California Banp(CALB) - 2024 Q1 - Quarterly Report

Financial Performance - Adjusted net income for Q1 2024 was $4.841 million, down from$ 5.451 million in Q1 2023, representing a decrease of 11.2%[161] - Diluted earnings per share for Q1 2024 were $0.45, compared to$ 0.64 in Q1 2023; excluding merger-related expenses, diluted earnings per share were $0.57[164] - Net income for Q1 2024 was$ 3.8 million, representing a decrease of $1.6 million or 30% compared to$ 5.5 million in Q1 2023[186] - Total revenue for Q1 2024 was $19.420 million, down 2.24% from$ 19.864 million in Q1 2023[184] Loan and Deposit Trends - Average loans decreased by $63.6 million, or 4%, year-over-year, while average non-interest-bearing deposits decreased by$ 71.7 million, or 10%[166] - Gross loan balances decreased by $38.6 million, or 2%, from December 31, 2023, primarily due to reductions in commercial and industrial loans and real estate-related loans[178] - As of March 31, 2024, total deposits amounted to$ 1,639,516 thousand, a slight increase from $1,625,244 thousand on December 31, 2023, reflecting a growth of approximately 0.9%[244] Income and Expense Analysis - Net interest income for the three months ended March 31, 2024, was$ 17.715 million, a decrease of 5.55% from $18.757 million in the same period of 2023[184] - Non-interest income increased by$ 598,000, or 54%, in Q1 2024, primarily due to higher service charges and fees related to treasury management activities[174] - Total non-interest expense for Q1 2024 was $13.704 million, an increase of 16% from$ 11.843 million in Q1 2023[175] - Non-interest expense for Q1 2024 was $13.704 million, an increase of 15.63% from$ 11.843 million in Q1 2023[196] Credit Losses and Asset Quality - The provision for credit losses for Q1 2024 was $126,000, with$ 301,000 related to loans and $(195,000) for unfunded loan commitments[172] - The provision for credit losses was$ 301,000 in Q1 2024, down from $464,000 in Q1 2023[193] - Total nonperforming loans decreased to$ 1.452 million as of March 31, 2024, from $3.781 million at December 31, 2023[202] Capital Ratios and Regulatory Compliance - The Bank's Tier 1 risk-based capital ratio improved to 12.69% as of March 31, 2024, compared to 12.04% on December 31, 2023, representing an increase of 0.65 percentage points[247] - The total capital to risk-weighted assets ratio increased to 13.63% as of March 31, 2024, from 12.96% at the end of 2023, showing a rise of 0.67 percentage points[247] - The leverage ratio also improved to 12.72% as of March 31, 2024, compared to 12.14% on December 31, 2023, reflecting an increase of 0.58 percentage points[247] - The Company is subject to heightened regulatory compliance and legal risk, but management does not expect any legal actions to materially affect its financial condition[207] Asset and Deposit Composition - The composition of deposits as of March 31, 2024, included 39% in demand noninterest-bearing, 1% in demand interest-bearing, 40% in money market and savings, and 20% in time deposits[244] - The Company reported wholesale brokered time deposits of$ 261.6 million as of March 31, 2024, up from $244.0 million as of December 31, 2023, indicating a growth of approximately 7%[246] Methodology and Management Insights - The Company adopted the Current Expected Credit Losses (CECL) Methodology effective January 1, 2023, to estimate the allowance for credit losses[245] - Management believes the allowance for credit losses is adequate based on a quarterly evaluation of risk, although specific figures were not disclosed[245] - The Company maintains high levels of liquid balances in demand deposit accounts, primarily generated through core customer relationships[246] Efficiency Metrics - The efficiency ratio for Q1 2024 was 70.57%, compared to 59.62% in Q1 2023; excluding merger-related expenses, the efficiency ratio was 65.29%[175] - The adjusted efficiency ratio for Q1 2024 was 65.29%, compared to 59.62% in Q1 2023[186] - The average rate paid on interest-bearing liabilities increased by 114 basis points to 3.78% in Q1 2024 from 2.64% in Q1 2023[171] - The yield on average earning assets increased by 54 basis points to 6.01% in Q1 2024 from 5.47% in Q1 2023[188]