Bay p(BCML) - 2024 Q1 - Quarterly Results

Q1 2024 Financial Performance Performance Summary & Highlights BayCom Corp's Q1 2024 net income decreased to $5.9 million, driven by lower net interest income and contracting margins Q1 2024 Key Financial Results | Metric | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Net Income | $5.9 million | $6.4 million | $7.2 million | | Diluted EPS | $0.51 | $0.55 | $0.57 | - The decrease in net income compared to Q4 2023 was mainly due to a $1.1 million drop in net interest income and a $1.0 million increase in noninterest expense, partially offset by a $2.1 million decrease in the provision for credit losses[2] Q1 2024 Performance Metrics | Performance Metric | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Annualized Net Interest Margin | 3.72% | 3.86% | 4.26% | | Annualized Return on Average Assets | 0.92% | 1.00% | 1.14% | | Total Assets | $2.6 billion | $2.6 billion | $2.5 billion | | Total Loans, net | $1.9 billion | $1.9 billion | $2.0 billion | | Nonperforming Loans / Total Loans | 0.64% | 0.67% | 0.64% | - The company repurchased 198,120 shares of common stock at an average price of $20.20 per share and declared a cash dividend of $0.10 per share during the first quarter of 2024[6] Management Commentary Management noted ongoing challenges from 2023, focusing on cost management, share repurchases, and dividends for shareholder value - Management noted that the financial results reflect ongoing challenges from 2023, specifically increased deposit costs and reduced loan demand[3] - The company remains committed to managing operating costs, strategically repurchasing shares, and providing cash dividends to enhance long-term value for shareholders[3] Earnings Analysis Earnings were impacted by contracting net interest income, lower credit loss provisions, decreased noninterest income, and higher noninterest expenses Net Interest Income Net interest income declined due to rising deposit costs outpacing asset yield increases, contracting the net interest margin Net Interest Income and Margin | Metric | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Net Interest Income | $22.4 million | $23.5 million | $25.3 million | | Annualized Net Interest Margin | 3.72% | 3.86% | 4.26% | - The decrease in net interest income from the prior quarter was driven by lower interest income on loans and higher interest expense on deposits[8] - The average rate paid on interest-bearing liabilities increased to 2.40% in Q1 2024, up from 2.21% in Q4 2023 and 1.35% in Q1 2023, reflecting rising market interest rates and increased competition for deposits[8][13] - Net interest margin was negatively impacted as the increase in funding costs outpaced the increase in yields on interest-earning assets[14] Provision for Credit Losses Provision for credit losses significantly decreased due to improved economic forecasts, despite replenishing allowance after net charge-offs Provision for Credit Losses | Period | Provision for Credit Losses | | :--- | :--- | | Q1 2024 | $252,000 | | Q4 2023 | $2.3 million | | Q1 2023 | $275,000 | - The relatively low provision in Q1 2024 was mainly for replenishing the allowance after net charge-offs of $3.4 million The provision was positively impacted by improvements in forecasted economic conditions, such as national unemployment and GDP[15][16] Noninterest Income Noninterest income decreased quarter-over-quarter, primarily due to lower gains on equity securities and SBIC fund investment income Noninterest Income | Period | Noninterest Income | | :--- | :--- | | Q1 2024 | $2.1 million | | Q4 2023 | $2.7 million | | Q1 2023 | $1.6 million | - The quarter-over-quarter decrease was primarily due to a $373,000 decrease in gain on equity securities and a $188,000 decrease in income from an SBIC fund investment[17] Noninterest Expense Noninterest expense increased sequentially, mainly driven by higher salaries and employee benefits due to prior period bonus accrual adjustments Noninterest Expense | Period | Noninterest Expense | | :--- | :--- | | Q1 2024 | $16.1 million | | Q4 2023 | $15.1 million | | Q1 2023 | $16.5 million | - The increase from the prior quarter was mainly driven by a $1.1 million rise in salaries and employee benefits, resulting from a downward adjustment to bonus accruals in Q4 2023[18] Provision for Income Taxes Provision for income taxes and effective tax rate remained relatively stable quarter-over-quarter Provision for Income Taxes and Effective Tax Rate | Metric | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Provision for Income Taxes | $2.3 million | $2.4 million | $2.8 million | | Effective Tax Rate | 27.9% | 27.3% | 28.2% | Balance Sheet and Asset Quality Total assets remained stable at $2.6 billion, with a slight decrease in net loans and an increase in nonperforming loans, while deposits shifted to higher-costing accounts Loans and Credit Quality Net loans decreased, while nonperforming loans and net charge-offs increased due to specific loan impairments Loans and Credit Quality Metrics | Metric | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | | :--- | :--- | :--- | :--- | | Loans, net of deferred fees | $1.9 billion | $1.9 billion | $2.0 billion | | Nonperforming loans | $16.5 million | $13.0 million | $13.1 million | | Allowance for credit losses | $18.9 million | $22.0 million | $20.4 million | | Net charge-offs (for the quarter) | $3.4 million | $150 thousand | $315 thousand | - The increase in nonperforming loans from the prior quarter was mainly due to six new loans totaling $7.3 million being placed on non-accrual status[21] - Net charge-offs for Q1 2024 were significantly higher due to partial charge-offs of two non-accrual loans ($2.9 million) and write-offs of five others ($435,000) because of collateral shortfalls[24] Deposits and Borrowings Total deposits remained stable, but a mix shift occurred from noninterest-bearing to higher-costing interest-bearing accounts Deposits and Noninterest-Bearing Mix | Metric | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | | :--- | :--- | :--- | :--- | | Total Deposits | $2.1 billion | $2.1 billion | $2.1 billion | | Noninterest-bearing deposits | $630.0 million | $646.3 million | $705.9 million | | % of Noninterest-bearing | 29.4% | 30.3% | 33.2% | - The deposit mix shifted as interest-rate sensitive clients moved funds from noninterest-bearing accounts to higher-costing money market and time deposits[26] - The Bank has access to significant borrowing facilities, including from the FHLB and Federal Funds lines, with no outstanding advances at the end of the quarter[28] Shareholders' Equity Shareholders' equity increased slightly, supported by net income offsetting share repurchases and cash dividends Total Shareholders' Equity | Metric | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | | :--- | :--- | :--- | :--- | | Total Shareholders' Equity | $314.2 million | $312.9 million | $313.5 million | - The increase in shareholders' equity from the previous quarter reflects $5.9 million in net income, partially offset by $4.0 million in common stock repurchases and $1.2 million in cash dividends[30] - As of March 31, 2024, 161,632 shares remained available for repurchase under the current stock repurchase plan[31] Financial Statements & Non-GAAP Measures Statements of Comprehensive Income The unaudited statement details Q1 2024 net income of $5.9 million, derived from $22.4 million net interest income after expenses Statements of Comprehensive Income (in thousands) | (In thousands) | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Net Interest Income | $22,407 | $23,527 | $25,257 | | Provision for credit losses | $252 | $2,325 | $275 | | Noninterest income | $2,062 | $2,677 | $1,561 | | Noninterest expense | $16,071 | $15,074 | $16,529 | | Net income | $5,877 | $6,398 | $7,191 | Statements of Condition The unaudited statement shows total assets of $2.56 billion as of March 31, 2024, supported by $2.14 billion in deposits and $314.2 million in equity Statements of Condition (in thousands) | (In thousands) | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $348,332 | $307,539 | $197,538 | | Loans, net | $1,867,840 | $1,905,829 | $2,024,136 | | Total Assets | $2,560,709 | $2,551,960 | $2,548,060 | | Total deposits | $2,142,907 | $2,132,750 | $2,127,769 | | Total Liabilities | $2,246,474 | $2,239,091 | $2,234,588 | | Total Shareholders' Equity | $314,235 | $312,869 | $313,472 | Financial Highlights Key performance ratios for Q1 2024 include an annualized return on average assets of 0.92% and a Tier 1 leverage ratio of 13.41% Key Financial Ratios | Ratio | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Return on average assets (annualized) | 0.92% | 1.00% | 1.14% | | Return on average equity (annualized) | 7.44% | 8.26% | 9.06% | | Net interest margin (annualized) | 3.72% | 3.86% | 4.26% | | Efficiency ratio | 65.68% | 57.53% | 61.63% | | Book value per share | $27.62 | $27.09 | $25.19 | | Tier 1 leverage ratio — Bank | 13.41% | 13.08% | 13.26% | Non-GAAP Financial Measures The company reconciles GAAP to non-GAAP measures, showing tangible book value per share at $23.89 and tangible equity to tangible assets at 10.79% Non-GAAP Financial Measures (in thousands, except per share data) | (In thousands, except per share data) | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | | :--- | :--- | :--- | :--- | | Total shareholders' equity (GAAP) | $314,235 | $312,869 | $313,472 | | less: Goodwill and other intangibles | $42,448 | $42,753 | $43,670 | | Tangible equity (Non-GAAP) | $271,787 | $270,116 | $269,802 | | Tangible equity to tangible assets (Non-GAAP) | 10.79% | 10.76% | 10.77% | | Book value per share (GAAP) | $27.62 | $27.09 | $25.19 | Other Information About BayCom Corp BayCom Corp, via United Business Bank, offers comprehensive loan and deposit services across multiple states, listed on NASDAQ as BCML - The Company operates through its wholly owned subsidiary, United Business Bank, offering a full range of loans and deposit products to businesses across California, Washington, New Mexico, and Colorado[32] Forward-Looking Statements This section contains a standard safe harbor statement, cautioning that forward-looking statements are subject to various economic and competitive risks - The release contains forward-looking statements that are subject to significant business, economic, and competitive uncertainties[33] - Key risk factors that could cause future results to differ include changes in the interest rate environment, inflation, potential recession, real estate market conditions, and competitive pressures[34]