California Banp(CALB) - 2023 Q3 - Quarterly Report

Interest Income and Assets - Interest income increased by $6.9 million in Q3 2023 compared to Q3 2022, primarily due to an increase in the prime rate from 6.25% to 8.50%[63] - The yield on average earning assets rose by 129 basis points to 5.83% in Q3 2023 from 4.54% in Q3 2022, with the yield on total average gross loans increasing to 6.09%[90] - The average total interest-earning assets were $1.91 billion in Q3 2023, up from $1.85 billion in the same period in 2022[90] - Interest income increased by $26.0 million for the nine months ended September 30, 2023, primarily due to higher yields on the loan portfolio, with interest earned on loans reaching $69.8 million, a 39% increase from $50.3 million in the same period of 2022[101] - Total interest-earning assets amounted to $1.901 billion with an average yield of 5.68% for the nine months ended September 30, 2023, compared to $1.826 billion and 4.01% in the same period of 2022[100] - Average total interest-earning assets rose to $1.90 billion, compared to $1.83 billion for the same period in 2022, primarily due to loan portfolio growth[122] Credit Losses and Allowances - The provision for credit losses was $121,000 for Q3 2023, influenced by changes in forecast assumptions and a specific reserve for a previously charged-off SBA loan[70] - The allowance for credit losses at September 30, 2023, was $2.047 million, reflecting a provision of $170,000 for the quarter[76] - The recorded investment in loans individually evaluated for expected credit losses did not require an allowance for credit losses as of the reporting dates[67] - The allowance for credit losses (ACL) on loans is maintained at a level deemed appropriate by management, based on an evaluation of the loan portfolio and economic conditions[104] - The provision for credit losses on loans was $1.1 million for the nine months ended September 30, 2023, down from $2.7 million in the same period last year[127] - The allowance for credit losses on loans as a percentage of outstanding loans was 1.01% as of September 30, 2023, compared to 1.07% at December 31, 2022[127] Non-Interest Income and Expenses - Non-interest income decreased by $190,000, or 13%, in Q3 2023 compared to Q3 2022, primarily due to fewer prepayment penalties assessed on loans[95] - Non-interest expense for Q3 2023 was $11.9 million, an increase of $200,000, or 2%, from $11.2 million in Q3 2022, driven by higher salaries and benefits[96] - Total non-interest expense for the nine months ended September 30, 2023, was $35.3 million, an increase of $2.3 million, or 7%, from $32.9 million in the same period of 2022[103] - Non-interest income decreased by $1.9 million to $3.5 million, a decline of 35% compared to $5.4 million in the prior year[128] - Non-interest expense increased to $35.3 million for the nine months ended September 30, 2023, up from $33.0 million in 2022, representing a 7% increase[129] Loans and Borrowing - Average commercial and real estate loans increased by $73.0 million and $82.5 million year over year, contributing to a total increase in average loan balances of $116.7 million[99] - The company reported a decrease in average SBA loans of $27.0 million due to PPP loan forgiveness, impacting overall loan growth[99] - The Company had approximately $414.0 million pledged and $368.5 million available under its borrowing arrangement with the Federal Home Loan Bank as of September 30, 2023[72] Shareholder Equity and Earnings - The company reported a net income of $5,401 thousand for the quarter ended September 30, 2023, compared to $5,440 thousand in the previous quarter[153] - For the nine months ended September 30, 2023, net income increased to $16.3 million, up 21% from $13.4 million in the same period of 2022[121] - Basic earnings per share for the nine months ended September 30, 2023, was $1.95, compared to $1.62 for the same period in 2022[140] - Total shareholders' equity increased to $190,115 thousand as of September 30, 2023, up from $184,235 thousand at June 30, 2023[153] - Retained earnings rose to $78,824 thousand as of September 30, 2023, compared to $73,423 thousand at June 30, 2023[153] Investment Securities - The company did not purchase any investment securities during the nine months ended September 30, 2023, while it purchased $36.0 million in available for sale securities in the same period of 2022[109] - As of September 30, 2023, the total investment securities amounted to $151,098 thousand, with $46,081 thousand available for sale at amortized cost[148] - The company had 54 securities in an unrealized loss position as of September 30, 2023, indicating potential market risk exposure[150] - The total unrealized losses for investment securities were aggregated by major security type, indicating ongoing market volatility[150] Accounting Standards - The Company adopted the current expected credit losses (CECL) accounting standard on January 1, 2023, which did not have a material impact on the financial statements[141] - The company adopted a new accounting standard, resulting in a minor adjustment to retained earnings of $(99) thousand during the quarter[153]