Merger and Acquisition - California BanCorp completed an all-stock merger with CALB on July 31, 2024, with CALB reporting total loans of $1.43 billion, total assets of $1.91 billion, and total deposits of $1.64 billion at the time of the merger[232]. - The merger with CALB is expected to enhance market share and scale, particularly in Northern California, by adding one full-service branch and four loan production offices[232]. - Net income for Q1 2025 increased by $11.9 million compared to Q1 2024, primarily due to a $21.8 million increase in net interest income from higher average interest-earning assets resulting from the CALB merger[264]. - Total noninterest income for Q1 2025 was $2.6 million, an increase of $1.2 million compared to $1.4 million in Q1 2024, attributed to the impact of the Merger[287]. Financial Performance - For the three months ended March 31, 2025, net interest income was $42.255 million, a decrease from $44.541 million in the previous quarter, while net income increased to $16.853 million from $16.772 million[249]. - The return on average assets for the three months ended March 31, 2025, was 1.71%, compared to 1.60% in the previous quarter, indicating improved efficiency[249]. - Noninterest income rose to $2.566 million for the three months ended March 31, 2025, up from $1.004 million in the previous quarter[249]. - Net income for Q1 2025 was $16.9 million, or $0.52 per diluted share, compared to $16.8 million, or $0.51 per diluted share in Q4 2024, reflecting a $81 thousand increase[263]. - Pre-tax, pre-provision income for Q1 2025 was $19.9 million, an increase of $481 thousand, or 2.5% compared to $19.4 million in Q4 2024[263]. - The efficiency ratio (non-GAAP) for Q1 2025 was 55.6%, compared to 57.4% in Q4 2024[260]. - Total noninterest expense for Q1 2025 was $24.9 million, a decrease of $1.2 million from $26.1 million in the prior quarter, largely due to the decrease in merger-related expenses[291]. Asset and Liability Management - Total assets as of March 31, 2025, were $3,983,090 thousand, a decrease from $4,031,654 thousand as of December 31, 2024[261]. - The tangible common equity to tangible assets ratio improved to 10.34% in Q1 2025 from 9.69% in Q4 2024[261]. - The allowance for loan losses decreased to $45,839 thousand in Q1 2025 from $50,540 thousand in Q4 2024[250]. - Total loans averaged $3,109.7 million in Q1 2025, generating interest income of $50.7 million with a yield of 6.61%[265]. - The cost of deposits decreased to 1.59% for the three months ended March 31, 2025, from 1.87% in the previous quarter, reflecting improved funding costs[249]. - The Company had seven loan modifications totaling $19.9 million for borrowers experiencing financial difficulty during the last twelve months ended March 31, 2025[332]. Credit Quality - The company reported a net charge-off rate of (0.20)% for the three months ended March 31, 2025, compared to (0.02)% in the previous quarter, indicating a slight increase in credit losses[249]. - Delinquent loans totaled $5.1 million, representing 0.17% of total loans held for investment, a decrease from 0.39% at December 31, 2024[327]. - Nonaccrual loans decreased to $22.8 million as of March 31, 2025, down from $26.4 million at December 31, 2024[335]. - The allowance for loan losses to total loans ratio was 1.49% as of March 31, 2025, compared to 1.61% at December 31, 2024[335]. Economic Environment - The Federal Reserve raised interest rates 11 times between March 2022 and September 2023, totaling 525 basis points, impacting the banking industry and economic conditions[236]. - The economic environment has experienced volatility, impacting the forecasting of future economic outcomes, with significant factors including high inflation and aggressive rate hikes by central banks[338]. - Interest rate risk is the primary market risk for the Company, impacting net interest income and net interest margin due to changes in market interest rates[394]. Capital and Liquidity - Total shareholders' equity increased to $531.4 million at March 31, 2025, up from $511.8 million at December 31, 2024, primarily due to net income of $16.9 million[360]. - The leverage capital ratio for the Company was 10.44% and the total risk-based capital ratio was 14.53% at March 31, 2025[365]. - The total liquidity ratio improved to 16.8% at March 31, 2025, compared to 15.7% at December 31, 2024[366]. - The Company and the Bank were in compliance with the capital conservation buffer requirements as of March 31, 2025[387]. Interest Rate Risk Management - The Asset Liability Committee (ALCO) oversees interest rate risk management, reviewing compliance with regulatory guidance and modeling results quarterly[395]. - The Company utilizes a simulation model to measure interest rate risk, including Net Interest Income at Risk (NII at Risk) and Economic Value of Equity (EVE) assessments[398]. - Projected changes in NII at Risk indicate a modest increase in net interest income in all rates-up scenarios as of March 31, 2025, with a decrease expected if interest rates decline[399]. - The modeled EVE results suggest the Company would benefit from an increase in interest rates and be adversely impacted by a decrease[400].
Southern California Bancorp(BCAL) - 2025 Q1 - Quarterly Report