CALIFORNIA BANCORP REPORTS NET INCOME OF $14.1 MILLION FOR THE SECOND QUARTER OF 2025
28-Jul-2025 08:00:23 EDT
CALIFORNIA BANCORP REPORTS NET INCOME OF $14.1 MILLION FOR THE SECOND QUARTER OF 2025
GlobeNewswire July 28, 2025
San Diego, Calif., July 28, 2025 (GLOBE NEWSWIRE) — California BanCorp (“us,” “we,” “our,” or the “Company”) (NASDAQ: BCAL), the holding company for California Bank of Commerce, N.A. (the “Bank”) announces its consolidated financial results for the second quarter of 2025.
The Company reported net income of $14.1 million, or $0.43 per diluted share, for the second quarter of 2025, compared to $16.9 million, or $0.52 per diluted share for the first quarter of 2025, and net income of $190 thousand, or $0.01 per diluted share for the second quarter of 2024.
“We are pleased to report strong second quarter earnings of $14.1 million, the third consecutive strong quarter of combined financial results since the close of our merger last July,” said David Rainer, Executive Chairman of the Company and Bank.
“Earlier this year we announced a strategy to derisk our consolidated balance sheet by decreasing our exposure in the Sponsor Finance portfolio, reducing our reliance on brokered deposits and improving overall credit quality. I am pleased to report that the Sponsor Finance portfolio continued to decline in the second quarter and we expect the remainder will likely run off by year end. The reduction in credit risk in our total loan portfolio is reflected in a significant decrease in our non-performing assets to total assets ratio to 0.46% from 0.68%, as well as a significant decrease in special mention and substandard loans from the prior quarter.
“During the second quarter we successfully completed the winding down of our brokered deposits. Going forward, we are focused on organic loan and deposit growth through our relationship-based business banking franchise and our footprint covering the biggest markets for small to medium-sized businesses in the state of California.”
“Our strong second quarter results are further evidence of our successful integration and the value of our combined operations,” said Steven Shelton, CEO of the Company and Bank. “We continue to monitor the effect of tariffs and trade negotiations on our clients and can report we do not expect to see an impact on client operations from those events. We have minimal exposure to international trade, although some of our clients do source materials from outside the country. However, we have observed that some clients have expressed hesitancy in initiating projects due to the uncertain economic environment. Regardless, we continue to develop new relationships across the state of California, providing all our clients with the outstanding high-touch, relationship-based service associated with California Bank of Commerce.”
Second Quarter 2025 Highlights
Net income of $14.1 million or $0.43 diluted earnings per share for the second quarter.
Net interest margin of 4.61%, compared with 4.65% in the prior quarter; average total loan yield of 6.58% compared with 6.61% in the prior quarter.
Reversal of credit losses of $634 thousand for the second quarter, compared with $3.8 million for the prior quarter.
Return on average assets of 1.45%, compared with 1.71% in the prior quarter.
Return on average common equity of 10.50%, compared with 13.18% in the prior quarter.
Efficiency ratio (non-GAAP1) of 56.1% compared with 55.6% in the prior quarter.
Redemption of subordinated notes at par value aggregating $18.0 million.
Tangible book value per common share (non-GAAP1) of $12.82 at June 30, 2025, up $0.53 from $12.29 at March 31, 2025.
Total assets of $3.95 billion at June 30, 2025, compared with $3.98 billion at March 31, 2025.
Total loans, including loans held for sale of $3.00 billion at June 30, 2025, compared with $3.07 billion at March 31, 2025.
Nonperforming assets to total assetsratio of 0.46% at June 30, 2025, compared with 0.68% at March 31, 2025.
Allowance for credit losses (“ACL”) was 1.46% of total loans held for investment at June 30, 2025; allowance for loan losses (“ALL”) was 1.37% of total loans held for investment at June 30, 2025.
Total deposits of $3.31 billion at June 30, 2025, decreased $30.2 million or 0.9% compared with $3.34 billion at March 31, 2025.
Noninterest-bearing demand deposits of $1.22 billion at June 30, 2025, a decrease of $74.6 million or 5.8% from March 31, 2025; noninterest bearing deposits represented 36.8% of total deposits, compared with $1.29 billion, or 38.7% of total deposits at March 31, 2025.
Cost of deposits was 1.59%, consistent with 1.59% in the prior quarter.
Cost of funds was 1.73%, compared with 1.72% in the prior quarter.
The Company's preliminary capital ratios at June 30, 2025exceed the minimums required to be “well-capitalized,“ the highest regulatory capital category.
Second Quarter Operating Results
Net Income
Net income for the second quarter of 2025 was $14.1 million, or $0.43 per diluted share, compared to $16.9 million, or $0.52 per diluted share in the first quarter of 2025. Pre-tax, pre-provision income (non-GAAP1) for the second quarter was $19.4 million, a decrease of $461 thousand from the prior quarter. The net income and diluted earnings per share decreases were largely driven by lower net interest income after reversal of credit losses, partially offset by higher noninterest income.
Net Interest Income and Net Interest Margin
Net interest income for the second quarter of 2025 was $41.4 million, compared with $42.3 million in the prior quarter. The decrease in net interest income was primarily due to a $1.0 million decrease in total interest and dividend income, partially offset by a $201 thousand decrease in total interest expense in the second quarter of 2025, as compared to the prior quarter. During the second quarter of 2025, loan interest income decreased by $1.6 million, including a decrease of $496 thousand of accretion income from the net purchase accounting discounts on acquired loans, partially offset by increases of $226 thousand in total debt securities income and $341 thousand in interest and dividend income from other financial institutions. The decrease in interest income was mainly due to decreases in average total loan balances. Average total interest-earning assets decreased $78.2 million in the second quarter of 2025, the result of a $117.4 million decrease in average total loans and a $21.0 million decrease in average deposits in other financial institutions, partially offset by a $25.0 million increase in average total debt securities and a $35.2 million increase in average Fed funds sold/resale agreements. The decrease in interest expense for the second quarter of 2025 was primarily due to a $239 thousand decrease in interest expense on interest-bearing deposits, the result of a $26.4 million decrease in average interest-bearing deposits and a 4 basis point decrease in average interest-bearing deposit costs in the second quarter of 2025.
Net interest margin for the second quarter of 2025 was 4.61%, compared with 4.65% in the prior quarter. The decrease was primarily related to a 5 basis point decrease in the total interest-earning assets yield, coupled with a 1 basis point increase in the cost of funds. The yield on total average interest-earning assets in the second quarter of 2025 was 6.21%, compared with 6.26% in the prior quarter. The yield on average total loans in the second quarter of 2025 was 6.58%, a decrease of 3 basis points from 6.61% in the prior quarter. Accretion income from the net purchase accounting discounts on acquired loans was $5.2 million, increasing the yield on average total loans by 69 basis points; the net amortization expense from the purchase accounting discounts on acquired subordinated debt and acquired time deposits premium increased the interest expense by $555 thousand, the combination of which increased the net interest margin by 51 basis points in the second quarter of 2025. In the prior quarter, accretion income from the net purchase accounting discounts on acquired loans was $5.7 million, increasing the yield on average total loans by 74 basis points; the net amortization expense from the purchase accounting discounts on acquired subordinated debt and acquired time deposits premium increased the interest expense by $526 thousand, the combination of which increased the net interest margin by 57 basis points.
Cost of funds for the second quarter of 2025 was 1.73%, a slight increase of 1 basis point from 1.72% in the prior quarter. The increase was primarily driven by an increase of 47 basis points in the cost of total borrowings, which was driven mostly by the decrease in average total borrowings of $2.9 million from the redemption of the $18 million subordinated notes in June, coupled with higher borrowing expense related to those subordinated notes converting to a floating-rate during the second quarter of 2025 and up to redemption, partially offset by a 4 basis point decrease in the cost of average interest-bearing deposits. The amortization expense of $560 thousand from the purchase accounting discounts on acquired subordinated debt contributed 7 basis points to the cost on total borrowings. Average noninterest-bearing demand deposits decreased $76.1 million to $1.18 billion and represented 36.2% of total average deposits for the second quarter of 2025, compared with $1.26 billion and 37.4%, respectively, in the prior quarter; average interest-bearing deposits decreased $26.4 million to $2.08 billion during the second quarter of 2025. The total cost of deposits in the second quarter of 2025 was maintained at 1.59%,the same as the prior quarter. The cost of total interest-bearing deposits decreased 4 basis points primarily due to the Company's ongoing strategy to pay off high cost brokered deposits and listing money market deposits in the second quarter of 2025.
Average total borrowings decreased $2.9 million to $67.2 million in the second quarter of 2025, primarily due to the redemption of the $18 million subordinated notes in June 2025. The average cost of total borrowings was 8.53% for the second quarter of 2025, up from 8.06% in the prior quarter.
Reversal of Credit Losses
The Company recorded a reversal of credit losses of $634 thousand for the second quarter of 2025, compared to $3.8 million in the prior quarter. Total net charge-offs were $4.1 million in the second quarter of 2025, which consisted of $4.2 million of gross charge-offs, offset by $181 thousand of gross recoveries. The net charge-offs resulted from the Company's continuing strategy to derisk the consolidated balance sheet by reducing our exposure to criticized loans. The reversal of credit losses in the second quarter of 2025 included a $29 thousand provision for credit losses for unfunded loan commitments related to the increase in unfunded loan commitments during the second quarter of 2025, partially offset by a decrease in average funding rates used to estimate the allowance for credit losses on unfunded commitments. Total unfunded loan commitments increased $9.1 million to $901.2 million at June 30, 2025, compared to $892.1 million in unfunded loan commitments at March 31, 2025.
The reversal of credit losses for loans held for investment in the second quarter of 2025 was $663 thousand, a decrease of $2.5 million from a reversal of credit losses of $3.2 million in the prior quarter. The decrease was driven primarily by the decrease in the balance of loans held for investment, changes in the composition of the loans held for investment portfolio, and changes in qualitative factors, partially offset by the net charge-offs and changes in the reasonable and supportable forecast, primarily related to the economic outlook for California. The Company's management continues to monitor macroeconomic variables related to changes in interest rates and the concerns of an economic downturn, and believes it has appropriately provisioned for the current environment.
Noninterest Income
The Company recorded noninterest income of $2.9 million in the second quarter of 2025, an increase of $290 thousand compared to $2.6 million in the first quarter of 2025. Other charges and fees increased $874 thousand in the second quarter due primarily to higher income from equity investments. There was no gain on sale of SBA 7A loans in the second quarter of 2025, compared to a gain on sale of loans from SBA 7A loan sales of $577 thousand in the prior quarter.
Noninterest Expense
Total noninterest expense for the second quarter of 2025 was $24.8 million, a slight decrease of $87 thousand from total noninterest expense of $24.9 million in the prior quarter. Salaries and employee benefits decreased $571 thousand during the second quarter of 2025 to $15.3 million. The decrease in salaries and employee benefits was primarily related to the decrease in payroll taxes, coupled with the increase in loan origination costs with increased loan origination activity. Regulatory assessments of $545 thousand decreased $177 thousand due to a decrease in the FDIC assessment rates in the second quarter of 2025. During the second quarter of 2025, the Company sold other real estate owned (“OREO”) and recognized a $862 thousand loss. There was no comparable transaction in the prior quarter.
Efficiency ratio (non-GAAP1) for the second quarter of 2025 was 56.1%, compared to 55.6% in the prior quarter. The $862 thousand loss on sale of other real estate owned negatively impacted the efficiency ratio by 1.9% during the second quarter of 2025.
Income Tax
In the second quarter of 2025, the Company's income tax expense was $6.0 million, compared with $6.8 million for the first quarter of 2025. The effective rate was 29.8% for the second quarter of 2025 and 28.8% for the first quarter of 2025. The increase in the effective tax rate for the second quarter of 2025 was primarily attributable to the vesting and exercise of equity awards combined with changes in the Company's stock price over time.
Balance Sheet
Assets
Total assets at June 30, 2025 were $3.95 billion, a decrease of $29.4 million or 0.7% from March 31, 2025. The decrease in total assets from the prior quarter was primarily related to a decrease in loans, including loans held for sale, of $75.8 million, a decrease in cash and cash equivalents of $9.1 million and a decrease in OREO of $4.1 million, partially offset by an increase in available-for-sale debt securities of $56.6 million and a decrease in the allowance for credit losses on loans of $4.7 million, as compared to the prior quarter.
Loans
Total loans held for investment were $2.99 billion at June 30, 2025, a decrease of $77.2 million, compared to March 31, 2025. During the second quarter of 2025, there were new originations of $106.4 million, partially offset by net paydowns of $45.8 million, loan payoffs of $133.7 million, and charge-offs of loans in the amount of $4.2 million. Total loans secured by real estate decreased by $11.8 million, of which construction and land development loans decreased by $36.7 million and 1-4 family residential loans decreased by $17.6 million, partially offset by increases in other commercial real estate loans of $22.0 million and multifamily loans of $20.5 million. Commercial and industrial loans decreased by $64.6 million, and other consumer loans decreased by $779 thousand. The Company had $6.1 million in loans held for sale at June 30, 2025, compared to $4.6 million at March 31, 2025.
Deposits
Total deposits at June 30, 2025 were $3.31 billion, a decrease of $30.2 million from March 31, 2025. The decrease primarily consisted of decreases of $10.0 million of brokered time deposits and $74.6 million of noninterest-bearing demand deposits, partially offset by increases of $62.5 million in interest-bearing non-maturity deposits and $8.1 million of non-brokered time deposits. Noninterest-bearing demand deposits at June 30, 2025, were $1.22 billion, or 36.8% of total deposits, compared with $1.29 billion, or 38.7% of total deposits at March 31, 2025. At June 30, 2025, total interest-bearing deposits were $2.09 billion, compared to $2.05 billion at March 31, 2025. At June 30, 2025, total brokered time deposits were $3.8 million, compared to $13.8 million at March 31, 2025. The Company offers the Insured Cash Sweep (ICS) product, Certificate of Deposit Account Registry Service (CDARS), and Reich & Tang Deposit Solutions (R&T) network, all of which provide reciprocal deposit placement services to fully qualified large customer deposits for FDIC insurance among other participating banks. Total reciprocal deposits were $730.6 million, or 22.1% of total deposits at June 30, 2025, compared to $763.6 million, or 22.8% of total deposits at March 31, 2025.
Federal Home Loan Bank (“FHLB”) and Liquidity
At June 30, 2025 and March 31, 2025, the Company had no FHLB borrowings. There were no outstanding Federal Reserve Discount Window borrowings at June 30, 2025 or March 31, 2025.
At June 30, 2025, the Company had available borrowing capacity from an FHLB secured line of credit of approximately $682.6 million and available borrowing capacity from the Federal Reserve Discount Window of approximately $320.4 million. The Company also had available borrowing capacity from four unsecured credit lines from correspondent banks of approximately $90.5 million at June 30, 2025, with no outstanding borrowings. Total available borrowing capacity was $1.09 billion at June 30, 2025. Additionally, the Company had unpledged liquid securities at fair value of approximately $169.9 million and cash and cash equivalents of $430.1 million at June 30, 2025.
Total borrowings decreased $17.4 million to $52.9 million June 30, 2025. During the second quarter of 2025, the Company redeemed all $18.0 million of its 5.50% fixed-to-floating rate subordinated notes due in 2030 at par value.
Asset Quality
Total non-performing assets decreased to $18.4 million, or 0.46% of total assets at June 30, 2025, compared with $26.9 million, or 0.68% of total assets at March 31, 2025. Total non-performing loans decreased to $18.4 million, or 0.61% of total loans held for investment at June 30, 2025, compared with $22.8 million, or 0.74% of total loans held for investment at March 31, 2025.
There were two loans repayments at discount totaling $4.4 million, which included a $635 thousand charge-off. No loans were downgraded to nonaccrual during the second quarter of 2025. At March 31, 2025, non-performing assets included OREO, net of $4.1 million which was sold in the second quarter of 2025, resulting in an $862 thousand loss.
Special mention loans decreased by $9.2 million during the second quarter of 2025 to $65.3 million at June 30, 2025. The decrease in the special mention loans was due mostly to $10.1 million in loans upgraded to a pass rating and $5.1 million in payoffs and $256 thousand in net paydowns, partially offset by $6.3 million in loans downgraded from a pass rating. Substandard loans decreased by $30.3 million during the second quarter of 2025 to $81.5 million at June 30, 2025. The decrease in the substandard loans was due primarily to $26.9 million in payoffs, $4.4 million in charge-offs and $698 thousand in loans upgraded to a pass rating, partially offset by $1.6 million in net advances and $115 thousand in loans downgraded from a pass rating.
The Company had no loans that were over 90 days past due and still accruing interest at June 30, 2025, compared to $45 thousand in such delinquencies at March 31, 2025.
There were $546 thousand in loan delinquencies (30-89 days past due, excluding nonaccrual loans) at June 30, 2025, compared to $5.1 million in such loan delinquencies at March 31, 2025. The decrease was due primarily to a commercial real estate loan of $4.2 million that was paid off in the second quarter of 2025.
The allowance for credit losses, which is comprised of the allowance for loan losses (“ALL”) and reserve for unfunded loan commitments, totaled $43.6 million at June 30, 2025, compared to $48.3 million at March 31, 2025. The decrease in the allowance for credit losses included a $663 thousand reversal of provision for credit losses for the loan portfolio and net charge-offs of $4.1 million, partially offset by a $29 thousand provision for credit losses for unfunded loan commitments for the quarter ended June 30, 2025.
The ALL was $41.1 million, or 1.37% of total loans held for investment at June 30, 2025, compared with $45.8 million, or 1.49% at March 31, 2025.
Capital
Tangible book value per common share (non-GAAP1) at June 30, 2025, was $12.82, compared with $12.29 at March 31, 2025. In the second quarter of 2025, tangible book value was primarily impacted by net income of $14.1 million for the second quarter, stock-based compensation activity, coupled with a decrease in net of tax unrealized losses on available-for-sale debt securities. Other comprehensive losses related to unrealized losses, net of taxes, on available-for-sale debt securities decreased by $679 thousand to $3.7 million at June 30, 2025, from $4.4 million at March 31, 2025. The decrease in the net of tax unrealized losses on available-for-sale debt securities was attributable to non-credit related factors, including an increase in bond prices at the long end of the yield curve and the general interest rate environment. Tangible common equity (non-GAAP1) as a percentage of total tangible assets (non-GAAP1) at June 30, 2025, increased to 10.89% from 10.34% in the prior quarter, and unrealized losses, net of taxes, on available-for-sale debt securities as a percentage of tangible common equity (non-GAAP1) at June 30, 2025 decreased to 0.9% from 1.1% in the prior quarter.
The Company's preliminary capital ratios exceed the minimums required to be “well-capitalized” at June 30, 2025.
ABOUT CALIFORNIA BANCORP
California BanCorp (NASDAQ: BCAL) is a registered bank holding company headquartered in San Diego, California. California Bank of Commerce, N.A., a national banking association chartered under the laws of the United States (the “Bank”) and regulated by the Office of Comptroller of the Currency, is a wholly owned subsidiary of California BanCorp. Established in 2001 and headquartered in San Diego, California, the Bank offers a range of financial products and services to individuals, professionals, and small to medium-sized businesses through its 14 branch offices and four loan production offices serving Northern and Southern California. The Bank's solutions-driven, relationship-based approach to banking provides accessibility to decision makers and enhances value through strong partnerships with its clients. Additional information is available at www.bankcbc.com.
In addition to historical information, this release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and other matters that are not historical facts. Examples of forward-looking statements include, among others, statements regarding expectations, plans or objectives for future operations, products or services, loan recoveries, projections, and expectations regarding the adequacy of reserves for credit losses, as well as forecasts relating to financial and operating results or other measures of economic performance. Forward-looking statements reflect management's current view about future events and involve risks and uncertainties that may cause actual results to differ from those expressed in the forward-looking statement or historical results. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and often include the words or phrases such as “aim,” “can,” “may,” “could,” “predict,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “hope,” “intend,” “plan,” “potential,” “project,” “will likely result,” “continue,” “seek,” “shall,” “possible,” “projection,” “optimistic,” and “outlook,” and variations of these words and similar expressions.
Factors that could cause or contribute to results differing from those in or implied in the forward-looking statements include but are not limited to the impact of bank failures or other adverse developments at other banks on general investor sentiment regarding the stability and liquidity of banks, changes in real estate markets and valuations; the impact on financial markets from geopolitical conflicts; inflation, interest rate, market and monetary fluctuations and general economic conditions, either nationally or locally in the areas in which the Company conducts business; increases in competitive pressures among financial institutions and businesses offering similar products and services; general credit risks related to lending, including changes in the value of real estate or other collateral, the financial condition of borrowers, the effectiveness of our underwriting practices and the risk of fraud; higher than anticipated defaults in the Company's loan portfolio; changes in management's estimate of the adequacy of the allowance for credit losses or the factors the Company uses to determine the allowance for credit losses; changes in demand for loans and other products and services offered by the Company; the costs and outcomes of litigation; legislative or regulatory changes or changes in accounting principles, policies or guidelines and other risk factors discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission (“SEC”) and other documents the Company may file with the SEC from time to time.
Additional information regarding these and other risks and uncertainties to which our business and future financial performance are subject is contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, and other documents the Company files with the SEC from time to time.
Any forward-looking statement made in this release is based only on information currently available to management and speaks only as of the date on which it is made. The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements or to conform such forward-looking statements to actual results or to changes in its opinions or expectations, except as required by law.
California BanCorp and Subsidiary Financial Highlights (Unaudited)
At or for the Three Months Ended
At or for the Six Months Ended
June 30, 2025
March 31, 2025
June 30, 2024
June 30, 2025
June 30, 2024
EARNINGS
($ in thousands except share and per share data)
Net interest income
$
41,417
$
42,255
$
21,007
$
83,672
$
41,501
Reversal of credit losses
$
(634
)
$
(3,776
)
$
2,893
$
(4,410
)
$
2,562
Noninterest income
$
2,856
$
2,566
$
1,169
$
5,422
$
2,582
Noninterest expense
$
24,833
$
24,920
$
19,005
$
49,753
$
33,986
Income tax expense
$
5,975
$
6,824
$
88
$
12,799
$
2,410
Net income
$
14,099
$
16,853
$
190
$
30,952
$
5,125
Pre-tax pre-provision income (1)
$
19,440
$
19,901
$
3,171
$
39,341
$
10,097
Adjusted pre-tax pre-provision income (1)
$
19,440
$
19,901
$
3,662
$
39,341
$
11,137
Diluted earnings per share
$
0.43
$
0.52
$
0.01
$
0.95
$
0.27
Shares outstanding at period end
32,463,311
32,402,140
18,547,352
32,463,311
18,547,352
PERFORMANCE RATIOS
Return on average assets
1.45
%
1.71
%
0.03
%
1.58
%
0.45
%
Adjusted return on average assets (1)
1.45
%
1.71
%
0.11
%
1.58
%
0.53
%
Return on average common equity
10.50
%
13.18
%
0.26
%
11.81
%
3.53
%
Adjusted return on average common equity (1)
10.50
%
13.18
%
0.82
%
11.81
%
4.19
%
Yield on total loans
6.58
%
6.61
%
6.21
%
6.59
%
6.11
%
Yield on interest earning assets
6.21
%
6.26
%
5.97
%
6.24
%
5.88
%
Cost of deposits
1.59
%
1.59
%
2.12
%
1.59
%
2.08
%
Cost of funds
1.73
%
1.72
%
2.21
%
1.73
%
2.19
%
Net interest margin
4.61
%
4.65
%
3.94
%
4.63
%
3.87
%
Efficiency ratio (1)
56.09
%
55.60
%
85.70
%
55.84
%
77.10
%
Adjusted efficiency ratio (1)
56.09
%
55.60
%
83.49
%
55.84
%
74.74
%
As of
June 30, 2025
March 31, 2025
December 31, 2024
CAPITAL
($ in thousands except share and per share data)
Tangible equity to tangible assets (1)
10.89
%
10.34
%
9.69
%
Book value (BV) per common share
$
16.87
$
16.40
$
15.86
Tangible BV per common share (1)
$
12.82
$
12.29
$
11.71
ASSET QUALITY
Allowance for loan losses (ALL)
$
41,110
$
45,839
$
50,540
Reserve for unfunded loan commitments
$
2,514
$
2,485
$
3,103
Allowance for credit losses (ACL)
$
43,624
$
48,324
$
53,643
Allowance for loan losses to nonperforming loans
2.24
x
2.01
x
1.90
x
ALL to total loans held for investment
1.37
%
1.49
%
1.61
%
ACL to total loans held for investment
1.46
%
1.57
%
1.71
%
30-89 days past due, excluding nonaccrual loans
$
546
$
5,103
$
12,082
Over 90 days past due, excluding nonaccrual loans
$
—
$
45
$
150
Special mention loans
$
65,264
$
74,421
$
69,339
Special mention loans to total loans held for investment
2.18
%
2.43
%
2.21
%
Substandard loans
$
81,456
$
111,786
$
117,598
Substandard loans to total loans held for investment
2.72
%
3.64
%
3.75
%
Nonperforming loans
$
18,354
$
22,825
$
26,536
Nonperforming loans to total loans held for investment
0.61
%
0.74
%
0.85
%
Other real estate owned, net
$
—
$
4,083
$
4,083
Nonperforming assets
$
18,354
$
26,908
$
30,619
Nonperforming assets to total assets
0.46
%
0.68
%
0.76
%
END OF PERIOD BALANCES
Total loans, including loans held for sale
$
2,997,648
$
3,073,399
$
3,156,345
Total assets
$
3,953,717
$
3,983,090
$
4,031,654
Deposits
$
3,312,278
$
3,342,503
$
3,398,760
Loans to deposits
90.5
%
91.9
%
$
92.9
%
Shareholders' equity
$
547,593
$
531,384
$
511,836
(1) Non-GAAP measure. See – GAAP to Non-GAAP reconciliation.
At or for the Three Months Ended
At or for the Six Months Ended
ALLOWANCE for CREDIT LOSSES
June 30, 2025
March 31, 2025
June 30, 2024
June 30, 2025
June 30, 2024
($ in thousands)
Allowance for loan losses
Balance at beginning of period
$
45,839
$
50,540
$
22,254
$
50,540
$
22,569
(Reversal of) provision for credit losses
(663
)
(3,158
)
2,990
(3,821
)
2,676
Charge-offs
(4,247
)
(3,159
)
(1,456
)
(7,406
)
(1,457
)
Recoveries
181
1,616
—
1,797
—
Net charge-offs
(4,066
)
(1,543
)
(1,456
)
(5,609
)
(1,457
)
Balance, end of period
$
41,110
$
45,839
$
23,788
$
41,110
$
23,788
Reserve for unfunded loan commitments (1)
Balance, beginning of period
$
2,485
$
3,103
$
916
$
3,103
$
933
Provision for (reversal of) credit losses
29
(618
)
(97
)
(589
)
(114
)
Balance, end of period
2,514
2,485
819
2,514
819
Allowance for credit losses
$
43,624
$
48,324
$
24,607
$
43,624
$
24,607
ALL to total loans held for investment
1.37
%
1.49
%
1.27
%
1.37
%
1.27
%
ACL to total loans held for investment
1.46
%
1.57
%
1.31
%
1.46
%
1.31
%
Net charge-offs to average total loans
(0.54
)%
(0.20
)%
(0.31
)%
(0.37
)%
(0.15
)%
(1) Included in “Accrued interest and other liabilities” on the consolidated balance sheets.
California BanCorp and Subsidiary Balance Sheets (Unaudited)
June 30, 2025
March 31, 2025
December 31, 2024
ASSETS
($ in thousands)
Cash and due from banks
$
84,017
$
80,441
$
60,471
Federal funds sold & other interest-bearing balances
346,120
358,800
327,691
Total cash and cash equivalents
430,137
439,241
388,162
Debt securities available-for-sale, at fair value (amortized cost of $193,465, $137,855 and $151,429 at June 30, 2025, March 31, 2025 and December 31, 2024)
188,167
131,593
142,001
Debt securities held-to-maturity, at cost (fair value of $47,538 $47,329 and $47,823 at June 30, 2025, March 31, 2025 and December 31, 2024)
53,108
53,194
53,280
Loans held for sale
6,088
4,625
17,180
Loans held for investment:
Construction & land development
184,744
221,437
227,325
1-4 family residential
139,855
157,442
164,401
Multifamily
258,395
237,896
243,993
Other commercial real estate
1,777,940
1,755,962
1,767,727
Commercial & industrial
607,836
672,468
710,970
Other consumer
22,790
23,569
24,749
Total loans held for investment
2,991,560
3,068,774
3,139,165
Allowance for credit losses – loans
(41,110
)
(45,839
)
(50,540
)
Total loans held for investment, net
2,950,450
3,022,935
3,088,625
Restricted stock at cost
30,858
30,845
30,829
Premises and equipment
12,728
13,154
13,595
Right of use asset
13,095
13,384
14,350
Other real estate owned, net
—
4,083
4,083
Goodwill
110,934
111,780
111,787
Intangible assets
20,375
21,323
22,271
Bank owned life insurance
66,397
66,867
66,636
Deferred taxes, net
33,454
36,473
43,127
Accrued interest and other assets
37,926
33,593
35,728
Total assets
$
3,953,717
$
3,983,090
$
4,031,654
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand
$
1,218,072
$
1,292,689
$
1,257,007
Interest-bearing NOW accounts
783,410
674,460
673,589
Money market and savings accounts
1,146,548
1,192,960
1,182,927
Time deposits
164,248
182,394
285,237
Total deposits
3,312,278
3,342,503
3,398,760
Borrowings
52,883
70,308
69,725
Operating lease liability
16,715
17,142
18,310
Accrued interest and other liabilities
24,248
21,753
33,023
Total liabilities
3,406,124
3,451,706
3,519,818
Shareholders' Equity:
Common stock – 50,000,000 shares authorized, no par value; issued and outstanding 32,463,311, 32,402,140 and 32,265,935 at June 30, 2025, March 31, 2025 and December 31, 2024
444,365
442,934
442,469
Retained earnings
106,960
92,861
76,008
Accumulated other comprehensive loss – net of taxes
(3,732
)
(4,411
)
(6,641
)
Total shareholders' equity
547,593
531,384
511,836
Total liabilities and shareholders' equity
$
3,953,717
$
3,983,090
$
4,031,654
California BanCorp and Subsidiary Income Statements – Quarterly and Year-to-Date (Unaudited)
Three Months Ended
Six Months Ended
June 30, 2025
March 31, 2025
June 30, 2024
June 30, 2025
June 30, 2024
($ in thousands except share and per share data)
INTEREST AND DIVIDEND INCOME
Interest and fees on loans
$
49,080
$
50,686
$
29,057
$
99,766
$
57,641
Interest on debt securities
1,751
1,524
1,229
3,275
2,442
Interest on tax-exempted debt securities
304
305
306
609
612
Interest and dividends from other institutions
4,651
4,310
1,257
8,961
2,418
Total interest and dividend income
55,786
56,825
31,849
112,611
63,113
INTEREST EXPENSE
Interest on NOW, savings, and money market accounts
11,390
11,116
7,039
22,506
13,809
Interest on time deposits
1,550
2,063
3,145
3,613
6,166
Interest on borrowings
1,429
1,391
658
2,820
1,637
Total interest expense
14,369
14,570
10,842
28,939
21,612
Net interest income
41,417
42,255
21,007
83,672
41,501
(Reversal of) provision for credit losses (1)
(634
)
(3,776
)
2,893
(4,410
)
2,562
Net interest income after (reversal of) provision for credit losses
42,051
46,031
18,114
88,082
38,939
NONINTEREST INCOME
Service charges and fees on deposit accounts
1,178
1,186
568
2,364
1,093
Gain on sale of loans
—
577
—
577
415
Bank owned life insurance income
503
463
266
966
527
Servicing and related income (expense) on loans
102
142
(5
)
244
68
Loss on sale of building and related fixed assets
—
(1
)
(19
)
(1
)
(19
)
Other charges and fees
1,073
199
359
1,272
498
Total noninterest income
2,856
2,566
1,169
5,422
2,582
NONINTEREST EXPENSE
Salaries and employee benefits
15,293
15,864
8,776
31,157
18,386
Occupancy and equipment expenses
2,094
2,152
1,445
4,246
2,897
Data processing
1,831
1,935
1,186
3,766
2,336
Legal, audit and professional
972
859
557
1,831
1,073
Regulatory assessments
545
722
347
1,267
734
Director and shareholder expenses
395
404
229
799
432
Merger and related expenses
—
—
491
—
1,040
Intangible assets amortization
948
948
65
1,896
130
Other real estate owned expense
862
68
4,935
930
5,023
Other expense
1,893
1,968
974
3,861
1,935
Total noninterest expense
24,833
24,920
19,005
49,753
33,986
Income before income taxes
20,074
23,677
278
43,751
7,535
Income tax expense
5,975
6,824
88
12,799
2,410
Net income
$
14,099
$
16,853
$
190
$
30,952
$
5,125
Net income per share – basic
$
0.43
$
0.52
$
0.01
$
0.96
$
0.28
Net income per share – diluted
$
0.43
$
0.52
$
0.01
$
0.95
$
0.27
Weighted average common shares-diluted
32,685,132
32,698,227
18,799,513
32,691,643
18,800,614
Pre-tax, pre-provision income (2)
$
19,440
$
19,901
$
3,171
$
39,341
$
10,097
(1) Included provision for (reversal of) credit losses on unfunded loan commitments of $29 thousand, $(618) thousand and $(97) thousand for the three months endedJune 30, 2025, March 31, 2025, and June 30, 2024, respectively; and $(589) thousand and $(114) thousand for the six months endedJune 30, 2025 and June 30, 2024, respectively. (2) Non-GAAP measure. See — GAAP to Non-GAAP reconciliation.
California BanCorp and Subsidiary Average Balance Sheets and Yield Analysis (Unaudited)
Three Months Ended
June 30, 2025
March 31, 2025
June 30, 2024
Average Balance
Income/ Expense
Yield/ Cost
Average Balance
Income/ Expense
Yield/ Cost
Average Balance
Income/ Expense
Yield/ Cost
Assets
($ in thousands)
Interest-earning assets:
Total loans
$
2,992,299
$
49,080
6.58
%
$
3,109,722
$
50,686
6.61
%
$
1,882,845
$
29,057
6.21
%
Taxable debt securities
164,558
1,751
4.27
%
139,481
1,524
4.43
%
123,906
1,229
3.99
%
Tax-exempt debt securities (1)
53,438
304
2.89
%
53,522
305
2.93
%
53,754
306
2.90
%
Deposits in other financial institutions
295,602
3,270
4.44
%
316,582
3,468
4.44
%
47,417
638
5.41
%
Fed funds sold/resale agreements
65,568
730
4.47
%
30,413
335
4.47
%
19,062
261
5.51
%
Restricted stock investments and other bank stock
31,672
651
8.24
%
31,657
507
6.50
%
17,091
358
8.42
%
Total interest-earning assets
3,603,137
55,786
6.21
%
3,681,377
56,825
6.26
%
2,144,075
31,849
5.97
%
Total noninterest-earning assets
302,142
318,132
150,603
Total Assets
$
3,905,279
$
3,999,509
$
2,294,678
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing NOW accounts
$
763,987
$
3,666
1.92
%
$
735,209
$
3,366
1.86
%
$
361,244
$
2,134
2.38
%
Money market and savings accounts
1,149,286
7,724
2.70
%
1,161,960
7,750
2.70
%
653,244
4,905
3.02
%
Time deposits
165,049
1,550
3.77
%
207,519
2,063
4.03
%
259,722
3,145
4.87
%
Total interest-bearing deposits
2,078,322
12,940
2.50
%
2,104,688
13,179
2.54
%
1,274,210
10,184
3.21
%
Borrowings:
FHLB advances
—
—
—
%
—
—
—
%
27,391
387
5.68
%
Subordinated debt
67,159
1,429
8.53
%
70,027
1,391
8.06
%
17,901
271
6.09
%
Total borrowings
67,159
1,429
8.53
%
70,027
1,391
8.06
%
45,292
658
5.84
%
Total interest-bearing liabilities
2,145,481
14,369
2.69
%
2,174,715
14,570
2.72
%
1,319,502
10,842
3.30
%
Noninterest-bearing liabilities:
Noninterest-bearing deposits (2)
1,179,791
1,255,883
658,001
Other liabilities
41,629
50,368
23,054
Shareholders' equity
538,378
518,543
294,121
Total Liabilities and Shareholders' Equity
$
3,905,279
$
3,999,509
$
2,294,678
Net interest spread
3.52
%
3.54
%
2.67
%
Net interest income and margin
$
41,417
4.61
%
$
42,255
4.65
%
$
21,007
3.94
%
Cost of deposits
$
3,258,113
$
12,940
1.59
%
$
3,360,571
$
13,179
1.59
%
$
1,932,211
$
10,184
2.12
%
Cost of funds
$
3,325,272
$
14,369
1.73
%
$
3,430,598
$
14,570
1.72
%
$
1,977,503
$
10,842
2.21
%
(1) Tax-exempt debt securities yields are presented on a tax equivalent basis using a 21% tax rate. (2) Average noninterest-bearing deposits represent 36.21%, 37.37% and 34.05% of average total deposits for the three months ended June 30, 2025, March 31, 2025 and June 30, 2024, respectively.
California BanCorp and Subsidiary Average Balance Sheets and Yield Analysis (Unaudited)
Six Months Ended
June 30, 2025
June 30, 2024
Average Balance
Income/ Expense
Yield/ Cost
Average Balance
Income/ Expense
Yield/ Cost
Assets
($ in thousands)
Interest-earning assets:
Total loans
$
3,050,686
$
99,766
6.59
%
$
1,896,058
$
57,641
6.11
%
Taxable debt securities
152,089
3,275
4.34
%
125,355
2,442
3.92
%
Tax-exempt debt securities (1)
53,480
609
2.91
%
53,798
612
2.90
%
Deposits in other financial institutions
306,034
6,738
4.44
%
50,737
1,354
5.37
%
Fed funds sold/resale agreements
48,088
1,065
4.47
%
14,417
395
5.51
%
Restricted stock investments and other bank stock
31,665
1,158
7.37
%
16,752
669
8.03
%
Total interest-earning assets
3,642,042
112,611
6.24
%
2,157,117
63,113
5.88
%
Total noninterest-earning assets
310,092
145,135
Total Assets
$
3,952,134
$
2,302,252
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing NOW accounts
$
749,677
$
7,032
1.89
%
$
360,514
$
4,179
2.33
%
Money market and savings accounts
1,155,588
15,474
2.70
%
650,942
9,630
2.98
%
Time deposits
186,167
3,613
3.91
%
257,598
6,166
4.81
%
Total interest-bearing deposits
2,091,432
26,119
2.52
%
1,269,054
19,975
3.17
%
Borrowings:
FHLB advances
—
—
—
%
38,992
1,095
5.65
%
Subordinated debt
68,585
2,820
8.29
%
17,890
542
6.09
%
Total borrowings
68,585
2,820
8.29
%
56,882
1,637
5.79
%
Total interest-bearing liabilities
2,160,017
28,939
2.70
%
1,325,936
21,612
3.28
%
Noninterest-bearing liabilities:
Noninterest-bearing deposits (2)
1,217,627
659,633
Other liabilities
45,974
24,741
Shareholders' equity
528,516
291,942
Total Liabilities and Shareholders' Equity
$
3,952,134
$
2,302,252
Net interest spread
3.54
%
2.60
%
Net interest income and margin
$
83,672
4.63
%
$
41,501
3.87
%
Cost of deposits
$
3,309,059
$
26,119
1.59
%
$
1,928,687
$
19,975
2.08
%
Cost of funds
$
3,377,644
$
28,939
1.73
%
$
1,985,569
$
21,612
2.19
%
(1) Tax-exempt debt securities yields are presented on a tax equivalent basis using a 21% tax rate. (2) Average noninterest-bearing deposits represent 36.80%, and 34.20% of average total deposits for the six months endedJune 30, 2025 and June 30, 2024, respectively.
California BanCorp and Subsidiary GAAP to Non-GAAP Reconciliation (Unaudited)
The following tables present a reconciliation of non-GAAP financial measures to GAAP measures for: (1) adjusted net income (loss), (2) efficiency ratio, (3) adjusted efficiency ratio, (4) pre-tax pre-provision income, (5) adjusted pre-tax pre-provision income, (6) average tangible common equity, (7) adjusted return on average assets, (8) adjusted return on average equity, (9) return on average tangible common equity, (10) adjusted return on average tangible common equity, (11) tangible common equity, (12) tangible assets, (13) tangible common equity to tangible asset ratio, and (14) tangible book value per common share. We believe the presentation of certain non-GAAP financial measures provides useful information to assess our consolidated financial condition and consolidated results of operations and to assist investors in evaluating our financial results relative to our peers. These non-GAAP financial measures complement our GAAP reporting and are presented below to provide investors and others with information that we use to manage the business each period. Because not all companies use identical calculations, the presentation of these non-GAAP financial measures may not be comparable to other similarly titled measures used by other companies. These non-GAAP measures should be taken together with the corresponding GAAP measures and should not be considered a substitute of the GAAP measures.
Three Months Ended
Six Months Ended
June 30, 2025
March 31, 2025
June 30, 2024
June 30, 2025
June 30, 2024
($ in thousands)
Adjusted net income
Net income
$
14,099
$
16,853
$
190
$
30,952
$
5,125
Add: After-tax merger and related expenses (1)
—
—
412
—
959
Adjusted net income (non-GAAP)
$
14,099
$
16,853
$
602
$
30,952
$
6,084
Efficiency Ratio
Noninterest expense
$
24,833
$
24,920
$
19,005
$
49,753
$
33,986
Deduct: Merger and related expenses
—
—
491
—
1,040
Adjusted noninterest expense
24,833
24,920
18,514
49,753
32,946
Net interest income
41,417
42,255
21,007
83,672
41,501
Noninterest income
2,856
2,566
1,169
5,422
2,582
Total net interest income and noninterest income
$
44,273
$
44,821
$
22,176
$
89,094
$
44,083
Efficiency ratio (non-GAAP)
56.1
%
55.6
%
85.7
%
55.8
%
77.1
%
Adjusted efficiency ratio (non-GAAP)
56.1
%
55.6
%
83.5
%
55.8
%
74.7
%
Pre-tax pre-provision income
Net interest income
$
41,417
$
42,255
$
21,007
$
83,672
$
41,501
Noninterest income
2,856
2,566
1,169
5,422
2,582
Total net interest income and noninterest income
44,273
44,821
22,176
89,094
44,083
Less: Noninterest expense
24,833
24,920
19,005
49,753
33,986
Pre-tax pre-provision income (non-GAAP)
19,440
19,901
3,171
39,341
10,097
Add: Merger and related expenses
—
—
491
—
1,040
Adjusted pre-tax pre-provision income (non-GAAP)
$
19,440
$
19,901
$
3,662
$
39,341
$
11,137
(1) After-tax merger and related expenses are presented using a 29.56% tax rate.
Three Months Ended
Six Months Ended
June 30, 2025
March 31, 2025
June 30, 2024
June 30, 2025
June 30, 2024
($ in thousands)
Return on Average Assets, Equity, and Tangible Equity
Net income
$
14,099
$
16,853
$
190
$
30,952
$
5,125
Adjusted net income (non-GAAP)
$
14,099
$
16,853
$
602
$
30,952
$
6,084
Average assets
$
3,905,279
$
3,999,509
$
2,294,678
$
3,952,134
$
2,302,252
Average shareholders' equity
538,378
518,543
294,121
528,516
291,942
Less: Average intangible assets
132,600
133,567
38,900
133,081
38,932
Average tangible common equity (non-GAAP)
$
405,778
$
384,976
$
255,221
$
395,435
$
253,010
Return on average assets
1.45
%
1.71
%
0.03
%
1.58
%
0.45
%
Adjusted return on average assets (non-GAAP)
1.45
%
1.71
%
0.11
%
1.58
%
0.53
%
Return on average equity
10.50
%
13.18
%
0.26
%
11.81
%
3.53
%
Adjusted return on average equity (non-GAAP)
10.50
%
13.18
%
0.82
%
11.81
%
4.19
%
Return on average tangible common equity (non-GAAP)
13.94
%
17.75
%
0.30
%
15.78
%
4.07
%
Adjusted return on average tangible common equity (non-GAAP)
13.94
%
17.75
%
0.95
%
15.78
%
4.84
%
June 30, 2025
March 31, 2025
December 31, 2024
($ in thousands except share and per share data)
Tangible Common Equity Ratio/Tangible Book Value Per Share
Shareholders' equity
$
547,593
$
531,384
$
511,836
Less: Intangible assets
131,309
133,103
134,058
Tangible common equity (non-GAAP)
$
416,284
$
398,281
$
377,778
Total assets
$
3,953,717
$
3,983,090
$
4,031,654
Less: Intangible assets
131,309
133,103
134,058
Tangible assets (non-GAAP)
$
3,822,408
$
3,849,987
$
3,897,596
Equity to asset ratio
13.85
%
13.34
%
12.70
%
Tangible common equity to tangible asset ratio (non-GAAP)
10.89
%
10.34
%
9.69
%
Book value per share
$
16.87
$
16.40
$
15.86
Tangible book value per share (non-GAAP)
$
12.82
$
12.29
$
11.71
Shares outstanding
32,463,311
32,402,140
32,265,935
INVESTOR RELATIONS CONTACT Kevin Mc Cabe California Bank of Commerce, N.A. kmccabe@bankcbc.com 818.637.7065
1 Reconciliations of non-U.S. generally accepted accounting principles (“GAAP”) measures are set forth at the end of this press release.
