Financial Performance - Net interest income for Q3 2023 was $23,261,000, a decrease of 0.7% from $23,426,000 in Q2 2023, and an increase of 2.0% from $23,786,000 in Q3 2022[183]. - Noninterest income for Q3 2023 was $815,000, down 25.6% from $1,096,000 in Q2 2023, and up 127.8% from $358,000 in Q3 2022[183]. - Net income for Q3 2023 was $6,556,000, a decrease of 2.4% from $6,718,000 in Q2 2023, and a decrease of 5.4% from $6,929,000 in Q3 2022[183]. - Diluted earnings per share for Q3 2023 was $0.35, compared to $0.36 in Q2 2023 and $0.38 in Q3 2022[183]. - Net income for the three months ended September 30, 2023 was $6.6 million, or $0.35 per diluted share, a decrease of $162 thousand from the prior quarter[217]. - Net income for the nine months ended September 30, 2023 was $21.5 million, or $1.15 per diluted share, an increase of $13.9 million from the same period in 2022[220]. Loan and Asset Management - Total loans as of September 30, 2023, were $1,935,364,000, an increase from $1,906,800,000 as of December 31, 2022[185]. - Total assets as of September 30, 2023, were $2,313,649,000, compared to $2,283,927,000 as of December 31, 2022[185]. - Total loans increased to $1,924,384 thousand with a yield of 5.97% for the three months ended September 30, 2023, compared to $1,900,033 thousand and 5.91% in the previous quarter[224]. - Total loans held for investment increased to $1.93 billion, representing 83.4% of total assets as of September 30, 2023, up from $1.90 billion or 83.1% at December 31, 2022[278]. - Loans secured by real estate rose by $56.1 million to $1.62 billion, primarily driven by a $61.0 million increase in commercial real estate and other loans[278]. Deposits and Funding - The company’s total deposits as of September 30, 2023, were $1,983,857,000, an increase from $1,931,905,000 as of December 31, 2022[185]. - The company’s total deposits in the Insured Cash Sweep (ICS Product) increased to $252.7 million, or 13% of total deposits, as of September 30, 2023, compared to $65.5 million, or 3% of total deposits, as of December 31, 2022[194]. - Total deposits amounted to $1,981,216 thousand, with a cost of deposits at 1.56% for the quarter[224]. - Noninterest-bearing demand deposits decreased to $736.0 million, representing 37.1% of total deposits at September 30, 2023, compared to $923.9 million or 47.8% at December 31, 2022[320]. Credit Quality and Allowances - The allowance for loan losses increased to $22,705,000 as of September 30, 2023, from $17,099,000 as of December 31, 2022[185]. - Nonperforming loans as of September 30, 2023, were $14,272,000, significantly up from $41,000 as of December 31, 2022[185]. - The allowance for loan losses to total loans ratio was 1.18% as of September 30, 2023, up from 0.90% at December 31, 2022[298]. - The total allowance for credit losses at the end of the period was $24,040 thousand as of September 30, 2023[300]. - The provision for credit losses for the nine months ended September 30, 2023 was $91 thousand, a significant decrease from $5.2 million for the same period in 2022[239]. Expenses and Efficiency - Total noninterest expense for the three months ended September 30, 2023 was $14.8 million, an increase of $174 thousand from $14.6 million in the prior quarter[247]. - The efficiency ratio (non-GAAP) for the three months ended September 30, 2023 was 61.4%, compared to 59.6% in the prior quarter[215]. - Total noninterest expense for the nine months ended September 30, 2023, was $44.4 million, a decrease of $6.0 million from $50.4 million in the same period of 2022[253]. - The efficiency ratio improved to 59.2% for the nine months ended September 30, 2023, compared to 76.4% for the same period in 2022[253]. Capital and Liquidity - Shareholders' equity increased to $278.6 million at September 30, 2023, up $18.2 million from $260.4 million at December 31, 2022, primarily due to $21.5 million of net income generated[258]. - The liquidity position remains strong, with a total liquidity ratio of approximately 10.6%, slightly up from 10.5%[196]. - The total available borrowing capacity increased to approximately $656.8 million at September 30, 2023, up from $460.7 million[196]. - The Bank is considered "well capitalized" under regulatory standards, with all capital ratios exceeding the minimum requirements as of September 30, 2023[345]. Economic Outlook and Risk Management - Economic forecasts suggest a GDP growth of 2.1% in 2023, with a potential mild recession predicted for late 2023[307]. - The qualitative reserve was increased to account for potential losses from future recessionary pressures and banking turmoil[304]. - Interest rate risk is primarily managed through monitoring net interest income and net interest margin, with oversight by the Asset Liability Committee (ALCO)[353]. - Projected changes in Net Interest Income (NII) at September 30, 2023 indicate a decrease in NII if interest rates decline, while a slight increase is expected in a rising rate environment[358].
Southern California Bancorp(BCAL) - 2023 Q3 - Quarterly Report