California Banp(CALB) - 2023 Q4 - Annual Report

Financial Position - As of December 31, 2023, the company had total consolidated assets of $1.99 billion, total gross loans of $1.56 billion, total deposits of $1.63 billion, and total shareholders' equity of $196.5 million[17]. - The Company had $460.0 million in reciprocal deposits as of December 31, 2023, compared to $46.9 million at the end of 2022, with insured deposits representing 61% of the total deposit portfolio[407]. - The Tier 1 risk-based capital ratio improved to 12.04% as of December 31, 2023, from 10.54% a year earlier, while the total capital to risk-weighted assets ratio increased to 12.96% from 11.40%[414]. Loan Portfolio Composition - Commercial and industrial loans constituted approximately $626.6 million, or 40% of the company's loan portfolio[27]. - Real estate loans, including commercial real estate loans, made up approximately $849.3 million, or 54% of the loan portfolio[31]. - Construction and development loans accounted for approximately $44.2 million, or 3% of the loan portfolio[30]. - Consumer loans totaled approximately $35.4 million, representing about 2% of the loan portfolio[35]. - The Company’s loan portfolio composition and maturity distribution were detailed, indicating a focus on managing loan performance and risk[400]. Credit Quality and Risks - Total nonperforming loans increased to $3.781 million as of December 31, 2023, from $1.250 million a year earlier, resulting in a nonperforming loans to gross loans ratio of 0.24% compared to 0.08%[402]. - The allowance for credit losses on loans to nonperforming loans ratio was 423.91% as of December 31, 2023, down from 1360.40% the previous year[402]. - The Company reported an ending balance of $16.028 million for the allowance for credit losses as of December 31, 2023, compared to $17.005 million the previous year[403]. - The aggregate amount of time deposits exceeding the FDIC insurance limit decreased to $33.9 million as of December 31, 2023, from $43.6 million a year earlier[409]. - The company faces significant risks related to its proposed merger with Southern California Bancorp, including potential disruptions to business and challenges in retaining employees and customers[14]. Tax and Regulatory Environment - The income tax expense for the year ended December 31, 2023, was $9.0 million, compared to $8.8 million for the previous year, with effective tax rates of 29.3% and 29.4% respectively[397]. - The Company adopted a new accounting standard for credit losses effective January 1, 2023, impacting the reporting of prior period amounts[392]. Market Position and Strategy - The banking industry is highly competitive, with the company facing competition from various local, regional, and national financial institutions[21]. - The company emphasizes maintaining close relationships with customers for ongoing credit monitoring and loan servicing[24]. - The company is positioned to be moderately asset sensitive, with earnings expected to increase in a rising rate environment[412].