OAKLAND, Calif., April 30, 2019 (GLOBE NEWSWIRE) -- California BanCorp (the “Company”) (OTCQX-CALB), the parent company of California Bank of Commerce (the “Bank”), today announced very strong year-over-year loan growth resulting from the investments in both bankers and infrastructure made after its successful 2018 capital raise.

With the Bank’s focus on relationship banking and the continued economic strength in the Northern California commercial and industrial sector, total loans increased by $146 million, or 20% at March 31, 2019 compared to March 31, 2018.  “Achieving this increase in loan volume is directly attributable to the quality of our bankers and our attention to building quality long-term relationships in the Northern California business community,” stated Steve Shelton, President and Chief Executive Officer.

Net income was $1.87 million, or $0.23 per share for the first quarter of 2019 compared to $1.93 million or $0.30 per share for the first quarter of 2018.  Overall first quarter 2019 earnings were impacted by strategic investments and costs associated with hiring to support continued growth and expansion into new geographies, and public company readiness initiatives including  preparing for FDICIA compliance.

Excluding non-recurring expenses in both 2019 and 2018, net income for the first quarter of 2019 was $2.3 million, or $0.29 per share, compared to $2.1 million, or $0.33 per share for the same quarter in 2018.  The lower earnings per share primarily resulted from additional shares issued in 2018 from its private placement of common stock.

During the first quarter of 2019, average earning assets were $937 million, an increase of $106 million, or 13% from the same period in 2018 and include growth in average loan and investment securities balances of $130 million and $30 million respectively, with a coinciding decline in cash balances of $53 million.

Total assets reached a record $1.04 billion as of March 31, 2019, up 14%, or $129 million compared to $909 million at March 31, 2018. This growth was propelled by an $84 million, or 12% increase in core commercial deposits, including $15 million in non-interest-bearing commercial deposits.  Core deposit growth exceeded the change in total deposits between the periods as a result of a shift in funding strategy during 2018, as the Bank reduced its reliance on a few higher cost and non-core deposits, which declined by $60 million at March 31, 2019, compared to March 31, 2018.

Financial Highlights

March 31, 2019 compared to March 31, 2018

• Total assets increased by $129 million, or 14% to $1.04 billion.
• Total loans increased by $146 million, or 20% to $889 million.
• Total deposits increased by $72 million, or 9% to $871 million.
• Total core deposits increased by $84 million, or 12% to $779 million.
• Total equity increased by $36 million, or 41% to $124 million.

Income Statement

Three months ended March 31, 2019 compared to March 31, 2018

• First quarter net income of $1.87 million.
• Net interest income increased by $1.4 million, or 17% to $9.8 million.
• Non-interest income decreased by $177 thousand, or 17% to $863 thousand.
• Core earnings increased by $179 thousand, or 8% to $2.3 million.

Balance Sheet

Total loans increased by $146 million, or 20% to $889 million at March 31, 2019, with the largest categories of growth within the loan portfolio in relationship-based commercial real estate loans at $117 million and commercial & industrial loans at $42 million.  While CRE loan originations were especially strong during 2018, C&I loan growth was robust during the first quarter of 2019, as a result of both new relationships and additional borrowing on existing lines of credit during the quarter, reflecting the continued strength in the regional economy.

The Bank’s investment portfolio was $42 million at March 31, 2019 compared to $12.3 million at the prior year quarter end, reflecting the deployment of excess cash during the third and fourth quarters of 2018 as market interest rates peaked.

Total deposits increased by $72 million, or 9% to $871 million at March 31, 2019, from $799 million at March 31, 2018, with growth primarily concentrated in core commercial deposits, which increased by $84 million, or 12% to $779 million. Non-interest bearing deposits, primarily commercial business operating accounts, represented 38.5% of total deposits at March 31, 2019, compared to 40.2% at March 31, 2018, indicative of lower levels of operating cash from some commercial clients, as they deployed funds into commercial activity. 

Shareholder’s Equity

Total shareholder’s equity increased by $35.8 million, or 41% from $87.9 million at March 31, 2018, to $123.7 million at March 31, 2019. The $35.8 million increase includes earnings during the twelve-month period totaling $8.7 million, proceeds from the exercise of stock options totaling $3.5 million and $23.6 million in net proceeds from the Company’s successful private placement of common stock during the third quarter of 2018. Tangible book value per common share increased by 18% between the periods, from $12.23 at March 31, 2018, to $14.43 at March 31, 2019.

Net Interest Income and Net Interest Margin – three months ended March 31, 2019 and March 31, 2018

Net interest income was $9.8 million for the three months ended March 31, 2019, an increase of $1.4 million or 17% from $8.4 million for the same period in 2018. The increase in net interest income was primarily attributable to an increase in interest and fees on loans of $1.9 million, the result of a $130 million increase in the average balance of loans outstanding between the periods and the change in the Prime Rate, with the average yield on loans increasing by 11 basis points, from 5.06% during the 2018 quarter to 5.17% in the current quarter.

Interest income from investment securities increased by $265 thousand to $331 thousand, compared to the 2018 quarter, as a result of the $30 million, or 235% increase in the average balance of investment securities outstanding in 2019 compared to the 2018 period, and the increase in the average yield to 3.14% in the current quarter compared to 2.09% in 2018.

With the substantial increase in the average balances of loans and investment securities during the 2019 quarter, the average balance of interest-earning cash and equivalents declined by $53 million compared to the 2018 period, while the  average yield on cash and equivalents increased to 2.43% from 1.56% in 2018.

The yield on total interest-earning assets increased by 34 basis points to 4.98% in the 2019 quarter, compared to 4.64% during the same period in 2018, as a result of the stronger balances of both loans and investments and reduced cash and cash equivalents balances in the period.

Both non-interest-bearing and interest-bearing deposits grew at a strong rate between the periods, with average non-interest-bearing deposits up by $30 million, or 10% to $334 million and average interest-bearing deposits up by $51 million, or 10% to $523 million during the first quarter of 2019, compared to the same 2018 period. The increase in the average balance of interest-bearing deposits, as well as higher market interest rates between the periods, led to an increase in interest paid on deposits of $680 thousand to $1.5 million and an increase in the average rate paid on total deposits of 28 basis points to 0.73%, compared to 0.45% in the 2018 period.

As a result of the significant growth in higher rate loan and investment securities during the 2019 quarter compared to the 2018 period, the net interest margin increased by 14 basis points to 4.26% in 2019, compared to 4.12% in 2018.

Non-Interest Income and Expense – three months ended March 31, 2019 and March 31, 2018

During the quarter ended March 31, 2019, non-interest income totaled $863 thousand, a decrease of $177 thousand, or 17% from the quarter ended March 31, 2018. The decrease was primarily the result of a $152 thousand decrease in gains on loan sales during the 2019 quarter, in addition to a $53 thousand decrease in loan fees, primarily pre-payment fees, all partially offset by a $36 thousand increase in client service charge and other account fee income.

For the quarter ended March 31, 2019, total non-interest expenses increased by $1.1 million, or 17% to $7.6 million compared to the same 2018 period.  Of the increase, $636 thousand was in net salaries and benefits expenses, the result of hiring key lending and operational staff positions during 2018 to support the Company’s continued growth.  Occupancy and FF&E expense increased by $81 thousand, or 12% to $745 thousand in the 2019 period, as the Bank expanded its Oakland, California premises.  Other non-interest expenses increased by $411 thousand, or 21% to $2.4 million during the 2019 quarter, primarily as a result of increased professional fees incurred during the period.  Of the 2019 first quarter non-interest expenses, $648 thousand were non-recurring and primarily related to costs associated with public company readiness and FDICIA implementation.  These 2019 non-recurring expenses compare to $302 thousand in non-recurring expenses during the 2018 quarter related to a strategic initiative.

Credit Quality

Credit quality remains strong, with non-performing assets (“NPAs”) to total assets of 0.56% at March 31, 2019, compared to 0.44% at March 31, 2018, with non-performing loans of $5.8 million and $4.0 million, respectively, on those dates.

The allowance for loan losses increased by $1.7 million, or 17% to $11.3 million, or 1.27% of total loans at March 31, 2019, compared to $9.6 million, or 1.29% of total loans at March 31, 2018.

Closing Remarks

“It is a credit to our strong commercial loan culture and credit administration team to have achieved this level of loan growth over the previous year while maintaining our loan quality,” stated Chairman Stephen Cortese. “We are also especially pleased to have reported earlier this month, the addition of Senior Executive Vice President/Chief Lending Officer Scott Myers  and the formation of a Sacramento, California based commercial banking team, which will allow the Bank to expand and diversify our client base in Northern California in the years ahead.”

Please see our detailed First Quarter 2019 Unaudited Summary Financial Statements or visit our Investor Relations website for more information.

About California BanCorp

California BanCorp, the parent company for California Bank of Commerce, offers a broad range of commercial banking services to closely held businesses and professionals located throughout the San Francisco Bay Area. The stock trades on the OTCQX marketplace under the symbol CALB (formerly CABC). For more information on California BanCorp, call us at (510) 457-3751, or visit us at www.californiabankofcommerce.com.

Forward-Looking Information

Statements in this news release regarding expectations and beliefs about future financial performance and financial condition, as well as trends in the Company’s business and markets are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements often include words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "project," "outlook," or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could," or "may." The forward looking statements in this news release are based on current information and on assumptions that the Company makes about future events and circumstances that are subject to a number of risks and uncertainties that are often difficult to predict and beyond the Company’s control. As a result of those risks and uncertainties, the Company’s actual financial results in the future could differ, possibly materially, from those expressed in or implied by the forward looking statements contained in this news release and could cause the Company to make changes to future plans. Those risks and uncertainties include, but are not limited to, the risk of incurring loan losses, which is an inherent risk of the banking business; the risk that the Company will not be able to continue its internal growth rate; the risk that the United States economy will experience slowed growth or recession or will be adversely affected by domestic or international economic conditions and risks associated with the Federal Reserve Board taking actions with respect to interest rates, any of which could adversely affect, among other things, the values of real estate collateral supporting many of the Company’s loans, interest income and interest rate margins and, therefore, the Company’s future operating results; risks associated with changes in income tax laws and regulations; and risks associated with seeking new client relationships and maintaining existing client relationships.  Also, the Company’s actual financial results in the future may differ from those currently expected or previously reported due to additional risks and uncertainties of which the Company is not currently aware or does not currently view as, but in the future may become, material to its business or operating results. Due to these and other possible uncertainties and risks, readers are cautioned not to place undue reliance on the forward-looking statements contained in this news release, which speak only as of today's date, or to make predictions based solely on historical financial performance. The Company disclaims any obligation to update forward-looking statements contained in this news release, whether as a result of new information, future events or otherwise, except as may be required by law.

California BanCorp
Steven E. Shelton, (510) 457-3751
President and Chief Executive Officer
seshelton@bankcbc.com

Randall D. Greenfield, (510) 457-3769
Senior Executive Vice President and Chief Financial Officer
rgreenfield@bankcbc.com

Source: California BanCorp

	California BanCorp Financial Data as of March 31, 2019 (Unaudited)
	($ Thousands)		For the three months ended												Change %
	Income Statement		3/31/2019				12/31/2018				3/31/2018				QoQ			YoY
	Interest and fees on loans		$	10,954			$	10,120			$	9,099			8	%		20	%
	Other interest income			540				913				403			(41	%)		34	%
	Total interest income			11,494				11,033				9,502			4	%		21	%
	Interest on deposits			1,543				1,396				863			11	%		79	%
	Interest on borrowings and subordinated debentures			114				78				206			47	%		(44	%)
	Total interest expense			1,657				1,474				1,069			12	%		55	%
	Net interest income			9,837				9,559				8,433			3	%		17	%
	Provision for loan loss			581				591				260			(2	%)		123	%
	Net interest income after provision			9,256				8,968				8,173			3	%		13	%
	Service charges and other account fees			300				292				264			3	%		14	%
	Loan related fees			370				291				423			27	%		(13	%)
	Net gains on securities sales			-				97				-			(100	%)		0	%
	Net gains on loan sales			23				135				175			(83	%)		(87	%)
	Other			170				47				178			262	%		(4	%)
	Total non-interest income			863				862				1,040			0	%		(17	%)
	Salaries and employee benefits			4,515				4,052				3,879			11	%		16	%
	Occupancy and equipment expenses			745				773				664			(4	%)		12	%
	Data processing, internet and software			419				424				385			(1	%)		9	%
	Professional and legal			358				190				177			88	%		102	%
	Strategic initiatives			648				348				302			86	%		115	%
	Other operating expenses			930				1,304				1,080			(29	%)		(14	%)
	Total operating expenses			7,615				7,091				6,487			7	%		17	%
	Net income before taxes			2,504				2,739				2,726			(9	%)		(8	%)
	Income taxes			636				632				793			1	%		(20	%)
	Net income		$	1,868			$	2,107			$	1,933			(11	%)		(3	%)
	Earnings Per Share
	Basic earnings per share		$	0.23			$	0.26			$	0.30			(12	%)		(22	%)
	Diluted earnings per share		$	0.23			$	0.26			$	0.28			(11	%)		(19	%)
	Average shares outstanding			8,020,456				7,990,089				6,508,999
	Average diluted shares			8,102,543				8,103,041				6,819,965
	CORE EARNINGS SUMMARY
			For the three months Ended												Change %
	Nonrecurring expense		3/31/2019				12/31/2018				3/31/2018				QoQ			YoY
	Strategic initiatives		$	648			$	348			$	302
	Total Nonrecurring expense			648				348				302
	Income taxes			191				103				89
	Nonrecurring expense (net of tax)			457				245				213
	Core Net income		$	2,325			$	2,352			$	2,146			(1	%)		8	%
	Core Earnings Per Share
	Basic core earnings per share			0.29				0.29				0.33			(2	%)		(12	%)
	Diluted core earnings per share			0.29				0.29				0.31			(1	%)		(9	%)
	Core return on average assets			0.95	%			0.95	%			0.99	%
	Core return on average tangible common equity			8.19	%			8.30	%			11.00	%
			For the three months Ended												Change $						Change %
	Average Balance Sheet Items		3/31/2019				12/31/2018				3/31/2018				QoQ			YoY			QoQ			YoY
	Total Assets			995,362				982,992				882,386			12,370			112,976			1%			13	%
	Total Loans			859,326				784,765				729,781			74,561			129,545			10%			18	%
	Investments			42,719				52,836				12,736			(10,117	)		29,983			-19%			235	%
	Earning Assets			936,929				926,331				830,522			10,598			106,407			1%			13	%
	Non-Interest Bearing Deposits			334,493				358,016				304,551			(23,523	)		29,942			-7%			10	%
	Core Deposits			760,652				760,220				665,711			432			94,941			0%			14	%
	Total Deposits			857,034				854,165				775,625			2,869			81,409			0%			10	%
	Borrowings			10,781				5,000				16,078			5,781			(5,297	)		116%			-33	%
	Tangible Common Equity			115,117				112,450				79,137			2,667			35,980			2%			45	%
			At the periods ended												Change $						Change %
	Balance Sheet		3/31/2019				12/31/2018				3/31/2018				QoQ			YoY			QoQ			YoY
	Cash and equivalents			61,320				78,705				121,342			(17,385	)		(60,022	)		(22%)			(49	%)
	Investment securities			42,008				43,415				12,268			(1,407	)		29,740			(3%)			242	%
	Other investments			3,536				3,536				3,199			0			337			0%			11	%
	Commercial loans			371,359				341,184				329,269			30,175			42,090			9%			13	%
	CRE loans			462,779				451,851				345,580			10,928			117,199			2%			34	%
	Construction and land loans			38,764				37,344				41,182			1,420			(2,418	)		4%			(6	%)
	Other loans			15,800				16,552				26,342			(752	)		(10,542	)		(5%)			(40	%)
	Loans			888,702				846,931				742,373			41,771			146,329			5%			20	%
	Allowance for loan losses			11,250				10,800				9,600			450			1,650			4%			17	%
	Net loans			877,452				836,131				732,773			41,321			144,679			5%			20	%
	Premises and equipment, net			1,942				2,076				2,600			(134	)		(658	)		(6%)			(25	%)
	Bank owned life insurance			17,933				17,806				16,547			127			1,386			1%			8	%
	Deferred income taxes, net			4,804				5,803				3,894			(999	)		910			(17%)			23	%
	Core Deposit Intangible			276				286				433			(10	)		(157	)		(4%)			(36	%)
	Goodwill			7,350				7,350				7,350			-			-			0%			0	%
	Other assets and interest receivable			21,885				10,564				8,942			11,321			12,943			107%			145	%
	Total assets			1,038,506				1,005,672				909,348			32,834			129,158			3%			14	%
	Demand deposits			335,719				352,402				321,214			(16,683	)		14,505			(5%)			5	%
	Interest bearing demand deposits			25,878				32,650				26,744			(6,772	)		(866	)		(21%)			(3	%)
	Money market & savings deposits			414,734				392,290				361,023			22,444			53,711			6%			15	%
	Time deposits			94,844				96,912				89,927			(2,068	)		4,917			(2%)			5	%
	Total deposits			871,175				874,254				798,908			(3,079	)		72,267			(0%)			9	%
	Borrowings			25,000				-				14,500			25,000			10,500			N/A			72	%
	Subordinated debentures, net			4,964				4,960				4,947			4			17			0%			0	%
	Other liabilities			13,710				5,379				3,130			8,331			10,580			155%			338	%
	Total liabilities			914,849				884,593				821,485			30,256			93,364			3%			11	%
	Common stock			105,107				104,563				78,229			544			26,878			1%			34	%
	Retained earnings			18,383				16,515				9,735			1,868			8,648			11%			89	%
	Other comprehensive income			167				1				(101	)		166			268			N/A			-
	Total shareholder’s equity			123,657				121,079				87,863			2,578			35,794			2%			41	%
	Total liabilities and equity			1,038,506				1,005,672				909,348			32,834			129,158			3%			14	%
	Tangible book value per common share			14.43				14.20				12.23									2%			18	%
	Total shares outstanding			8,045,399				7,993,908				6,560,445
	Core relationship deposits			778,627				779,783				694,165			(1,156	)		84,462			(0%)			12	%
			For the three months ended
	Performance Ratios		3/31/2019				12/31/2018				3/31/2018
	Return on average assets			0.76	%			0.85	%			0.89	%
	Return on average tangible common equity			6.58	%			7.43	%			9.91	%
	Efficiency ratio			71.17	%			68.05	%			68.48	%
	Net Interest Margin
	Net interest margin			4.26	%			4.09	%			4.12	%
	Average investment yield			3.14	%			3.08	%			2.09	%
	Average loan yield			5.17	%			5.12	%			5.06	%
	Average total deposit rate			0.73	%			0.65	%			0.45	%
	Average borrowing rate			4.31	%			6.17	%			5.20	%
	Other Ratios
	Average total loans to total deposits			100.3	%			91.9	%			94.1	%
	Average C&I loans to total loans			40.2	%			41.1	%			43.9	%
	Average non-interest bearing deposits to total deposits			39.0	%			41.9	%			39.3	%
	Average core deposits to total deposits			88.8	%			89.0	%			85.8	%
			At the periods ended
	Capital Ratios - Bank		3/31/2019				12/31/2018				3/31/2018
	Tier 1 leverage ratio			11.41	%			11.31	%			10.27	%
	Common equity tier 1 capital ratio			10.81	%			10.94	%			10.34	%
	Tier 1 risk-based capital ratio			10.81	%			10.94	%			10.34	%
	Total risk-based capital ratio			12.38	%			12.52	%			12.04	%
			At the periods ended
	Non-Performing Assets		3/31/2019				12/31/2018				3/31/2018
	Non-Accrual Loans		$	4,185			$	4,463			$	2,632
	Restructured Loans			1,586				930				1,399
	Total non-performing loans (NPL)			5,771				5,393				4,031
	Other Real Estate Owned			-				-				-
	Total non-performing assets (NPA)		$	5,771			$	5,393			$	4,031
	Quarterly Net (Charge-offs)/Recoveries		$	(135	)		$	9			$	40
	NPAs / Assets %			0.56	%			0.54	%			0.44	%
	NPAs / Loans and OREO %			0.65	%			0.64	%			0.54	%
	Loan Loss Reserves / Loans (%)			1.27	%			1.28	%			1.29	%
	Loan Loss Reserves / NPLs (%)			195	%			200	%			238	%

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