Bay p(BCML) - 2020 Q1 - Quarterly Report

Financial Position - As of March 31, 2020, the company had approximately $2.2 billion in total assets, $1.6 billion in total loans, $1.8 billion in total deposits, and $253.6 million in shareholders' equity[109]. - Total assets increased by $174.6 million, or 8.8%, to $2.2 billion at March 31, 2020, from $2.0 billion at December 31, 2019[148]. - Loans receivable, net of allowance for loan losses, increased by $167.4 million, or 11.5%, to $1.6 billion at March 31, 2020, from $1.5 billion at December 31, 2019[151]. - Total deposits increased by $77.5 million, or 4.6%, to $1.8 billion at March 31, 2020, from $1.7 billion at December 31, 2019[174]. - Shareholders' equity decreased by $659,000, or 0.3%, to $253.6 million at March 31, 2020, primarily due to the repurchase of $4.6 million of common stock[180]. Earnings Performance - Net income for the three months ended March 31, 2020, was $2.8 million, a decrease of $2.1 million or 43.0% from $4.9 million for the same period in 2019[182]. - Diluted earnings per share were $0.23 for the three months ended March 31, 2020, a decrease of $0.22 from $0.45 for the same period in 2019[183]. - The efficiency ratio was 74.81% for the three months ended March 31, 2020, compared to 57.39% for the same period in 2019, largely due to acquisition-related expenses[184]. Interest Income and Expenses - Interest income for Q1 2020 was $22.5 million, a 37.5% increase from $16.4 million in Q1 2019, driven by a $579.0 million increase in average loans outstanding[185]. - Interest on loans increased by $7.1 million, or 52.2%, due to the growth in average loan balances, despite a 33 basis point decrease in average loan yield to 5.34%[185]. - Interest expense rose by $961,000, or 64.4%, to $2.5 million in Q1 2020, with total average interest-bearing liabilities increasing by $310.1 million, or 35.8%, to $1.2 billion[189]. - Net interest income increased by $5.2 million, or 34.8%, to $20.0 million for Q1 2020, while the annualized net interest margin decreased by eight basis points to 4.22%[190]. Noninterest Income and Expenses - Noninterest income includes loan servicing fees, gains on loan sales, and other related income, contributing to overall revenue growth[115]. - Noninterest income increased by $458,000, or 21.6%, to $2.6 million for the three months ended March 31, 2020, compared to $2.1 million for the same period in 2019[196]. - Gain on sale of loans rose to $642,000, a 237.9% increase from $190,000 in the prior year, while loan servicing fees increased by $236,000, or 57.6%, to $646,000[197]. - Noninterest expense increased by $7.2 million, or 73.6%, to $16.9 million for the three months ended March 31, 2020, compared to $9.7 million for the same period in 2019[198]. Loan Loss Provisions and Credit Quality - The provision for loan losses was recorded at $1.7 million for Q1 2020, compared to $277,000 in Q1 2019, reflecting concerns over economic conditions due to the COVID-19 pandemic[194]. - The allowance for loan losses was $9.1 million at March 31, 2020, or 0.56% of total loans, compared to $7.4 million, or 0.51% of total loans at December 31, 2019[168]. - Nonperforming assets increased by $1.6 million, or 21.1%, to $9.3 million at March 31, 2020, compared to $7.7 million at December 31, 2019[155]. - Nonaccrual loans totaled $8.3 million, or 0.51% of total loans, as of March 31, 2020, up from $6.8 million, or 0.47%, at December 31, 2019[163]. COVID-19 Impact and Relief Measures - The company funded over $78.3 million in Paycheck Protection Program (PPP) loans as of April 30, 2020, with an average loan amount of $180,000[135]. - The company has provided various short-term relief options to borrowers affected by COVID-19, including interest-only payments for up to 180 days and full payment deferrals for up to 90 days[140]. - The company has accepted more than 999 applications for PPP loans, including from new and existing clients, small to midsize businesses, independent contractors, sole proprietors, and partnerships[134]. - The company intends to utilize the Federal Reserve's Paycheck Protection Program Liquidity Facility (PPPLF) to pledge its PPP loans as collateral for non-recourse loans[137]. Capital Adequacy and Regulatory Compliance - The Bank was considered to be well-capitalized based on capital levels at March 31, 2020, in compliance with Federal Reserve regulations[206]. - BayCom Corp's leverage ratio decreased to 10.29% as of March 31, 2020, from 11.15% as of December 31, 2019[207]. - United Business Bank's common equity tier 1 (CET1) ratio was 12.55% at March 31, 2020, down from 14.23% at December 31, 2019[207]. - The minimum requirement for "well-capitalized" status for BayCom Corp is 10.00% for total risk-based capital ratio, which it exceeded[207]. Operational Growth and Strategy - The company aims to increase shareholder value and generate consistent earnings growth through strategic acquisitions and organic growth, having completed nine acquisitions in recent years[111]. - The company operates 35 full-service branches across California, Washington, Colorado, and New Mexico, enhancing its geographic footprint[109]. - The company is focused on expanding its commercial client base and increasing market share in targeted areas, including the San Francisco Bay area and metropolitan markets of Los Angeles and Seattle[111].