12,657

 

Interest payable and other liabilities

 

 

16,533

 

 

 

11,376

 

 

 

13,856

 

Total liabilities

 

 

2,196,185

 

 

 

2,220,095

 

 

 

2,088,090

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ Equity

 

 

 

 

 

 

 

 

 

Common stock, no par value

 

 

204,588

 

 

 

208,770

 

 

 

157,385

 

Retained earnings

 

 

127,379

 

 

 

119,971

 

 

 

103,056

 

Accumulated other comprehensive (loss) income, net of tax

 

 

(14,818

)

 

 

(14,338

)

 

 

2,166

 

Total shareholders’ equity

 

 

317,149

 

 

 

314,403

 

 

 

262,607

 

Total Liabilities and Shareholders’ Equity

 

$

2,513,334

 

 

$

2,534,498

 

 

$

2,350,697

 

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:

 

2022

2022

2021

 

2022

2021

Performance Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (1)

 

 

1.28

%

 

1.11

%

 

0.92

%

 

 

1.03

%

 

0.89

%

Return on average equity (1)

 

 

10.15

 

 

8.97

 

 

8.33

 

 

 

8.50

 

 

8.06

 

Yield on earning assets (1)

 

 

4.91

 

 

4.38

 

 

3.79

 

 

 

4.31

 

 

3.74

 

Rate paid on average interest-bearing liabilities

 

 

0.89

 

 

0.66

 

 

0.64

 

 

 

0.70

 

 

0.67

 

Interest rate spread - average during the period

 

 

4.02

 

 

3.72

 

 

3.15

 

 

 

3.61

 

 

3.07

 

Net interest margin (1)

 

 

4.40

 

 

3.99

 

 

3.41

 

 

 

3.90

 

 

3.34

 

Loan to deposit ratio

 

 

96.91

 

 

94.30

 

 

83.86

 

 

 

96.91

 

 

83.86

 

Efficiency ratio (2)

 

 

58.29

 

 

58.60

 

 

63.19

 

 

 

61.40

 

 

65.57

 

(Recoveries)/charge-offs, net

 

$

(233

)

$

944

 

$

95

 

 

$

3,241

 

$

266

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Data:

 

 

 

 

 

 

 

 

 

 

 

 

Shares outstanding at end of period

 

 

12,838,462

 

 

13,075,447

 

 

10,680,386

 

 

 

12,838,462

 

 

10,680,386

 

Average diluted shares outstanding

 

 

12,960,723

 

 

13,307,555

 

 

10,683,702

 

 

 

13,124,179

 

 

10,882,344

 

Diluted earnings per share

 

$

0.62

 

$

0.54

 

$

0.51

 

 

$

2.06

 

$

1.90

 

Book value per share

 

 

24.70

 

 

24.05

 

 

24.59

 

 

 

24.70

 

 

24.14

 

Tangible book value per share (3)

 

 

21.27

 

 

20.64

 

 

20.34

 

 

 

21.27

 

 

20.34

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Quality Data:

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming assets to total assets (4)

 

 

0.61

%

 

0.78

%

 

0.29

%

 

 

 

 

 

Nonperforming loans to total loans (5)

 

 

0.75

%

 

0.99

%

 

0.41

%

 

 

 

 

 

Allowance for loan losses to nonperforming loans (5)

 

 

124.16

%

 

91.70

%

 

256.98

%

 

 

 

 

 

Allowance for loan losses to total loans

 

 

0.94

%

 

0.90

%

 

1.06

%

 

 

 

 

 

Classified assets (graded substandard and doubtful)

 

$

20,355

 

$

23,904

 

$

13,062

 

 

 

 

 

 

Total accruing loans 30‑89 days past due

 

 

1,497

 

 

5,343

 

 

3,832

 

 

 

 

 

 

Total loans 90 days past due and still accruing

 

 

934

 

 

3,315

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Ratios (6):

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 leverage ratio - Bank

 

 

13.64

%

 

12.90

%

 

10.87

%

 

 

 

 

 

Common equity tier 1 - Bank

 

 

16.42

%

 

16.16

%

 

14.60

%

 

 

 

 

 

Tier 1 capital ratio - Bank

 

 

16.42

%

 

16.16

%

 

14.60

%

 

 

 

 

 

Total capital ratio - Bank

 

 

17.36

%

 

17.07

%

 

15.65

%

 

 

 

 

 

Equity to total assets at end of period

 

 

12.62

%

 

12.40

%

 

11.17

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

$

1,806,187

 

$

1,746,157

 

$

1,407,860

 

 

 

 

 

 

Non-real estate

 

 

201,252

 

 

233,178

 

 

254,131

 

 

 

 

 

 

Nonaccrual loans

 

 

14,289

 

 

16,369

 

 

6,888

 

 

 

 

 

 

Mark to fair value at acquisition

 

 

(522

)

 

(480

)

 

(2,086

)

 

 

 

 

 

Total Loans

 

 

2,021,206

 

 

1,995,224

 

 

1,666,793

 

 

 

 

 

 

Net deferred fees on loans (7)

 

 

(82

)

 

(258

)

 

(1,903

)

 

 

 

 

 

Loans, net of deferred fees

 

$

2,021,124

 

$

1,994,966

 

$

1,664,890

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Data:

 

 

 

 

 

 

 

 

 

 

 

 

Number of full-service offices

 

 

34

 

 

34

 

 

33

 

 

 

 

 

 

Number of full-time equivalent employees

 

 

374

 

 

375

 

 

307

 

 

 

 

 

 

(1)

 

Annualized.

(2)

 

Total noninterest expense as a percentage of net interest income and total noninterest income.

(3)

 

Tangible book value per share using outstanding common shares excludes goodwill and intangible assets. This ratio 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 $94,000, $227,000 and $2.0 million as of December 31, 2022, September 30, 2022, and December 31, 2021, 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 the tangible book value per share, a non-GAAP financial measure. 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 common shareholders’ equity is calculated by excluding intangible assets from shareholders’ equity. For this financial measure, the Company’s intangible assets are goodwill and core deposit intangibles. The Company believes that this measure is consistent with the capital treatment by our bank regulatory agencies, which excludes intangible assets from the calculation of risk-based capital ratios, and presents this measure to facilitate comparison of the quality and composition of the Company’s capital over time in comparison to its competitors. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Further, these non-GAAP financial measure 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 a similarly titled measure 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,

 

 

2022

2022

2021

Tangible Book Value:

 

 

Total common shareholders’ equity

 

$

317,149

 

$

314,404

 

$

262,607

 

less: Goodwill and other intangibles

 

 

44,039

 

 

44,556

 

 

45,327

 

Tangible common shareholders’ equity

 

$

273,110

 

$

269,848

 

$

217,280

 

 

 

 

 

 

 

 

 

Total assets

 

$

2,513,334

 

$

2,534,498

 

$

2,350,697

 

less: Goodwill and other intangibles

 

 

44,039

 

 

44,556

 

 

45,327

 

Total tangible assets

 

$

2,469,295

 

$

2,489,942

 

$

2,305,370

 

 

 

 

 

 

 

 

 

Tangible equity to tangible assets

 

 

11.06

%

 

10.84

%

 

9.42

%

Average equity to average assets

 

 

12.12

%

 

11.96

%

 

11.05

%

Tangible book value per share

 

$

21.27

 

$

20.64

 

$

20.34

 

 

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