Financial Performance - The company reported a 12-month net interest income of $59,265,000 under a zero rate change scenario, which is a decrease from $61,652,000 in 2023[449]. - Net interest income decreased to $56,470 thousand in 2024 from $64,959 thousand in 2023, a decline of 13.73%[473]. - Net income for 2024 was $2,138 thousand, down from $7,413 thousand in 2023, reflecting a decrease of 71.16%[473]. - Comprehensive income for 2024 was $3,847 thousand, down from $11,714 thousand in 2023, a decrease of 67.16%[476]. - The company reported a net income of $2,138 thousand for the year ended December 31, 2024, compared to $7,413 thousand in 2023 and a net loss of $14,194 thousand in 2022[483]. Asset and Equity Changes - Total assets increased to $2,436,512 thousand in 2024 from $2,416,003 thousand in 2023, representing a growth of 0.84%[472]. - The total shareholders' equity increased to $333,963 thousand by December 31, 2024, up from $327,723 thousand in 2023, reflecting a growth of approximately 0.7%[480]. - Cash and due from banks increased to $878,181 thousand at the end of 2024, compared to $577,967 thousand at the end of 2023, representing a growth of approximately 52.1%[483]. Interest Income and Expenses - Interest on deposits increased to $78,298 thousand in 2024 from $57,109 thousand in 2023, an increase of 37.06%[473]. - Non-interest income decreased significantly to $1,057 thousand in 2024 from $2,786 thousand in 2023, a drop of 62.06%[473]. - Total non-interest expense decreased to $61,813 thousand in 2024 from $65,710 thousand in 2023, a reduction of 5.45%[473]. Credit Quality and Losses - Provision for credit losses showed a recovery of $8,536 thousand in 2024 compared to a recovery of $8,527 thousand in 2023, indicating stability in credit quality[473]. - The allowance for credit losses for loans was $20,805 thousand at the end of 2024, down from $29,404 thousand in 2023, a reduction of 29.25%[472]. - Nonaccrual loans increased from $8,942,000 in 2023 to $14,558,000 in 2024, with residential loans contributing $11,601,000 to this increase[608]. - The total past due loans amounted to $14,584,000 in 2024, with $6,078,000 past due by 30-59 days and $1,011,000 past due by 60-89 days[610]. Loan Portfolio and Concentration - The company’s loan portfolio is primarily concentrated in California, with approximately 75% of gross loans originated in the state as of December 31, 2024[504]. - Residential real estate loans accounted for 73% of total gross loans as of December 31, 2024, down from 80% in 2023[504]. - The total amortized cost basis for commercial real estate loans was $296,457,000, with $110,055,000 rated as pass[618]. Regulatory and Operational Risks - The company is exposed to liquidity risks due to potential shareholder litigation and regulatory approvals related to ongoing transactions[17]. - The company faces credit risks associated with lending activities, particularly in residential real estate loans concentrated in California[17]. - The company’s operational risks include increased reliance on technology and the potential for cybersecurity breaches[20]. Future Plans and Transactions - The company plans to sell all shares of its bank subsidiary to EverBank for a fixed purchase price of $261,000 thousand, with the transaction expected to close following regulatory approvals[489]. - The company plans to dissolve following the completion of the sale of its bank subsidiary, with intentions to distribute remaining cash to shareholders[490]. - The Company received shareholder approval for the Stock Purchase Agreement and the Transaction, expected to close early in Q2 2025, subject to regulatory approvals[492]. Accounting and Valuation - The Company utilizes fair value measurements for certain assets and liabilities, requiring significant judgment and estimates[497]. - The Company recognizes revenue from contracts with customers when control of promised goods or services is transferred, in accordance with ASC 606[559]. - The Company evaluates mortgage servicing rights for impairment based on fair value compared to carrying amounts, with impairment recognized when necessary[545].

Financial Performance - The Company reported a net income of $1.2 million, or $0.02 per diluted share, for Q4 2024, compared to a net loss of $(0.1) million for Q3 2024[3]. - Net income for the year ended December 31, 2024, was $5,063,000, compared to $2,138,000 for the previous year, representing a 137% increase[24]. - Net income for the three months ended December 31, 2024, was $1,162,000, a significant decline from a profit of $5,063,000 in the same quarter last year, representing a 77% decrease[26]. Assets and Liabilities - Total assets were $2.4 billion at December 31, 2024, unchanged from September 30, 2024, and increased by $20.5 million, or 1%, from December 31, 2023[5]. - Total deposits remained stable at $2.1 billion as of December 31, 2024, consistent with September 30, 2024, and increased from $2.0 billion at December 31, 2023[9]. - Total assets as of December 31, 2024, were $2,436,512,000, a slight decrease of 0% from $2,438,554,000 at September 30, 2024[25]. - Total deposits as of December 31, 2024, were $2,070,890,000, a slight increase of 0% from $2,067,193,000 at September 30, 2024, and a 3% increase from $2,003,986,000 at December 31, 2023[25]. Loans and Credit Quality - Total gross loans decreased by $68.0 million, or 6%, from September 30, 2024, totaling $1.2 billion at December 31, 2024[8]. - Nonperforming loans totaled $14.6 million, or 0.60% of total assets, at December 31, 2024, up from $13.2 million, or 0.54% of total assets, at September 30, 2024[14]. - Nonperforming loans increased to $14,584,000 as of December 31, 2024, compared to $8,973,000 a year earlier, reflecting a 63% increase[24]. - The allowance for credit losses to total loans ratio was 1.80% as of December 31, 2024, down from 2.18% a year earlier[24]. - The provision for credit losses was a recovery of $(4,160,000), which is a 78% increase compared to $(2,338,000) in the previous quarter[26]. Income and Expenses - Non-interest income for the year ended December 31, 2024, was $1.1 million, a decrease of $1.7 million from $2.8 million in 2023[17]. - Non-interest expense for Q4 2024 was $15.9 million, an increase of $3.1 million, or 24%, compared to Q4 2023[18]. - Total non-interest expense increased by 2% to $15,888,000 compared to $15,610,000 in the previous quarter, and rose by 24% from $12,830,000 year-over-year[26]. Interest Income and Margin - The net interest margin for Q4 2024 was 2.24%, a decrease from 2.30% in Q3 2024 and from 2.52% in Q4 2023[15]. - Total interest income for the three months ended December 31, 2024, was $33,635,000, a decrease of 2% from $34,354,000 in the previous quarter and an increase of 2% from $32,928,000 in the same quarter last year[26]. - Net interest income for the year ended December 31, 2024, was $56,470 thousand, with a net interest margin of 2.37%, compared to $64,959 thousand and 2.68% for the year ended December 31, 2023[28]. Operational Efficiency - The efficiency ratio for the year ended December 31, 2024, was 107.45%, compared to 97.00% for the previous year, indicating a decline in operational efficiency[24]. - The return on average assets for the year ended December 31, 2024, was 0.09%, compared to 0.30% for the previous year[24]. Future Expectations - The Company expects the stock purchase transaction with EverBank for $261.0 million to close in Q1 2025, subject to regulatory approvals[4].

Financial Performance - Net loss of $(0.1) million, or $(0.00) per diluted share, for Q3 2024 compared to net income of $1.3 million, or $0.03 per diluted share, for Q2 2024[2] - Net income for the three months ended September 30, 2024, was a loss of $143,000 compared to a profit of $1,316,000 for the previous quarter and $314,000 for the same period last year[18] - Net interest income decreased to $13,618,000, down 5% from $14,395,000 in the previous quarter and 15% from $15,994,000 a year ago[18] - Non-interest income totaled $379 for the three months ended September 30, 2024, an 8% decrease from $412 in the previous quarter[22] - The efficiency ratio increased to 111.52%, compared to 100.78% in the previous quarter and 108.08% a year ago[18] - Basic earnings per share for the three months ended September 30, 2024, was $(0.00), compared to $0.03 in the previous quarter[22] Assets and Liabilities - Total assets increased by $63.8 million, or 3%, to $2.4 billion at September 30, 2024[4] - Total liabilities increased by 3% to $2,103,945,000 from $2,045,869,000 in the previous quarter[20] - Shareholders' equity increased by $5.7 million to $334.6 million at September 30, 2024[8] - Shareholders' equity rose to $334,609,000, a 2% increase from $328,870,000 in the previous quarter[21] - The company reported a total asset value of $2,402,314 thousand as of September 30, 2024[24] Loans and Credit Quality - Total gross loans decreased by $40.5 million, or 3%, to $1.2 billion at September 30, 2024[6] - Nonperforming loans totaled $13.2 million, or 0.54% of total assets, compared to $12.2 million, or 0.51% of total assets at June 30, 2024[11] - Nonperforming loans rose to $13,214,000, up from $12,213,000 in the previous quarter and significantly higher than $6,182,000 a year ago[18] - The allowance for credit losses to total loans ratio was 2.04%, down from 2.18% in the previous quarter and 2.42% a year ago[18] - Nonaccrual loans increased to $13,187,000, up from $11,049,000 in the previous quarter[28] - Total loans held for investment decreased by 3% to $1,223,737,000 compared to the previous quarter[25] Deposits - Total deposits were $2.1 billion, an increase of $53.7 million, or 3%, from June 30, 2024[7] - Total deposits increased by 3% to $2,067,193,000 from $2,013,465,000 in the previous quarter and by 1% from $2,040,658,000 a year ago[20] - Time deposits increased by 7% to $972,171,000, reflecting a positive trend in customer savings[27] Interest Income and Expenses - Net interest margin was 2.30% for Q3 2024, down from 2.44% in Q2 2024[12] - Total interest income for the three months ended September 30, 2024, was $34,354, a 1% increase from $33,864 in the previous quarter[22] - Interest on deposits increased by 7% to $20,736 for the three months ended September 30, 2024, compared to $19,350 in the previous quarter[22] - Total non-interest expense increased by 5% to $15,610 for the three months ended September 30, 2024, compared to $14,923 in the previous quarter[22] - The provision for credit losses was $(2,338) for the three months ended September 30, 2024, a 12% increase from $(2,079) in the previous quarter[22] Future Outlook - A definitive stock purchase agreement was signed for the sale of the Bank to EverBank for cash consideration of $261.0 million, expected to close in Q1 2025[3]

Financial Performance - Net income for the three months ended June 30, 2024, was $1.3 million, down from $2.5 million for the same period in 2023, primarily due to a decline in net interest income of $1.8 million and non-interest income of $1.5 million[111]. - Net income for the three months ended June 30, 2024, was $1.3 million, a decrease from $2.5 million for the same period in 2023[161]. - The company recorded an income tax expense of $0.6 million for the three months ended June 30, 2024, with an effective tax rate of 33%[182]. Asset and Loan Portfolio - Total assets slightly declined during the first six months of 2024, with cash and debt securities increasing to offset a decrease in loans, while deposit levels remained generally unchanged[110]. - Residential loans totaled $972.3 million at June 30, 2024, a decrease of $113.5 million, or 10%, from $1.1 billion at December 31, 2023, including loan payoffs prior to maturity of $87.1 million[116]. - The company’s total loans amounted to $1.26 billion at June 30, 2024, down from $1.35 billion at December 31, 2023[117]. - Commercial real estate loans totaled $277.3 million at June 30, 2024, an increase of $40.3 million (17%) from $236.9 million (18%) at December 31, 2023[120]. - The company discontinued originating residential real estate loans in early 2023, with no new loans added to the portfolio during the six months ended June 30, 2024[120]. - The construction loan portfolio decreased to $5.1 million at June 30, 2024, from $10.4 million at December 31, 2023, due to matured loans being paid in full[122]. - Total loans amounted to $1,264.2 million as of June 30, 2024, down from $1,349.0 million at the end of 2023[146]. Nonperforming Assets and Credit Quality - Nonperforming assets increased to $12.2 million, or 0.51% of total assets, at June 30, 2024, compared to $9.0 million, or 0.37% of total assets, at December 31, 2023[113]. - Total nonperforming loans increased to $12.2 million, primarily due to $4.1 million in residential loans added to nonaccrual status[132]. - The ratio of nonaccrual loans to total loans increased to 0.87% at June 30, 2024, up from 0.66% at December 31, 2023[132]. - Total loans past due increased by $8.9 million, or 32%, from $27.9 million at December 31, 2023, to $36.8 million at June 30, 2024[135]. - The allowance for credit losses decreased to $27.6 million at June 30, 2024, from $29.3 million at the beginning of the period[141]. - The allowance for credit losses at June 30, 2024, was $27.6 million, or 2.18% of total loans held for investment, unchanged from December 31, 2023[146]. Interest Income and Expense - Net interest income for the three months ended June 30, 2024, was $14.4 million, a decrease of $1.8 million, or 11%, from $16.2 million for the same period in 2023[168]. - Interest income increased to $33.9 million for the three months ended June 30, 2024, up $2.3 million, or 7%, compared to $31.6 million for the same period in 2023[169]. - Interest expense rose to $19.5 million for the three months ended June 30, 2024, an increase of $4.1 million, or 27%, from $15.4 million for the same period in 2023[170]. - Net interest margin decreased to 2.44% for the three months ended June 30, 2024, down 20 basis points from 2.64% for the same period in 2023[171]. - For the six months ended June 30, 2024, net interest income was $29.3 million, a decrease of $4.5 million, or 13%, from the same period in 2023[172]. - Interest expense for the six months ended June 30, 2024, was $37.8 million, compared to $27.1 million for the same period in 2023[173]. Deposits and Equity - Total deposits were $2.0 billion as of June 30, 2024, an increase of $9.5 million from December 31, 2023[157]. - Time deposits increased by $32.0 million, or 4%, while money market, savings, and NOW deposits decreased by $19.4 million, or 2%[157]. - Total shareholders' equity was $328.9 million at June 30, 2024, compared to $327.7 million at December 31, 2023[162]. - Estimated uninsured deposits were $443.5 million, or approximately 22% of total deposits, at June 30, 2024[158]. Regulatory Compliance and Capital - The company and the bank met all regulatory capital requirements as of June 30, 2024, with leverage capital ratios of 14.26% and 13.81%, respectively[193]. - The Tier 1 capital to average total assets ratios remained above the capital ratio requirements to be considered well capitalized under applicable regulations[113]. Non-Interest Income and Expenses - Non-interest income was $0.4 million for the three months ended June 30, 2024, a decrease of $1.5 million from the same period in 2023, primarily due to a prior gain on loan sales[176]. - Total non-interest expense decreased to $14.9 million for the three months ended June 30, 2024, down $2.4 million from $17.3 million for the same period in 2023, mainly due to lower salaries and professional fees[178]. - Professional fees decreased to $2.1 million for the three months ended June 30, 2024, down $1.4 million from the same period in 2023, due to resolved government investigations[178]. - Non-interest expense for the six months ended June 30, 2024, was $30.3 million, a decrease of $4.9 million compared to the same period in 2023[180].

Financial Data and Key Metrics Changes - The company reported operating essentially at a breakeven level, with capital and liquidity remaining strong [16] - Legal fees amounted to approximately $1.3 million, with other professional fees around $800,000, indicating a reduction in costs related to investigations [12][10] - The final maturity of the last wholesale funding of $50 million was noted, transitioning to core deposit funding without reliance on wholesale funding [16] Business Line Data and Key Metrics Changes - The company has seen growth in commercial real estate loans, while residential loans continue to pay down aggressively, with no plans to originate new residential loans [11] - The company is focusing on commercial opportunities while being cautious about charge-offs and maintaining the integrity of the balance sheet [11] Market Data and Key Metrics Changes - Credit conditions remain mild, with reserve levels being very healthy, although there is noted weakness in office and multifamily sectors, particularly in the Metro New York area [18] - The company anticipates potential benefits from a possible rate cut later in the year, which could help alleviate speculation regarding interest rates [17] Company Strategy and Development Direction - The company continues to focus on its outlined strategies and objectives, looking for ways to grow and prosper despite past challenges [10] - Management emphasized the importance of maintaining a cautious approach in the current market environment while seeking opportunities for growth [11] Management Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the end of investigations, which should help remove uncertainty and improve operational efficiency [17] - The company expects that lower interest rates could positively impact margins as liabilities are repriced [35] Other Important Information - The company has successfully concluded various investigations that had been ongoing since 2019, which had previously imposed significant costs [10] - The management indicated that there are no significant expenditures expected in the near term, maintaining a steady expense run rate [25][24] Q&A Session Summary Question: What are the legal and compliance costs for the quarter? - Legal fees were approximately $1.3 million, with other professional fees around $800,000, indicating a decrease in investigation-related costs [12][10] Question: What is the outlook for loan roll-off if rates drop? - Management indicated that prepayment levels are expected to remain stable, with no significant changes anticipated in the residential loan portfolio [35] Question: Are there any concerns regarding asset quality? - Management reported virtually no delinquencies in the commercial portfolio, with only a few residential loans in foreclosure, indicating strong asset quality [27][29]

Financial Performance - The Company reported net income of $1.3 million, or $0.03 per diluted share, for the quarter ended June 30, 2024, compared to a net loss of $(0.2) million for the quarter ended March 31, 2024[2]. - Net income for the three months ended June 30, 2024, was $1,316,000, compared to a net loss of $197,000 for the previous quarter[26]. - Net income for the second quarter was $1.3 million, or $0.03 per diluted share[33]. - Return on average assets was 0.22%, compared to (0.03)% in the previous quarter[26]. Income and Expenses - Net interest income for the second quarter of 2024 was $14.4 million, a decrease from $14.9 million in the first quarter of 2024, with a net interest margin of 2.44%[13]. - Net interest income decreased by 3% to $14,395,000 from $14,934,000 in the previous quarter[26]. - Total interest income rose by 2% to $33,864,000 from $33,282,000 in the previous quarter[28]. - Non-interest income for the second quarter of 2024 was $0.4 million, an increase of 100% from $0.2 million in the first quarter of 2024, primarily due to funds received from the Federal Home Loan Bank[7]. - Non-interest income increased significantly to $412,000 from $199,000 in the previous quarter[28]. - Non-interest expense decreased by $0.5 million, or 3%, to $14.9 million for the second quarter of 2024 compared to $15.4 million in the first quarter of 2024[14]. - Total non-interest expense decreased to $14,923,000 from $15,392,000 in the previous quarter[28]. Asset Quality - The allowance for credit losses at June 30, 2024, was $27.6 million, or 2.18% of total loans, down from $29.3 million, or 2.24% of total loans, at March 31, 2024[11]. - The allowance for credit losses to total loans ratio was 2.18%, down from 2.24% in the previous quarter[26]. - Nonperforming loans totaled $12.2 million, or 0.51% of total assets at June 30, 2024, compared to $9.3 million, or 0.39% of total assets at March 31, 2024[12]. - Nonperforming loans increased to $12,213,000, up from $9,348,000 in the previous quarter[26]. - The allowance for credit losses decreased by 6% to $27,556 thousand from $29,257 thousand in the previous quarter[46]. Shareholders' Equity and Deposits - Total shareholders' equity increased by $1.6 million to $328.9 million at June 30, 2024, compared to $327.3 million at March 31, 2024[10]. - Total deposits increased slightly to $2,013,465,000 from $2,005,855,000 in the previous quarter[26]. - Total deposits reached $2.0 billion, an increase of $7.6 million from the previous quarter[35]. - Total deposits remained stable at $2,013,465,000, showing no change from the previous quarter[43]. Total Assets and Liabilities - Total assets were $2.4 billion, a decrease of $39.8 million, or 2%, from March 31, 2024[38]. - Total assets decreased by 2% to $2,374,739,000 compared to $2,414,555,000 in the previous quarter[43]. - Total interest-bearing liabilities were $2,003,521 thousand with an average rate of 3.79%[45]. - Other liabilities increased by 10% to $19,900,000 from $18,027,000 in the previous quarter[43]. Loan Portfolio - Total gross loans amounted to $1.3 billion, a decrease of $39.0 million, or 3%, from the previous quarter[39]. - Total loans held for investment decreased by 3% to $1,264,243 thousand from $1,303,279 thousand in the previous quarter[46]. - Residential real estate loans declined by 7% to $972,326 thousand compared to $1,040,464 thousand in the prior quarter[46]. - Commercial real estate loans increased by 13% to $277,273 thousand from $244,546 thousand in the previous quarter[46]. Other Financial Metrics - The efficiency ratio improved to 100.78% from 101.71% in the previous quarter[26]. - The effective tax rate for the three months ended June 30, 2024, was 33.0%, compared to an effective tax rate of 34.3% for the three months ended March 31, 2024[23]. - The company's consolidated leverage ratio was 14.26%[33]. - Average yield on loans increased to 6.47% from 6.29% in the previous quarter[44].

Financial Performance - For the three months ended March 31, 2024, the net loss was $(0.2) million, an improvement from $(0.5) million for the same period in 2023[126]. - Net interest income decreased from $17.7 million in Q1 2023 to $14.9 million in Q1 2024, primarily due to increased deposit costs outpacing yield increases[126]. - The company recorded an income tax benefit of $(103) thousand for the three months ended March 31, 2024, with an effective tax rate of 34.3%[197]. - Non-interest income decreased by $79 thousand, or 28%, to $199 thousand for the three months ended March 31, 2024, primarily due to a decline in the fair value of equity securities[195]. - Average interest-earning assets totaled $2.37 billion for the three months ended March 31, 2024, generating interest income of $33.3 million[182]. - Interest income increased by $3.9 million, or 13%, to $33.3 million for the three months ended March 31, 2024, driven by higher yields on interest-earning assets[188]. - Interest expense rose by $6.6 million, or 56%, to $18.3 million for the three months ended March 31, 2024, primarily due to increased rates on interest-bearing deposits[189]. - The net interest margin decreased to 2.52% for the three months ended March 31, 2024, down from 2.93% in the prior year[182]. Credit Quality - The provision for credit losses decreased to $0.1 million in Q1 2024 from $0.7 million in Q1 2023[128]. - The company’s credit quality remains strong, with a focus on maintaining robust liquidity and capital levels[126]. - Nonperforming assets were $9.3 million, or 0.39% of total assets, at March 31, 2024, compared to $9.0 million, or 0.37% of total assets, at December 31, 2023[128]. - Total nonperforming assets to total assets ratio increased to 0.39% as of March 31, 2024, from 0.37% at December 31, 2023[147]. - The allowance for credit losses at March 31, 2024, was $29.3 million, or 2.24% of total loans held for investment, compared to $29.4 million, or 2.18% at December 31, 2023[158]. - No charge-offs were recorded during the three months ended March 31, 2024, compared to $6.5 million for the same period in 2023[159]. - The allowance for credit losses to nonaccrual loans was 314% at March 31, 2024, compared to 329% at December 31, 2023[161]. - Total Special Mention and Substandard loans were $48.7 million, or 4% of total gross loans, at March 31, 2024, down from $57.9 million, or 4% of total gross loans, at December 31, 2023[152]. Loan Portfolio - As of March 31, 2024, total loans amounted to $1,303.3 million, a decrease of $45.7 million, or 3.4%, from $1,348.9 million at December 31, 2023[134]. - Residential real estate loans accounted for 80% of total gross loans, totaling $1,040.5 million, down from $1,085.8 million, a decrease of $45.3 million, or 4%[134]. - Commercial real estate loans totaled $244.5 million, with 42% secured by multifamily properties, reflecting a slight decrease of $0.4 million from the previous quarter[135][136]. - The company originated commercial loans with an aggregate principal balance of $30.0 million during the three months ended March 31, 2024[135]. - The company’s construction loans decreased to $4.9 million from $10.4 million due to maturing loans being paid in full[135]. - Total loans past due decreased by $5.5 million, or 20%, from $27.9 million at December 31, 2023, to $22.4 million at March 31, 2024[149]. - Loans 30-59 days past due decreased by $6.3 million, or 38%, from $16.6 million at December 31, 2023[149]. - The company’s adjustable-rate loans accounted for 92% of the total loan portfolio, with 10% of these loans at their interest rate floor[141]. Deposits and Capital - Total deposits were $2.0 billion as of March 31, 2024, an increase of $1.9 million from December 31, 2023, with time deposits increasing by $27.8 million, or 3%[174]. - Noninterest-bearing deposits decreased by $2.6 million, or 7%, from December 31, 2023[174]. - Total shareholders' equity was $327.3 million at March 31, 2024, compared to $327.7 million at December 31, 2023[179]. - The company met all regulatory capital requirements as of March 31, 2024, with leveraged capital ratios of 14.10% and 13.58% for the company and the bank, respectively[208]. - Time deposits due within one year were $796.0 million, or 40% of total deposits, as of March 31, 2024, up from $761.7 million, or 38%, at December 31, 2023[204]. Market Conditions and Strategic Outlook - The company aims to protect book value and liquidity during financial uncertainty, reflecting a cautious approach to market conditions[126]. - The company continues to incur significant professional fees related to ongoing investigations, despite the resolution of prior governmental inquiries[127]. - The company continues to consider the impact of inflation and recession risks in estimating expected credit losses[155]. - The analysis highlights that actual results may differ significantly from projections due to various factors, including market conditions and timing of rate changes[222]. - The computations do not account for management actions that may be taken in response to anticipated interest rate changes[222]. - The EVE presented does not represent the fair market value of the company or amounts available for distribution to shareholders in the event of liquidation[222].

Financial Data and Key Metrics Changes - The first quarter was described as a breakeven quarter, primarily impacted by legal expenses related to OCC investigations [25] - The company anticipates that legal expenses will tail off in the coming quarters as the OCC's investigations have concluded [15][29] Business Line Data and Key Metrics Changes - The company has exited high-risk commercial real estate and nonperforming loans, which has positively impacted its metrics and risk profile [26] - There are approximately $200 million of loans that will reprice upwards in the coming quarters, but increasing deposit costs may offset this [32] Market Data and Key Metrics Changes - Inflation remains high, particularly in consumables and energy, which may influence the Federal Reserve's decisions on interest rates [12] - The commercial real estate market is under pressure, especially in major U.S. cities, which could affect the company's performance [26] Company Strategy and Development Direction - The company is focused on protecting book value, liquidity, and credit amidst significant uncertainty in capital markets [26] - There is a strategic emphasis on building a more moderate cost of funds by increasing lower-cost deposits [17] Management's Comments on Operating Environment and Future Outlook - Management expressed that the overall economy remains resilient, but there are expectations of further challenges within the banking sector [10] - The company operates from a position of strength and transparency, despite the uncertain market conditions [10] Other Important Information - The company has made internal changes, including the promotion of Christine Meredith to Chief Operating Officer [8] - Legal costs related to former employees are expected to be immaterial moving forward [3][19] Q&A Session Summary Question: Will expenses continue at the current rate? - Management indicated that expenses related to legal matters will decrease as the OCC's investigations are concluded [15] Question: What is the outlook for nonaccrual loans? - Management believes that the $9 million in nonaccrual loans can be resolved in the next few quarters, with no significant loss content expected [56] Question: Will the company consider share buybacks? - Management acknowledged the strategic reasons for and against share buybacks, indicating that it is a consideration but not currently planned [35] Question: How does the company view its reserve levels? - Management stated that while the credit profile has improved, they prefer to maintain higher reserves for caution [66] Question: What is the company's stance on the residential lending business? - Management expressed reluctance to enter the residential lending market due to the associated risks and costs [49]

Financial Performance - The Company reported a net loss of $(0.2) million, or $(0.00) per diluted share, for Q1 2024, compared to net income of $5.1 million, or $0.10 per diluted share, for Q4 2023[4]. - Net income for the three months ended March 31, 2024, was a loss of $197,000 compared to a profit of $5,063,000 in the previous quarter[25]. - Return on average assets was (0.03)% compared to 0.83% in the previous quarter, showing a decline in profitability[25]. Assets and Liabilities - Total assets remained stable at $2.4 billion as of March 31, 2024, consistent with December 31, 2023[7]. - Total assets remained relatively stable at $2,414,555,000, a slight decrease from $2,416,003,000 in the previous quarter[26]. - Total deposits were $2.0 billion as of March 31, 2024, unchanged from December 31, 2023, with time deposits increasing by $27.8 million, or 3%[10]. - Total deposits increased slightly to $2,005,855,000 from $2,003,986,000 in the previous quarter, marking a 0% change[26]. - Total loans held for investment decreased by 3% to $1,303,279 thousand compared to $1,348,972 thousand in the previous quarter[29]. Income and Expenses - The net interest margin was 2.52% for both Q1 2024 and Q4 2023, with net interest income decreasing to $14.9 million from $15.1 million[15]. - Net interest income decreased to $14,934,000 from $15,105,000 in the previous quarter, a decline of 1%[27]. - Non-interest expense increased by $2.6 million, or 20%, to $15.4 million in Q1 2024, primarily due to a rise in professional fees[17]. - Non-interest expense rose significantly to $15,392,000, up 20% from $12,830,000 in the previous quarter[27]. - The efficiency ratio worsened to 101.71% from 83.76% in the previous quarter, indicating increased operational costs relative to income[25]. Credit Quality - The provision for credit losses was $41 thousand, with the allowance for credit losses at $29.3 million, or 2.24% of total loans[13]. - Nonperforming loans totaled $9.3 million, or 0.72% of total loans and 0.39% of total assets as of March 31, 2024[8]. - Nonperforming loans increased to $9,348,000 from $8,973,000 in the previous quarter, reflecting a slight deterioration in asset quality[25]. - The allowance for credit losses to total loans ratio was 2.24%, up from 2.18% in the previous quarter, indicating a cautious approach to credit risk[25]. - The provision for credit losses showed a recovery of $147 thousand for the three months ended March 31, 2024[30]. Loan Portfolio - Total gross loans decreased by $45.7 million, or 3%, to $1.3 billion at March 31, 2024, from December 31, 2023[9]. - Residential real estate loans decreased by 4% to $1,040,464 thousand compared to $1,085,776 thousand in the previous quarter[29]. - Nonaccrual loans increased to $9,318 thousand, representing 0.71% of total loans outstanding[32]. Deposits - Total deposits remained stable at $2,005,855 thousand, a slight increase of 0% from $2,003,986 thousand in the previous quarter[31]. - Time deposits increased by 3% to $900,996 thousand compared to $873,220 thousand in the previous quarter[31].

Financial Performance - The estimated net interest income for 2023 is projected to be $62,356,000 under a 200 basis points increase in interest rates, compared to $83,587,000 in 2022, reflecting a decrease of 25%[441]. - The company reported a 3% decrease in net interest income under a 100 basis points decrease in interest rates, amounting to $60,057,000 for 2023[441]. - Net interest income after provision for credit losses was $73,486 thousand for the year ended December 31, 2023, down from $88,736 thousand in 2022, a decrease of about 17.2%[465]. - Interest income increased to $126,789 thousand in 2023, up from $99,932 thousand in 2022, reflecting a growth of approximately 26.9%[465]. - Net income for the year ended December 31, 2023, was $7,413 thousand, compared to a net loss of $14,194 thousand in 2022, marking a significant turnaround[465]. - Total comprehensive income for 2023 was $11,714,000, compared to a loss of $32,822,000 in 2022[468]. - The company reported a basic income per share of $0.15 for 2023, recovering from a loss of $0.28 per share in 2022[465]. Asset and Liability Management - Total assets decreased to $2,416,003 thousand as of December 31, 2023, from $2,444,735 thousand in 2022, representing a decline of approximately 1.2%[463]. - The allowance for credit losses for loans decreased by $1.7 million upon the adoption of the current expected credit loss (CECL) model on January 1, 2023[457]. - The total allowance for credit losses was $29,404 thousand as of December 31, 2023, down from $45,464 thousand in 2022, a decrease of approximately 35.4%[463]. - The allowance for credit losses as of December 31, 2023, totaled $29,404, with a beginning balance of $45,464, reflecting a decrease of approximately 35.3%[585]. - The provision for credit losses for the year ended December 31, 2023, was a recovery of $8,844, compared to a provision of $9,934 for the previous year[586]. Credit and Operational Risks - The company faces significant liquidity risks due to deposit account balances exceeding FDIC insurance limits[18]. - The prolonged suspension of the residential loan origination function has impacted the company's strategic execution and liquidity[17]. - The company is exposed to credit risks from lending activities, including potential increases in delinquencies and nonperforming assets due to economic conditions[17]. - The company has experienced operational risks related to increased reliance on technology and cybersecurity threats, which may affect its financial stability[22]. Changes in Accounting Standards - The company adopted a new accounting standard for credit losses effective January 1, 2023, which may impact future financial reporting and credit loss estimations[450]. - The company adopted the CECL model, which estimates credit losses over the expected life of loans, reflecting a shift in accounting standards effective January 1, 2023[457]. - The company recorded a cumulative effect adjustment of $276, net of tax, to decrease the opening balance of retained earnings as of January 1, 2023, due to the adoption of ASU 2022-02[555]. - Upon the adoption of ASU 2016-13, the allowance for credit losses for loans decreased by $1,651, primarily driven by the construction loan portfolio[557]. Deposits and Funding - Total deposits rose to $2,003,986 thousand in 2023, compared to $1,954,037 thousand in 2022, indicating an increase of about 2.5%[463]. - The net increase in deposits for 2023 was $49,949,000, a recovery from a decrease of $(307,698,000) in 2022[474]. - Time deposits increased to $873,220 thousand at December 31, 2023, from $861,733 thousand at December 31, 2022, representing a growth of 1.4%[608]. - The Company has unused borrowing capacity of $65,000 thousand under the Bank Term Funding Program as of December 31, 2023[616]. - The Company had additional borrowing capacity with the FHLB of $311,183 thousand at December 31, 2023, based on collateral and holdings of FHLB stock[614]. Loan Portfolio and Performance - As of December 31, 2023, residential real estate loans accounted for 80% of total gross loans, down from 84% in 2022, with approximately 80% of gross loans originated in California[489]. - The Advantage Loan Program, which required a down payment of at least 35%, represented 58% of gross residential loans at December 31, 2023, down from 63% in 2022, totaling $628,245[490]. - Loans held for investment totaled $1,348,972 as of December 31, 2023, down from $1,658,849 in 2022, with a decrease in the allowance for credit losses from $45,464 to $29,404[578]. - The total charge-offs for the year ended December 31, 2023, amounted to $6,478, while recoveries were $533, resulting in a net charge-off of $5,945[585]. - The aging analysis of past due loans as of December 31, 2023, shows a total of $27,912 past due loans, with $1,321,060 in current loans, resulting in a total of $1,348,972[593]. Investment and Securities - The fair value of U.S. Treasury and Agency securities was $175,019 as of December 31, 2023, with unrealized losses of $(4,176)[569]. - The total amortized cost of available for sale debt securities was $440,211, with a fair value of $419,213, reflecting a gross unrealized loss of $(21,082)[563]. - The company sold debt securities for proceeds of $9,578 in 2023, resulting in total net realized losses of $(113)[566]. - The company has not recorded an allowance for credit losses for its available for sale debt securities as of December 31, 2023, due to the expectation of no credit losses from U.S. government-backed securities[571]. Equity and Shareholder Information - The bank's total shareholders' equity increased to $327,723,000 by the end of 2023, up from $312,627,000 in 2022[471]. - The company redeemed all outstanding Subordinated Notes on July 15, 2023, for a total cash payment of $66,821 thousand, recording a gain of $234 thousand on extinguishment[617]. - The interest expense on Subordinated Notes was $3,727 thousand for the year ended December 31, 2023, compared to $4,969 thousand in 2022, indicating a decrease of 25%[618].