• SOUTHERN CALIFORNIA BANCORP REPORTS NET INCOME OF $8.2 MILLION FOR THE FIRST QUARTER

    来源: Nasdaq GlobeNewswire / 25 4月 2023 07:00:01   America/Chicago

    San Diego, Calif., April 25, 2023 (GLOBE NEWSWIRE) -- Southern California Bancorp (“us,” “we,” “our,” or the “Company”) (OTC Pink: BCAL), the holding company for Bank of Southern California, N.A. (the “Bank”) announces its consolidated financial results for the first quarter of 2023.

    Southern California Bancorp reported net income of $8.2 million for the first quarter of 2023, or $0.44 per diluted share, compared to net income of $1.4 million, or $0.08 per diluted share in the first quarter of 2022, and $8.5 million, or $0.46 per diluted share in the fourth quarter of 2022.

    First Quarter 2023 Highlights

    • Net income of $8.2 million, compared with $8.5 million in the prior quarter
    • Diluted earnings per share of $0.44, compared with $0.46 the prior quarter
    • Net interest margin of 4.71%, compared with 4.62% in the prior quarter; average loan yield of 5.78% compared with 5.47% in the prior quarter
    • Return on average assets of 1.46%, the same as the prior quarter
    • Return on average common equity of 12.72%, compared with 13.21% in the prior quarter
    • Efficiency ratio of 56.8%, compared with 51.5% in the prior quarter
    • Tangible book value per common share ("TBV") (non-GAAP) of $12.49 at March 31, 2023, up $0.17 from $12.32 at December 31, 2022
    • Day 1 CECL transition adjustment to the allowance for credit losses ("ACL") of $5.5 million, and a related after-tax decrease to retained earnings of $3.9 million
    • Day 2 CECL provisions for credit losses of $202 thousand
    • Total assets of $2.29 billion, relatively flat from December 31, 2022
    • Total loans, including loans held for sale, of $1.89 billion, compared with $1.91 billion at December 31, 2022
    • Nonperforming assets to total assets ratio of 0.000% at March 31, 2023, compared with 0.002% at December 31, 2022
    • Total deposits of $1.99 billion, up $54.0 million or 2.8%, compared with $1.93 billion at December 31, 2022
    • Noninterest-bearing demand deposits were $882.0 million, representing 44.4% of total deposits, compared with $923.9 million, or 47.8% of total deposits at December 31, 2022
    • Cost of deposits was 0.80%, compared with 0.51% in the prior quarter
    • Banks's capital exceeds minimums to be “well-capitalized,” the highest regulatory capital category

    “We are pleased to report the Company’s continued strong financial performance in the first quarter of 2023, with net income of $8.2 million, an increase of $6.8 million from the year-ago quarter," said David Rainer, Chairman and CEO of Southern California Bancorp and Bank of Southern California. "Our first quarter return on average assets of 1.46% and net interest margin of 4.71%, increased from 0.26% and 3.40%, respectively, from the year-ago quarter, The increase in income and performance metrics was the direct result of the outstanding execution of our relationship-based commercial banking model by our dedicated and accomplished team.

    “While the banking industry experienced some disruption in the first quarter, and there is economic uncertainty regarding a potential recession and the future direction of the Fed funds rate, we believe our strong balance sheet and very diversified loan and deposit portfolios, which have very little sector or individual customer concentration, position us safely and soundly in the current environment. Our commercial banking model is founded on strong, ongoing relationships with clients in a broad variety of industries. I note that the current uncertainty in the banking industry has provided us with an opportunity to attract new clients.

    “We are optimistic about the future and in early April 2023 we announced the filing of a Registration Statement on Form 10 with the U.S. Securities and Exchange Commission, subsequent to our March 2023 application to be listed on the Nasdaq Capital Market.”

    Adoption of the Current Expected Credit Loss ("CECL") Model

    On January 1, 2023, we adopted the new accounting standard, commonly known as CECL, which uses a current expected credit loss model for determining ACL. Upon adoption, we recognized a Day 1 increase in the ACL of $5.5 million and a related after-tax decrease to retained earnings of $3.9 million. Our Day 1 ACL under the new CECL methodology totaled $23.9 million, or 1.26% of total loans, compared to $18.4 million under the incurred loss model at December 31, 2022. We recorded a Day 2 provision for credit losses of $202 thousand which reflects the new CECL methodology using current economic forecasts on lifetime credit losses. At March 31, 2023, the ACL totaled $24.1 million resulting in an ACL to total loans coverage ratio of 1.27%, up from 0.97% at December 31, 2022. The ACL includes amounts for reserve for unfunded loan commitments of $1.7 million and $1.3 million at March 31, 2023 and December 31, 2022.

    First Quarter Operating Results

    Net Income

    Net income for the first quarter of 2023 was $8.2 million, or $0.44 per diluted share, compared with net income of $8.5 million, or $0.46 per diluted share in the fourth quarter of 2022. Pre-tax, pre-provision income (non-GAAP) for the first quarter was $11.4 million, a decrease of $902 thousand or 7.3% from the prior quarter.

    Net Interest Income and Net Interest Margin

    Net interest income for the first quarter of 2023 was $24.9 million, compared to $25.3 million in the prior quarter. The decrease in net interest income was primarily due to a $1.4 million increase in total interest expense, combined with two fewer interest-earning days in the first quarter of 2023 compared to the fourth quarter of 2022. The decrease was partially offset by a $1.1 million increase in total interest and dividend income in the first quarter of 2023 as compared to the prior quarter. During the first quarter of 2023, loan interest income increased $1.2 million, debt securities income increased $83 thousand, and interest and dividend income from other financial institutions decreased $255 thousand. The increase in interest income was due to a number of factors: a higher average total loan balance from organic loan growth; a change in the interest-earning asset mix; and higher yields on interest-earning assets resulting from increases in the target Fed funds rate. Average interest-earning assets decreased $26.9 million, the result of a $43.1 million decrease in average Fed funds sold/resale agreements, a $4.2 million decrease in average debt securities, and a $3.2 million decrease in average deposits in other financial institutions, partially offset by a $23.5 million increase in average total loans. The increase in interest expense for the first quarter of 2023 was primarily due to a $1.3 million increase in interest expense on interest-bearing deposits, the result of a 53 basis point increase in interest-bearing deposit costs.

    Net interest margin for the first quarter of 2023 was 4.71%, compared with 4.62% in the prior quarter. The increase was primarily related to a 39 basis point increase in the total interest-earning assets yield, the result of higher market interest rates and a change in the Bank's interest-earning asset mix, partially offset by a 32 basis point increase in the cost of funds. The yield on total earning assets in the first quarter of 2023 was 5.53%, compared with 5.14% in the prior quarter. The yield on average total loans in the first quarter of 2023 was 5.78%, an increase of 31 basis points from 5.47% in the prior quarter.

    Cost of funds for the first quarter of 2023 was 88 basis points, an increase of 32 basis points from 56 basis points in the prior quarter. The increase was primarily driven by a 53 basis point increase in the cost of interest-bearing deposits, coupled with a decrease in average noninterest-bearing deposits. Average noninterest-bearing demand deposits decreased $55.7 million to $915.2 million and represented 46.7% of total average deposits for the first quarter of 2023, compared with $970.9 million and 48.3%, respectively, for the prior quarter. The total cost of deposits in the first quarter of 2023 was 80 basis points, an increase of 29 basis points from 51 basis points in the prior quarter.

    Average total borrowings increased $10.7 million to $32.1 million for the first quarter of 2023, primarily the result of an increase of $10.7 million in Federal Home Loan Bank (FHLB) borrowings during the quarter. The average cost of total borrowings was 5.54% for the first quarter of 2023, down from 5.82% in the prior quarter.

    Provision for Credit Losses

    The Company recorded a provision for credit losses of $202 thousand under the CECL model, compared to a $750 thousand provision in the prior quarter under the incurred loss model. The provision for credit losses included a $76 thousand negative provision for unfunded commitments primarily due to the impact of lower unfunded loan commitments. Total unfunded loan commitments decreased $43.6 million to $557.5 million at March 31, 2023 from $601.1 million at December 31, 2022. The provision for credit losses was driven by a number of factors: a slight increase in loan downgrades into special mention and substandard, changes in the portfolio mix and our reasonable and supportable forecast, primarily related to the economic outlook from the Federal Reserve's actions to control inflation over bank turmoil, and a decrease in total loan balances. The Company also increased the qualitative reserve to consider the potential losses resulting from future recessionary pressures and the impact of the banking turmoil that were not captured in quantitative analysis. The Company’s management continues to monitor macroeconomic variables related to increasing interest rates, inflation and the concerns of an economic downturn, and believes it is appropriately provisioned for the current environment.

    Noninterest Income

    Total noninterest income in the first quarter of 2023 was $1.6 million, an increase of $1.4 million compared to total noninterest income of $188 thousand in the fourth quarter of 2022. The increase was due primarily to a $994 thousand pre-tax loss on sale of debt securities recorded in the previous quarter, for which there was no comparable transaction in the first quarter of 2023. In addition, in the first quarter of 2023, the Company recorded a gain on sale of loans of $808 thousand on the sale of $9.9 million of SBA 7A loans and $39 thousand on a nonaccrual 1-4 family residential loan, an increase of $515 thousand from the $293 thousand gain on sale of loans recorded on the sale of $5.1 million in SBA 7A loans in the prior quarter.

    Noninterest Expense

    Total noninterest expense for the first quarter of 2023 was $15.0 million, an increase of $1.9 million from total noninterest expense of $13.1 million in the prior quarter. In the first quarter of 2023, salaries and employee benefits increased by $1.6 million, legal, audit and professional fees increased by $298 thousand and regulatory assessments increased by $107 thousand.

    The $1.6 million increase in salaries and benefits was due primarily to an accelerated stock compensation expense related to the vesting of performance-based restricted stock units of $632 thousand, and seasonal increases in payroll taxes and benefits expense, which were coupled with a decrease in the deferred loan origination costs resulting from slower loan growth in the first quarter of 2023. The $298 thousand increase in legal, audit and professional fees was due primarily to preparation for the Company's planned listing to the Nasdaq. The $107 thousand increase in regulatory assessments was due primarily to the increase in the initial base deposit insurance assessment rate beginning in the first quarterly assessment period of 2023.

    Efficiency ratio for the first quarter of 2023 was 56.8%, compared to 51.5% in the prior quarter.

    Income Tax

    In the first quarter of 2023, the Company’s income tax expense was $3.0 million, compared with $3.1 million in the fourth quarter of 2022. The effective rate was 26.8% for the first quarter of 2023 and 26.9% for the fourth quarter of 2022. The slight decrease in the effective tax rate for the first quarter of 2023 was primarily attributable to the impact of the vesting and exercise of equity awards combined with changes in the Company's stock price over time.

    Balance Sheet

    Assets

    Total assets at March 31, 2023 were $2.29 billion, an increase of $8.1 million or 0.4% from December 31, 2022. The increase in total assets from the prior quarter was primarily related to a $15.4 million increase in cash and cash equivalents and an $11.9 million increase in securities available-for-sale, partially offset by a decrease of $12.3 million in total loans, including loans held for sale, and a Day 1 CECL transition adjustment of $5.0 million in the ACL for loan portfolio.

    Loans

    Total loans held for investment were $1.89 billion at March 31, 2023, compared to $1.90 billion at December 31, 2022, with first quarter of 2023 new originations of $78.6 million and payoffs and net paydowns of $81.7 million. Total loans secured by real estate decreased by $13.7 million, with construction and land development loans increasing by $17.0 million, and 1-4 family residential and multifamily increasing $9.7 million and $9.1 million, respectively, offset by a decrease in commercial real estate of $22.2 million. In addition, commercial and industrial loans decreased by $17.4 million. The Company had $577 thousand in SBA 7A loans held for sale at March 31, 2023, compared to $9.0 million at December 31, 2022; most of these loans are expected to be sold in the secondary market in the second quarter of 2023.

    Deposits

    Total deposits at March 31, 2023 were $1.99 billion, an increase of $54.0 million from December 31, 2022. Noninterest-bearing demand deposits at March 31, 2023 were $882.0 million, or 44.4% of total deposits, compared with $923.9 million, or 47.8% of total deposits at December 31, 2022. At March 31, 2023, total brokered time deposits were $84.5 million, compared to $20.7 million at December 31, 2022, as we refined our funding strategy by paying off short-term FHLB financing of $50 million and replacing it with brokered term deposits. Given the nature of our commercial banking model, at March 31, 2023, approximately 50% of our total deposits exceeded the FDIC insurance limits; however, for our larger depositors we offer the Insured Cash Sweep (ICS) product, providing customers with FDIC insurance coverage at ICS network institutions. At March 31, 2023, ICS deposits increased to $140.3 million, or 7% of total deposits, compared to $65.5 million, or 3% of total deposits at December 31, 2022.

    Federal Home Loan Bank ("FHLB") and Federal Reserve Bank ("Federal Reserve") Borrowings

    During the first quarter of 2023, the Company repaid $50.0 million of outstanding overnight FHLB borrowings; there were no outstanding FHLB borrowings or Federal Reserve Discount Window borrowings at March 31, 2023, compared with the $50.0 million in overnight advances with the FHLB at December 31, 2022. The Company did not participate in the Federal Reserve Bank Term Funding Program.

    At March 31, 2023, the Company had available borrowing capacity from the FHLB secured lines of credit of approximately $453 million and available borrowing capacity from the Federal Reserve Discount Window of approximately $110 million. The Company also had available borrowing capacity from three unsecured credit lines from correspondent banks of approximately $75 million at March 31, 2023, with no outstanding borrowings. Additionally, the Company had unpledged, liquid securities of approximately $132 million and cash and cash equivalents of $102.1 million at March 31, 2023.

    Asset Quality

    Total non-performing assets decreased to $1 thousand, or 0.000% of total assets at March 31, 2023, compared with $41 thousand, or 0.002% of total assets at December 31, 2022. The decrease from December 31, 2022, was due primarily to $39 thousand in note sales. There were no loans downgraded to nonaccrual during the quarter. Special mention loans increased by $4.7 million during the first quarter due mostly to a downgrade from one loan relationship with $4.3 million in commercial real estate loans. Substandard loans increased by $2.6 million during the first quarter of 2023 due mostly to downgrades from four loan relationships that totaled $2.7 million in commercial and industrial loans.

    The Company had no loans over 90 days past due that were accruing interest at March 31, 2023.

    Loan delinquencies (30-89 days past due) totaled $123 thousand at March 31, 2023, compared to no loan delinquencies (30-89 days past due) at December 31, 2022.

    The allowance for credit losses, which is comprised of allowance for loan losses (ALL) and reserve for unfunded loan commitments, totaled $24.1 million, or 1.27% of total loans at March 31, 2023, compared to $18.4 million, or 0.97% at December 31, 2022. The $5.7 million increase in the allowance includes a $5.5 million Day 1 CECL transition adjustment, a $278 thousand provision in credit losses for the loan portfolio and a $76 thousand negative provision for unfunded loan commitments for the quarter end March 31, 2023. The Day 1 adjustment to the allowance for credit losses is reflective of expected lifetime credit losses associated with the composition of financial assets within in the scope of the CECL accounting standard as of January 1, 2023, which is substantially comprised of loans held for investment and off-balance sheet unfunded loan commitments at January 1, 2023, as well as management’s current expectation of future economic conditions.

    Allowance for loan losses was $22.4 million, or 1.18% of total loans at March 31, 2023, compared to $17.1 million, or 0.90% at December 31, 2022.

    Capital

    Tangible book value (non-GAAP) per common share at March 31, 2023, was $12.49, compared with $12.32 at December 31, 2022. In the first quarter of 2023, tangible book value was primarily impacted by a net decrease of $3.9 million to the beginning balance of retained earnings as of January 1, 2023, for the cumulative effect of the Day 1 CECL transition adjustment, and an increase of outstanding common stock related to the vesting of performance-based restricted stock units. These decreases were modestly offset by a reduction of $1.4 million in other comprehensive losses related to unrealized losses, net of taxes, on securities available-for-sale; the balance of which was $5.0 million at March 31, 2023, and $6.4 million at December 31, 2022. Tangible common equity (non-GAAP) as a percent of total tangible assets at March 31, 2023 increased to 10.13% from 9.84% in the prior quarter, and unrealized losses as a percent of tangible capital equity at March 31, 2023 were reduced to 2.2% from 2.9% in the prior quarter.

    The Bank’s leverage capital ratio and total risk-based capital ratio were 11.15% and 12.61%, respectively, at March 31, 2023. The Bank elected the three-year phase-in period under the regulatory capital rules, which allow a phase-in of the Day 1 CECL transition adjustment to the regulatory capital at 25% per year over a three-year transition period.

    ABOUT BANK OF SOUTHERN CALIFORNIA AND SOUTHERN CALIFORNIA BANCORP

    Southern California Bancorp (OTC Pink: BCAL) is a registered bank holding company headquartered in San Diego, California. Bank of Southern California, N.A., a national banking association chartered under the laws of the United States and regulated by the Office of Comptroller of the Currency, is a wholly owned subsidiary of Southern California Bancorp. Established in 2001 and headquartered in San Diego, California, Bank of Southern California, N.A. offers a range of financial products and services to individuals, professionals, and small- to medium-sized businesses through its 13 branch offices serving Orange, Los Angeles, Riversides, San Diego, and Ventura counties, as well as the Inland Empire. The Bank's solutions-driven, relationship-based approach to banking provides accessibility to decision makers and enhances value through strong partnerships with its clients. Additional information is available at www.banksocal.com.

    Southern California Bancorp’s common stock is traded on the OTC Markets Group Inc. Pink Open Market under the symbol “BCAL.” For more information, please visit banksocal.com or call (844) BNK-SOCAL.

    NON-GAAP FINANCIAL MEASURES

    This press release contains certain non-GAAP financial measures in addition to results presented in accordance with GAAP. The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company's results of operations and financial condition and to enhance investors' overall understanding of such results of operations and financial condition, permit investors to effectively analyze financial trends of our business activities, and enhance comparability with peers across the financial services sector. These non-GAAP financial measures are not a substitute for GAAP measures and should be read in conjunction with the Company's GAAP financial information. A reconciliation of GAAP financial measures to non-GAAP financial measures is included in the accompanying financial tables.

    FORWARD-LOOKING STATEMENTS

    In addition to historical information, certain matters set forth herein constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements relating to management’s beliefs, projections and assumptions concerning future results and events. Forward-looking statements include descriptions of management’s plans or objectives for future operations, products or services, and forecasts of Southern California Bancorp’s revenues, earnings, litigation expenses, or other measures of economic performance. Also, forward-looking statements may relate to future outlook and anticipated events. These forward-looking statements involve risks and uncertainties, based on the beliefs and assumptions of management and on the information available to management at the time that such forward-looking statements were made and can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words or phrases such as “aim,” “can,” "may," "could," "predict," "should," "will," "would," "believe," "anticipate," "estimate," "expect," “hope,” "intend," "plan," “potential," “project,” "will likely result," "continue," "seek," “shall,” “possible,” "projection," “optimistic,” and "outlook," and variations of these words and similar expressions or the negative version of those words or phrases.

    Forward-looking statements involve substantial risks and uncertainties, many of which are difficult to predict and are generally beyond our control. Many factors could cause actual results to differ materially from those contemplated by these forward-looking statements. Except to the extent required by applicable law or regulation, Southern California Bancorp does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements except as required by law.

    Southern California Bancorp and Subsidiary
    Financial Highlights (Unaudited)

      At or for the
    Three Months Ended    		 
      March 31,
    2023    		  December 31,
    2022    		  March 31,
    2022    		 
    EARNINGS ($ in thousands except share and per share data) 
    Net interest income $24,892  $25,269  $17,795 
    Provision for credit losses $202  $750  $1850 
    Noninterest income $1,570  $188  $1,603 
    Noninterest expense $15,019  $13,112  $15,552 
    Income tax expense $3,017  $3,121  $550 
    Net income $8,224  $8,474  $1,446 
    Pre-tax pre-provision income (1) $11,443  $12,345  $3,846 
    Adjusted pre-tax pre-provision income (1) $11,443  $12,337  $4,370 
    Diluted earnings per share $0.44  $0.46  $0.08 
    Ending shares outstanding  18,271,194   17,940,283   17,753,849 
                 
    PERFORMANCE RATIOS            
    Return on average assets  1.46%  1.46%  0.26%
    Adjusted return on average assets  (1)  1.46%  1.45%  0.33%
    Return on average common equity  12.72%  13.21%  2.37%
    Adjusted return on average common equity  (1)  12.72%  13.20%  3.00%
    Yield on total loans  5.78%  5.47%  4.70%
    Yield on interest earning assets  5.53%  5.14%  3.54%
    Cost of deposits  0.80%  0.51%  0.08%
    Cost of funds  0.88%  0.56%  0.14%
    Net interest margin  4.71%  4.62%  3.40%
    Efficiency ratio (1)  56.8%  51.5%  80.2%
    Adjusted efficiency ratio (1)  56.8%  51.5%  77.5%


      As of 
      March 31,
    2023    		  December 31,
    2022    		 
    CAPITAL ($ in thousands except share and per share data) 
    Tangible equity to tangible assets (1)  10.13%  9.84%
    Book value (BV) per common share $14.64  $14.51 
    Tangible BV per common share (1) $12.49  $12.32 
             
    ASSET QUALITY        
    Allowance for loan losses (ALL) $22,391  $17,099 
    Reserve for unfunded loan commitments $1,673  $1,310 
    Allowance for credit losses (ACL) $24,064  $18,409 
    ALL to total loans  1.18%  0.90%
    ACL to total loans  1.27%  0.97%
    Nonperforming loans $1  $41 
    Other real estate owned $—  $— 
    Nonperforming assets to total assets  —%  —%
             
    END OF PERIOD BALANCES        
    Total loans, including loans held for sale $1,894,509  $1,906,800 
    Total assets $2,292,053  $2,283,927 
    Deposits $1,985,856  $1,931,905 
    Loans to deposits  95.4%  98.7%
    Shareholders' equity $267,539  $260,355 

     (1)   Non-GAAP measure. See – GAAP to Non-GAAP reconciliation

      For the
    Three Months Ended    		 
    ALLOWANCE for CREDIT LOSSES March 31,
    2023    		  December 31,
    2022    		  March 31,
    2022    		 
      ($ in thousands) 
    Allowance for loan losses (ALL)            
    Balance at beginning of period $17,099  $16,436  $11,657 
    Adoption of ASU 2016-13 (1)  5,027   —   — 
    Provision for loan losses  278   650   1,850 
    Charge-offs  (27)  —   — 
    Recoveries  14   13   27 
    Net (charge-offs) recoveries  (13)  13   27 
    Balance, end of period $22,391  $17,099  $13,534 
    Reserve for unfunded loan commitments            
    Balance, beginning of period $1,310  $1,210  $804 
    Adoption of ASU 2016-13 (1)  439   —   — 
    Provision (reversal) for loan losses  (76)  100   — 
    Balance, end of period  1,673   1,310   804 
    Allowance for credit losses (ACL) $24,064  $18,409  $14,338 
                 
    ALL to total loans  1.18%  0.90%  0.83%
    ACL to total loans  1.27%  0.97%  0.88%

    (1) Represents the impact of adopting ASU 2016-13, Financial Instruments - Credit Losses on January 1, 2023. As a result of adopting ASU 2016-13, our methodology to compute our allowance for credit losses is based on a current expected credit loss methodology, rather than the previously applied incurred loss methodology.

    Southern California Bancorp and Subsidiary
    Balance Sheets (Unaudited)

      March 31,
    2023    		  December 31,
    2022    		 
    ASSETS ($ in thousands) 
    Cash and due from banks $34,159  $60,295 
    Federal funds sold & interest-bearing balances  67,980   26,465 
    Total cash and cash equivalents  102,139   86,760 
             
    Securities available-for-sale, at fair value  124,438   112,580 
    Securities held-to-maturity, at cost (fair value of $49,713 at March 31, 2023 and $47,906 at December 31, 2022)  53,864   53,946 
    Loans held for sale  577   9,027 
    Loans held for investment:        
    Construction & land development  256,096   239,067 
    1-4 family residential  154,071   144,322 
    Multifamily  227,676   218,606 
    Other commercial real estate  936,513   958,676 
    Commercial & industrial  314,248   331,644 
    Other consumer  5,328   5,458 
    Total loans held for investment  1,893,932   1,897,773 
    Allowance for credit losses - loans  (22,391)  (17,099)
    Total loans held for investment, net  1,871,541   1,880,674 
             
    Restricted stock at cost  14,557   14,543 
    Premises and equipment  14,105   14,334 
    Right of use asset  8,384   8,607 
    Goodwill  37,803   37,803 
    Core deposit intangible  1,493   1,584 
    Bank owned life insurance  38,196   37,972 
    Deferred taxes, net  10,492   10,699 
    Accrued interest and other assets  14,464   15,398 
    Total Assets $2,292,053  $2,283,927 
             
    LIABILITIES AND SHAREHOLDERS' EQUITY        
    Deposits:        
    Noninterest-bearing demand $882,000  $923,899 
    Interest bearing NOW accounts  248,809   209,625 
    Money market and savings accounts  677,636   668,602 
    Time deposits  177,411   129,779 
    Total deposits  1,985,856   1,931,905 
             
    Borrowings  17,794   67,770 
    Operating lease liability  10,925   11,055 
    Accrued interest and other liabilities  9,939   12,842 
    Total liabilities  2,024,514   2,023,572 
             
    Shareholders' Equity:        
    Common Stock - 50,000,000 Shares Authorized, No Par Value; issued and Outstanding 18,271,194 at March 31, 2023 and 17,940,283 at December 31, 2022)  219,659   218,280 
    Retained earnings  52,889   48,516 
    Accumulated Other Comprehensive (Loss) Income - Net of Taxes  (5,009)  (6,441)
    Total shareholders' equity  267,539   260,355 
    Total Liabilities and Shareholders' Equity $2,292,053  $2,283,927 


    Southern California Bancorp and Subsidiary
    Income Statements - Quarterly and Year-to-Date (Unaudited)

      Three Months Ended 
      March 31,
    2023    		  December 31,
    2022    		  March 31,
    2022    		 
      ($ in thousands except share and per share data) 
    INTEREST AND DIVIDEND INCOME         
    Interest and fees on loans $27,019  $25,781  $17,731 
    Interest on debt securities  731   647   254 
    Interest on tax-exempted debt securities  487   488   76 
    Interest and dividends from other institutions  972   1,227   424 
    Total interest and dividend income  29,209   28,143   18,485 
                 
    INTEREST EXPENSE            
    Interest on NOW, savings, and money market accounts  2,903   2,096   282 
    Interest on time deposits  975   463   98 
    Interest on borrowings  439   315   310 
    Total interest expense  4,317   2,874   690 
    Net interest income  24,892   25,269   17,795 
                 
    Provision for credit losses (1)  202   750   1,850 
    Net interest income after provision for loan losses  24,690   24,519   15,945 
                 
    NONINTEREST INCOME            
    Service charges and fees on deposit accounts  439   456   487 
    Gain on sale of loans  808   293   49 
    Bank owned life insurance income  223   221   832 
    Servicing and related income on loans  75   53   69 
    Loss on sale of debt securities  —   (994)  — 
    Other charges and fees  25   159   166 
    Total noninterest income  1,570   188   1,603 
                 
    NONINTEREST EXPENSE            
    Salaries and employee benefits  10,241   8,634   10,196 
    Occupancy and equipment expenses  1,447   1,458   1,410 
    Data processing  1,056   1,089   1,420 
    Legal, audit and professional  785   487   617 
    Regulatory assessments  452   345   339 
    Director and shareholder expenses  213   219   195 
    Merger and related (income) expenses  —   (8)  524 
    Core deposit intangible amortization  91   141   99 
    Other expense  734   747   752 
    Total noninterest expense  15,019   13,112   15,552 
    Income before income tax expense  11,241   11,595   1,996 
    Income tax expense  3,017   3,121   550 
    Net income $8,224  $8,474  $1,446 
                 
    Net income per share - basic $0.46  $0.47  $0.08 
    Net income per share - diluted $0.44  $0.46  $0.08 
    Pre-tax, pre-provision income (2) $11,443  $12,345  $3,846 
    Adjusted pre-tax, pre-provision income (2) $11,443  $12,337  $4,370 

    (1) Included (reversal) provision for unfunded commitment of $(76) thousand and $100 thousand for the three months ended March 31, 2023 and December 31, 2022. There was no provision for unfunded commitment for the three months ended March 31, 2022.
    (2) Non-GAAP measure. See – GAAP to Non-GAAP reconciliation.

    Southern California Bancorp and Subsidiary
    Average Balance Sheets and Yield Analysis
    (Unaudited)

      Three Months Ended 
      March 31, 2023  December 31, 2022  March 31, 2022 
      Average Balance  Income/Expense  Yield/Cost  Average Balance  Income/Expense  Yield/Cost  Average Balance  Income/
    Expense    		  Yield/Cost 
    Assets ($ in thousands) 
    Interest-earning assets:                                    
    Total non-PPP loans $1,890,758  $27,005   5.79 % $1,866,708  $25,755   5.47 % $1,496,375  $16,409   4.45 %
    Total PPP loans  3,476   14   1.63 %  3,997   26   2.58 %  34,867   1,322   15.38 %
    Total loans  1,894,234   27,019   5.78 %  1,870,705   25,781   5.47 %  1,531,242   17,731   4.70 %
    Taxable debt securities  97,023   731   3.06 %  102,205   647   2.51 %  72,309   254   1.42 %
    Tax-exempt debt securities (1)  74,188   487   3.37 %  73,166   488   3.35 %  15,163   76   2.57 %
    Deposits in other financial institutions  37,611   457   4.93 %  40,781   347   3.38 %  463,977   193   0.17 %
    Fed funds sold/resale agreements  25,306   287   4.60 %  68,437   637   3.69 %  23,822   11   0.19 %
    Restricted stock investments and other bank stock  14,902   228   6.20 %  14,883   243   6.48 %  14,009   220   6.37 %
    Total interest-earning assets  2,143,264   29,209   5.53 %  2,170,177   28,143   5.14 %  2,120,522   18,485   3.54 %
    Total non-interest-earning assets  134,707           139,205           139,279         
    Total assets $2,277,971          $2,309,382          $2,259,801         
                                         
    Liabilities and Shareholders' Equity                                    
    Interest-bearing liabilities:                                    
    Interest-bearing NOW accounts $206,785  $316   0.62 % $215,272  $121   0.22 % $190,530  $81   0.17 %
    Money market and savings accounts  685,368   2,587   1.53 %  700,544   1,975   1.12 %  694,155   201   0.12 %
    Time deposits  152,613   975   2.59 %  123,524   463   1.49 %  97,030   98   0.41 %
    Total interest-bearing deposits  1,044,766   3,878   1.51 %  1,039,340   2,559   0.98 %  981,715   380   0.16 %
    Borrowings:                                    
    FHLB advances  14,356   168   4.75 %  3,696   44   4.72 %  —   —           —        % 
    Subordinated debt  17,783   271   6.18 %  17,759   271   6.05 %  17,688   272   6.24 %
    TruPS  —   —           —        %   —   —           —        %   2,737   38   5.63 %
    Total borrowings  32,139   439   5.54 %  21,455   315   5.82 %  20,425   310   6.16 %
    Total interest-bearing liabilities  1,076,905   4,317   1.63 %  1,060,795   2,874   1.07 %  1,002,140   690   0.28 %
                                         
    Non-interest-bearing liabilities:                                    
    Noninterest-bearing deposits (2)  915,160           970,908           990,185         
    Other liabilities  23,788           23,199           19,746         
    Shareholders' equity  262,118           254,480           247,730         
    Total Liabilities and Shareholders' Equity $2,277,971          $2,309,382          $2,259,801         
                                         
    Net interest spread          3.90 %          4.07 %          3.26 %
    Net interest income and margin     $24,892   4.71 %     $25,269   4.62 %     $17,795   3.40 %
    Cost of deposits          0.80 %          0.51 %          0.08 %
    Cost of funds          0.88 %          0.56 %          0.14 %

    (1) Tax-exempt debt securities yields are presented on a tax equivalent basis using a 21% tax rate.
    (2) Average noninterest-bearing deposits represent 46.69%, 48.30% and 50.21% of average total deposits for the three months ended March 31, 2023, December 31, 2022 and March 31, 2022.

    Southern California Bancorp and Subsidiary
    GAAP to Non-GAAP Reconciliation
    (Unaudited)

    The following tables present a reconciliation of non-GAAP financial measures to GAAP measures for: (1) adjusted net income, (2) efficiency ratio, (3) adjusted efficiency ratio, (4) pre-tax pre-provision income, (5) adjusted pre-tax pre-provision income, (6) average tangible common equity, (7) adjusted return on average assets, (8) adjusted return on average equity, (9) return on average tangible common equity, (10) adjusted return on average tangible common equity, (11) tangible common equity, (12) tangible assets, (13) tangible common equity to tangible asset ratio, and (14) tangible book value per share. We believe the presentation of certain non-GAAP financial measures provides useful information to assess our consolidated financial condition and consolidated results of operations and to assist investors in evaluating our financial results relative to our peers. These non-GAAP financial measures complement our GAAP reporting and are presented below to provide investors and others with information that we use to manage the business each period. Because not all companies use identical calculations, the presentation of these non-GAAP financial measures may not be comparable to other similarly titled measures used by other companies. These non-GAAP measures should be taken together with the corresponding GAAP measures and should not be considered a substitute of the GAAP measures.

      Three Months Ended 
      March 31,
    2023    		  December 31,
    2022    		  March 31,
    2022    		 
      ($ in thousands) 
    Adjusted net income            
    Net income $8,224  $8,474  $1,446 
    (Deduct)/add: After-tax merger and related (income) expenses (1)  —   (6)  387 
    Adjusted net income (non-GAAP) $8,224  $8,468  $1,833 
                 
    Efficiency Ratio            
    Noninterest expense $15,019  $13,112  $15,552 
    Less: Merger and related (income) expenses  —   (8)  524 
    Adjusted noninterest expense $15,019  $13,120  $15,028 
                 
    Net interest income  24,892   25,269   17,795 
    Noninterest income  1,570   188   1,603 
    Total net interest income and noninterest income $26,462  $25,457  $19,398 
    Efficiency ratio (non-GAAP)  56.8%  51.5%  80.2%
    Adjusted efficiency ratio (non-GAAP)  56.8%  51.5%  77.5%
                 
    Pre-tax pre-provision income            
    Net interest income $24,892  $25,269  $17,795 
    Noninterest income  1,570   188   1,603 
    Total net interest income and noninterest income  26,462   25,457   19,398 
    Less: Noninterest expense  15,019   13,112   15,552 
    Pre-tax pre-provision income (non-GAAP) $11,443  $12,345  $3,846 
    (Deduct)/add: Merger and related (income) expenses  —   (8)  524 
    Adjusted pre-tax pre-provision income (non-GAAP) $11,443  $12,337  $4,370 
                 
    Return on Average Assets, Equity, and Tangible Equity            
    Net income $8,224  $8,474  $1,446 
    Adjusted net income (non-GAAP) $8,224  $8,468  $1,833 
                 
    Average assets $2,277,971  $2,309,382  $2,259,801 
    Average shareholders' equity  262,118   254,480   247,730 
    Less: Average intangible assets  39,340   39,475   38,760 
    Average tangible common equity (non-GAAP) $222,778  $215,005  $208,970 

    (1) After-tax merger and related (income) expenses are presented using a 29.56% tax rate on taxable merger and related (income) expenses.

       Three Months Ended 
       March 31,
    2023    		  December 31,
    2022    		  March 31,
    2022    		 
       ($ in thousands) 
                 
    Return on average assets  1.46%  1.46%  0.26%
    Adjusted return on average assets (non-GAAP)  1.46%  1.45%  0.33%
    Return on average equity  12.72%  13.21%  2.37%
    Adjusted return on average equity (non-GAAP)  12.72%  13.20%  3.00%
    Return on average tangible common equity (non-GAAP)  14.97%  15.64%  2.81%
    Adjusted return on average tangible common equity (non-GAAP)  14.97%  15.63%  3.56%


      March 31,
    2023    		  December 31,
    2022    		 
      ($ in thousands except share and per share data) 
    Tangible Common Equity Ratio/Tangible Book Value Per Share        
    Shareholders' equity $267,539  $260,355 
    Less: Intangible assets  39,296   39,387 
    Tangible common equity (non-GAAP) $228,243  $220,968 
             
    Total assets $2,292,053  $2,283,927 
    Less: Intangible assets  39,296   39,387 
    Tangible assets (non-GAAP) $2,252,757  $2,244,540 
             
    Equity to asset ratio  11.67%  11.40%
    Tangible common equity to tangible asset ratio (non-GAAP)  10.13%  9.84%
    Book value per share $14.64  $14.51 
    Tangible book value per share (non-GAAP) $12.49  $12.32 
    Shares outstanding  18,271,194   17,940,283 


    INVESTOR RELATIONS CONTACT
    Kevin Mc Cabe
    Bank of Southern California
    kmccabe@banksocal.com
    818.637.7065


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