California Bancorp (CALB) 8-K Results of Operations and Financial Condition

Exhibit 99.1

California BanCorp Reports Financial Results for the Second Quarter and Six Months Ended June 30, 2024

Oakland, CA – July 29, 2024 – California BanCorp (NASDAQ: CALB) (the “Company”), whose subsidiary is California Bank of Commerce, announced today its financial results for the second quarter and six months ended June 30, 2024.

The Company reported a net loss of $5.9 million for the second quarter of 2024, representing a decrease of $9.7 million, or 254%, compared to net income of $3.8 million for the first quarter of 2024 and a decrease of $11.3 million, or 208%, compared to $5.4 million in the second quarter of 2023. For the six months ended June 30, 2024, the Company reported a net loss of $2.0 million representing a decrease of $12.9 million, or 119%, compared to net income of $10.9 million for the same period in 2023.

Diluted earnings per share of $(0.68) for the second quarter of 2024, compared to $0.45 for the first quarter of 2024 and $0.65 for the second quarter of 2023. For the six months ended June 30, 2024, diluted earnings per share of $(0.24), compared to $1.29 for the same period in 2023.

“As we announced earlier this month, on July 17, 2024, at their respective shareholder meetings, shareholders of Southern California Bancorp and California BanCorp approved the merger of the two companies, and we expect the transaction to close on July 31, 2024,” said Steven Shelton, Chief Executive Officer of California BanCorp. “Our second quarter results were impacted by a $13.5 million provision for credit losses, largely as the result of stepped up resolution activity on loans individually identified during a rigorous review of our loan portfolio. During the quarter, we focused our efforts on an active strategy of de-risking our balance sheet and remained measured in our new loan production, which led to a decline in total loans. At the same time, we continued to add new commercial relationships that helped contribute to an increase in our balances of noninterest-bearing deposits. We look forward to closing our merger and capitalizing on the strong market position of our combined entity to continue adding attractive commercial relationships, generating profitable growth, and further enhancing the value of our franchise in the coming years.”

Financial Highlights:

Profitability—three months ended June 30, 2024 compared to March 31, 2024

• Net loss of $5.9 million and $(0.68) per diluted share, compared to net income of $3.8 million and $0.45 per share, respectively.

• Revenue of $18.3 million decreased $1.1 million, or 6%, from $19.4 million for the first quarter of 2024 (See Interim Consolidated Non-GAAP Data).

• Net interest income of $16.8 million decreased $892,000, or 5%, compared to $17.7 million for the first quarter of 2024.

• Provision for credit losses of $13.5 million increased $13.4 million from $126,000 for the first quarter of 2024.

• Non-interest income of $1.5 million decreased $187,000, or 11%, compared to $1.7 million for the first quarter of 2024.

• Non-interest expense, excluding merger related expenses, of $12.5 million decreased $139,000, or 1%, compared to $12.7 million for the first quarter of 2024 (See Interim Consolidated Non-GAAP Data).

Profitability—six months ended June 30, 2024 compared to June 30, 2023

• Net loss of $2.0 million and $(0.24) per diluted share, compared to net income of $10.9 million and $1.29 per diluted share, respectively.

• Revenue of $37.8 million decreased $1.8 million, or 5%, compared to $39.6 million in the prior year (See Interim Consolidated Non-GAAP Data).

• Net interest income of $34.5 million decreased $2.9 million, or 8%, compared to $37.4 million for the same period in the prior year.

• Provision for credit losses of $13.6 million increased $12.8 million from $802,000 for the six months ended June 30, 2023.

• Non-interest income of $3.2 million increased $981,000, or 44%, from $2.2 million for the same period in the prior year.

• Non-interest expense, excluding merger related expenses, of $25.2 million increased $1.8 million, or 8%, compared to $23.4 million for the six months ended June 30, 2023 (See Interim Consolidated Non-GAAP Data).

Financial Position – June 30, 2024 compared to March 31, 2024

• Total assets decreased by $5.2 million to $1.92 billion; average total assets decreased by $7.0 million to $1.91 billion.

• Total gross loans decreased by $33.2 million to $1.49 billion; average total gross loans decreased by $11.1 million to $1.51 billion.

• Total deposits decreased by $827,000 to $1.64 billion; average total deposits decreased by $7.0 million to $1.62 billion.

• The Company had no other borrowings at June 30, 2024 or March 31, 2024.

• Capital ratios remain healthy with a tier I leverage ratio of 9.93%, tier I capital ratio of 10.06%, and total risk-based capital ratio of 13.93%.

• Book value per share of $23.07 decreased by $0.72, or 3%.

• Tangible book value per share of $22.20 decreased by $0.71, or 3% (See Interim Consolidated Non-GAAP Data).

Net Interest Income and Margin:

Net interest income for the quarter ended June 30, 2024 was $16.8 million, representing a decrease of $892,000, or 5%, from $17.7 million for the three months ended March 31, 2024, and a decrease of $1.8 million, or 10%, from $18.6 million for the quarter ended June 30, 2023. The decrease in net interest income compared to the first quarter of 2024 was primarily attributable to lower yields on interest earning assets. Compared to the second quarter of 2023, the decrease in net interest income resulted from a lower balance of average earning assets which was driven by a reduction in loan balances as a result of conservative underwriting combined with decreased demand and pay-offs occurring in the normal course of business. Additionally, during the current period the Company incurred higher yields on interest-bearing deposits.

Net interest income for the six months ended June 30, 2024 was $34.5 million, a decrease of $2.9 million, or 8% from $37.4 million for the six months ended June 30, 2023. The decrease in net interest income was primarily attributable to an increase in higher yields on interest-bearing deposits.

The Company’s net interest margin for the second quarter of 2024 was 3.71%, compared to 3.89% for the first quarter of 2024 and 3.93% for the same period in 2023. The Company’s net interest margin for the six months ended June 30, 2024 was 3.80% compared to 3.98% for the same period in 2023.

Non-Interest Income:

The Company’s non-interest income for the quarters ended June 30, 2024, March 31, 2024, and June 30, 2023 was $1.5 million, $1.7 million, and $1.1 million, respectively. For the six months ended June 30, 2024, non-interest income of $3.2 million compared to $2.2 million for the same period of 2023. The fluctuations in non-interest income from the prior periods were primarily due to service charges and loan related fees.

Net interest income and non-interest income comprised total revenue of $18.3 million, $19.4 million, and $19.8 million for the quarters ended June 30, 2024, March 31, 2024, and June 30, 2023, respectively. Total revenue for the six months ended June 30, 2024 and 2023 was $37.8 million and $39.6 million, respectively (See Interim Consolidated Non-GAAP Data).

Non-Interest Expense:

The Company’s non-interest expense for the quarters ended June 30, 2024, March 31, 2024, and June 30, 2023 was $13.2 million, $13.7 million, and $11.6 million, respectively. Non-interest expense of $26.9 million for the six months ended June 30, 2024 increased by $3.5 million, or 15%, compared to $23.4 million for the same period of 2023. The fluctuations in non-interest expense from the prior periods was primarily due to the recognition of merger related expenses. Additionally, compared to the same periods in the prior year, the Company incurred increases in salaries and benefits as well as premises and equipment.

Excluding the impact of merger related expenses, non-interest expense for the second quarter of 2024, the first quarter of 2024 and the second quarter of 2023 was $12.5 million, $12.7 million, and $11.6 million, respectively. For the six months ended June 30, 2024 and 2023, non-interest expense excluding the impact of merger related expenses was $25.2 million and $23.4 million, respectively (See Interim Consolidated Non-GAAP Data).

The Company’s efficiency ratio, the ratio of non-interest expense to revenues, was 71.90%, 70.57%, and 58.66% for the quarters ended June 30, 2024, March 31, 2024, and June 30, 2023, respectively. Excluding the impact of merger related expenses, the Company’s efficiency ratio was 68.38% and 65.29% for the second and first quarters of 2024, respectively. For the six months ended June 30, 2024 and 2023, the Company’s efficiency ratio was 71.22% and 59.14%, respectively. Excluding the impact of merger related expenses, the Company’s efficiency ratio was 66.79% for the six months ended June 30, 2024 (See Interim Consolidated Non-GAAP Data).

Balance Sheet:

Total assets were $1.92 billion as of June 30, 2024 and March 31, 2024, compared to total assets of $2.00 billion at June 30, 2023. The decrease in total assets from the prior year was primarily due to conservative new loan production, combined with decreased liquidity related to a reduction in noninterest-bearing deposits.

Total gross loans decreased by $33.2 million, or 2%, to $1.49 billion at June 30, 2024, from $1.52 billion at March 31, 2024 and decreased $95.9 million, or 6%, from $1.58 billion at June 30, 2023. During the second quarter of 2024, commercial loans increased by $1.7 million, or less than 1%, real estate related loans decreased by $33.0 million, or 4%, and other loans decreased $1.9 million, or 5%. Compared to the same period in the prior year, commercial, real estate other, real estate construction and land, and other loans decreased by $10.1 million, or 2%, $34.8 million, or 4%, $45.1 million, or 74%, and $5.9 million, or 13%, respectively.

Total deposits of $1.64 billion at June 30, 2024 remained unchanged from March 31, 2024, and decreased by $99.6 million, or 6%, from $1.74 billion at June 30, 2023. Compared to the same period last year, the decrease in total deposits was primarily concentrated in noninterest-bearing demand deposits. Noninterest-bearing deposits, primarily commercial business operating accounts, represented 39% of total deposits at both June 30, 2024 and March 31, 2024 and represented 43% of total deposits at June 30, 2023.

Excluding junior subordinated debt securities, the Company had no outstanding borrowings at June 30, 2024, March 31, 2024 or June 30, 2023.

Asset Quality:

The provision for credit losses on loans was $13.7 million for the second quarter of 2024, compared to $301,000 for the first quarter of 2024 and $340,000 for the second quarter of 2023. The Company had net loan charge-offs of $13.3 million, or 0.89% of gross loans, during the second quarter of 2024, net loan charge-offs of $348,000, or 0.02% of gross loans during the first quarter of 2024 and no charge-offs or recoveries during the second quarter of 2023.

Non-performing assets (“NPAs”) to total assets were 1.13% at June 30, 2024, compared to 0.08% at March 31, 2024 and 0.01% at June 30, 2023, with non-performing loans of $21.7 million, $1.5 million and $181,000, respectively, on those dates.

The allowance for credit losses on loans was $16.3 million, or 1.10% of total loans, at June 30, 2024, compared to $16.0 million, or 1.05% of total loans, at March 31, 2024 and $15.7 million, or 0.99% of total loans, at June 30, 2023.

The allowance for credit losses on unfunded loan commitments was $1.8 million, or 0.33% of total unfunded loan commitments, at June 30, 2024, compared to $2.0 million, or 0.32% of total unfunded loan commitments, at March 31, 2024 and $1.9 million, or 0.31% of total unfunded loan commitments, at June 30, 2023.

Capital Adequacy:

At June 30, 2024, shareholders’ equity totaled $195.5 million, compared to $200.7 million at March 31, 2024 and $184.2 million one year ago. Additionally, at June 30, 2024, the Company’s total risk-based capital ratio, tier one capital ratio, and leverage ratio were 13.93%, 10.06%, and 9.93%, respectively; all of which were above the regulatory standards of 10.00%, 8.00%, and 5.00%, respectively, for “well-capitalized” institutions.

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 Northern California. The Company’s common stock trades on the Nasdaq Global Select marketplace under the symbol CALB. For more information on California BanCorp, please visit our website at www.californiabankofcommerce.com.

Contacts:

Steven E. Shelton, (510) 457-3751

Chief Executive Officer

seshelton@bankcbc.com

Thomas A. Sa, (510) 457-3775

President, Chief Financial Officer and Chief Operating Officer

tsa@bankcbc.com

Use of Non-GAAP Financial Information:

This press release contains both financial measures based on GAAP and non-GAAP. Non-GAAP financial measures are used where management believes them to be helpful in understanding the Company’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. The non-GAAP financial measures included in this press release include: Total Revenue; Adjusted non-interest expense; Adjusted Efficiency Ratio; Tangible Equity to Tangible Assets Ratio; Quarterly and Year-to-Date Average Tangible Equity to Tangible Assets Ratio; and Tangible Book Value Per Share.

Forward-Looking Statements:

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 future performance or financial results 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 occurrence of any event, change or other circumstances that could give rise to the right of the Company or Southern California Bancorp to terminate their agreement with respect to the pending merger; the outcome of any legal proceedings that may be instituted against the Company or Southern California Bancorp; delays in completing the merger with Southern California Bancorp; the failure to satisfy any of the other conditions to the merger on a timely basis or at all; the ability to complete the merger and integration of the Company and Southern California Bancorp successfully; costs being greater than anticipated; cost savings being less than anticipated; the risk that the merger disrupts the business of the Company, Southern California Bancorp or the combined company; 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; the impacts of the failure of other depository institutions on investor and depositor sentiments and preferences; the Company’s ability to manage its liquidity; risks associated with changes in income tax laws and regulations; and risks associated with seeking new client relationships and maintaining existing client relationships. Readers of this news release are encouraged to review the additional information regarding these and other risks and uncertainties to which our business is subject that are contained in our Annual Report on Form 10-K for the year ended December 31, 2023 which is on file with the Securities and Exchange Commission (the “SEC”).

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.

FINANCIAL TABLES FOLLOW

CALIFORNIA BANCORP AND SUBSIDIARY

SELECTED INTERIM FINANCIAL INFORMATION (UNAUDITED) - PROFITABILITY

(Dollars in Thousands, Except Per Share Data)

							Change									Change
QUARTERLY HIGHLIGHTS:	Q2 2024			Q1 2024			$			%			Q2 2023			$			%
Interest income	$	26,748		$	27,382		$	(634	)		-2	%	$	27,172		$	(424	)		-2	%
Interest expense		9,925			9,667			258			3	%		8,526			1,399			16	%
Net interest income		16,823			17,715			(892	)		-5	%		18,646			(1,823	)		-10	%
Provision for credit losses		13,506			126			13,380			10619	%		444			13,062			2942	%
Net interest income after provision for credit losses		3,317			17,589			(14,272	)		-81	%		18,202			(14,885	)		-82	%
Non-interest income		1,518			1,705			(187	)		-11	%		1,135			383			34	%
Non-interest expense (1)		13,188			13,704			(516	)		-4	%		11,603			1,585			14	%
Income before income taxes		(8,353	)		5,590			(13,943	)		-249	%		7,734			(16,087	)		-208	%
Income tax expense		(2,492	)		1,773			(4,265	)		-241	%		2,294			(4,786	)		-209	%
Net income	$	(5,861	)	$	3,817		$	(9,678	)		-254	%	$	5,440		$	(11,301	)		-208	%
Diluted earnings per share	$	(0.68	)	$	0.45		$	(1.13	)		-251	%	$	0.65		$	(1.33	)		-205	%
Net interest margin		3.71	%		3.89	%		-18 Basis Points						3.93	%		-22 Basis Points
Efficiency ratio (1)		71.90	%		70.57	%		+133 Basis Points						58.66	%		+1324 Basis Points

							Change
YEAR-TO-DATE HIGHLIGHTS:	2024			2023			$			%
Interest income	$	54,130		$	52,711		$	1,419			3	%
Interest expense		19,592			15,308			4,284			28	%
Net interest income		34,538			37,403			(2,865	)		-8	%
Provision for credit losses		13,632			802			12,830			1600	%
Net interest income after provision for credit losses		20,906			36,601			(15,695	)		-43	%
Non-interest income		3,223			2,242			981			44	%
Non-interest expense (1)		26,892			23,446			3,446			15	%
Income before income taxes		(2,763	)		15,397			(18,160	)		-118	%
Income tax expense		(719	)		4,506			(5,225	)		-116	%
Net income	$	(2,044	)	$	10,891		$	(12,935	)		-119	%
Diluted earnings per share	$	(0.24	)	$	1.29		$	(1.53	)		-119	%
Net interest margin		3.80	%		3.98	%		-18 Basis Points
Efficiency ratio (1)		71.22	%		59.14	%		+1208 Basis Points

(1) See pro-forma balances and ratios, excluding the impact of merger related expenses - Interim Consolidated Non-GAAP Data

CALIFORNIA BANCORP AND SUBSIDIARY

SELECTED INTERIM FINANCIAL INFORMATION (UNAUDITED) - FINANCIAL POSITION

(Dollars in Thousands, Except Per Share Data)

							Change									Change
PERIOD-END HIGHLIGHTS:	Q2 2024			Q1 2024			$			%			Q2 2023			$			%
Total assets	$	1,917,389		$	1,922,541		$	(5,152	)		0	%	$	2,005,646		$	(88,257	)		-4	%
Gross loans		1,487,697			1,520,891			(33,194	)		-2	%		1,583,631			(95,934	)		-6	%
Deposits		1,638,689			1,639,516			(827	)		0	%		1,738,296			(99,607	)		-6	%
Tangible equity (1)		188,042			193,263			(5,221	)		-3	%		176,783			11,259			6	%
Tangible book value per share (1)	$	22.20		$	22.91		$	(0.71	)		-3	%	$	21.09		$	1.11			5	%
Tangible equity / tangible assets (1)		9.85	%		10.09	%		-24 Basis Points						8.85	%		+100 Basis Points
Gross loans / total deposits		90.79	%		92.76	%		-197 Basis Points						91.10	%		-31 Basis Points
Noninterest-bearing deposits / total deposits		39.31	%		38.64	%		+67 Basis Points						42.69	%		-338 Basis Points

QUARTERLY AVERAGE							Change									Change
HIGHLIGHTS:	Q2 2024			Q1 2024			$			%			Q2 2023			$			%
Total assets	$	1,909,125		$	1,916,142		$	(7,017	)		0	%	$	1,983,877		$	(74,752	)		-4	%
Total earning assets		1,823,785			1,831,333			(7,548	)		0	%		1,900,918			(77,133	)		-4	%
Gross loans		1,507,625			1,518,722			(11,097	)		-1	%		1,577,529			(69,904	)		-4	%
Deposits		1,622,673			1,629,636			(6,963	)		0	%		1,684,008			(61,335	)		-4	%
Tangible equity (1)		196,841			193,094			3,747			2	%		175,783			21,058			12	%
Tangible equity / tangible assets (1)		10.35	%		10.12	%		+23 Basis Points						8.89	%		+146 Basis Points
Gross loans / total deposits		92.91	%		93.19	%		-28 Basis Points						93.68	%		-77 Basis Points
Noninterest-bearing deposits / total deposits		39.55	%		40.34	%		-79 Basis Points						42.65	%		-310 Basis Points

YEAR-TO-DATE AVERAGE							Change
HIGHLIGHTS:	Q2 2024			Q2 2023			$			%
Total assets	$	1,912,634		$	1,979,107		$	(66,473	)		-3	%
Total earning assets		1,827,558			1,897,448			(69,890	)		-4	%
Gross loans		1,513,173			1,579,917			(66,744	)		-4	%
Deposits		1,626,155			1,691,925			(65,770	)		-4	%
Tangible equity (1)		194,967			172,636			22,331			13	%
Tangible equity / tangible assets (1)		10.23	%		8.76	%		+147 Basis Points
Gross loans / total deposits		93.05	%		93.38	%		-33 Basis Points
Noninterest-bearing deposits / total deposits		39.94	%		42.76	%		-282 Basis Points

(1) See Interim Consolidated Non-GAAP Data

CALIFORNIA BANCORP AND SUBSIDIARY

SELECTED INTERIM FINANCIAL INFORMATION (UNAUDITED) - ASSET QUALITY

(Dollars in Thousands)

ALLOWANCE FOR CREDIT LOSSES (LOANS):	06/30/24			03/31/24			12/31/23		09/30/23			06/30/23
Balance, beginning of period	$	15,981		$	16,028		$	15,921	$	15,722		$	15,382
CECL adjustment		—			—			—		—			—
Provision for credit losses, quarterly		13,668			301			87		121			340
Charge-offs, quarterly		(13,351	)		(439	)		—		(156	)		—
Recoveries, quarterly		50			91			20		234			—
Balance, end of period	$	16,348		$	15,981		$	16,028	$	15,921		$	15,722

NONPERFORMING ASSETS:	06/30/24		03/31/24		12/31/23		09/30/23		06/30/23
Loans accounted for on a non-accrual basis	$	21,463	$	1,212	$	3,781	$	1,236	$	181
Loans with principal or interest contractually past due 90 days or more and still accruing interest		244		240		—		—		—
Nonperforming loans	$	21,707	$	1,452	$	3,781	$	1,236	$	181
Other real estate owned		—		—		—		—		—
Nonperforming assets	$	21,707	$	1,452	$	3,781	$	1,236	$	181
Nonperforming loans by asset type:
Commercial	$	9,624	$	1,159	$	3,728	$	1,183	$	—
Real estate other		11,515		—		—		—		—
Real estate construction and land		—		—		—		—		—
SBA		324		53		53		53		181
Other		244		240		—		—		—
Nonperforming loans	$	21,707	$	1,452	$	3,781	$	1,236	$	181

ASSET QUALITY:	06/30/24			03/31/24			12/31/23			09/30/23			06/30/23
Allowance for credit losses (loans) / gross loans		1.10	%		1.05	%		1.03	%		1.01	%		0.99	%
Allowance for credit losses (loans) / nonperforming loans		75.31	%		1100.62	%		423.91	%		1288.11	%		8686.19	%
Nonperforming assets / total assets		1.13	%		0.08	%		0.19	%		0.06	%		0.01	%
Nonperforming loans / gross loans		1.46	%		0.10	%		0.24	%		0.08	%		0.01	%
Net quarterly charge-offs / gross loans		0.89	%		0.02	%		0.00	%		0.00	%		0.00	%

CALIFORNIA BANCORP AND SUBSIDIARY

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(Dollars in Thousands, Except Per Share Data)

	Three months ended									Six months ended
	06/30/24			03/31/24			06/30/23			06/30/24			06/30/23
INTEREST INCOME
Loans	$	22,962		$	23,574		$	23,476		$	46,536		$	45,948
Federal funds sold		2,542			2,334			2,238			4,876			3,998
Investment securities		1,244			1,474			1,458			2,718			2,765
Total interest income		26,748			27,382			27,172			54,130			52,711
INTEREST EXPENSE
Deposits		9,366			9,096			7,493			18,462			13,515
Other		559			571			1,033			1,130			1,793
Total interest expense		9,925			9,667			8,526			19,592			15,308
Net interest income		16,823			17,715			18,646			34,538			37,403
Provision for credit losses		13,506			126			444			13,632			802
Net interest income after provision for credit losses		3,317			17,589			18,202			20,906			36,601
NON-INTEREST INCOME
Service charges and other fees		1,147			1,379			867			2,526			1,730
Other non-interest income		371			326			268			697			512
Total non-interest income		1,518			1,705			1,135			3,223			2,242
NON-INTEREST EXPENSE (1)
Salaries and benefits		8,925			8,852			7,831			17,777			15,707
Premises and equipment		1,431			1,452			1,168			2,883			2,348
Merger related expenses		647			1,024			—			1,671			—
Other		2,185			2,376			2,604			4,561			5,391
Total non-interest expense		13,188			13,704			11,603			26,892			23,446
Income before income taxes		(8,353	)		5,590			7,734			(2,763	)		15,397
Income taxes		(2,492	)		1,773			2,294			(719	)		4,506
NET INCOME	$	(5,861	)	$	3,817		$	5,440		$	(2,044	)	$	10,891
EARNINGS PER SHARE
Basic earnings per share	$	(0.69	)	$	0.45		$	0.65		$	(0.24	)	$	1.30
Diluted earnings per share	$	(0.68	)	$	0.45		$	0.65		$	(0.24	)	$	1.29
Average common shares outstanding		8,456,488			8,413,735			8,369,907			8,480,654			8,354,564
Average common and equivalent shares outstanding		8,558,432			8,566,712			8,414,213			8,610,179			8,442,607
PERFORMANCE MEASURES
Return on average assets		-1.23	%		0.80	%		1.10	%		-0.21	%		1.11	%
Return on average equity		-11.54	%		7.66	%		11.91	%		-2.03	%		12.19	%
Return on average tangible equity		-11.98	%		7.95	%		12.41	%		-2.11	%		12.72	%
Efficiency ratio (1)		71.90	%		70.57	%		58.66	%		71.22	%		59.14	%

(1) See pro-forma balances and ratios, excluding the impact of merger related expenses - Interim Consolidated Non-GAAP Data

CALIFORNIA BANCORP AND SUBSIDIARY

INTERIM CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in Thousands)

	06/30/24			03/31/24			12/31/23			09/30/23			06/30/23
ASSETS
Cash and due from banks	$	14,036		$	12,071		$	27,520		$	17,128		$	19,763
Federal funds sold		217,713			191,027			184,834			181,854			187,904
Investment securities		125,303			126,918			145,401			149,244			151,129
Loans:
Commercial		612,208			610,459			626,615			633,902			622,270
Real estate other		821,551			834,143			849,306			858,611			856,344
Real estate construction and land		15,467			35,886			44,186			40,003			60,595
SBA		3,678			3,919			4,032			4,415			4,936
Other		34,793			36,484			35,394			36,184			39,486
Loans, gross		1,487,697			1,520,891			1,559,533			1,573,115			1,583,631
Unamortized net deferred loan costs (fees)		1,708			1,223			1,107			1,312			1,637
Allowance for credit losses		(16,348	)		(15,981	)		(16,028	)		(15,921	)		(15,722	)
Loans, net		1,473,057			1,506,133			1,544,612			1,558,506			1,569,546
Premises and equipment, net		1,763			1,987			2,207			2,432			2,625
Bank owned life insurance		26,273			26,084			25,878			25,697			25,519
Goodwill and core deposit intangible		7,415			7,422			7,432			7,442			7,452
Accrued interest receivable and other assets		51,829			50,899			48,021			41,614			41,708
Total assets	$	1,917,389		$	1,922,541		$	1,985,905		$	1,983,917		$	2,005,646
LIABILITIES
Deposits:
Demand noninterest-bearing	$	644,179		$	633,489		$	657,302		$	686,723		$	742,160
Demand interest-bearing		22,550			21,911			26,715			28,533			29,324
Money market and savings		633,880			656,236			631,015			672,119			633,620
Time		338,080			327,880			310,212			319,706			333,192
Total deposits		1,638,689			1,639,516			1,625,244			1,707,081			1,738,296
Junior subordinated debt securities		54,360			54,326			54,291			54,256			54,221
Other borrowings		—			—			75,000			—			—
Accrued interest payable and other liabilities		28,883			28,014			34,909			32,465			28,894
Total liabilities		1,721,932			1,721,856			1,789,444			1,793,802			1,821,411
SHAREHOLDERS’ EQUITY
Common stock		114,095			113,566			113,227			112,656			112,167
Retained earnings		82,121			87,982			84,165			78,824			73,423
Accumulated other comprehensive loss		(759	)		(863	)		(931	)		(1,365	)		(1,355	)
Total shareholders’ equity		195,457			200,685			196,461			190,115			184,235
Total liabilities and shareholders’ equity	$	1,917,389		$	1,922,541		$	1,985,905		$	1,983,917		$	2,005,646
CAPITAL ADEQUACY
Tier I leverage ratio		9.93	%		10.17	%		9.61	%		9.27	%		9.01	%
Tier I risk-based capital ratio		10.06	%		10.15	%		9.53	%		9.34	%		9.07	%
Total risk-based capital ratio		13.93	%		13.93	%		13.16	%		13.00	%		12.73	%
Total equity/ total assets		10.19	%		10.44	%		9.89	%		9.58	%		9.19	%
Book value per share	$	23.07		$	23.79		$	23.38		$	22.64		$	21.98
Common shares outstanding		8,472,038			8,436,732			8,402,482			8,395,483			8,383,772

CALIFORNIA BANCORP AND SUBSIDIARY

INTERIM CONSOLIDATED AVERAGE BALANCE SHEET AND YIELD DATA (UNAUDITED)

(Dollars in Thousands)

	Three months ended June 30,							Three months ended March 31,
	2024							2024
			Yields			Interest				Yields			Interest
	Average		or			Income/		Average		or			Income/
	Balance		Rates			Expense		Balance		Rates			Expense
ASSETS
Interest earning assets:
Loans (1)	$	1,507,625		6.13	%	$	22,962	$	1,518,722		6.24	%	$	23,574
Federal funds sold		190,007		5.38	%		2,542		174,551		5.38	%		2,334
Investment securities		126,153		3.97	%		1,244		138,060		4.29	%		1,474
Total interest earning assets		1,823,785		5.90	%		26,748		1,831,333		6.01	%		27,382
Noninterest-earning assets:
Cash and due from banks		17,526							18,858
All other assets (2)		67,814							65,951
TOTAL	$	1,909,125						$	1,916,142
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing liabilities:
Deposits:
Demand	$	23,735		0.22	%		13	$	24,736		0.20	%		12
Money market and savings		637,301		3.24	%		5,128		635,696		3.12	%		4,928
Time		319,899		5.31	%		4,225		311,884		5.36	%		4,156
Other		54,339		4.14	%		559		55,130		4.17	%		571
Total interest-bearing liabilities		1,035,274		3.86	%		9,925		1,027,446		3.78	%		9,667
Noninterest-bearing liabilities:
Demand deposits		641,738							657,320
Accrued expenses and other liabilities		27,855							30,856
Shareholders’ equity		204,258							200,520
TOTAL	$	1,909,125						$	1,916,142
Net interest income and margin (3)				3.71	%	$	16,823				3.89	%	$	17,715

(1) Nonperforming loans are included in average loan balances. No adjustment has been made for these loans in the calculation of yields. Interest income on loans includes amortization of net deferred loan costs of $197,000 and $34,000, respectively.

(2) Other noninterest-earning assets includes the allowance for credit losses of $15.2 million and $16.1 million, respectively.

(3) Net interest margin is net interest income divided by total interest-earning assets.

CALIFORNIA BANCORP AND SUBSIDIARY

INTERIM CONSOLIDATED AVERAGE BALANCE SHEET AND YIELD DATA (UNAUDITED)

(Dollars in Thousands)

	Three months ended June 30,
	2024							2023
			Yields			Interest				Yields			Interest
	Average		or			Income/		Average		or			Income/
	Balance		Rates			Expense		Balance		Rates			Expense
ASSETS
Interest earning assets:
Loans (1)	$	1,507,625		6.13	%	$	22,962	$	1,577,529		5.97	%	$	23,476
Federal funds sold		190,007		5.38	%		2,542		170,608		5.26	%		2,238
Investment securities		126,153		3.97	%		1,244		152,781		3.83	%		1,458
Total interest earning assets		1,823,785		5.90	%		26,748		1,900,918		5.73	%		27,172
Noninterest-earning assets:
Cash and due from banks		17,526							19,207
All other assets (2)		67,814							63,752
TOTAL	$	1,909,125						$	1,983,877
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing liabilities:
Deposits:
Demand	$	23,735		0.22	%		13	$	30,346		0.16	%		12
Money market and savings		637,301		3.24	%		5,128		609,200		2.50	%		3,793
Time		319,899		5.31	%		4,225		326,291		4.53	%		3,688
Other		54,339		4.14	%		559		90,188		4.59	%		1,033
Total interest-bearing liabilities		1,035,274		3.86	%		9,925		1,056,025		3.24	%		8,526
Noninterest-bearing liabilities:
Demand deposits		641,738							718,171
Accrued expenses and other liabilities		27,855							26,441
Shareholders’ equity		204,258							183,240
TOTAL	$	1,909,125						$	1,983,877
Net interest income and margin (3)				3.71	%	$	16,823				3.93	%	$	18,646

(1) Nonperforming loans are included in average loan balances. No adjustment has been made for these loans in the calculation of yields. Interest income on loans includes amortization of net deferred loan costs of $197,000 and $175,000, respectively.

(2) Other noninterest-earning assets includes the allowance for credit losses of $15.2 million and $15.4 million, respectively.

(3) Net interest margin is net interest income divided by total interest-earning assets.

CALIFORNIA BANCORP AND SUBSIDIARY

INTERIM CONSOLIDATED AVERAGE BALANCE SHEET AND YIELD DATA (UNAUDITED)

(Dollars in Thousands)

	Six months ended June 30,
	2024							2023
			Yields			Interest				Yields			Interest
	Average		or			Income/		Average		or			Income/
	Balance		Rates			Expense		Balance		Rates			Expense
ASSETS
Interest earning assets:
Loans (1)	$	1,513,173		6.18	%	$	46,536	$	1,579,917		5.86	%	$	45,948
Federal funds sold		182,279		5.38	%		4,876		163,812		4.92	%		3,998
Investment securities		132,106		4.14	%		2,718		153,719		3.63	%		2,765
Total interest earning assets		1,827,558		5.96	%		54,130		1,897,448		5.60	%		52,711
Noninterest-earning assets:
Cash and due from banks		18,192							18,656
All other assets (2)		66,884							63,003
TOTAL	$	1,912,634						$	1,979,107
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing liabilities:
Deposits:
Demand	$	24,236		0.21	%		25	$	32,179		0.12	%		19
Money market and savings		636,499		3.18	%		10,056		617,885		2.25	%		6,897
Time		315,891		5.34	%		8,381		318,313		4.18	%		6,599
Other		54,734		4.15	%		1,130		80,701		4.48	%		1,793
Total interest-bearing liabilities		1,031,360		3.82	%		19,592		1,049,078		2.94	%		15,308
Noninterest-bearing liabilities:
Demand deposits		649,529							723,548
Accrued expenses and other liabilities		29,356							26,383
Shareholders’ equity		202,389							180,098
TOTAL	$	1,912,634						$	1,979,107
Net interest income and margin (3)				3.80	%	$	34,538				3.98	%	$	37,403

(1) Nonperforming loans are included in average loan balances. No adjustment has been made for these loans in the calculation of yields. Interest income on loans includes amortization of net deferred loan costs of $231,000 and $401,000, respectively.

(2) Other noninterest-earning assets includes the allowance for loan losses of $15.7 million and $16.2 million, respectively.

(3) Net interest margin is net interest income divided by total interest-earning assets.

CALIFORNIA BANCORP AND SUBSIDIARY

INTERIM CONSOLIDATED NON GAAP DATA (UNAUDITED)

(Dollars in Thousands, Except Per Share Data)

TOTAL REVENUE:	Three months ended						Six months ended
	06/30/24		03/31/24		06/30/23		06/30/24		06/30/23
Net interest income	$	16,823	$	17,715	$	18,646	$	34,538	$	37,403
Non-interest income		1,518		1,705		1,135		3,223		2,242
Total revenue	$	18,341	$	19,420	$	19,781	$	37,761	$	39,645

ADJUSTED NON-INTEREST EXPENSE	Three months ended									Six months ended
AND EFFICIENCY RATIO:	06/30/24			03/31/24			06/30/23			06/30/24			06/30/23
Non-interest expense	$	13,188		$	13,704		$	11,603		$	26,892		$	23,446
Less: Merger related expenses		(647	)		(1,024	)		—			(1,671	)		—
Total non-interest expense, before merger related expenses	$	12,541		$	12,680		$	11,603		$	25,221		$	23,446
Total revenue	$	18,341		$	19,420		$	19,781		$	37,761		$	39,645
Adjusted efficiency ratio		68.38	%		65.29	%		58.66	%		66.79	%		59.14	%

AVERAGE TANGIBLE EQUITY /	Three months ended									Six months ended
AVERAGE TANGIBLE ASSETS:	06/30/24			03/31/24			06/30/23			06/30/24			06/30/23
Total assets	$	1,909,125		$	1,916,142		$	1,983,877		$	1,912,634		$	1,979,107
Goodwill and core deposit intangibles		7,417			7,426			7,457			7,422			7,462
Tangible assets	$	1,901,708		$	1,908,716		$	1,976,420		$	1,905,212		$	1,971,645
Total shareholders’ equity	$	204,258		$	200,520		$	183,240		$	202,389		$	180,098
Goodwill and core deposit intangibles		7,417			7,426			7,457			7,422			7,462
Tangible equity	$	196,841		$	193,094		$	175,783		$	194,967		$	172,636
Tangible equity / tangible assets		10.35	%		10.12	%		8.89	%		10.23	%		8.76	%

CALIFORNIA BANCORP AND SUBSIDIARY

INTERIM CONSOLIDATED NON-GAAP DATA (UNAUDITED)

(Dollars in Thousands)

TANGIBLE EQUITY / TANGIBLE ASSETS:	06/30/24			03/31/24			12/31/23			09/30/23			06/30/23
Total assets	$	1,917,389		$	1,922,541		$	1,985,905		$	1,983,917		$	2,005,646
Goodwill and core deposit intangibles		7,415			7,422			7,432			7,442			7,452
Tangible assets	$	1,909,974		$	1,915,119		$	1,978,473		$	1,976,475		$	1,998,194
Total shareholders’ equity	$	195,457		$	200,685		$	196,461		$	190,115		$	184,235
Goodwill and core deposit intangibles		7,415			7,422			7,432			7,442			7,452
Tangible equity	$	188,042		$	193,263		$	189,029		$	182,673		$	176,783
Tangible equity / tangible assets		9.85	%		10.09	%		9.55	%		9.24	%		8.85	%

BOOK VALUE PER SHARE:	06/30/24		03/31/24		12/31/23		09/30/23		06/30/23
Total shareholders’ equity	$	195,457	$	200,685	$	196,461	$	190,115	$	184,235
Common shares outstanding		8,472,038		8,436,732		8,402,482		8,395,483		8,383,772
Total shareholders’ equity / common shares outstanding	$	23.07	$	23.79	$	23.38	$	22.64	$	21.98

TANGIBLE BOOK VALUE PER SHARE:	06/30/24		03/31/24		12/31/23		09/30/23		06/30/23
Tangible equity	$	188,042	$	193,263	$	189,029	$	182,673	$	176,783
Common shares outstanding		8,472,038		8,436,732		8,402,482		8,395,483		8,383,772
Tangible equity / common shares outstanding	$	22.20	$	22.91	$	22.50	$	21.76	$	21.09