Bay p(US:BCML)2023-03-30 16:00Loan Portfolio - As of December 31, 2022, the company had net loans of $2.0 billion, representing 80.4% of total assets[40] - The loan portfolio primarily consists of commercial real estate loans totaling $1.7 billion, which constitutes 85.0% of total loans[41] - The company’s commercial and industrial loans amounted to $188.5 million, representing 9.3% of total loans as of December 31, 2022[41] - The aggregate amount of loans to the 10 largest borrowers was approximately $180.0 million, or 8.9% of total loans[43] - The company held $1.8 billion in loans secured by real estate, representing 90.5% of total loans receivable[53] - The commercial real estate loan portfolio included $107.6 million of loans originated under the SBA's 504 loan program as of December 31, 2022[59] - During 2022, the company originated $36.4 million in commercial real estate SBA 7(a) loans and sold $28.4 million of the guaranteed portion, recognizing a gain of $2.2 million[60] - The average loan size in the commercial real estate portfolio was approximately $1.1 million with an estimated weighted average loan-to-value ratio of 45.5%[61] - The company’s authorized legal lending limit for unsecured loans was $53.4 million, and for specific secured loans, it was $89.0 million as of December 31, 2022[52] - The company’s commercial real estate loans included $658.2 million of owner-occupied loans, or 32.6% of the total loan portfolio[54] - As of December 31, 2022, agricultural real estate secured loans totaled $17.3 million, representing 0.9% of total loans[62] - The commercial real estate loan portfolio amounted to $1,704.7 million, with retail loans making up 24.4% and multifamily residential loans at 14.1%[65] - Construction and land loans outstanding were $13.2 million, accounting for 0.7% of total loans, with an average loan size of approximately $235,000[66] - One-to-four family residential loans totaled $110.6 million, or 5.5% of total loans, including a significant loan of $26.8 million secured by a multi-unit residential property[70] - Home equity loans and lines of credit reached $7.7 million, representing 0.4% of total loans, with unfunded commitments totaling $8.7 million[71] - Commercial and industrial loans included $19.7 million in SBA 7(a) loans, with $14.8 million of the guaranteed portion not yet sold as of December 31, 2022[77] - Agricultural operating loans amounted to $17.2 million, or 1.0% of total loans, reflecting the dependency on the agricultural business's cash flow for repayment[79] - Loans enrolled in the California Capital Access Program totaled $26.3 million, representing 1.3% of total loans, providing coverage for losses on qualified loans[80] - The largest commercial real estate loan had a net outstanding balance of $26.8 million, secured by a church in San Diego, California[65] - The average loan-to-value ratio for construction and land loans was estimated at 50.7%[66] - As of December 31, 2022, loans enrolled in the On-Road Heavy-Duty Vehicle Air Quality Loan Program totaled $26.2 million, representing 1.3% of total loans[82] - Consumer loans amounted to $4.2 million, which is 0.2% of total loans as of December 31, 2022[85] Financial Position - The investment portfolio totaled $167.8 million with an average yield of 3.4% and an estimated duration of approximately 6.7 years as of December 31, 2022[101] - At December 31, 2022, the Bank had $70.3 million in reciprocal CDARS deposits and $56.3 million in ICS deposits[93] - The Bank had $473.6 million of available credit capacity with the Federal Home Loan Bank as of December 31, 2022[95] - Outstanding subordinate debt, net of costs to issue, totaled $63.7 million as of December 31, 2022[99] - The Company discontinued its escrow services in 2021, which previously provided a low-cost core deposit base[94] - The Bank's borrowing from the Federal Reserve Bank was closed during 2022, with no outstanding borrowings as of December 31, 2022[95] Regulatory Compliance - The Company is subject to significant regulation by federal and state laws, which may impact its operations and financial condition[104] - The Bank paid $680,000 in FDIC assessments for the year ended December 31, 2022[115] - As of December 31, 2022, the Bank met the requirements to be "well capitalized" and satisfied the fully phased-in capital conservation buffer requirement[124] - The Bank's aggregate recorded loan balances for construction, land development, and land loans were 7.1% of total regulatory capital as of December 31, 2022[134] - The Bank's commercial real estate loans represented 297.8% of total regulatory capital as of December 31, 2022[134] - The FDIC's base assessment rates are between 3 to 30 basis points, subject to adjustments based on supervisory ratings and financial ratios[112] - The FDIC projected that the DIF reserve ratio was at risk of not reaching the statutory minimum of 1.35% by September 30, 2028[113] - The Bank's adoption of the CECL model is estimated to result in a $1 million to $3 million increase to its allowance for credit losses for loans[126] - The revised assessment rate schedules by the FDIC are intended to increase the likelihood that the DIF reserve ratio reaches the statutory minimum level of 1.35% by September 30, 2028[115] - The minimum capital ratios required include a CET1 capital ratio of 4.5%, a Tier 1 capital ratio of 6.0%, and a total risk-based capital ratio of 8.0%[120] - The Bank's total average consolidated assets less average tangible equity capital is used to determine the assessment base for FDIC[112] - The Bank was in compliance with the reserve requirements set by the Federal Reserve as of December 31, 2022[140] Community and Employee Engagement - The Bank received a "satisfactory" rating during its most recent Community Reinvestment Act examination, which assesses performance in meeting community credit needs[142] - Dividends payable by the Bank to the Company depend on the Bank's earnings and capital position, limited by federal and state laws[143] - The Bank must maintain a capital conservation buffer requirement to avoid restrictions on dividend payments[144] - The Bank is subject to the California Consumer Privacy Act, which imposes requirements for data privacy and can lead to significant compliance costs[148] - The Bank's policies comply with the USA Patriot Act and the Bank Secrecy Act, which require programs to prevent money laundering and terrorist financing[149] - The Company is subject to comprehensive regulation by the Federal Reserve and must file quarterly reports[152] - The Bank Holding Company Act requires the Company to serve as a source of financial strength to its subsidiary banks[153] - The Federal Reserve may approve the ownership of shares by a bank holding company in companies closely related to banking activities[157] - Bank holding companies with less than $3 billion in consolidated assets are generally no longer subject to the Federal Reserve's capital regulations[158] - The company will maintain its status as an "emerging growth company" until it reaches total annual gross revenues of $1.07 billion or more, or until December 31, 2023, whichever comes first[159] - As of December 31, 2022, the company had approximately 374 full-time equivalent employees, with 72% identifying as female and 28% as male[175] - The average tenure of employees was 5.0 years, with 68% of management roles held by women[175] - The company is committed to supporting its community during the COVID-19 pandemic, with all branches open as of December 31, 2022[167] - The company faces competition from various financial institutions, including credit unions and FinTech companies, in both commercial and retail banking[168][171] - The Federal Reserve requires prior written notice for stock repurchases if the gross consideration equals 10% or more of the company's consolidated net worth[166] - The company is subject to heightened legal and regulatory compliance risks due to the complex legal landscape governing its operations[174] - The company has a diverse workforce, with 34% White, 31% Asian, 25% Hispanic/Latino, 5% Black, and 3% identifying as Two or More Races[175] - The company emphasizes employee development through ongoing training programs and educational reimbursement[181] Leadership and Management - Ms. Mary Therese Curley joined the Bank as Executive Vice President and Director of Labor Service Division in April 2017, and was appointed Chief Credit Officer in 2022[190] - Mr. Rick Pak has been responsible for overall organic loan growth in Commercial Real Estate and various government guaranteed programs since January 2019[191] - Ms. Izabella Zhu Mitchell oversees risk governance and regulatory relations as Chief Risk Officer since September 2013[192]