Financial Performance - Net interest income for the three months ended March 31, 2023, was $24,892,000, a decrease of 1.5% from $25,269,000 in the previous quarter, and an increase of 39.5% from $17,795,000 in the same period last year [173]. - Net income for the three months ended March 31, 2023, was $8,224,000, a decrease of 2.9% from $8,474,000 in the previous quarter, and an increase of 469.5% from $1,446,000 in the same period last year [173]. - Pre-tax pre-provision income (non-GAAP) for the three months ended March 31, 2023, was $11,443,000, down from $12,345,000 in the previous quarter and up from $3,846,000 a year ago [209]. - Net income for Q1 2023 was $8.2 million, or $0.44 per diluted share, a decrease from $8.5 million, or $0.46 per diluted share in Q4 2022 [212]. - Pre-tax, pre-provision income for Q1 2023 was $11.4 million, a decrease of $902 thousand, or 7.3% compared to $12.3 million in Q4 2022 [212]. Loan and Deposit Trends - Total loans, including loans held for sale, were $1,894,509,000 as of March 31, 2023, a slight decrease from $1,906,800,000 at December 31, 2022 [175]. - Total deposits increased to $1,985,856,000 as of March 31, 2023, compared to $1,931,905,000 at December 31, 2022 [175]. - Total loans amounted to $1,894.23 million in Q1 2023, with a net interest income of $27.02 million from these loans [218]. - Total deposits increased to $1.99 billion at March 31, 2023, up $54.0 million from $1.93 billion at December 31, 2022 [300]. - Noninterest-bearing demand deposits totaled $882.0 million, representing 44.4% of total deposits, down from $923.9 million or 47.8% in the prior year [300]. Credit Quality and Loss Provisions - Provision for credit losses decreased significantly to $202,000 from $750,000 in the previous quarter and $1,850,000 in the same period last year, indicating improved asset quality [173]. - The allowance for loan losses was $22.4 million as of March 31, 2023, compared to $17.1 million at December 31, 2022 [266]. - The provision for credit losses was $202 thousand in Q1 2023, significantly lower than the $1.9 million provision in Q1 2022 [226]. - The ratio of ALL to total loans increased to 1.18% as of March 31, 2023, compared to 0.90% at December 31, 2022, influenced by the adoption of the CECL standard [287]. - The company expects loans held for sale to be sold in the secondary market in Q2 2023 [264]. Capital and Liquidity - The company has a strong capital position with tangible equity to tangible assets at 10.13% as of March 31, 2023, up from 9.84% at December 31, 2022 [175]. - The liquidity ratio improved to approximately 11.4% as of March 31, 2023, compared to 10.5% at December 31, 2022 [187]. - Total shareholders' equity increased to $267.5 million at March 31, 2023, up $7.2 million from $260.4 million at December 31, 2022, driven by net income and share-based compensation activity [244]. - The Bank's leverage capital ratio and total risk-based capital ratio were 11.15% and 12.61%, respectively, at March 31, 2023, exceeding regulatory requirements [310]. - As of March 31, 2023, the Bank was in compliance with all capital adequacy requirements and capital conservation buffer requirements [330]. Interest Rate and Risk Management - The Federal Reserve raised interest rates by an aggregate of 500 basis points in 2022 and through May 2023, impacting the banking industry and creating a challenging market environment [180]. - Interest rate risk management is overseen by the Asset Liability Committee (ALCO), which reviews interest rate risk modeling quarterly [338]. - The modeled NII results indicate a moderate decrease in NII if interest rates decline, primarily due to adjustable-rate loans repricing lower faster than deposit rates [343]. - The company benefits from an increase in interest rates, while a decrease would adversely impact EVE [343]. - The risk management framework involves multiple committees, including the ALCO and the Audit and Risk Committee, which meet regularly to oversee risk management practices [345]. Noninterest Income and Expenses - Total noninterest income for the three months ended March 31, 2023 was $1.6 million, an increase of $1.4 million from $188 thousand in the prior quarter, primarily due to higher gains on loan sales [228]. - Total noninterest expense for the three months ended March 31, 2023 was $15.0 million, an increase of $1.9 million from $13.1 million in the prior quarter, mainly due to higher salaries and benefits, legal, audit, and professional fees [235]. - Salaries and employee benefits rose to $10.2 million during the three months ended March 31, 2023, compared to $8.6 million in the prior quarter, with a $1.6 million increase primarily due to accelerated stock compensation [236]. - Deposit-related fees decreased to $439 thousand during the three months ended March 31, 2023, down $48 thousand from $487 thousand in the same period of 2022, attributed to lower average noninterest-bearing deposit balances [231]. - The average balance of total deposits was $1,959.9 million for the three months ended March 31, 2023, with an average rate paid of 0.80% [302].
Southern California Bancorp(BCAL) - 2023 Q1 - Quarterly Report