Table of Contents BAYCOM CORP | --- | --- | --- | |----------------------------------------------------------------|-----------------------------------------------------------|-------------------------------------------| | California | (Exact Name of Registrant as Specified in its Charter) \n | 37-1849111 | | (State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) | | 500 Ygnacio Valley Road, Suite 200, Walnut Creek, California | | 94596 | | (Address of princi ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to COMMISSION FILE NUMBER 001-38483 BAYCOM CORP (Exact Name of Registrant as Specified in its Charter) California 37-1849111 (State or other jurisdiction of incorporatio ...

TABLE OF CONTENTS UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2019 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38483 ☐ BAYCOM CORP (Exact name of registrant as specified in its charter) | --- | --- | --- | --- | |-------|-------|--------- ...

[PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part provides the Company's comprehensive financial data, including statements, notes, and management's analysis of performance and condition [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the Company's unaudited condensed consolidated financial statements, including balance sheets, income statements, comprehensive income, changes in shareholders' equity, and cash flows, along with detailed notes explaining accounting policies, acquisitions, and financial instrument specifics [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(unaudited)) This section details the Company's financial position, presenting assets, liabilities, and shareholders' equity at specific reporting dates Condensed Consolidated Balance Sheets (in thousands) | Metric | Sep 30, 2019 (in thousands) | Dec 31, 2018 (in thousands) | Change (in thousands) | % Change | | :------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :------- | | **ASSETS** | | | | | | Cash and cash equivalents | $337,078 | $323,581 | $13,497 | 4.2% | | Loans, net of allowance for loan losses | $1,225,321 | $970,189 | $255,132 | 26.3% | | Total Assets | $1,770,710 | $1,478,395 | $292,315 | 19.8% | | **LIABILITIES AND SHAREHOLDERS' EQUITY** | | | | | | Noninterest and interest bearing deposits | $1,498,194 | $1,257,768 | $240,426 | 19.1% | | Total liabilities | $1,529,825 | $1,277,642 | $252,183 | 19.7% | | Total shareholders' equity | $240,885 | $200,753 | $40,132 | 20.0% | | Total Liabilities and Shareholders' Equity | $1,770,710 | $1,478,395 | $292,315 | 19.8% | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(unaudited)) This section outlines the Company's financial performance over specific periods, detailing revenues, expenses, and net income Condensed Consolidated Statements of Income (in thousands, except per share data) | Metric | Three months ended Sep 30, 2019 (in thousands) | Three months ended Sep 30, 2018 (in thousands) | Change (in thousands) | % Change | Nine months ended Sep 30, 2019 (in thousands) | Nine months ended Sep 30, 2018 (in thousands) | Change (in thousands) | % Change | | :------------------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :------- | :-------------------------------------------- | :-------------------------------------------- | :-------------------- | :------- | | Total interest and dividend income | $20,390 | $14,287 | $6,103 | 42.7% | $54,695 | $41,590 | $13,105 | 31.5% | | Total interest expense | $2,633 | $1,272 | $1,361 | 107.0% | $6,056 | $3,561 | $2,495 | 70.1% | | Net interest income | $17,757 | $13,015 | $4,742 | 36.4% | $48,639 | $38,029 | $10,610 | 27.9% | | Provision for loan losses | $479 | $1,081 | $(602) | -55.7% | $1,201 | $1,578 | $(377) | -23.9% | | Total noninterest income | $2,114 | $1,638 | $476 | 29.1% | $6,774 | $5,447 | $1,327 | 24.4% | | Total noninterest expense | $11,664 | $8,417 | $3,247 | 38.6% | $36,207 | $25,196 | $11,011 | 43.7% | | Net income | $5,563 | $3,518 | $2,045 | 58.1% | $12,731 | $11,875 | $856 | 7.2% | | Basic earnings per common share | $0.46 | $0.31 | $0.15 | 48.4% | $1.11 | $1.30 | $(0.19) | -14.6% | | Diluted earnings per common share | $0.46 | $0.31 | $0.15 | 48.4% | $1.11 | $1.30 | $(0.19) | -14.6% | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(unaudited)) This section presents the Company's total comprehensive income, including net income and other comprehensive income items Condensed Consolidated Statements of Comprehensive Income (in thousands) | Metric | Three months ended Sep 30, 2019 (in thousands) | Three months ended Sep 30, 2018 (in thousands) | Change (in thousands) | % Change | Nine months ended Sep 30, 2019 (in thousands) | Nine months ended Sep 30, 2018 (in thousands) | Change (in thousands) | % Change | | :------------------------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :------- | :-------------------------------------------- | :-------------------------------------------- | :-------------------- | :------- | | Net income | $5,563 | $3,518 | $2,045 | 58.1% | $12,731 | $11,875 | $856 | 7.2% | | Change in unrealized gain (loss) on available-for-sale securities | $446 | $(301) | $747 | -248.2% | $2,391 | $(1,106) | $3,497 | -316.2% | | Other comprehensive income (loss), net of tax | $318 | $(212) | $530 | -250.0% | $1,707 | $(779) | $2,486 | -319.1% | | Total comprehensive income | $5,881 | $3,306 | $2,575 | 77.9% | $14,438 | $11,096 | $3,342 | 30.1% | [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity%20(unaudited)) This section details the changes in the Company's shareholders' equity over time, including common stock, retained earnings, and comprehensive income Condensed Consolidated Statements of Changes in Shareholders' Equity (in thousands) | Metric | Dec 31, 2018 (in thousands) | Sep 30, 2019 (in thousands) | Change (in thousands) | % Change | | :------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :------- | | Common stock amount | $149,248 | $174,942 | $25,694 | 17.2% | | Retained earnings | $51,321 | $64,052 | $12,731 | 24.8% | | Accumulated other comprehensive income (loss), net of tax | $(103) | $1,604 | $1,707 | -1657.3% | | Total shareholders' equity | $200,753 | $240,885 | $40,132 | 20.0% | - Stock issued in acquisition contributed **$24.89 million** to common stock during the nine months ended **September 30, 2019**[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) This section provides an overview of the Company's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Nine months ended Sep 30, 2019 (in thousands) | Nine months ended Sep 30, 2018 (in thousands) | Change (in thousands) | % Change | | :--------------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :-------------------- | :------- | | Net cash provided by operating activities | $5,381 | $1,758 | $3,623 | 206.1% | | Net cash provided by (used in) investing activities | $33,476 | $(25,571) | $59,047 | -230.9% | | Net cash (used in) provided by financing activities | $(25,360) | $87,177 | $(112,537) | -129.1% | | Increase in cash and cash equivalents | $13,497 | $63,364 | $(49,867) | -78.7% | | Cash and cash equivalents at end of period | $337,078 | $313,217 | $23,861 | 7.6% | - Non-cash investing activities for the nine months ended **September 30, 2019**, included the recognition of Right-of-Use (ROU) assets of **$11.41 million** and lease liabilities of **$11.73 million** due to new accounting standards[17](index=17&type=chunk) - Acquisition-related non-cash activities for the nine months ended **September 30, 2019**, included **$289.55 million** in assets acquired (net of cash received) and **$267.17 million** in liabilities assumed[17](index=17&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [NOTE 1 – BASIS OF PRESENTATION](index=10&type=section&id=NOTE%201%20%E2%80%93%20BASIS%20OF%20PRESENTATION) This note describes the Company's business, its wholly-owned subsidiary, and significant acquisitions and accounting standard adoptions - BayCom Corp is a bank holding company with United Business Bank as its wholly-owned subsidiary, providing financial services to small and mid-sized businesses, service professionals, and individuals[19](index=19&type=chunk) - The Company completed the acquisition of Bethlehem Financial Corporation (BFC) on **November 30, 2018**, and Uniti Financial Corporation (Uniti) on **May 24, 2019**, significantly expanding its operations[22](index=22&type=chunk) - Post-**September 30, 2019**, on **October 21, 2019**, the Company completed the acquisition of TIG Bancorp, expanding its franchise into Colorado with **32 full-service offices**[23](index=23&type=chunk) - Effective **January 1, 2019**, the Company adopted new lease accounting standards (Topic 842), recognizing right-of-use assets and lease liabilities of **$7.8 million** and **$8.2 million**, respectively, with no significant impact on regulatory capital[24](index=24&type=chunk) [NOTE 2 - ACCOUNTING STANDARDS RECENTLY ISSUED OR ADOPTED](index=11&type=section&id=NOTE%202%20-%20ACCOUNTING%20STANDARDS%20RECENTLY%20ISSUED%20OR%20ADOPTED) This note outlines recently issued or adopted accounting standards and their expected or actual impact on the Company's financial statements - ASU No. 2016-13 (CECL model) will significantly change how credit losses are measured for financial assets, replacing the 'incurred loss' approach with an 'expected loss' model, effective after **December 15, 2022**, and is expected to increase the allowance for loan losses[30](index=30&type=chunk)[31](index=31&type=chunk) - The Company adopted ASU 2017-08 (shortening amortization for callable debt securities premiums) and ASU 2018-07 (simplifying nonemployee share-based payment accounting) on **January 1, 2019**, neither of which had a material impact[33](index=33&type=chunk)[34](index=34&type=chunk) - ASU No. 2017-04 (simplifying goodwill impairment) is effective after **December 15, 2019**, for public business entities, but the Company does not expect a material impact[32](index=32&type=chunk) [NOTE 3 - ACQUISITIONS](index=13&type=section&id=NOTE%203%20-%20ACQUISITIONS) This note details the Company's recent mergers, including consideration, acquired assets, assumed liabilities, and related expenses - Uniti Merger (**May 24, 2019**): Total consideration of **$62.7 million**, consisting of **1,115,006 common shares** and **$37.8 million** cash, adding **three Southern California branches**[40](index=40&type=chunk) - BFC Merger (**November 30, 2018**): Total consideration of **$23.5 million** cash, adding **five New Mexico branches**[41](index=41&type=chunk) - The primary reasons for these mergers were to expand geographic footprint, achieve operational scale, and realize efficiencies[42](index=42&type=chunk) Fair Value of Assets Acquired and Liabilities Assumed at Acquisition Date (in thousands) | Metric | Uniti Merger (May 24, 2019) | BFC Merger (Nov 30, 2018) | | :---------------------------------------------------- | :-------------------------- | :-------------------------- | | Total assets acquired | $318,018 | $157,820 | | Total liabilities assumed | $267,172 | $138,526 | | Cash consideration | $37,814 | $23,523 | | Common stock issued | $24,887 | $- | | Goodwill | $11,855 | $4,229 | Pro Forma Net Income and EPS (Nine Months Ended Sep 30) | Metric | 2019 (in thousands, except EPS) | 2018 (in thousands, except EPS) | | :------------------------- | :------------------------------ | :------------------------------ | | Net interest income | $51,904 | $53,106 | | Net income | $12,195 | $15,964 | | Basic earnings per share | $1.01 | $1.53 | | Diluted earnings per share | $1.01 | $1.53 | Acquisition Related Expenses (in thousands) | Expense Type | Uniti Merger (Nine months ended Sep 30, 2019) | BFC Merger (Year ended Dec 31, 2018) | | :-------------------- | :-------------------------------------------- | :----------------------------------- | | Professional fees | $535 | $130 | | Data processing | $2,657 | $1,290 | | Severance expense | $578 | $536 | | Other expense | $365 | $369 | | Total | $4,135 | $2,325 | [NOTE 4 – INVESTMENT SECURITIES](index=16&type=section&id=NOTE%204%20%E2%80%93%20INVESTMENT%20SECURITIES) This note provides information on the Company's investment securities, including fair value, unrealized gains/losses, and contractual maturities Investment Securities Available-for-Sale (in thousands) | Metric | Sep 30, 2019 | Dec 31, 2018 | | :------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | :----------- | :----------- | | Amortized cost | $96,765 | $99,935 | | Gross unrealized gains | $2,346 | $368 | | Gross unrealized losses | $(94) | $(507) | | Estimated fair value | $99,017 | $99,796 | - At **September 30, 2019**, the Company held **208 investment securities**, with **17 in an unrealized loss position** for over twelve months and **19 for less than twelve months**, primarily due to current interest rates. Full recovery of amortized cost is anticipated at maturity[52](index=52&type=chunk) Contractual Maturity of Available-for-Sale Securities (in thousands) | Maturity | Sep 30, 2019 (Amortized Cost, in thousands) | Sep 30, 2019 (Estimated Fair Value, in thousands) | Dec 31, 2018 (Amortized Cost, in thousands) | Dec 31, 2018 (Estimated Fair Value, in thousands) | | :------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | :---------------------------- | :---------------------------------- | :---------------------------- | :---------------------------------- | | Due in one year or less | $7,788 | $7,823 | $14,292 | $14,279 | | Due after one through five years | $27,924 | $28,394 | $26,287 | $26,327 | | Due after five years through ten years | $20,971 | $21,603 | $20,840 | $20,758 | | Due after ten years | $40,082 | $41,197 | $38,516 | $38,432 | | Total | $96,765 | $99,017 | $99,935 | $99,796 | [NOTE 5 – LOANS](index=17&type=section&id=NOTE%205%20%E2%80%93%20LOANS) This note details the Company's loan portfolio by type, including impaired loans, nonaccrual loans, and troubled debt restructurings Loan Portfolio by Type (in thousands) | Loan Type | Sep 30, 2019 (in thousands) | Dec 31, 2018 (in thousands) | Change (in thousands) | % Change | | :---------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :------- | | Commercial and industrial | $160,173 | $121,855 | $38,318 | 31.4% | | Construction and land | $24,623 | $47,302 | $(22,679) | -47.9% | | Commercial real estate | $912,622 | $701,983 | $210,639 | 30.0% | | Residential | $133,466 | $102,708 | $30,758 | 29.9% | | Consumer | $1,375 | $1,847 | $(472) | -25.6% | | Total loans | $1,232,259 | $975,695 | $256,564 | 26.3% | | Net loans | $1,225,321 | $970,189 | $255,132 | 26.3% | Impaired Loans (in thousands) | Metric | Sep 30, 2019 (in thousands) | Dec 31, 2018 (in thousands) | Change (in thousands) | % Change | | :------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :------- | | Total recorded investment in impaired loans | $7,365 | $3,878 | $3,487 | 89.9% | | Specific allowance on impaired loans | $28 | $10 | $18 | 180.0% | Nonaccrual Loans (in thousands) | Loan Type | Sep 30, 2019 (in thousands) | Dec 31, 2018 (in thousands) | Change (in thousands) | % Change | | :---------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :------- | | Commercial and industrial | $2,317 | $1,878 | $439 | 23.4% | | Construction and land | $2,737 | $- | $2,737 | - | | Commercial real estate | $1,435 | $596 | $839 | 140.8% | | Residential | $119 | $654 | $(535) | -81.8% | | Total nonaccrual loans | $6,608 | $3,128 | $3,480 | 111.3% | - Troubled Debt Restructurings (TDRs) totaled **$1.3 million** at **September 30, 2019**, with **$757,000** performing in accordance with modified terms. No TDRs defaulted within **12 months** of modification during the nine months ended **September 30, 2019**[59](index=59&type=chunk) PCI Loans (in thousands) | Loan Type | Sep 30, 2019 (Unpaid Principal Balance, in thousands) | Sep 30, 2019 (Carrying Value, in thousands) | Dec 31, 2018 (Unpaid Principal Balance, in thousands) | Dec 31, 2018 (Carrying Value, in thousands) | | :---------------------------- | :------------------------------------ | :---------------------------- | :------------------------------------ | :---------------------------- | | Commercial and industrial | $1,193 | $521 | $125 | $2 | | Construction and land | $279 | $192 | $335 | $233 | | Commercial real estate | $14,562 | $12,330 | $12,605 | $10,776 | | Residential | $2,227 | $1,641 | $2,381 | $1,793 | | Total | $18,261 | $14,684 | $15,446 | $12,804 | [NOTE 6 – ALLOWANCE FOR LOAN LOSSES](index=24&type=section&id=NOTE%206%20%E2%80%93%20ALLOWANCE%20FOR%20LOAN%20LOSSES) This note outlines the activity and balances of the allowance for loan losses, reflecting changes in credit quality Allowance for Loan Losses Activity (in thousands) | Metric | Nine months ended Sep 30, 2019 (in thousands) | Nine months ended Sep 30, 2018 (in thousands) | | :------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | :----------------------------- | :----------------------------- | | Beginning balance | $5,140 | $4,215 | | Provision for loan losses | $1,201 | $1,578 | | Charge-offs | $(22) | $(437) | | Recoveries | $41 | $144 | | Ending balance | $6,360 | $5,500 | - At **September 30, 2019**, the allowance for loan losses was **$6.36 million**, representing **0.52%** of total loans and **96.25%** of nonperforming loans, compared to **0.53%** and **164.32%** respectively, at **December 31, 2018**[77](index=77&type=chunk)[173](index=173&type=chunk) [NOTE 7 – PREMISES AND EQUIPMENT](index=25&type=section&id=NOTE%207%20%E2%80%93%20PREMISES%20AND%20EQUIPMENT) This note provides details on the Company's premises and equipment, including changes due to sales and lease accounting impacts Premises and Equipment, Net (in thousands) | Metric | Sep 30, 2019 (in thousands) | Dec 31, 2018 (in thousands) | Change (in thousands) | % Change | | :------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :------- | | Premises owned, net | $4,622 | $9,667 | $(5,045) | -52.2% | | Total premises and equipment, net | $6,702 | $11,168 | $(4,466) | -40.0% | - The decrease was primarily due to the sale of a commercial building in Oakland, California, with a carrying value of **$4.6 million**, resulting in a **$78,000** gain[80](index=80&type=chunk) - The Company leases **19 branches** and administration offices, recognizing right-of-use assets and lease liabilities of **$10.19 million** and **$10.39 million**, respectively, as of **September 30, 2019**, following the adoption of Topic 842[81](index=81&type=chunk)[8](index=8&type=chunk) [NOTE 8 – GOODWILL AND INTANGIBLE ASSETS](index=26&type=section&id=NOTE%208%20%E2%80%93%20GOODWILL%20AND%20INTANGIBLE%20ASSETS) This note details the Company's goodwill and core deposit intangible assets, including acquisition-related changes and impairment assessments Goodwill (in thousands) | Metric | Sep 30, 2019 (in thousands) | Dec 31, 2018 (in thousands) | Change (in thousands) | % Change | | :------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :------- | | Balance at beginning of period | $14,594 | $10,365 | $4,229 | 40.8% | | Acquired goodwill | $11,855 | $4,229 | $7,626 | 180.3% | | Balance at end of period | $26,449 | $14,594 | $11,855 | 81.2% | - The Company performed a qualitative assessment for goodwill impairment and concluded **no impairment** existed as of **September 30, 2019**[85](index=85&type=chunk) Core Deposit Intangible (in thousands) | Metric | Sep 30, 2019 (in thousands) | Dec 31, 2018 (in thousands) | Change (in thousands) | % Change | | :------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :------- | | Balance at beginning of period | $7,205 | $4,772 | $2,433 | 51.0% | | Additions | $566 | $3,604 | $(3,038) | -84.3% | | Amortization | $(1,177) | $(1,171) | $(6) | 0.5% | | Balance at end of period | $6,594 | $7,205 | $(611) | -8.5% | - Core deposit intangible amortization expense was **$1.2 million** for the nine months ended **September 30, 2019**, compared to **$868,000** for the same period in **2018**[86](index=86&type=chunk) [NOTE 9 – INTEREST RECEIVABLE AND OTHER ASSETS](index=27&type=section&id=NOTE%209%20%E2%80%93%20INTEREST%20RECEIVABLE%20AND%20OTHER%20ASSETS) This note provides a breakdown of the Company's interest receivable and other asset categories Interest Receivable and Other Assets (in thousands) | Metric | Sep 30, 2019 (in thousands) | Dec 31, 2018 (in thousands) | Change (in thousands) | % Change | | :------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :------- | | Deferred tax assets, net | $6,285 | $5,891 | $394 | 6.7% | | Accrued interest receivable | $4,318 | $3,676 | $642 | 17.5% | | Servicing asset | $2,197 | $814 | $1,383 | 169.9% | | Total | $19,451 | $17,381 | $2,070 | 11.9% | [NOTE 10 – DEPOSITS](index=27&type=section&id=NOTE%2010%20%E2%80%93%20DEPOSITS) This note categorizes the Company's deposits by type, including demand, NOW, savings, money market, and time deposits Deposits by Type (in thousands) | Deposit Type | Sep 30, 2019 (in thousands) | Dec 31, 2018 (in thousands) | Change (in thousands) | % Change | | :------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :------- | | Demand deposits | $523,505 | $398,045 | $125,460 | 31.5% | | NOW accounts and savings | $254,835 | $246,288 | $8,547 | 3.5% | | Money market | $398,442 | $398,081 | $361 | 0.1% | | Time deposits - $250,000 or less | $179,711 | $117,653 | $62,058 | 52.7% | | Time deposits - more than $250,000 | $141,701 | $97,701 | $44,000 | 45.0% | | Total | $1,498,194 | $1,257,768 | $240,426 | 19.1% | [NOTE 11 – INTEREST PAYABLE AND OTHER LIABILITIES](index=27&type=section&id=NOTE%2011%20%E2%80%93%20INTEREST%20PAYABLE%20AND%20OTHER%20LIABILITIES) This note provides a breakdown of the Company's interest payable and other liability categories Interest Payable and Other Liabilities (in thousands) | Metric | Sep 30, 2019 (in thousands) | Dec 31, 2018 (in thousands) | Change (in thousands) | % Change | | :------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :------- | | Accrued expenses | $5,356 | $5,508 | $(152) | -2.8% | | Accrued interest payable | $1,556 | $198 | $1,358 | 685.9% | | Total | $9,472 | $8,375 | $1,097 | 13.1% | [NOTE 12 – OTHER EXPENSES](index=28&type=section&id=NOTE%2012%20%E2%80%93%20OTHER%20EXPENSES) This note details the Company's other noninterest expenses, including professional fees and core deposit premium amortization Other Expenses (Nine Months Ended Sep 30, in thousands) | Expense Type | 2019 (in thousands) | 2018 (in thousands) | Change (in thousands) | % Change | | :------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | :------------------ | :------------------ | :-------------------- | :------- | | Professional fees | $1,643 | $1,273 | $370 | 29.1% | | Core deposit premium amortization | $1,177 | $868 | $309 | 35.6% | | Marketing and promotions | $877 | $687 | $190 | 27.7% | | Total | $6,394 | $5,458 | $936 | 17.1% | [NOTE 13 – EQUITY INCENTIVE PLANS](index=28&type=section&id=NOTE%2013%20%E2%80%93%20EQUITY%20INCENTIVE%20PLANS) This note describes the Company's equity incentive plans, including authorized shares, awards granted, and related compensation expense - The **2017** Omnibus Equity Incentive Plan authorizes up to **450,000 shares** for equity incentive awards to employees and non-employee directors, with **170,715 restricted stock awards** granted as of **September 30, 2019**[94](index=94&type=chunk) - Total compensation expense for equity incentive plans was **$807,000** for the nine months ended **September 30, 2019**, and **$367,000** for the three months ended **September 30, 2019**[97](index=97&type=chunk) - As of **September 30, 2019**, **$2.8 million** of unrecognized compensation cost related to non-vested restricted stock awards is expected to be recognized over **approximately two years**[98](index=98&type=chunk) [NOTE 14 – FAIR VALUE MEASUREMENT](index=29&type=section&id=NOTE%2014%20%E2%80%93%20FAIR%20VALUE%20MEASUREMENT) This note explains the Company's fair value measurement hierarchy and provides tables for assets measured at fair value on recurring and nonrecurring bases - Fair value measurements are categorized into **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than quoted prices), and **Level 3** (unobservable inputs)[100](index=100&type=chunk)[101](index=101&type=chunk) Assets Measured at Fair Value on a Recurring Basis (in thousands) | Asset Type | Sep 30, 2019 (Total, in thousands) | Sep 30, 2019 (Level 1, in thousands) | Sep 30, 2019 (Level 2, in thousands) | Sep 30, 2019 (Level 3, in thousands) | | :------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | :------------------- | :--------------------- | :--------------------- | :--------------------- | | U.S. Treasuries | $998 | $998 | $- | $- | | U.S. Government Agencies | $10,589 | $- | $10,589 | $- | | Municipal securities | $16,827 | $- | $16,827 | $- | | Mortgage-backed securities | $31,042 | $- | $31,042 | $- | | Collateralized mortgage obligations | $25,740 | $- | $25,740 | $- | | SBA securities | $3,632 | $- | $3,632 | $- | | Corporate bonds | $10,189 | $- | $10,189 | $- | | Total assets measured at fair value | $99,017 | $998 | $98,019 | $- | Assets Measured at Fair Value on a Nonrecurring Basis (in thousands) | Asset Type | Sep 30, 2019 (Total, in thousands) | Sep 30, 2019 (Level 1, in thousands) | Sep 30, 2019 (Level 2, in thousands) | Sep 30, 2019 (Level 3, in thousands) | | :------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | :------------------- | :--------------------- | :--------------------- | :--------------------- | | Performing impaired loans | $757 | $- | $- | $757 | | Nonperforming impaired loans | $6,608 | $- | $- | $6,608 | | OREO | $635 | $- | $- | $635 | | Total assets measured at fair value | $8,000 | $- | $- | $8,000 | - Impaired loans and OREO are measured at fair value on a nonrecurring basis, often classified as **Level 3** due to significant unobservable inputs and management's assumptions regarding market trends and selling costs[106](index=106&type=chunk)[107](index=107&type=chunk) [NOTE 15 – COMMITMENTS AND CONTINGENCIES](index=32&type=section&id=NOTE%2015%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines the Company's off-balance sheet commitments, including loan commitments, letters of credit, and potential concentrations of credit risk - Undisbursed loan commitments totaled **$115.3 million** at **September 30, 2019**, up from **$99.2 million** at **December 31, 2018**[110](index=110&type=chunk) - Standby letter of credit commitments were **$1.9 million** at **September 30, 2019**, compared to **$1.8 million** at **December 31, 2018**[110](index=110&type=chunk) - A concentration of loans exists in commercial real estate, which could be adversely impacted by declines in the economy or real estate values[112](index=112&type=chunk) - The Company had remaining commitments of approximately **$3.4 million** for LIHTC and **$473,000** for SBIC at **September 30, 2019**[113](index=113&type=chunk) - Deposits from the top ten depositors accounted for **10.4%** (**$155.9 million**) of total deposits at **September 30, 2019**[114](index=114&type=chunk) [NOTE 16 – SUBSEQUENT EVENTS](index=33&type=section&id=NOTE%2016%20%E2%80%93%20SUBSEQUENT%20EVENTS) This note discloses significant events occurring after the reporting period, including further acquisitions and a stock repurchase plan - On **October 21, 2019**, BayCom Corp completed the acquisition of TIG Bancorp for approximately **$39.9 million** (**876,803 shares** and **$20.2 million cash**), adding **seven branch offices** in the Denver metropolitan area, Colorado[117](index=117&type=chunk) - On **November 4, 2019**, the Company announced an agreement to acquire Grand Mountain Bancshares, Inc. for approximately **$13.9 million** in an **all-cash transaction**, expected to close in **Q1 2020**, further expanding its Colorado presence to **11 locations** and a total of **36 full-service locations** across all states[119](index=119&type=chunk) - On **October 23, 2019**, the Board authorized a stock repurchase plan for up to **5%** (approximately **646,922 shares**) of the Company's outstanding common shares[120](index=120&type=chunk) Pro Forma Net Income and EPS (Nine Months Ended Sep 30, including TIG Merger) | Metric | 2019 (in thousands, except EPS) | 2018 (in thousands, except EPS) | | :------------------------- | :------------------------------ | :------------------------------ | | Net interest income | $55,920 | $45,361 | | Net income | $14,408 | $13,462 | | Basic earnings per share | $1.17 | $1.32 | | Diluted earnings per share | $1.17 | $1.32 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial performance and condition, highlighting strategic objectives, key factors influencing profitability, and a detailed comparison of financial results and condition for the periods presented. It also discusses critical accounting policies, liquidity, and capital resources [SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS](index=34&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section highlights the inherent uncertainties and risks associated with forward-looking statements, including those related to acquisitions and economic conditions - Forward-looking statements are based on current management expectations and involve risks and uncertainties, including those related to acquisitions (GMB, Uniti, TIG Mergers), economic conditions, interest rate fluctuations, and regulatory changes[122](index=122&type=chunk) - Key risk factors include difficulties in realizing expected benefits from acquisitions, business disruption, credit risks, changes in interest rates, regulatory examinations, and challenges in expanding into new markets[122](index=122&type=chunk) [Executive Overview](index=35&type=section&id=Executive%20Overview) This section provides a high-level summary of the Company's strategic objectives, financial position, and key drivers of profitability - BayCom Corp's principal objective is to increase shareholder value and generate consistent earnings growth through strategic acquisitions and organic growth, expanding its commercial banking franchise[128](index=128&type=chunk) - As of **September 30, 2019**, the Company had **$1.8 billion** in total assets, **$1.2 billion** in total loans, **$1.5 billion** in total deposits, and **$240.9 million** in shareholders' equity, with **25 full-service branches**[126](index=126&type=chunk) - Profitability primarily depends on net interest income after provision for loan losses, noninterest income, and noninterest expenses, which are impacted by banking operations growth and strategic acquisitions[129](index=129&type=chunk) [Critical Accounting Policies and Estimates](index=38&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section discusses the Company's key accounting policies and estimates, particularly those requiring significant judgment and potential for variability - The allowance for loan losses is a critical accounting policy, requiring subjective estimates based on historical experience, loan portfolio characteristics, economic conditions, and borrower financial health, susceptible to significant change and regulatory review[136](index=136&type=chunk) - Business combinations are accounted for using the acquisition method, recognizing identifiable assets and liabilities at fair value, with any excess purchase price recorded as goodwill[143](index=143&type=chunk) - Goodwill is reviewed annually for impairment, with a qualitative assessment performed to determine if fair value exceeds carrying value. A decline in stock price or adverse changes in the operating environment could lead to future impairment charges[147](index=147&type=chunk)[148](index=148&type=chunk)[150](index=150&type=chunk) [Comparison of Financial Condition](index=40&type=section&id=Comparison%20of%20Financial%20Condition%20at%20September%2030%2C%202019%20and%20December%2031%2C%202018) This section analyzes changes in the Company's balance sheet items, including assets, liabilities, and equity, between reporting periods - Total assets increased **$292.3 million** (**19.8%**) to **$1.8 billion** at **September 30, 2019**, primarily driven by the Uniti Merger[152](index=152&type=chunk) - Loans receivable, net, increased **$255.1 million** (**26.3%**) to **$1.2 billion**, with commercial real estate and commercial and industrial loans showing significant growth, and organic loan originations increasing to **$176.6 million** for the first nine months of **2019**[155](index=155&type=chunk) Loan Portfolio by Type (in thousands) | Loan Type | Sep 30, 2019 (in thousands) | Dec 31, 2018 (in thousands) | % Change | | :-------------------------- | :-------------------------- | :-------------------------- | :------- | | Commercial and industrial | $159,652 | $121,853 | 31.0% | | Residential | $131,825 | $100,915 | 30.6% | | Owner occupied CRE | $368,244 | $270,204 | 36.3% | | Non-owner occupied CRE | $414,686 | $308,045 | 34.6% | | Construction and land | $24,431 | $47,069 | (48.1)% | | Total Loans | $1,232,259 | $975,695 | 26.3% | - Nonperforming assets increased **$3.3 million** (**84.3%**) to **$7.2 million**, with nonaccrual loans totaling **$6.6 million** (**0.54%** of total loans), primarily due to one construction loan[160](index=160&type=chunk) - Total deposits increased **$240.4 million** (**19.1%**) to **$1.5 billion**, mainly due to the Uniti Merger, with noninterest bearing demand deposits increasing by **31.5%**[179](index=179&type=chunk)[182](index=182&type=chunk) - Shareholders' equity increased **$40.1 million** (**20.0%**) to **$240.9 million**, driven by common stock issuance in the Uniti Merger and net income[185](index=185&type=chunk) [Comparison of Results of Operations](index=46&type=section&id=Comparison%20of%20Results%20of%20Operations%20for%20the%20Three%20and%20Nine%20Months%20Ended%20September%2030%2C%202019%20and%202018) This section compares the Company's income statement performance over different periods, focusing on revenue, expenses, and profitability drivers - Net income increased by **$2.0 million** (**58.1%**) to **$5.6 million** for the three months ended **September 30, 2019**, and by **$856,000** (**7.2%**) to **$12.7 million** for the nine months, primarily due to increased net interest income and noninterest income, partially offset by higher noninterest expense[186](index=186&type=chunk) - Diluted EPS was **$0.46** for the three months (up **$0.15**) and **$1.11** for the nine months (down **$0.19**) ended **September 30, 2019**[187](index=187&type=chunk) - Net interest income increased **$4.7 million** (**36.4%**) to **$17.8 million** for the three months and **$10.6 million** (**27.9%**) to **$48.6 million** for the nine months, driven by increased average interest-earning assets (loans) and higher loan yields, including accretion of purchase accounting fair value adjustments[196](index=196&type=chunk)[197](index=197&type=chunk) - Net interest margin was **4.23%** for the three months (up **17 bps**) and **4.28%** for the nine months (up **14 bps**) ended **September 30, 2019**, enhanced by acquisition accounting discounts[196](index=196&type=chunk)[197](index=197&type=chunk) - Noninterest income increased **$476,000** (**29.1%**) to **$2.1 million** for the three months and **$1.3 million** (**24.4%**) to **$6.8 million** for the nine months, primarily from gains on loan sales, service charges, and loan servicing fees[206](index=206&type=chunk)[208](index=208&type=chunk) - Noninterest expense increased **$3.2 million** (**38.6%**) to **$11.7 million** for the three months and **$11.0 million** (**43.7%**) to **$36.2 million** for the nine months, largely due to acquisition-related increases in salaries and employee benefits, occupancy, and data processing costs[210](index=210&type=chunk)[211](index=211&type=chunk) Average Balances, Interest and Average Yields/Cost (Three Months Ended Sep 30, in thousands) | Metric | 2019 Average Balance (in thousands) | 2019 Interest (in thousands) | 2019 Average Yield/Cost | 2018 Average Balance (in thousands) | 2018 Interest (in thousands) | 2018 Average Yield/Cost | | :------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | :------------------- | :------------ | :---------------------- | :------------------- | :------------ | :---------------------- | | Total interest earning assets | $1,664,288 | $20,390 | 4.86% | $1,271,225 | $14,287 | 4.46% | | Total interest bearing liabilities | $994,512 | $2,633 | 1.05% | $787,993 | $1,272 | 0.64% | | Net interest income | | $17,757 | | | $13,015 | | | Interest rate spread | | | 3.81% | | | 3.82% | | Net interest margin | | | 4.23% | | | 4.06% | Average Balances, Interest and Average Yields/Cost (Nine Months Ended Sep 30, in thousands) | Metric | 2019 Average Balance (in thousands) | 2019 Interest (in thousands) | 2019 Average Yield/Cost | 2018 Average Balance (in thousands) | 2018 Interest (in thousands) | 2018 Average Yield/Cost | | :------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | :------------------- | :------------ | :---------------------- | :------------------- | :------------ | :---------------------- | | Total interest earning assets | $1,519,525 | $54,695 | 4.81% | $1,227,705 | $41,590 | 4.53% | | Total interest bearing liabilities | $917,293 | $6,056 | 0.88% | $788,953 | $3,561 | 0.60% | | Net interest income | | $48,639 | | | $38,029 | | | Interest rate spread | | | 3.93% | | | 3.93% | | Net interest margin | | | 4.28% | | | 4.14% | [Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the Company's ability to meet its financial obligations and maintain adequate capital levels, including sources of liquidity and regulatory compliance - Primary liquidity sources include deposits, loan payments, and proceeds from loan sales. Secondary sources include **$535.1 million** in FHLB borrowing capacity and **$65.0 million** in federal funds lines from correspondent banks as of **September 30, 2019**[215](index=215&type=chunk)[217](index=217&type=chunk) - Net cash provided by operating activities was **$5.4 million** for the nine months ended **September 30, 2019**, up from **$1.8 million** in the prior year[219](index=219&type=chunk) - BayCom Corp and its subsidiary, United Business Bank, are considered '**well-capitalized**' under Federal Reserve regulations, exceeding all minimum regulatory capital requirements under the Basel III framework as of **September 30, 2019**[221](index=221&type=chunk)[222](index=222&type=chunk)[225](index=225&type=chunk) Capital Ratios (Sep 30, 2019, in thousands, except ratios) | Capital Ratio | BayCom Corp (Amount, in thousands) | BayCom Corp (Ratio) | Minimum "Well-Capitalized" (Ratio) | | :------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | :------------------- | :------------------ | :--------------------------------- | | Leverage Ratio | $204,659 | 11.74% | 5.00% | | Common Equity Tier 1 Ratio | $204,659 | 16.15% | 6.50% | | Tier 1 Risk-Based Capital Ratio | $212,880 | 16.80% | 8.00% | | Total Risk-Based Capital Ratio | $219,615 | 17.33% | 10.00% | [Off-Balance Sheet Arrangements](index=55&type=section&id=Off-Balance%20Sheet%20Arrangements) This section describes the Company's off-balance sheet commitments and their associated risks, such as loan commitments and letters of credit - Off-balance sheet arrangements include loan commitments, lines of credit, and standby letters of credit, which carry elements of credit, interest rate, and liquidity risk[226](index=226&type=chunk) - These commitments are used to manage client funding requests and are further detailed in Note 15[227](index=227&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=56&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The Company is primarily exposed to interest rate risk through its lending and deposit activities, which is considered a significant market risk. Management assesses this risk quarterly, and no material change in exposure has occurred since the 2018 Annual Report - The Company's primary market risk exposure is interest rate risk, arising from lending and deposit gathering activities, which is measured and assessed quarterly[228](index=228&type=chunk) - **No material change** in interest rate risk exposure has occurred since the **2018** Annual Report[228](index=228&type=chunk) [Item 4. Controls and Procedures](index=56&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of September 30, 2019, ensuring timely and accurate reporting. There were no significant changes in internal control over financial reporting during the nine months ended September 30, 2019, though management acknowledges inherent limitations in all control procedures - As of **September 30, 2019**, the Company's CEO and CFO concluded that disclosure controls and procedures were **effective** in ensuring timely and accurate reporting of required information under the Exchange Act[230](index=230&type=chunk) - **No significant changes** in internal control over financial reporting occurred during the nine months ended **September 30, 2019**[231](index=231&type=chunk) - Management acknowledges that disclosure controls and procedures, due to inherent limitations, provide only **reasonable, not absolute, assurance** against errors or fraud[229](index=229&type=chunk)[231](index=231&type=chunk) [PART II. OTHER INFORMATION](index=57&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part includes disclosures on legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits [Item 1. Legal Proceedings](index=57&type=section&id=Item%201.%20Legal%20Proceedings) The Company is occasionally involved in legal proceedings in the normal course of business, but management believes any resulting liability would not have a material adverse effect on its financial condition or business - Management believes that any liability from occasional legal proceedings would **not materially adversely affect** the Company's business or financial condition[233](index=233&type=chunk) [Item 1A. Risk Factors](index=57&type=section&id=Item%201A.%20Risk%20Factors) The Company's risk factors have not materially changed from those disclosed in its 2018 Annual Report filed on March 19, 2019 - As of **September 30, 2019**, the Company's risk factors have **not materially changed** from those disclosed in the **2018** Annual Report[234](index=234&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=57&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is not applicable for the reporting period [Item 3. Defaults Upon Senior Securities](index=57&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable for the reporting period [Item 4. Mine Safety Disclosures](index=57&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable for the reporting period [Item 5. Other Information](index=57&type=section&id=Item%205.%20Other%20Information) This item is not applicable for the reporting period [Item 6. Exhibits](index=58&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including merger agreements, organizational documents, certifications, and XBRL financial data - Exhibits include merger agreements for TIG Bancorp, Uniti Financial Corporation, and Bethlehem Financial Corporation[237](index=237&type=chunk) - Certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of **2002** are included[237](index=237&type=chunk) - XBRL formatted financial statements and notes for the quarter ended **September 30, 2019**, are provided[237](index=237&type=chunk) [SIGNATURES](index=59&type=section&id=SIGNATURES) This section provides the official signatures of the Company's authorized officers, certifying the accuracy of the report - The report was signed on **November 12, 2019**, by George Guarini (CEO) and Keary Colwell (SEVP, CFO, CAO)[240](index=240&type=chunk)

[PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%2E%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the company's unaudited condensed consolidated financial statements, including balance sheets, income statements, comprehensive income statements, statements of changes in shareholders' equity, and cash flow statements, along with related notes, for the periods ended June 30, 2019, and December 31, 2018 [Condensed Consolidated Balance Sheets (unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(unaudited)) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and shareholders' equity as of June 30, 2019, and December 31, 2018 Balance Sheet Key Data (As of June 30, 2019 vs December 31, 2018) | Indicator | June 30, 2019 (USD thousands) | December 31, 2018 (USD thousands) | | :----------------------------------- | :--------------------- | :---------------------- | | **Assets** | | | | Cash and cash equivalents | 351,594 | 323,581 | | Available-for-sale investment securities | 100,271 | 99,796 | | Loans, net | 1,213,527 | 970,189 | | Goodwill | 26,449 | 14,594 | | Total assets | 1,771,727 | 1,478,395 | | **Liabilities** | | | | Deposits | 1,505,382 | 1,257,768 | | Total liabilities | 1,537,090 | 1,277,642 | | **Shareholders' Equity** | | | | Common stock | 174,575 | 149,248 | | Retained earnings | 58,489 | 51,321 | | Total shareholders' equity | 234,637 | 200,753 | | Total liabilities and shareholders' equity | 1,771,727 | 1,478,395 | [Condensed Consolidated Statements of Income (unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(unaudited)) This section presents the company's operating results, including interest income, interest expense, net interest income, non-interest income, non-interest expense, and net income for the three and six months ended June 30, 2019, and 2018 Income Statement Key Data (For the Three and Six Months Ended June 30, 2019) | Indicator | 2019 3 Months (USD thousands) | 2018 3 Months (USD thousands) | 2019 6 Months (USD thousands) | 2018 6 Months (USD thousands) | | :--------------------------- | :------------------- | :------------------- | :------------------- | :------------------- | | Total interest income | 17,948 | 13,751 | 34,305 | 27,303 | | Total interest expense | 1,930 | 1,151 | 3,422 | 2,289 | | Net interest income | 16,018 | 12,600 | 30,883 | 25,014 | | Provision for loan losses | 445 | 243 | 722 | 497 | | Net interest income (after provision for loan losses) | 15,573 | 12,357 | 30,161 | 24,517 | | Total non-interest income | 2,540 | 2,083 | 4,660 | 3,809 | | Total non-interest expense | 14,795 | 8,656 | 24,543 | 16,779 | | Income before income tax provision | 3,318 | 5,784 | 10,278 | 11,547 | | Income tax provision | 1,091 | 1,496 | 3,110 | 3,190 | | Net income | 2,227 | 4,288 | 7,168 | 8,357 | | Basic earnings per share | 0.20 | 0.45 | 0.64 | 0.99 | | Diluted earnings per share | 0.20 | 0.45 | 0.64 | 0.99 | [Condensed Consolidated Statements of Comprehensive Income (unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(unaudited)) This section details the company's comprehensive income, including net income and other comprehensive income (loss) components, for the three and six months ended June 30, 2019, and 2018 Comprehensive Income Statement Key Data (For the Three and Six Months Ended June 30, 2019) | Indicator | 2019 3 Months (USD thousands) | 2018 3 Months (USD thousands) | 2019 6 Months (USD thousands) | 2018 6 Months (USD thousands) | | :----------------------------------- | :------------------- | :------------------- | :------------------- | :------------------- | | Net income | 2,227 | 4,288 | 7,168 | 8,357 | | Other comprehensive income (loss), net of tax | 792 | (285) | 1,389 | (567) | | Total comprehensive income | 3,019 | 4,003 | 8,557 | 7,790 | [Condensed Consolidated Statements of Changes in Shareholders' Equity (unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity%20(unaudited)) This section outlines the changes in the company's shareholders' equity, including common stock, additional paid-in capital, accumulated other comprehensive income (loss), and retained earnings, as of June 30, 2019, and December 31, 2018 Changes in Shareholders' Equity (As of June 30, 2019) | Indicator | June 30, 2019 (USD thousands) | December 31, 2018 (USD thousands) | | :--------------------------- | :--------------------- | :---------------------- | | Common stock | 174,575 | 149,248 | | Additional paid-in capital | 287 | 287 | | Accumulated other comprehensive income (loss), net of tax | 1,286 | (103) | | Retained earnings | 58,489 | 51,321 | | Total shareholders' equity | 234,637 | 200,753 | - As of June 30, 2019, the number of common shares outstanding increased to **12,052,266** from 10,869,275 as of December 31, 2018, primarily due to shares issued for acquisitions[9](index=9&type=chunk) [Condensed Consolidated Statements of Cash Flows (unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) This section summarizes the company's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2019, and 2018 Cash Flow Statement Key Data (For the Six Months Ended June 30, 2019) | Cash Flow Activity | 2019 6 Months (USD thousands) | 2018 6 Months (USD thousands) | | :------------------- | :------------------- | :------------------- | | Net cash from operating activities | 2,166 | 3,292 | | Net cash from investing activities | 44,019 | (29,502) | | Net cash from financing activities | (18,172) | 94,624 | | Increase in cash and cash equivalents | 28,013 | 68,414 | | Cash and cash equivalents at end of period | 351,594 | 318,267 | - In the first half of 2019, net cash from investing activities turned into a **net inflow of $44.019 million**, compared to a net outflow of $29.502 million in the same period of 2018, primarily influenced by net changes in loans and investment securities purchases and sales[215](index=215&type=chunk) - Net cash from financing activities shifted from a **net inflow of $94.624 million** in the first half of 2018 to a **net outflow of $18.172 million** in the first half of 2019, mainly due to net changes in deposits[215](index=215&type=chunk) [Notes to Condensed Consolidated Financial Statements (unaudited)](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) This section provides detailed explanations and additional information regarding the figures presented in the condensed consolidated financial statements [NOTE 1 – BASIS OF PRESENTATION](index=9&type=section&id=NOTE%201%20%E2%80%93%20BASIS%20OF%20PRESENTATION) This note describes BayCom Corp's business as a bank holding company and its wholly-owned bank subsidiary, United Business Bank, including its operational nature, geographic reach, adoption of new accounting standards, and strategic acquisitions - BayCom Corp, a bank holding company headquartered in Walnut Creek, California, operates through its wholly-owned subsidiary, United Business Bank, providing a wide range of financial services primarily to local small and medium-sized businesses, service professionals, and individuals[13](index=13&type=chunk) - As of June 30, 2019, the bank has expanded to **25 full-service banking branches** and **1 loan production office** across California, Washington, and New Mexico[13](index=13&type=chunk) - The company completed the acquisition of Bethlehem Financial Corporation (BFC) on November 30, 2018, and Uniti Financial Corporation (Uniti) on May 24, 2019, to expand market share[16](index=16&type=chunk) - The company adopted the new lease accounting standard (Topic 842) on January 1, 2019, requiring operating leases to be recognized as right-of-use assets and lease liabilities, with no significant impact on opening retained earnings[18](index=18&type=chunk) - As an "emerging growth company," the company has elected to delay the adoption of new or revised accounting standards applicable to public companies until they apply to private companies[21](index=21&type=chunk) [NOTE 2 - ACCOUNTING STANDARDS RECENTLY ISSUED OR ADOPTED](index=11&type=section&id=NOTE%202%20-%20ACCOUNTING%20STANDARDS%20RECENTLY%20ISSUED%20OR%20ADOPTED) This note details the accounting standards recently adopted or to be adopted by the company, including ASU 2016-13 (CECL model), ASU 2017-04 (goodwill impairment simplification), ASU 2017-08 (redeemable debt securities amortization), ASU 2018-07 (non-employee equity compensation), ASU 2018-13 (fair value measurement disclosures), and ASU 2018-15 (cloud service implementation costs) - The company is reviewing the requirements of ASU No. 2016-13 (CECL model), which is expected to change the calculation processes and procedures for the allowance for loan losses and may result in an **increase in the allowance for loan losses**[22](index=22&type=chunk) - The company adopted ASU 2017-08 on January 1, 2019, which shortens the amortization period for certain callable debt securities with premium, but had no material impact on the consolidated financial statements[25](index=25&type=chunk) - The company adopted ASU 2018-07 on January 1, 2019, simplifying the accounting for non-employee equity compensation transactions, with no material impact on the consolidated financial statements[26](index=26&type=chunk) - ASU 2017-04 (goodwill impairment simplification), ASU 2018-13 (fair value measurement disclosures), and ASU 2018-15 (cloud service implementation costs) are not expected to have a material impact on the company's consolidated financial statements[24](index=24&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk) [NOTE 3 - ACQUISITION](index=13&type=section&id=NOTE%203%20-%20ACQUISITION) This note provides details on the company's recent Uniti and BFC mergers and the proposed acquisition of TIG Bancorp, outlining the strategic rationale, fair value of acquired assets and assumed liabilities, goodwill recognized, and related acquisition expenses - The company completed the Uniti merger on May 24, 2019, issuing **1,115,006 shares of common stock** and paying **$37.8 million in cash**, for a total consideration of **$62.7 million**, expanding its market share in Southern California[31](index=31&type=chunk) - The BFC merger was completed on November 30, 2018, with a **cash payment of $23.5 million**, expanding the company's market share in New Mexico[32](index=32&type=chunk) - The Uniti merger generated **$11.855 million in goodwill**, and the BFC merger generated **$4.229 million in goodwill**, primarily aimed at deepening geographic footprint and achieving operational scale and efficiency[33](index=33&type=chunk)[35](index=35&type=chunk)[37](index=37&type=chunk) Uniti and BFC Merger Fair Value Summary of Assets and Liabilities | Item | Uniti Merger (May 24, 2019) (USD thousands) | BFC Merger (November 30, 2018) (USD thousands) | | :--------------------------- | :--------------------------------- | :--------------------------------- | | **Acquired Assets** | | | | Cash and due from banks | 6,392 | 4,932 | | Federal funds sold | 22,080 | 9,346 | | Loans, net | 276,719 | 75,384 | | Core deposit intangible | 566 | 3,604 | | Total assets | 318,018 | 157,820 | | **Liabilities Assumed** | | | | Deposits | 265,786 | 135,482 | | Total liabilities | 267,172 | 138,526 | | **Consideration** | | | | Cash consideration | 37,814 | 23,523 | | Common stock issued | 24,887 | - | | Goodwill | 11,855 | 4,229 | Acquisition-Related Expenses (For the Six Months Ended June 30, 2019) | Expense Type | Uniti Merger (USD thousands) | BFC Merger (USD thousands) | | :------------- | :------------------ | :---------------- | | Professional fees | 535 | 130 | | Data processing | 2,657 | 1,290 | | Severance | 578 | 536 | | Other | 365 | 369 | | Total | 4,135 | 2,325 | - The company announced on June 28, 2019, the signing of an agreement to acquire TIG Bancorp in an all-cash and stock transaction valued at approximately **$39.4 million**, expected to close in the fourth quarter of 2019[42](index=42&type=chunk) [NOTE 4 – INVESTMENT SECURITIES](index=17&type=section&id=NOTE%204%20%E2%80%93%20INVESTMENT%20SECURITIES) This note provides information on the amortized cost, unrealized gains and losses, and estimated fair value of the company's available-for-sale investment securities, which totaled $100.271 million as of June 30, 2019 Available-for-Sale Investment Securities Fair Value (As of June 30, 2019 vs December 31, 2018) | Security Type | June 30, 2019 (USD thousands) | December 31, 2018 (USD thousands) | | :--------------------------- | :--------------------- | :---------------------- | | U.S. Treasury securities | 996 | 985 | | U.S. government agency securities | 13,587 | 13,765 | | Municipal securities | 17,464 | 19,503 | | Mortgage-backed securities | 29,646 | 49,602 | | Collateralized mortgage obligations | 24,166 | 4,717 | | SBA securities | 4,241 | 4,241 | | Corporate bonds | 10,171 | 6,983 | | Total | 100,271 | 99,796 | Available-for-Sale Securities Unrealized Loss Status (As of June 30, 2019) | Security Type | Unrealized Losses Less Than 12 Months (USD thousands) | Unrealized Losses 12 Months or More (USD thousands) | Total Unrealized Losses (USD thousands) | | :--------------------------- | :---------------------------- | :---------------------------- | :---------------------- | | U.S. government agency securities | (14) | - | (14) | | Municipal securities | (4) | (11) | (15) | | Mortgage-backed securities | (5) | (3) | (8) | | Collateralized mortgage obligations | (10) | (1) | (11) | | SBA securities | - | (48) | (48) | | Corporate bonds | (4) | - | (4) | | Total | (37) | (63) | (100) | - As of June 30, 2019, the company held **214 investment securities**, with **20 in an unrealized loss position for over 12 months** and **22 for less than 12 months**; these losses are primarily interest rate related, and the company expects to fully recover amortized cost at maturity or when market conditions improve[48](index=48&type=chunk) [NOTE 5 - LOANS](index=18&type=section&id=NOTE%205%20-%20LOANS) This note details the composition of the company's loan portfolio, including commercial and industrial, real estate, and consumer loans, along with an analysis of nonperforming loans, troubled debt restructurings (TDRs), and purchased credit impaired (PCI) loans Loan Portfolio Overview (As of June 30, 2019 vs December 31, 2018) | Loan Type | June 30, 2019 (USD thousands) | December 31, 2018 (USD thousands) | | :------------------- | :--------------------- | :---------------------- | | Commercial and industrial | 151,862 | 121,855 | | Construction and land | 30,502 | 47,302 | | Commercial real estate | 902,896 | 701,983 | | Residential | 128,590 | 102,708 | | Consumer | 6,052 | 1,847 | | Total loans | 1,219,902 | 975,695 | | Allowance for loan losses | (5,880) | (5,140) | | Loans, net | 1,213,527 | 970,189 | Nonperforming Loans and Troubled Debt Restructurings (TDRs) (As of June 30, 2019 vs December 31, 2018) | Indicator | June 30, 2019 (USD thousands) | December 31, 2018 (USD thousands) | | :--------------------------- | :--------------------- | :---------------------- | | Total nonperforming loans | 3,822 | 3,128 | | Total troubled debt restructurings (TDRs) | 1,400 | 1,400 | | Total purchased credit impaired (PCI) loans | 18,601 | 12,804 | - As of June 30, 2019, total nonperforming loans amounted to **$3.822 million**, comprising $2.25 million in commercial and industrial loans, $1.452 million in commercial real estate loans, and $0.12 million in residential loans[54](index=54&type=chunk) - As of June 30, 2019, **$0.763 million of TDR loans** were performing under modified terms, and the company had no additional credit commitments to TDR borrowers[56](index=56&type=chunk) Loan Risk Grade Distribution (As of June 30, 2019) | Loan Type | Pass (USD thousands) | Special Mention (USD thousands) | Substandard (USD thousands) | Doubtful (USD thousands) | Total (USD thousands) | | :------------------- | :------------ | :-------------- | :------------ | :------------ | :------------ | | Commercial and industrial | 149,943 | 1,253 | 666 | - | 151,862 | | Construction and land | 27,618 | 147 | 2,737 | - | 30,502 | | Commercial real estate | 882,714 | 16,038 | 4,144 | - | 902,896 | | Residential | 127,239 | 1,231 | 120 | - | 128,590 | | Consumer | 6,041 | 11 | - | - | 6,052 | | Total | 1,193,555 | 18,680 | 7,667 | - | 1,219,902 | [NOTE 6 – ALLOWANCE FOR LOAN LOSSES](index=24&type=section&id=NOTE%206%20%E2%80%93%20ALLOWANCE%20FOR%20LOAN%20LOSSES) This note provides a detailed analysis of the company's allowance for loan losses (ALLL), including changes in the allowance and its composition by loan product and assessment method, with management affirming its adequacy Allowance for Loan Losses Movement Analysis (For the Three and Six Months Ended June 30, 2019) | Indicator | 2019 3 Months (USD thousands) | 2019 6 Months (USD thousands) | | :------------------- | :------------------- | :------------------- | | Beginning balance | 5,405 | 5,140 | | Charge-offs | - | (21) | | Recoveries | 30 | 39 | | Provision for loan losses | 445 | 722 | | Ending balance | 5,880 | 5,880 | Allowance for Loan Losses Composition (As of June 30, 2019) | Category | Amount (USD thousands) | | :--------------------------- | :------------ | | Loans individually evaluated for impairment | 19 | | Loans collectively evaluated for impairment | 5,861 | | PCI loans | - | | Total | 5,880 | - As of June 30, 2019, the allowance for loan losses was **$5.88 million**, representing **0.48% of total loans** and **153.85% of total nonperforming loans**[170](index=170&type=chunk)[172](index=172&type=chunk) - In the first half of 2019, the company recorded **net recoveries of $0.018 million**, compared to net charge-offs of $0.112 million in the same period of 2018[202](index=202&type=chunk) [NOTE 7 – PREMISES AND EQUIPMENT](index=25&type=section&id=NOTE%207%20%E2%80%93%20PREMISES%20AND%20EQUIPMENT) This note details the composition and changes in the company's premises and equipment, including the recognition of lease liabilities and right-of-use assets following the adoption of new lease accounting standards Premises and Equipment, Net (As of June 30, 2019 vs December 31, 2018) | Item | June 30, 2019 (USD thousands) | December 31, 2018 (USD thousands) | | :--------------------------- | :--------------------- | :---------------------- | | Owned premises, net | 4,571 | 9,667 | | Leasehold improvements | 2,178 | 1,654 | | Furniture, fixtures, and equipment | 4,016 | 3,835 | | Less: Accumulated depreciation and amortization | (4,184) | (3,988) | | Total premises and equipment, net | 6,581 | 11,168 | - Net premises and equipment decreased by **$4.6 million**, primarily due to the sale of a commercial building in Oakland with a book value of $4.6 million, and a partial space leaseback[78](index=78&type=chunk)[177](index=177&type=chunk) - The company adopted Topic 842 on January 1, 2019, recognizing **$7.8 million in right-of-use assets** and **$8.2 million in lease liabilities**, with no significant impact on regulatory capital measures[18](index=18&type=chunk)[176](index=176&type=chunk) Lease Liabilities Present Value (As of June 30, 2019) | Year | Total Lease Payments (USD thousands) | | :------------------- | :-------------------- | | For the remainder of 2019 | 1,465 | | 2020 | 2,759 | | 2021 | 2,431 | | 2022 | 1,801 | | 2023 | 1,299 | | Thereafter | 1,906 | | Total lease payments | 11,661 | | Less: Interest | (863) | | Present value of lease liabilities | 10,798 | [NOTE 8 – GOODWILL AND INTANGIBLE ASSETS](index=26&type=section&id=NOTE%208%20%E2%80%93%20GOODWILL%20AND%20INTANGIBLE%20ASSETS) This note discloses the changes in the company's goodwill and core deposit intangible assets, including additions from acquisitions and amortization, and confirms the absence of impairment Goodwill Changes (As of June 30, 2019 vs December 31, 2018) | Indicator | June 30, 2019 (USD thousands) | December 31, 2018 (USD thousands) | | :------------------- | :--------------------- | :---------------------- | | Beginning balance (January 1) | 14,594 | 10,365 | | Goodwill from acquisitions | 11,855 | 4,229 | | Impairment | - | - | | Ending balance | 26,449 | 14,594 | - As of June 30, 2019, the company performed a qualitative assessment of goodwill and determined that its fair value exceeded its carrying value, thus **no impairment occurred**[83](index=83&type=chunk) Core Deposit Intangible Asset Changes (As of June 30, 2019 vs December 31, 2018) | Indicator | June 30, 2019 (USD thousands) | December 31, 2018 (USD thousands) | | :------------------- | :--------------------- | :---------------------- | | Beginning balance (January 1) | 7,205 | 4,772 | | Additions | 566 | 3,604 | | Less: Amortization | (781) | (1,171) | | Ending balance | 6,990 | 7,205 | - Core deposit intangible asset amortization expense for the first half of 2019 was **$0.781 million**, an increase from $0.578 million in the same period of 2018[84](index=84&type=chunk) [NOTE 9 – INTEREST RECEIVABLE AND OTHER ASSETS](index=27&type=section&id=NOTE%209%20%E2%80%93%20INTEREST%20RECEIVABLE%20AND%20OTHER%20ASSETS) This note details the composition of the company's interest receivable and other assets, which increased to $19.581 million as of June 30, 2019, primarily due to higher net deferred tax assets and interest receivable Interest Receivable and Other Assets Composition (As of June 30, 2019 vs December 31, 2018) | Item | June 30, 2019 (USD thousands) | December 31, 2018 (USD thousands) | | :--------------------------- | :--------------------- | :---------------------- | | Net deferred tax assets | 7,295 | 5,891 | | Interest receivable | 4,228 | 3,676 | | SBIC fund investment | 2,113 | 1,347 | | Prepaid assets | 1,322 | 2,156 | | Servicing assets | 2,446 | 814 | | Low-income housing partnerships, net | 705 | 607 | | Statutory trust investments | 395 | 395 | | All other | 1,077 | 2,495 | | Total | 19,581 | 17,381 | [NOTE 10 – DEPOSITS](index=27&type=section&id=NOTE%2010%20%E2%80%93%20DEPOSITS) This note provides a detailed breakdown of the company's deposit composition, highlighting a 19.7% increase to $1.505382 billion as of June 30, 2019, primarily driven by the Uniti merger Deposits Composition (As of June 30, 2019 vs December 31, 2018) | Deposit Type | June 30, 2019 (USD thousands) | December 31, 2018 (USD thousands) | | :--------------------------- | :--------------------- | :---------------------- | | Non-interest bearing demand | 538,504 | 398,045 | | NOW accounts and savings | 248,029 | 246,288 | | Money market | 385,934 | 398,081 | | Time deposits under $250,000 | 189,842 | 117,653 | | Time deposits $250,000 and over | 143,073 | 97,701 | | Total | 1,505,382 | 1,257,768 | - Total deposits increased by **$247.6 million, or 19.7%**, primarily attributable to the Uniti merger[178](index=178&type=chunk)[180](index=180&type=chunk) [NOTE 11 – INTEREST PAYABLE AND OTHER LIABILITIES](index=27&type=section&id=NOTE%2011%20%E2%80%93%20INTEREST%20PAYABLE%20AND%20OTHER%20LIABILITIES) This note outlines the composition of the company's interest payable and other liabilities, which increased to $9.238 million as of June 30, 2019, mainly due to higher accrued expenses and interest payable Interest Payable and Other Liabilities Composition (As of June 30, 2019 vs December 31, 2018) | Item | June 30, 2019 (USD thousands) | December 31, 2018 (USD thousands) | | :--------------------------- | :--------------------- | :---------------------- | | Accrued expenses | 5,448 | 5,508 | | Deferred rent | - | 528 | | CDARs deferred fees | - | 494 | | Accounts payable | 1,044 | 811 | | Reserve for unfunded commitments | - | 330 | | Interest payable | 1,453 | 198 | | Other miscellaneous liabilities | - | 506 | | Total | 9,238 | 8,375 | [NOTE 12 – OTHER EXPENSES](index=28&type=section&id=NOTE%2012%20%E2%80%93%20OTHER%20EXPENSES) This note details the composition of the company's other non-interest expenses, which increased for both the three and six months ended June 30, 2019, driven by professional fees, core deposit intangible amortization, and marketing expenses Other Expenses Composition (For the Three and Six Months Ended June 30, 2019) | Expense Type | 2019 3 Months (USD thousands) | 2018 3 Months (USD thousands) | 2019 6 Months (USD thousands) | 2018 6 Months (USD thousands) | | :--------------------------- | :------------------- | :------------------- | :------------------- | :------------------- | | Professional fees | 867 | 557 | 1,264 | 898 | | Core deposit intangible amortization | 392 | 290 | 781 | 578 | | Marketing and promotion | 396 | 248 | 606 | 459 | | Stationery and supplies | 161 | 91 | 298 | 215 | | Insurance (including FDIC premiums) | 159 | 107 | 315 | 265 | | Directors' fees | 375 | 72 | 496 | 131 | | Total other expenses | 2,850 | 2,226 | 4,601 | 3,752 | [NOTE 13 – EQUITY INCENTIVE PLANS](index=28&type=section&id=NOTE%2013%20%E2%80%93%20EQUITY%20INCENTIVE%20PLANS) This note describes the company's equity incentive plans, including the 2017 and 2014 Omnibus Equity Incentive Plans, which aim to incentivize employees and non-employee directors through stock options and restricted stock awards - The 2017 Omnibus Equity Incentive Plan authorizes equity incentive awards to employees and non-employee directors, with a maximum of **450,000 shares of common stock**; as of June 30, 2019, **161,365 restricted stock awards** have been granted[92](index=92&type=chunk) - The 2014 Omnibus Equity Incentive Plan has granted **148,962 restricted stock awards** and will not grant any further awards in the future[93](index=93&type=chunk) - Total compensation expense for equity incentive plans was **$0.32 million** and **$0.44 million** for the three and six months ended June 30, 2019, respectively[94](index=94&type=chunk) - As of June 30, 2019, total unrecognized compensation cost related to unvested restricted stock awards was **$2.6 million**, expected to be recognized over approximately two years[96](index=96&type=chunk) [NOTE 14 – FAIR VALUE MEASUREMENT](index=29&type=section&id=NOTE%2014%20%E2%80%93%20FAIR%20VALUE%20MEASUREMENT) This note provides information on the company's assets and liabilities measured at fair value, explaining the valuation techniques and the three-level fair value hierarchy used - The fair value hierarchy is categorized into three levels: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs)[98](index=98&type=chunk)[99](index=99&type=chunk) Assets Measured at Fair Value on a Recurring Basis (As of June 30, 2019) | Asset Type | Total (USD thousands) | Level 1 (USD thousands) | Level 2 (USD thousands) | Level 3 (USD thousands) | | :--------------------------- | :------------ | :------------ | :------------ | :------------ | | U.S. Treasury securities | 996 | 996 | - | - | | U.S. government agency securities | 13,587 | - | 13,587 | - | | Municipal securities | 17,464 | - | 17,464 | - | | Mortgage-backed securities | 29,646 | - | 29,646 | - | | Collateralized mortgage obligations | 24,166 | - | 24,166 | - | | SBA securities | 4,241 | - | 4,241 | - | | Corporate bonds | 10,171 | - | 10,171 | - | | Total | 100,271 | 996 | 99,275 | - | Assets Measured at Fair Value on a Non-Recurring Basis (As of June 30, 2019) | Asset Type | Total (USD thousands) | Level 1 (USD thousands) | Level 2 (USD thousands) | Level 3 (USD thousands) | | :--------------------------- | :------------ | :------------ | :------------ | :------------ | | Performing impaired loans | 763 | - | - | 763 | | Nonperforming impaired loans | 3,822 | - | - | 3,822 | | OREO | 627 | - | - | 627 | | Total | 5,212 | - | - | 5,212 | - Fair value measurements for impaired loans and OREO typically involve significant assumptions and unobservable market data, thus classified as **Level 3**[104](index=104&type=chunk)[105](index=105&type=chunk) [NOTE 15 – COMMITMENTS AND CONTINGENCIES](index=32&type=section&id=NOTE%2015%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) This note discloses the company's various commitments and contingencies arising in the normal course of business, including loan commitments, letters of credit, commercial real estate loan concentrations, and investments in low-income housing tax credit (LIHTC) and Small Business Investment Company (SBIC) partnerships - As of June 30, 2019, total unfunded loan commitments were **$120.7 million**, and standby letters of credit totaled **$0.769 million**[109](index=109&type=chunk) - The company has a concentration in commercial real estate-related loans, but management believes the risks are manageable[111](index=111&type=chunk) - As of June 30, 2019, the company's remaining commitments to LIHTC and SBIC were approximately **$3.6 million** and **$0.473 million**, respectively[112](index=112&type=chunk) - As of June 30, 2019, the company's top ten deposit customers accounted for **8.6% of total deposits**, and local agency deposits require collateralization[113](index=113&type=chunk)[114](index=114&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's detailed analysis of the company's financial condition and operating results, covering forward-looking statements, executive overview, critical accounting policies, comparative financial condition, operating performance, and liquidity and capital resources [SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS](index=31&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section cautions investors that forward-looking statements in the report involve risks and uncertainties, and actual results may differ materially from expectations - Forward-looking statements are based on current management expectations and involve risks and uncertainties related to M&A integration, credit risk, economic conditions, interest rate fluctuations, regulatory requirements, acquisition strategy, goodwill impairment, legal and regulatory changes, deposit attraction, operating cost control, IT system security, and key talent retention[116](index=116&type=chunk)[118](index=118&type=chunk) - Actual results may differ materially from forward-looking statements due to various factors, and investors should not place undue reliance on these statements[116](index=116&type=chunk)[119](index=119&type=chunk) [Executive Overview](index=34&type=section&id=Executive%20Overview) BayCom Corp, a bank holding company operating through United Business Bank, aims to enhance shareholder value and sustained profitability through strategic acquisitions and organic growth, with profitability primarily driven by net interest income, loan loss provision, non-interest income, and non-interest expense - BayCom Corp, a bank holding company operating through United Business Bank, reported approximately **$1.8 billion in total assets**, **$1.2 billion in total loans**, **$1.5 billion in total deposits**, and **$234.6 million in shareholders' equity** as of June 30, 2019[120](index=120&type=chunk) - The company's primary goal is to increase shareholder value and sustained profitability through strategic acquisitions and organic growth, having expanded its geographic footprint through **six acquisitions** and planning to continue seeking acquisition opportunities[122](index=122&type=chunk) - Company profitability is primarily dependent on net interest income (after provision for loan losses), non-interest income, and non-interest expense[123](index=123&type=chunk) - Net interest income is influenced by market interest rates, the yield curve, asset yields, liability costs, and changes in the asset and liability structure[124](index=124&type=chunk)[125](index=125&type=chunk) [Critical Accounting Policies and Estimates](index=36&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section outlines the critical accounting policies and estimates used in the company's financial reporting, which require complex and subjective management judgments, including the allowance for loan losses, purchased credit impaired loans, business combinations, loan sales, income taxes, and goodwill - The assessment of the allowance for loan losses is inherently subjective, requiring management to make estimates based on historical experience, loan portfolio type, borrower repayment ability, collateral fair value, and economic conditions[130](index=130&type=chunk) - Expected cash flows for purchased credit impaired (PCI) loans are accounted for under ASC 310-30, estimated using an internal cash flow model, and projected based on assumptions such as default rates, loss severity, and prepayment speeds[133](index=133&type=chunk)[134](index=134&type=chunk) - Business combinations are accounted for using the acquisition method, recognizing acquired assets and assumed liabilities at fair value on the acquisition date, with any excess recognized as goodwill[137](index=137&type=chunk) - Goodwill is tested for impairment annually or more frequently if impairment indicators arise; as of June 30, 2019, the company completed a qualitative assessment of goodwill and found no impairment[141](index=141&type=chunk)[142](index=142&type=chunk) [Comparison of Financial Condition at June 30, 2019 and December 31, 2018](index=38&type=section&id=Comparison%20of%20Financial%20Condition%20at%20June%2030%2C%202019%20and%20December%2031%2C%202018) This section compares the company's financial condition as of June 30, 2019, and December 31, 2018, highlighting significant increases in total assets, net loans, total deposits, and shareholders' equity, primarily driven by the Uniti merger - Total assets increased by **$293.3 million to $1.8 billion**, primarily attributable to the Uniti merger[146](index=146&type=chunk) - Cash and cash equivalents increased by **$28 million (8.7%) to $351.6 million**, mainly due to a decrease in net loans[147](index=147&type=chunk) - Net loans increased by **$243.3 million (25.1%) to $1.2 billion**, primarily driven by the Uniti merger, partially offset by loan repayments[149](index=149&type=chunk) Loan Portfolio Type Changes (As of June 30, 2019 vs December 31, 2018) | Loan Type | June 30, 2019 (USD thousands) | December 31, 2018 (USD thousands) | Percentage Change | | :--------------------------- | :--------------------- | :---------------------- | :--------- | | Commercial and industrial | 151,086 | 121,853 | 24.0% | | Residential real estate | 126,814 | 100,915 | 25.7% | | Multi-family residential | 116,197 | 112,958 | 2.9% | | Owner-occupied commercial real estate | 360,978 | 270,204 | 33.6% | | Non-owner-occupied commercial real estate | 409,892 | 308,045 | 33.1% | | Construction and land | 30,282 | 47,069 | -35.7% | | Consumer | 6,052 | 1,847 | 227.7% | | PCI loans | 18,601 | 12,804 | 45.3% | | Total loans | 1,219,902 | 975,695 | 25.0% | - Nonperforming assets increased by **$0.52 million (13.2%) to $4.4 million**, primarily due to a $0.907 million increase in commercial real estate loans[155](index=155&type=chunk) - Total deposits increased by **$247.6 million to $1.5 billion**, primarily attributable to the Uniti merger[178](index=178&type=chunk) - Shareholders' equity increased by **$33.9 million (16.8%) to $234.6 million**, mainly due to the issuance of **$24.9 million in common stock** in the Uniti merger, **$7.2 million in net income**, and an improvement in the fair value of available-for-sale investments[184](index=184&type=chunk) [Comparison of Results of Operations for the Three and Six Months Ended June 30, 2019 and 2018](index=45&type=section&id=Comparison%20of%20Results%20of%20Operations%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202019%20and%202018) This section compares the company's operating results for the three and six months ended June 30, 2019, and 2018, noting a decline in net income and EPS primarily due to acquisition-related expenses, despite growth in net interest and non-interest income, which was offset by a significant increase in non-interest expenses Net Income and Earnings Per Share (For the Three and Six Months Ended June 30, 2019) | Indicator | 2019 3 Months (USD thousands) | 2018 3 Months (USD thousands) | 2019 6 Months (USD thousands) | 2018 6 Months (USD thousands) | | :--------------------------- | :------------------- | :------------------- | :------------------- | :------------------- | | Net income | 2,227 | 4,288 | 7,168 | 8,357 | | Diluted earnings per share | 0.20 | 0.45 | 0.64 | 0.99 | - Net income decreased primarily due to **$4.1 million in acquisition-related expenses** associated with the Uniti merger in the first half of 2019[185](index=185&type=chunk) Net Interest Income and Net Interest Margin (For the Three and Six Months Ended June 30, 2019) | Indicator | 2019 3 Months (USD thousands) | 2018 3 Months (USD thousands) | 2019 6 Months (USD thousands) | 2018 6 Months (USD thousands) | | :--------------------------- | :------------------- | :------------------- | :------------------- | :------------------- | | Net interest income | 16,018 | 12,600 | 30,883 | 25,014 | | Net interest spread | 3.99% | 3.89% | 4.00% | 3.99% | | Net interest margin | 4.29% | 4.11% | 4.31% | 4.19% | - Net interest income growth was primarily driven by an increase in average interest-earning assets, particularly loans, largely propelled by the Uniti and BFC mergers[188](index=188&type=chunk) Non-Interest Income (For the Three and Six Months Ended June 30, 2019) | Income Type | 2019 3 Months (USD thousands) | 2018 3 Months (USD thousands) | 2019 6 Months (USD thousands) | 2018 6 Months (USD thousands) | | :--------------------------- | :------------------- | :------------------- | :------------------- | :------------------- | | Gain on sale of loans | 903 | 548 | 1,169 | 1,199 | | Service charges and other fees | 663 | 469 | 1,396 | 915 | | Loan servicing fees and other income | 514 | 274 | 924 | 519 | | Other income | 239 | 792 | 873 | 1,176 | | Total non-interest income | 2,540 | 2,083 | 4,660 | 3,809 | - Non-interest income increased primarily due to higher gains on loan sales, increased service charges and other fees, and higher loan servicing fees and other income, partially offset by a decrease in other income (due to a bank-owned life insurance death benefit in 2018)[203](index=203&type=chunk)[205](index=205&type=chunk) Non-Interest Expense (For the Three and Six Months Ended June 30, 2019) | Expense Type | 2019 3 Months (USD thousands) | 2018 3 Months (USD thousands) | 2019 6 Months (USD thousands) | 2018 6 Months (USD thousands) | | :--------------------------- | :------------------- | :------------------- | :------------------- | :------------------- | | Salaries and employee benefits | 7,198 | 4,547 | 13,161 | 9,461 | | Occupancy and equipment | 1,064 | 1,268 | 2,174 | 2,243 | | Data processing | 3,683 | 615 | 4,607 | 1,323 | | Other expenses | 2,850 | 2,226 | 4,601 | 3,752 | | Total non-interest expense | 14,795 | 8,656 | 24,543 | 16,779 | - Non-interest expense significantly increased, primarily due to **$4.1 million in acquisition-related expenses** for the Uniti merger and higher salaries and benefits costs resulting from increased employee count due to the Uniti and BFC mergers[207](index=207&type=chunk) - The efficiency ratio deteriorated to **79.73%** (three months) and **69.05%** (six months) in the first half of 2019, compared to 57.39% and 58.21% in the same periods of 2018, mainly due to the substantial increase in non-interest expenses[187](index=187&type=chunk) [Liquidity and Capital Resources](index=51&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's liquidity management strategies and capital adequacy, highlighting its ability to meet daily funding needs through deposits, loan repayments, and sales, supplemented by available borrowing capacity, while maintaining "well-capitalized" status - The company meets liquidity needs through deposits, loan principal and interest repayments, and loan sale proceeds, with additional borrowing capacity of **$371 million from FHLB** and **$65 million from federal funds**[211](index=211&type=chunk)[212](index=212&type=chunk) Cash Flow Overview (For the Six Months Ended June 30, 2019) | Cash Flow Activity | 2019 6 Months (USD thousands) | | :------------------- | :------------------- | | Net cash from operating activities | 2,166 | | Net cash from investing activities | 44,019 | | Net cash from financing activities | (18,172) | - As of June 30, 2019, the company (non-consolidated) held **$3.9 million in liquid assets**[216](index=216&type=chunk) - As of June 30, 2019, the bank was considered "well-capitalized," meeting the Federal Reserve Board's capital adequacy requirements[217](index=217&type=chunk) Basel III Capital Ratios (As of June 30, 2019) | Capital Ratio | BayCom Corp | United Business Bank | | :--------------------------- | :---------- | :------------------- | | Leverage ratio | 11.35% | 11.55% | | Common Equity Tier 1 capital ratio | 15.94% | 16.22% | | Tier 1 risk-based capital ratio | 16.60% | 16.22% | | Total risk-based capital ratio | 17.10% | 16.73% | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=54&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company primarily faces interest rate risk, with its operating performance highly dependent on effective interest rate risk management, and no significant changes in exposure since the 2018 annual report - The company primarily faces **interest rate risk**, and its operating performance is highly dependent on its ability to manage this risk effectively[223](index=223&type=chunk) - The company assesses and measures interest rate risk quarterly and believes there have been **no significant changes** in its interest rate risk exposure since the disclosure in the 2018 annual report[223](index=223&type=chunk) [Item 4. Controls and Procedures](index=54&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, assessed the effectiveness of disclosure controls and procedures as of June 30, 2019, deeming them effective, with no material changes to internal control over financial reporting during the period - As of June 30, 2019, the company's Chief Executive Officer and Chief Financial Officer assessed and concluded that the company's disclosure controls and procedures were **effective**[225](index=225&type=chunk) - There were **no material changes** in the company's internal control over financial reporting during the reporting period[226](index=226&type=chunk) - Management acknowledges that any control procedures have inherent limitations, can only provide reasonable assurance, not absolute, and may not prevent all errors and fraud due to judgment errors, simple mistakes, collusion, or circumvention[226](index=226&type=chunk) [PART II. OTHER INFORMATION](index=55&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=55&type=section&id=Item%201.%20Legal%20Proceedings) The company is occasionally involved in various legal proceedings in the normal course of business, with management believing that any resulting liabilities will not materially adversely affect its business or financial condition - The company is occasionally involved in various legal proceedings in the normal course of business[228](index=228&type=chunk) - Management believes that any liabilities arising from these proceedings will **not have a material adverse effect** on the company's business or financial condition[228](index=228&type=chunk) [Item 1A. Risk Factors](index=55&type=section&id=Item%201A.%20Risk%20Factors) This section states that as of June 30, 2019, the company's risk factors have not materially changed from those disclosed in its 2018 annual report - As of June 30, 2019, the company's risk factors have **not materially changed** from those disclosed in its 2018 annual report[229](index=229&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=55&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section states that it is not applicable, indicating no information regarding unregistered sales of equity securities and use of proceeds for the reporting period - This section is **not applicable**, indicating no information regarding unregistered sales of equity securities and use of proceeds for the reporting period[229](index=229&type=chunk) [Item 3. Defaults Upon Senior Securities](index=55&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that it is not applicable, indicating no information regarding defaults upon senior securities for the reporting period - This section is **not applicable**, indicating no information regarding defaults upon senior securities for the reporting period[229](index=229&type=chunk) [Item 4. Mine Safety Disclosures](index=55&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that it is not applicable, indicating no information regarding mine safety disclosures - This section is **not applicable**, indicating no information regarding mine safety disclosures[230](index=230&type=chunk) [Item 5. Other Information](index=55&type=section&id=Item%205.%20Other%20Information) This section states that it is not applicable, indicating no other information requiring disclosure - This section is **not applicable**, indicating no other information requiring disclosure[230](index=230&type=chunk) [Item 6. Exhibits](index=56&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the company's Form 10-Q report, including merger agreements, articles of incorporation, CEO and CFO certifications, and financial statements in XBRL format - Exhibits include merger agreements with TIG Bancorp and Uniti Financial Corporation, articles of incorporation, Sarbanes-Oxley certifications from the Chief Executive Officer and Chief Financial Officer, and financial statements in XBRL format[232](index=232&type=chunk) [SIGNATURES](index=57&type=section&id=SIGNATURES) This section contains the signatures of the company's Chief Executive Officer, George Guarini, and Chief Financial Officer, Keary Colwell, as required by the Securities Exchange Act of 1934 - The report was signed by Chief Executive Officer George Guarini and Chief Financial Officer Keary Colwell on August 9, 2019[236](index=236&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to COMMISSION FILE NUMBER 001-38483 BAYCOM CORP | --- | --- | |---------------------------------------------------------------------------------------------------------- ...

TABLE OF CONTENTS UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2018 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38483 BAYCOM CORP (Exact name of registrant as specified in its charter) California 37-1849111 (State or other jurisdiction o ...