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Friday, January 28, 2022 12:26:00 PM
$BCAL Southern California Bancorp Reports Continued Strong Loan Growth for the Fourth Quarter and Full Year of 2021
Press Release | 01/26/2022
Southern California Bancorp (“us,” “we,” “our,” or the “Company”) (OTC Pink: BCAL), the holding company for Bank of Southern California, N.A. (the “Bank”) today reported consolidated financial results for the fourth quarter and full year of 2021.
The comparability of consolidated financial information for the fourth quarter and for the full year of 2021 to the same periods of 2020 is affected by the acquisition of Bank of Santa Clarita (“BSCA”) which was completed effective October 1, 2021. Accordingly, BSCA’s operating results for the fourth quarter and for the full year 2021 are included in the Company’s consolidated financial statements for the periods beginning after October 1, 2021.
Fourth Quarter 2021 Highlights
Closed the BSCA acquisition on October 1, 2021: BSCA’s total assets and deposits were $425.6 million and $342.3 million, respectively, at the closing date
Quarterly net income of $3.4 million, compared to $3.5 million in the prior quarter
Pre-tax, pre-provision income increased to $6.0 million, up $960,000, or 19.1%, from the prior quarter
Total Non-Paycheck Protection Program (“PPP”) loans (“non-PPP”) increased to $1.45 billion, up $394.8 million, or 37.6%, from September 30, 2021; excluding loans acquired from BSCA, net organic loans were up $154.3 million, or 14.7%, from September 30, 2021
PPP loan portfolio balance of $58.7 million, down from $181.4 million at September 30, 2021
Total assets of $2.26 billion, up $475.7 million, or 26.7%, from the prior quarter
Total deposits of $1.97 billion, up $406.7 million, or 26.0%, from the prior quarter
Noninterest-bearing demand deposits were 50.0% of total deposits, up from 48.6% at September 30, 2021; cost of deposits was 0.09%, down from 0.11% in the prior quarter
Net interest margin of 3.74% in the fourth quarter compared to 3.67% in the prior quarter; average yield on non-PPP loans of 4.58% compared with 4.60% in the prior quarter
Nonperforming assets to total assets ratio remain at 0.04%, the same as the two prior quarters
Continued status as “well-capitalized,” the highest regulatory capital category
Full Year 2021 Highlights
Annual net income increased to a record $10.7 million, up $6.0 million, or 126.8% from $4.7 million in the prior year
Pre-tax, pre-provision income increased to $15.4 million, up $4.1 million, or 35.9% from $11.3 million in the prior year
Total non-PPP loans increased to $1.45 billion, up $618.7 million, or 74.8% from December 31, 2020; excluding loans acquired from BSCA, net organic loans grew $378.2 million, or 45.7%, from December 31, 2020.
PPP loan portfolio balance of $58.7 million, down from $406.5 million at December 31, 2020
Total assets of $2.26 billion, up $680.8 million, or 43.1% from December 31, 2020
Total deposits of $1.97 billion, up $778.4 million, or 65.1% from December 31, 2020
Noninterest-bearing demand deposits were 50.0% of total deposits, up from 44.7% at December 31, 2020; cost of deposits for 2021 was 0.13%, down from 0.39% in 2020
Net interest margin of 3.64% for 2021, compared with 3.66% in the prior year; average yield on non-PPP loans of 4.71% in 2021, compared with 4.90% in the prior year
Completed acquisition of BSCA, effective October 1, 2021
Completed sale of three branches to align footprint to support a commercial banking strategy, effective September 24, 2021
“I am very pleased to report organic non-PPP loan growth of $378.2 million or 46% for the full year of 2021, net of approximately $222.1 million in payoffs, and organic non-PPP loan growth of $154.3 million or 15% in the fourth quarter, net of approximately $67.1 million in payoffs,” said David Rainer, Chairman, CEO and President of Southern California Bancorp and Bank of Southern California, N.A. “We credit this tremendous growth to the successful execution of our relationship-based commercial banking model, and the Bank’s expansion into Orange, Los Angeles and Ventura counties in 2021, combined with positive growth in San Diego. The payoffs and paydowns we received in both periods were associated with the Company’s former heavily overweighted transaction-based banking model. Along with our strong loan growth, our ratio of nonperforming assets to total assets has held steady at 0.04% over the last three quarters, which resulted directly from our disciplined loan underwriting standards.
“Our strong organic loan growth in 2021 drove a significant increase in net interest income, with 2021 net interest income growing to $64.4 million, an $18.5 million, or 40% increase over the prior year, and fourth quarter net interest income growing to $20.3 million, a $4.3 million or 27% increase over the prior quarter. The increase in net interest income resulted in record annual net income of $10.7 million for 2021 and $3.4 million for the fourth quarter of 2021. Given the strong loan growth we experienced last year, we recorded a $1.2 million provision for loan loss in the fourth quarter; our pre-tax, pre-provision income was $15.4 million and $6.0 million for the full year and fourth quarter of 2021, respectively.
“Our total assets grew to $2.3 billion in 2021, an increase of $680.8 million, or 43%, and included $426 million from the BSCA acquisition at the closing date. Total deposits grew $778 million, or 65%, and included $342 million from the BSCA acquisition, bringing average deposits for all branches to $152 million per branch. The growth in total deposits was especially strong considering we sold three branches in the third quarter of 2021 with a combined $82 million in deposits. We are deploying this cash from deposit growth to fund new loans and, over time, make additions to our investment portfolio.
“We are currently in the process of integrating the Bank of Santa Clarita and working to ensure a smooth transition for both customers and employees. We anticipate completing the BSCA system conversion in the second quarter of 2022. After building the foundation and expanding the footprint of our relationship-based commercial banking model in 2021, and with the recent addition of our Private Banking and SBA lending divisions, we are looking forward to a very productive year in 2022, as we continue providing highly personalized service to all our Southern California customers.”
Fourth Quarter and Full Year Operating Results
Net Income
Net income for the fourth quarter of 2021 was $3.4 million, or $0.19 per diluted share, compared to net income of $3.5 million, or $0.25 per diluted share in the third quarter of 2021. Pre-tax, pre-provision income for the fourth quarter of 2021 was $6.0 million, an increase of $960,000, or 19.1% compared to pre-tax, pre-provision income of $5.0 million in the prior quarter. The decrease in net income in the fourth quarter of 2021 compared with the third quarter of 2021 was due to a $4.3 million increase in net interest income, offset by a $1.2 million increase in the provision for loan losses, a $1.2 million decrease in noninterest income, and a $2.2 million increase in noninterest expense.
Net income for the full year of 2021 was $10.7 million, or $0.72 per diluted share, compared to net income of $4.7 million or $0.49 per diluted share for 2020, an increase of 126.8%. Pre-tax, pre-provision income for 2021 was $15.4 million, an increase of $4.1 million, or 35.9% compared to pre-tax, pre-provision income of $11.3 million for the full year of 2020. The increase in net income in 2021 compared with 2020 was primarily due to an $18.5 million increase in net interest income, a $2.2 million increase in noninterest income, and a $3.4 million decrease in the provision for loan losses, partially offset by a $16.6 million increase in noninterest expense.
Net Interest Income and Net Interest Margin
Net interest income for the fourth quarter of 2021 was $20.3 million, an increase of $4.3 million, or 26.9% from $16.0 million in the prior quarter. The increase was due to strong organic loan growth, as well as net interest income associated with the BSCA acquisition, which became effective October 1, 2021. Total average loans for the quarter ended December 31, 2021, increased to $1.5 billion as compared to $1.2 billion in the prior quarter. Total average loans related to the BSCA acquisition was $250.1 million. PPP net loan interest income in the fourth quarter of 2021 decreased to $4.8 million, compared to $5.2 million in the prior quarter. Interest expense in the fourth quarter of 2021 was $781,000 compared to $752,000 in the prior quarter.
Net interest margin for the fourth quarter of 2021 was 3.74%, compared with 3.67% in the prior quarter. The increase was primarily related to loan interest income from payoffs and an improved funding mix in the fourth quarter of 2021. The yield on average loans in the fourth quarter of 2021, excluding PPP loans, was 4.58%, a decrease of two basis points from 4.60% in the prior quarter. Average PPP loan yields in the fourth quarter of 2021 increased to 15.79%, compared to 7.88% in the prior quarter. The increase was due to accelerated unearned fee income related to the SBA’s forgiveness of Round 2 PPP loans, which are typically amortized on a straight-line basis over five years. The yield on total earning assets in the fourth quarter of 2021 was 3.89%, compared with 3.84% in the prior quarter.
Cost of funds for the fourth quarter of 2021 was 0.15%, down from 0.18% in the prior quarter. The decrease was primarily due to an increase in average noninterest-bearing demand deposits. Average noninterest-bearing demand deposits increased $229.2 million to $1.01 billion and represented 50.4% of total average deposits for the fourth quarter of 2021, compared to $778.0 million, or 48.4% of total average deposits for the prior quarter. The total cost of deposits in the fourth quarter of 2021 was 0.09%, down from 0.11% in the prior quarter.
Net interest income in 2021 totaled $64.4 million, an increase of $18.5 million, or 40.2% from the previous year. The increase in net interest income was primarily due to strong organic loan growth, the acceleration of deferred fee income from PPP loan forgiveness, net interest income associated with the BSCA acquisition effective October 1, 2021, and a lower cost of funds. Average loans increased by $246.0 million due primarily to average organic loan growth of $219.2 million, and the BSCA acquired loan portfolio. Total average loans for the year ended December 31, 2021, increased to $1.4 billion, compared with $1.1 billion at December 31, 2020. Total average loans for 2021 related to the BSCA acquisition was $63.0 million. Interest income from PPP loans increased to $17.7 million for the year ended December 31, 2021, compared with $12.0 million in the prior year. Total interest expense for the full year of 2021 was $3.4 million, a decrease of $2.5 million from the full year of 2020. The decrease in interest expense for the full year of 2021 was primarily due to run-off of higher-cost time deposits, the payoff of FHLB advances and PPP Liquidity Facility (“PPPLF”) borrowings, and a decrease in total deposit costs. Interest-bearing deposit expense decreased $1.8 million, coupled with a $682,000 decrease in total borrowings expense.
Net interest margin for the full year of 2021 was 3.64%, compared with 3.66% in the prior year. The decrease was primarily related to the yield on non-PPP loans declining to 4.71% in 2021, compared with 4.90% in the prior year. This was partially offset by an increase in the yield on PPP loans to 5.43% in 2021, compared with 3.70% in the prior year, which increase was due to the accelerated deferred fee income from PPP loan forgiveness in 2021. The yield on total interest-earning assets declined to 3.83% in 2021, compared with 4.13% in 2020. The decrease in the other interest earning assets yield was driven by lower market interest rates.
The cost of funds for the full year of 2021 decreased to 0.20% from 0.50% for the full year of 2020. The decrease was primarily due to lower market interest rates, run-off of higher-cost time deposits, payoff of FHLB borrowings, and an increase in average noninterest-bearing demand deposits. Average noninterest-bearing demand deposits increased $362.4 million to $783.8 million and represented 48.6% of total average deposits for the full year of 2021, compared to $421.4 million, or 42.3% of total average deposits for the prior year. The total cost of deposits for the full year of 2021 was 0.13%, down from 0.39% in the prior year.
Average total borrowings decreased $146.6 million to $42.7 million for the full year of 2021. The average cost of borrowings was 3.07%, up from 1.05% in the prior year.
Provision for Loan Losses
The Company recorded a loan loss provision of $1.2 million in the fourth quarter of 2021 and for the full year of 2021, primarily related to strong organic loan growth. In 2020, the Company recorded a loan loss provision of $4.6 million. The Company’s management continues to monitor macroeconomic variables related to COVID-19 and reasonably believes it is appropriately provisioned for the current environment. Management will continue to monitor and manage the loan portfolio to minimize potential future losses.
Noninterest Income
Total noninterest income in the fourth quarter of 2021 was $526,000, a decrease of $1.2 million compared with noninterest income of $1.7 million in the third quarter of 2021. The decrease was due primarily to the recognition of a gain on sale of $726,000 for the sale of three nonstrategic branches in the third quarter of 2021, for which there was no corresponding transaction in the fourth quarter. In the fourth quarter of 2021, income from service charges, fees and other income increased $94,000, and income from bank-owned life insurance increased $54,000 over the prior quarter.
Total noninterest income for the full year of 2021 was $4.5 million, an increase of $2.2 million compared with $2.3 million for the full year of 2020. The increase in total noninterest income in 2021 was primarily due to a $577,000 increase in service charges, fees and other income; a $425,000 increase in income from bank owned life insurance; a $920,000 gain on sale of an acquired loan; and a $726,000 gain on sale from the sale of three nonstrategic branches.
Noninterest Expense
Noninterest expense for the fourth quarter of 2021 increased $2.2 million to $14.9 million, compared with $12.7 million in the prior quarter. The increase was largely due to an increase of $1.4 million in salaries and benefits, and a $356,000 increase in strategic and other non-operating expenses primarily related to termination charges for core conversion.
Noninterest expense for the full year of 2021 was $53.5 million, an increase of $16.6 million compared with $36.9 million for the full year of 2020. The increase was largely due to a $13.2 million increase in salaries and employee benefits related to the Company’s strategic expansion into Orange, Los Angeles and Ventura counties, which also included approximately $3.1 million in compensation expense related to the settlement of a preexisting employment contract and approximately $500,000 additional salary and benefit expense related to the additional BSCA employees. Occupancy and equipment expense increased by $1.1 million in 2021, primarily related to the Company’s strategic expansion. Other expense increased $3.9 million in 2021, primarily related to increased expenses for data processing, legal, and the provision for unfunded loan commitments.
Income Tax
In the fourth quarter of 2021, the Company’s income tax expense was $1.4 million, compared with $1.5 million in the third quarter of 2021. The effective rate was 29.6% for the fourth quarter of 2021 and 30.4% for the third quarter of 2021. For the full year of 2021 the Company’s income tax expense was $3.5 million, compared with $2.0 million for the full year of 2020. The effective rate was 24.5% for 2021 and 30.2% for 2020. The decrease for the full year of 2021 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 December 31, 2021, were $2.26 billion, an increase of $680.8 million or 43.1% from December 31, 2020, and an increase of $475.7 million, or 26.7% from September 30, 2021. The increase in total assets from the prior year was primarily related to a $778.4 million increase in deposits. The increase in total assets from the prior quarter included the acquisition of BSCA and its $425.6 million in assets, including $342.3 million in deposits at the closing date.
Loans
Total loans were $1.50 billion at December 31, 2021, including $244.5 million in loans acquired in the BSCA acquisition, compared to $1.23 billion at September 30, 2021, and December 31, 2020. In 2021, the Company’s non-PPP loan portfolio had net organic growth of $378.2 million, or 45.7%, after payoffs of approximately $221.1 million. In the fourth quarter of 2021, organic non-PPP loan growth was $154.3 million or 14.7%, after payoffs of approximately $67.1 million, with an outstanding organic non-PPP loan balance of $1.45 billion at December 31, 2021.
During the fourth quarter of 2021, total commercial and industrial loans, excluding PPP loans, increased by $58.0 million, of which $13.5 million was related to the BSCA acquisition. PPP loans decreased by $122.7 million during the fourth quarter, with an outstanding balance of $58.7 million at December 31, 2021. Loans secured by real estate increased by $296.6 million, of which $223.6 million was related to the BSCA acquisition. Construction and land development loans increased by $43.2 million, of which $3.0 million was related to the BSCA acquisition.
Deposits
Total deposits at December 31, 2021, were $1.97 billion, an increase of $406.7 million from the end of the prior quarter, and $778.4 million from December 31, 2020. The increase reflected organic growth, as well as $319 million in deposits related to the BSCA acquisition in the fourth quarter of 2021. Noninterest-bearing demand deposits at December 31, 2021 were $986.9 million, or 50.0% of total deposits, compared to $760.5 million, or 48.6% of total deposits, at September 30, 2021 and $533.9 million, or 44.7% of total deposits, at December 31, 2020.
Asset Quality
Total non-performing assets totaled $809,000 or 0.04% of total assets at December 31, 2021, compared with $666,000 or 0.04% at September 30, 2021, and $896,000 or 0.06% at December 31, 2020. The increase in nonperforming loans in the fourth quarter of 2021 was primarily due to two loans associated with the acquisition of BSCA on October 1, 2021, offset by the payoff of an impaired loan during the fourth quarter.
During the fourth quarter of 2021, the Company recorded net recoveries of $92,000, compared to net recoveries of $75,000 in the third quarter of 2021. For the full year of 2021, the Company recorded net recoveries of $202,000 compared to net recoveries of $340,000 for the prior year.
Loan delinquencies (30-89 days past due) totaled $1.0 million at December 31, 2021, compared to $2.3 million at December 31, 2020. No loans were 30-89 days past due at September 30, 2021.
The allowance for loan losses ("ALLL") was $11.7 million at December 31, 2021, compared to $10.4 million at September 30, 2021 and $10.3 million at December 31, 2020. The ALLL to total loans was 0.77%, 0.84% and 0.83% at December 31, 2021, September 30, 2021 and December 31, 2020. The ALLL to total loans, excluding PPP loans was 0.81%, 0.99% and 1.24% at December 31, 2021, September 30, 2021 and December 31, 2020. The net carrying value of acquired loans totaled $383.2 million and included a remaining net discount of $2.7 million at December 31, 2021. The discount is available to absorb losses on the acquired loans and represented 0.70% of the net carrying value of acquired loans and 0.18% of total gross loans held for investment.
Liquidity and Capital
With 65.1% growth in total deposits for 2021, and a strong cash balance from the quick pace of forgiveness of PPP loans, the Bank has ample liquidity resources to meet its customers’ needs.
The significant production in PPP loans in 2020 and 2021 was funded through a combination of increased DDA accounts, generally associated directly with the PPP Loans, borrowings under PPPLF, and other sources. At December 31, 2021, the Bank’s PPP loan portfolio was entirely funded by Bank deposits.
PPP loans are considered zero risk-weighted assets and, as such, have helped maintain the Bank’s preliminary leverage capital ratio and total risk-based capital ratio at 9.95% and 15.03%, respectively, at December 31, 2021.
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 San Diego, Orange, Los Angeles, and Ventura counties, as well as the Inland Empire. The Bank's solution-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.
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, or other measures of economic performance. As well, forward-looking statements may relate to future outlook and anticipated events, such as Southern California Bancorp's plans and protocols with regard to managing potential impacts related to the ongoing COVID-19 pandemic. 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
Quarterly and YTD Financial Highlights
(Unaudited)
At or for the Three Months Ended
At or for the
Twelve Months Ended
($ in thousands except share and per share data)
Dec 31, 2021
Sept 30, 2021
Dec 31, 2020
2021
2020
EARNINGS
Net interest income
$
20,333
16,027
13,144
64,411
45,945
Provision for loan losses
$
1,200
0
0
1,200
4,552
Noninterest income
$
526
1,686
436
4,514
2,297
Noninterest expense
$
14,866
12,679
16,433
53,539
36,921
Income tax expense (benefit)
$
1,418
1,532
(856
)
3,477
2,046
Net income (loss)
$
3,375
3,502
(1,997
)
10,709
4,722
Pre-tax pre-provision income
$
5,994
5,034
(2,853
)
15,387
11,320
Diluted earnings (loss) per share
$
0.19
0.25
(0.21
)
0.72
0.49
Ending shares outstanding
17,707,737
13,509,081
13,267,380
17,707,737
13,267,380
PERFORMANCE RATIOS
Return on average assets
0.58
%
0.76
%
-0.50
%
0.57
%
0.36
%
Return on average common equity
5.47
%
7.92
%
-6.06
%
5.61
%
3.75
%
Yield on loans
5.49
%
5.29
%
4.36
%
4.88
%
4.55
%
Yield on earning assets
3.89
%
3.84
%
3.83
%
3.83
%
4.13
%
Cost of deposits
0.09
%
0.11
%
0.25
%
0.13
%
0.39
%
Cost of funding
0.15
%
0.18
%
0.38
%
0.20
%
0.50
%
Net interest margin
3.74
%
3.67
%
3.47
%
3.64
%
3.66
%
Efficiency ratio
71.3
%
71.6
%
121.0
%
77.7
%
76.5
%
CAPITAL
Tangible equity to tangible assets
9.35
%
8.87
%
9.46
%
9.35
%
9.46
%
Book value (BV) per common share
$
13.92
13.15
12.73
13.92
12.73
Tangible BV per common share
$
11.73
11.57
11.10
11.73
11.10
ASSET QUALITY
Net loan (recoveries) charge-offs
$
(92
)
(75
)
41
(202
)
(340
)
Allowance for loan losses (ALLL)
$
11,657
10,365
10,255
11,657
10,255
ALLL to total loans
0.77
%
0.84
%
0.83
%
0.77
%
0.83
%
ALLL to total loans (excl PPP)
0.81
%
0.99
%
1.24
%
0.81
%
1.24
%
Nonperforming loans
$
809
666
896
809
896
Other real estate owned
$
-
-
-
-
-
Nonperforming assets to total assets
0.04
%
0.04
%
0.06
%
0.04
%
0.06
%
END OF PERIOD BALANCES
Total loans
$
1,504,748
1,232,642
1,233,881
1,504,748
1,233,881
Total assets
$
2,259,865
1,784,186
1,579,048
2,259,865
1,579,048
Deposits
$
1,973,097
1,566,360
1,194,739
1,973,097
1,194,739
Loans to deposits
76.3
%
78.7
%
103.3
%
76.3
%
103.3
%
Shareholders' equity
$
246,528
177,636
168,885
246,528
168,885
Southern California Bancorp and Subsidiary
Balance Sheets
(Unaudited)
Dec 31, 2021
Sept 30, 2021
Dec 31, 2020
ASSETS
Cash and due from banks
$
81,795,089
$
12,166,356
$
11,950,639
Fed funds & int-bearing balances
498,211,021
435,475,700
238,866,116
Total cash and cash equivalents
580,006,110
447,642,056
250,816,755
Debt securities (AFS)
55,566,560
24,905,267
24,702,467
FRB, FHLB and other equity stock
12,842,516
11,270,350
8,872,900
Construction & land development
77,629,461
34,438,305
31,375,236
1-4 Family Residential
133,993,768
108,632,444
103,367,391
Multifamily
175,751,365
142,220,706
111,815,776
Other commercial real estate
766,823,986
529,062,592
404,856,966
Commercial & industrial
349,021,603
413,758,869
577,608,374
Other consumer
1,528,236
4,528,805
4,857,563
Total loans
1,504,748,419
1,232,641,721
1,233,881,306
Allowance for loan losses
(11,657,121
)
(10,364,693
)
(10,255,005
)
Total loans and leases, net
1,493,091,298
1,222,277,028
1,223,626,301
Premises, equipment, and ROU, net
27,707,334
15,237,117
15,051,487
Other real estate owned
-
-
-
Goodwill and core deposit intangible
38,806,311
21,334,833
21,599,001
Bank owned life insurance
37,848,951
27,973,099
17,990,765
Accrued interest and other assets
13,995,682
13,546,434
16,388,640
Total Assets
$
2,259,864,762
$
1,784,186,184
$
1,579,048,316
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand
$
986,934,581
$
760,492,115
$
533,923,009
Interest bearing checking
193,524,630
136,851,252
83,566,875
Money market and savings
690,348,061
593,255,255
458,529,872
Time deposits
102,290,095
75,761,818
118,719,534
Total deposits
1,973,097,367
1,566,360,440
1,194,739,290
Other borrowings
20,408,791
20,377,355
199,648,070
Accrued interest and other liabilities
19,831,038
19,812,618
15,775,916
Total liabilities
2,013,337,196
1,606,550,413
1,410,163,276
Shareholders' Equity:
Common stock and APIC
214,162,682
148,384,701
146,895,943
Retained earnings
32,403,019
29,027,837
21,693,933
Accum. other comprehensive (loss) income
(38,135
)
223,233
295,164
Total shareholders' equity
246,527,566
177,635,771
168,885,040
Total Liabilities and Shareholders' Equity
$
2,259,864,762
$
1,784,186,184
$
1,579,048,316
Southern California Bancorp and Subsidiary
Income Statements - Quarterly
(Unaudited)
Three Months Ended
Dec 31, 2021
Sept 30, 2021
Dec 31, 2020
INTEREST INCOME
Loans, including fees
$20,568,279
$16,373,790
$14,255,623
Debt securities and equity stock
329,327
245,527
222,737
Fed funds & int-bearing balances
216,522
159,972
41,094
Total interest income
21,114,128
16,779,289
14,519,454
INTEREST EXPENSE
Deposits
452,995
451,181
726,717
Other borrowings
327,791
300,705
648,616
Total interest expense
780,786
751,886
1,375,333
Net interest income
20,333,342
16,027,403
13,144,121
Provision for loan losses
1,200,000
-
-
Net interest income after provision
19,133,342
16,027,403
13,144,121
NONINTEREST INCOME
Service charges, fees and other income
597,597
503,839
421,803
Income on bank owned life insurance
219,255
164,979
107,310
Gains on loan sales
-
-
-
OREO, investment, other (losses) gains
(290,912
)
1,017,273
(92,856
)
Total noninterest income
525,940
1,686,091
436,257
NONINTEREST EXPENSE
Salaries and benefits
9,157,954
7,751,397
11,120,598
Occupancy and equipment
1,348,191
1,323,747
1,048,852
Strategic and other non-operating expense
970,800
614,695
2,369,649
Other expense
3,388,676
2,989,590
1,894,352
Total noninterest expense
14,865,621
12,679,429
16,433,451
Income (loss) before income tax expense (benefit)
4,793,661
5,034,065
(2,853,073
)
Income tax expense (benefit)
1,418,478
1,532,000
(855,623
)
Net Income (Loss)
$3,375,183
$3,502,065
($1,997,450
)
Diluted earnings (loss) per share
$0.19
$0.25
($0.21
)
Average shares outstanding
16,931,041
13,509,081
9,661,860
Pre-tax, pre-provision income (loss)
$5,993,660
$5,034,065
(2,853,073
)
Southern California Bancorp and Subsidiary
Income Statements - Year-to-Date
(Unaudited)
Twelve Months Ended
Dec 31, 2021
Dec 31, 2020
INTEREST INCOME
Loans, including fees
$
66,213,473
$
50,476,782
Investment securities
1,089,957
859,462
Fed funds & int-bearing balances
469,752
478,724
Total interest income
67,773,182
51,814,968
INTEREST EXPENSE
Deposits
2,053,686
3,880,133
Other borrowings
1,308,369
1,989,988
Total interest expense
3,362,055
5,870,121
Net interest income
64,411,127
45,944,847
Provision for loan losses
1,200,000
4,552,000
Net interest income after provision for loan losses
63,211,127
41,392,847
NONINTEREST INCOME
Service charges, fees and other income
2,031,506
1,454,912
Income on bank owned life insurance
785,606
360,780
Gains on loan sales
919,722
-
OREO, investment, other gains
777,201
481,016
Total noninterest income
4,514,035
2,296,708
NONINTEREST EXPENSE
Salaries and benefits
34,883,298
21,690,611
Occupancy and equipment
4,883,908
3,784,946
Strategic and other non-operating expense
3,088,514
4,618,053
Other expense
10,682,877
6,827,703
Total noninterest expense
53,538,597
36,921,313
Income before income tax expense
14,186,565
6,768,242
Income tax expense
3,477,478
2,045,754
Net Income
$
10,709,087
$
4,722,488
Diluted earnings per share
$
0.72
$
0.49
Average shares outstanding
14,250,653
9,480,736
Pre-tax, pre-provision income
$
15,386,564
$
11,320,242
Southern California Bancorp
and Subsidiary
Average Balance Sheets and Yield Analysis
(Unaudited)
Three Months Ended
December 31, 2021
September 30, 2021
Average
Income/
Yield/
Average
Income/
Yield/
Balance
Expense
Cost
Balance
Expense
Cost
Assets
Interest-earning assets:
Total loans-non-PPP
$
1,366,239,712
$
15,771,875
4.58
%
$
967,043,748
$
11,210,529
4.60
%
Total loans-PPP
120,480,607
4,796,404
15.79
%
259,808,941
5,163,261
7.88
%
Total loans
1,486,720,319
20,568,279
5.49
%
1,226,852,689
16,373,790
5.29
%
Debt securities
43,192,089
137,149
1.26
%
23,610,793
84,908
1.43
%
Deposits in other financial institutions
594,957,465
210,588
0.14
%
460,391,353
155,497
0.13
%
Fed fund sold/resale agreements
17,572,522
5,933
0.13
%
12,889,916
4,475
0.14
%
Restricted stock investments and other bank stock
12,927,516
192,179
5.90
%
11,270,350
160,618
5.65
%
Total interest-earning assets
2,155,369,910
21,114,128
3.89
%
1,735,015,102
16,779,288
3.84
%
Total non-interest-earning assets
138,007,235
88,530,081
Total assets
$
2,293,377,145
$
1,823,545,183
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing NOW accounts
$
186,207,318
99,900
0.21
%
$
131,864,224
32,392
0.10
%
Money market and savings accounts
694,506,117
219,684
0.13
%
609,193,692
263,782
0.17
%
Time deposits
109,745,218
133,411
0.48
%
89,376,853
155,008
0.69
%
Total interest-bearing deposits
990,458,653
452,995
0.18
%
830,434,768
451,181
0.22
%
Borrowings:
FHLB advances
6,652,174
24,879
1.48
%
-
-
0.00
%
PPPLF
-
-
0.00
%
-
-
0.00
%
Subordinated debts
17,663,737
271,261
6.09
%
17,640,063
271,261
6.10
%
TruPS
2,729,792
31,651
4.60
%
2,722,144
29,445
4.29
%
Total borrowings
27,045,702
327,791
4.81
%
20,362,206
300,706
5.86
%
Total Interest-bearing liabilities
1,017,504,356
780,786
0.30
%
850,796,974
751,886
0.35
%
Non-interest-bearing liabilities:
Avg NIB/Avg TTL Deposits
Avg NIB/Avg TTL Deposits
Demand deposits
1,007,192,235
777,972,703
Other liabilities
23,886,118
50.4%
19,480,875
48.4%
Shareholders' equity
244,794,436
175,294,630
Total Liabilities and Shareholders' Equity
$
2,293,377,145
$
1,823,545,183
Net interest spread
3.58
%
3.49
%
Net interest income and margin
$
20,333,342
3.74
%
$
16,027,402
3.67
%
Cost of deposits
0.09
%
0.11
%
Cost of funds
0.15
%
0.18
%
Southern California Bancorp and Subsidiary
Average Balance Sheets and Yield Analysis
(Unaudited)
Twelve Months Ended
December 31, 2021
December 31, 2020
Average
Income/
Yield/
Average
Income/
Yield/
Balance
Expense
Cost
Balance
Expense
Cost
Assets
Interest-earning assets:
Total loans-non-PPP
$
1,029,701,618
$
48,523,110
4.71
%
$
784,700,111
$
38,464,077
4.90
%
Total loans-PPP
326,063,957
17,690,363
5.43
%
325,036,933
12,012,706
3.70
%
Total loans
1,355,765,575
66,213,473
4.88
%
1,109,737,044
50,476,782
4.55
%
Debt securities
28,751,129
454,641
1.58
%
21,477,174
421,958
1.96
%
Deposits in other financial institutions
358,905,466
452,427
0.13
%
88,388,796
334,841
0.38
%
Fed fund sold/resale agreements
15,559,390
17,325
0.11
%
26,816,485
143,883
0.54
%
Restricted stock investments and other bank stock
11,185,576
635,316
5.68
%
8,596,857
437,504
5.09
%
Total interest-earning assets
1,770,167,136
67,773,182
3.83
%
1,255,016,356
51,814,969
4.13
%
Total non-interest-earning assets
97,435,768
68,602,952
Total assets
$
1,867,602,904
$
1,323,619,307
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing NOW accounts
$
135,765,096
206,655
0.15
%
$
77,699,989
109,393
0.14
%
Money market and savings accounts
589,383,979
1,112,670
0.19
%
351,700,863
1,537,042
0.44
%
Time deposits
105,101,253
734,361
0.70
%
144,697,500
2,233,699
1.54
%
Total interest-bearing deposits
830,250,328
2,053,686
0.25
%
574,098,352
3,880,133
0.68
%
Borrowings:
FHLB advances
5,169,863
24,879
0.48
%
42,825,126
794,350
1.85
%
PPPLF
17,149,983
59,834
0.35
%
133,530,317
468,646
0.35
%
Subordinated debts
17,628,403
1,085,042
6.16
%
11,060,730
666,972
6.03
%
TruPS
2,718,230
138,613
5.10
%
1,843,817
60,020
3.26
%
Total borrowings
42,666,479
1,308,369
3.07
%
189,259,990
1,989,988
1.05
%
Total Interest-bearing liabilities
872,916,807
3,362,055
0.39
%
763,358,342
5,870,122
0.77
%
Non-interest-bearing liabilities:
Avg NIB/Avg TTL Deposits
Avg NIB/Avg TTL Deposits
Demand deposits
783,753,552
421,387,811
Other liabilities
19,787,736
48.6%
11,030,772
42.3%
Shareholders' equity
191,144,809
127,842,383
Total liabilities and shareholders' equity
$
1,867,602,904
$
1,323,619,307
Net interest spread
3.44
%
3.36
%
Net interest income and margin
$
64,411,127
3.64
%
$
45,944,847
3.66
%
Cost of deposits
0.13
%
0.39
%
Cost of funds
0.20
%
0.50
%
Press Release | 01/26/2022
Southern California Bancorp (“us,” “we,” “our,” or the “Company”) (OTC Pink: BCAL), the holding company for Bank of Southern California, N.A. (the “Bank”) today reported consolidated financial results for the fourth quarter and full year of 2021.
The comparability of consolidated financial information for the fourth quarter and for the full year of 2021 to the same periods of 2020 is affected by the acquisition of Bank of Santa Clarita (“BSCA”) which was completed effective October 1, 2021. Accordingly, BSCA’s operating results for the fourth quarter and for the full year 2021 are included in the Company’s consolidated financial statements for the periods beginning after October 1, 2021.
Fourth Quarter 2021 Highlights
Closed the BSCA acquisition on October 1, 2021: BSCA’s total assets and deposits were $425.6 million and $342.3 million, respectively, at the closing date
Quarterly net income of $3.4 million, compared to $3.5 million in the prior quarter
Pre-tax, pre-provision income increased to $6.0 million, up $960,000, or 19.1%, from the prior quarter
Total Non-Paycheck Protection Program (“PPP”) loans (“non-PPP”) increased to $1.45 billion, up $394.8 million, or 37.6%, from September 30, 2021; excluding loans acquired from BSCA, net organic loans were up $154.3 million, or 14.7%, from September 30, 2021
PPP loan portfolio balance of $58.7 million, down from $181.4 million at September 30, 2021
Total assets of $2.26 billion, up $475.7 million, or 26.7%, from the prior quarter
Total deposits of $1.97 billion, up $406.7 million, or 26.0%, from the prior quarter
Noninterest-bearing demand deposits were 50.0% of total deposits, up from 48.6% at September 30, 2021; cost of deposits was 0.09%, down from 0.11% in the prior quarter
Net interest margin of 3.74% in the fourth quarter compared to 3.67% in the prior quarter; average yield on non-PPP loans of 4.58% compared with 4.60% in the prior quarter
Nonperforming assets to total assets ratio remain at 0.04%, the same as the two prior quarters
Continued status as “well-capitalized,” the highest regulatory capital category
Full Year 2021 Highlights
Annual net income increased to a record $10.7 million, up $6.0 million, or 126.8% from $4.7 million in the prior year
Pre-tax, pre-provision income increased to $15.4 million, up $4.1 million, or 35.9% from $11.3 million in the prior year
Total non-PPP loans increased to $1.45 billion, up $618.7 million, or 74.8% from December 31, 2020; excluding loans acquired from BSCA, net organic loans grew $378.2 million, or 45.7%, from December 31, 2020.
PPP loan portfolio balance of $58.7 million, down from $406.5 million at December 31, 2020
Total assets of $2.26 billion, up $680.8 million, or 43.1% from December 31, 2020
Total deposits of $1.97 billion, up $778.4 million, or 65.1% from December 31, 2020
Noninterest-bearing demand deposits were 50.0% of total deposits, up from 44.7% at December 31, 2020; cost of deposits for 2021 was 0.13%, down from 0.39% in 2020
Net interest margin of 3.64% for 2021, compared with 3.66% in the prior year; average yield on non-PPP loans of 4.71% in 2021, compared with 4.90% in the prior year
Completed acquisition of BSCA, effective October 1, 2021
Completed sale of three branches to align footprint to support a commercial banking strategy, effective September 24, 2021
“I am very pleased to report organic non-PPP loan growth of $378.2 million or 46% for the full year of 2021, net of approximately $222.1 million in payoffs, and organic non-PPP loan growth of $154.3 million or 15% in the fourth quarter, net of approximately $67.1 million in payoffs,” said David Rainer, Chairman, CEO and President of Southern California Bancorp and Bank of Southern California, N.A. “We credit this tremendous growth to the successful execution of our relationship-based commercial banking model, and the Bank’s expansion into Orange, Los Angeles and Ventura counties in 2021, combined with positive growth in San Diego. The payoffs and paydowns we received in both periods were associated with the Company’s former heavily overweighted transaction-based banking model. Along with our strong loan growth, our ratio of nonperforming assets to total assets has held steady at 0.04% over the last three quarters, which resulted directly from our disciplined loan underwriting standards.
“Our strong organic loan growth in 2021 drove a significant increase in net interest income, with 2021 net interest income growing to $64.4 million, an $18.5 million, or 40% increase over the prior year, and fourth quarter net interest income growing to $20.3 million, a $4.3 million or 27% increase over the prior quarter. The increase in net interest income resulted in record annual net income of $10.7 million for 2021 and $3.4 million for the fourth quarter of 2021. Given the strong loan growth we experienced last year, we recorded a $1.2 million provision for loan loss in the fourth quarter; our pre-tax, pre-provision income was $15.4 million and $6.0 million for the full year and fourth quarter of 2021, respectively.
“Our total assets grew to $2.3 billion in 2021, an increase of $680.8 million, or 43%, and included $426 million from the BSCA acquisition at the closing date. Total deposits grew $778 million, or 65%, and included $342 million from the BSCA acquisition, bringing average deposits for all branches to $152 million per branch. The growth in total deposits was especially strong considering we sold three branches in the third quarter of 2021 with a combined $82 million in deposits. We are deploying this cash from deposit growth to fund new loans and, over time, make additions to our investment portfolio.
“We are currently in the process of integrating the Bank of Santa Clarita and working to ensure a smooth transition for both customers and employees. We anticipate completing the BSCA system conversion in the second quarter of 2022. After building the foundation and expanding the footprint of our relationship-based commercial banking model in 2021, and with the recent addition of our Private Banking and SBA lending divisions, we are looking forward to a very productive year in 2022, as we continue providing highly personalized service to all our Southern California customers.”
Fourth Quarter and Full Year Operating Results
Net Income
Net income for the fourth quarter of 2021 was $3.4 million, or $0.19 per diluted share, compared to net income of $3.5 million, or $0.25 per diluted share in the third quarter of 2021. Pre-tax, pre-provision income for the fourth quarter of 2021 was $6.0 million, an increase of $960,000, or 19.1% compared to pre-tax, pre-provision income of $5.0 million in the prior quarter. The decrease in net income in the fourth quarter of 2021 compared with the third quarter of 2021 was due to a $4.3 million increase in net interest income, offset by a $1.2 million increase in the provision for loan losses, a $1.2 million decrease in noninterest income, and a $2.2 million increase in noninterest expense.
Net income for the full year of 2021 was $10.7 million, or $0.72 per diluted share, compared to net income of $4.7 million or $0.49 per diluted share for 2020, an increase of 126.8%. Pre-tax, pre-provision income for 2021 was $15.4 million, an increase of $4.1 million, or 35.9% compared to pre-tax, pre-provision income of $11.3 million for the full year of 2020. The increase in net income in 2021 compared with 2020 was primarily due to an $18.5 million increase in net interest income, a $2.2 million increase in noninterest income, and a $3.4 million decrease in the provision for loan losses, partially offset by a $16.6 million increase in noninterest expense.
Net Interest Income and Net Interest Margin
Net interest income for the fourth quarter of 2021 was $20.3 million, an increase of $4.3 million, or 26.9% from $16.0 million in the prior quarter. The increase was due to strong organic loan growth, as well as net interest income associated with the BSCA acquisition, which became effective October 1, 2021. Total average loans for the quarter ended December 31, 2021, increased to $1.5 billion as compared to $1.2 billion in the prior quarter. Total average loans related to the BSCA acquisition was $250.1 million. PPP net loan interest income in the fourth quarter of 2021 decreased to $4.8 million, compared to $5.2 million in the prior quarter. Interest expense in the fourth quarter of 2021 was $781,000 compared to $752,000 in the prior quarter.
Net interest margin for the fourth quarter of 2021 was 3.74%, compared with 3.67% in the prior quarter. The increase was primarily related to loan interest income from payoffs and an improved funding mix in the fourth quarter of 2021. The yield on average loans in the fourth quarter of 2021, excluding PPP loans, was 4.58%, a decrease of two basis points from 4.60% in the prior quarter. Average PPP loan yields in the fourth quarter of 2021 increased to 15.79%, compared to 7.88% in the prior quarter. The increase was due to accelerated unearned fee income related to the SBA’s forgiveness of Round 2 PPP loans, which are typically amortized on a straight-line basis over five years. The yield on total earning assets in the fourth quarter of 2021 was 3.89%, compared with 3.84% in the prior quarter.
Cost of funds for the fourth quarter of 2021 was 0.15%, down from 0.18% in the prior quarter. The decrease was primarily due to an increase in average noninterest-bearing demand deposits. Average noninterest-bearing demand deposits increased $229.2 million to $1.01 billion and represented 50.4% of total average deposits for the fourth quarter of 2021, compared to $778.0 million, or 48.4% of total average deposits for the prior quarter. The total cost of deposits in the fourth quarter of 2021 was 0.09%, down from 0.11% in the prior quarter.
Net interest income in 2021 totaled $64.4 million, an increase of $18.5 million, or 40.2% from the previous year. The increase in net interest income was primarily due to strong organic loan growth, the acceleration of deferred fee income from PPP loan forgiveness, net interest income associated with the BSCA acquisition effective October 1, 2021, and a lower cost of funds. Average loans increased by $246.0 million due primarily to average organic loan growth of $219.2 million, and the BSCA acquired loan portfolio. Total average loans for the year ended December 31, 2021, increased to $1.4 billion, compared with $1.1 billion at December 31, 2020. Total average loans for 2021 related to the BSCA acquisition was $63.0 million. Interest income from PPP loans increased to $17.7 million for the year ended December 31, 2021, compared with $12.0 million in the prior year. Total interest expense for the full year of 2021 was $3.4 million, a decrease of $2.5 million from the full year of 2020. The decrease in interest expense for the full year of 2021 was primarily due to run-off of higher-cost time deposits, the payoff of FHLB advances and PPP Liquidity Facility (“PPPLF”) borrowings, and a decrease in total deposit costs. Interest-bearing deposit expense decreased $1.8 million, coupled with a $682,000 decrease in total borrowings expense.
Net interest margin for the full year of 2021 was 3.64%, compared with 3.66% in the prior year. The decrease was primarily related to the yield on non-PPP loans declining to 4.71% in 2021, compared with 4.90% in the prior year. This was partially offset by an increase in the yield on PPP loans to 5.43% in 2021, compared with 3.70% in the prior year, which increase was due to the accelerated deferred fee income from PPP loan forgiveness in 2021. The yield on total interest-earning assets declined to 3.83% in 2021, compared with 4.13% in 2020. The decrease in the other interest earning assets yield was driven by lower market interest rates.
The cost of funds for the full year of 2021 decreased to 0.20% from 0.50% for the full year of 2020. The decrease was primarily due to lower market interest rates, run-off of higher-cost time deposits, payoff of FHLB borrowings, and an increase in average noninterest-bearing demand deposits. Average noninterest-bearing demand deposits increased $362.4 million to $783.8 million and represented 48.6% of total average deposits for the full year of 2021, compared to $421.4 million, or 42.3% of total average deposits for the prior year. The total cost of deposits for the full year of 2021 was 0.13%, down from 0.39% in the prior year.
Average total borrowings decreased $146.6 million to $42.7 million for the full year of 2021. The average cost of borrowings was 3.07%, up from 1.05% in the prior year.
Provision for Loan Losses
The Company recorded a loan loss provision of $1.2 million in the fourth quarter of 2021 and for the full year of 2021, primarily related to strong organic loan growth. In 2020, the Company recorded a loan loss provision of $4.6 million. The Company’s management continues to monitor macroeconomic variables related to COVID-19 and reasonably believes it is appropriately provisioned for the current environment. Management will continue to monitor and manage the loan portfolio to minimize potential future losses.
Noninterest Income
Total noninterest income in the fourth quarter of 2021 was $526,000, a decrease of $1.2 million compared with noninterest income of $1.7 million in the third quarter of 2021. The decrease was due primarily to the recognition of a gain on sale of $726,000 for the sale of three nonstrategic branches in the third quarter of 2021, for which there was no corresponding transaction in the fourth quarter. In the fourth quarter of 2021, income from service charges, fees and other income increased $94,000, and income from bank-owned life insurance increased $54,000 over the prior quarter.
Total noninterest income for the full year of 2021 was $4.5 million, an increase of $2.2 million compared with $2.3 million for the full year of 2020. The increase in total noninterest income in 2021 was primarily due to a $577,000 increase in service charges, fees and other income; a $425,000 increase in income from bank owned life insurance; a $920,000 gain on sale of an acquired loan; and a $726,000 gain on sale from the sale of three nonstrategic branches.
Noninterest Expense
Noninterest expense for the fourth quarter of 2021 increased $2.2 million to $14.9 million, compared with $12.7 million in the prior quarter. The increase was largely due to an increase of $1.4 million in salaries and benefits, and a $356,000 increase in strategic and other non-operating expenses primarily related to termination charges for core conversion.
Noninterest expense for the full year of 2021 was $53.5 million, an increase of $16.6 million compared with $36.9 million for the full year of 2020. The increase was largely due to a $13.2 million increase in salaries and employee benefits related to the Company’s strategic expansion into Orange, Los Angeles and Ventura counties, which also included approximately $3.1 million in compensation expense related to the settlement of a preexisting employment contract and approximately $500,000 additional salary and benefit expense related to the additional BSCA employees. Occupancy and equipment expense increased by $1.1 million in 2021, primarily related to the Company’s strategic expansion. Other expense increased $3.9 million in 2021, primarily related to increased expenses for data processing, legal, and the provision for unfunded loan commitments.
Income Tax
In the fourth quarter of 2021, the Company’s income tax expense was $1.4 million, compared with $1.5 million in the third quarter of 2021. The effective rate was 29.6% for the fourth quarter of 2021 and 30.4% for the third quarter of 2021. For the full year of 2021 the Company’s income tax expense was $3.5 million, compared with $2.0 million for the full year of 2020. The effective rate was 24.5% for 2021 and 30.2% for 2020. The decrease for the full year of 2021 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 December 31, 2021, were $2.26 billion, an increase of $680.8 million or 43.1% from December 31, 2020, and an increase of $475.7 million, or 26.7% from September 30, 2021. The increase in total assets from the prior year was primarily related to a $778.4 million increase in deposits. The increase in total assets from the prior quarter included the acquisition of BSCA and its $425.6 million in assets, including $342.3 million in deposits at the closing date.
Loans
Total loans were $1.50 billion at December 31, 2021, including $244.5 million in loans acquired in the BSCA acquisition, compared to $1.23 billion at September 30, 2021, and December 31, 2020. In 2021, the Company’s non-PPP loan portfolio had net organic growth of $378.2 million, or 45.7%, after payoffs of approximately $221.1 million. In the fourth quarter of 2021, organic non-PPP loan growth was $154.3 million or 14.7%, after payoffs of approximately $67.1 million, with an outstanding organic non-PPP loan balance of $1.45 billion at December 31, 2021.
During the fourth quarter of 2021, total commercial and industrial loans, excluding PPP loans, increased by $58.0 million, of which $13.5 million was related to the BSCA acquisition. PPP loans decreased by $122.7 million during the fourth quarter, with an outstanding balance of $58.7 million at December 31, 2021. Loans secured by real estate increased by $296.6 million, of which $223.6 million was related to the BSCA acquisition. Construction and land development loans increased by $43.2 million, of which $3.0 million was related to the BSCA acquisition.
Deposits
Total deposits at December 31, 2021, were $1.97 billion, an increase of $406.7 million from the end of the prior quarter, and $778.4 million from December 31, 2020. The increase reflected organic growth, as well as $319 million in deposits related to the BSCA acquisition in the fourth quarter of 2021. Noninterest-bearing demand deposits at December 31, 2021 were $986.9 million, or 50.0% of total deposits, compared to $760.5 million, or 48.6% of total deposits, at September 30, 2021 and $533.9 million, or 44.7% of total deposits, at December 31, 2020.
Asset Quality
Total non-performing assets totaled $809,000 or 0.04% of total assets at December 31, 2021, compared with $666,000 or 0.04% at September 30, 2021, and $896,000 or 0.06% at December 31, 2020. The increase in nonperforming loans in the fourth quarter of 2021 was primarily due to two loans associated with the acquisition of BSCA on October 1, 2021, offset by the payoff of an impaired loan during the fourth quarter.
During the fourth quarter of 2021, the Company recorded net recoveries of $92,000, compared to net recoveries of $75,000 in the third quarter of 2021. For the full year of 2021, the Company recorded net recoveries of $202,000 compared to net recoveries of $340,000 for the prior year.
Loan delinquencies (30-89 days past due) totaled $1.0 million at December 31, 2021, compared to $2.3 million at December 31, 2020. No loans were 30-89 days past due at September 30, 2021.
The allowance for loan losses ("ALLL") was $11.7 million at December 31, 2021, compared to $10.4 million at September 30, 2021 and $10.3 million at December 31, 2020. The ALLL to total loans was 0.77%, 0.84% and 0.83% at December 31, 2021, September 30, 2021 and December 31, 2020. The ALLL to total loans, excluding PPP loans was 0.81%, 0.99% and 1.24% at December 31, 2021, September 30, 2021 and December 31, 2020. The net carrying value of acquired loans totaled $383.2 million and included a remaining net discount of $2.7 million at December 31, 2021. The discount is available to absorb losses on the acquired loans and represented 0.70% of the net carrying value of acquired loans and 0.18% of total gross loans held for investment.
Liquidity and Capital
With 65.1% growth in total deposits for 2021, and a strong cash balance from the quick pace of forgiveness of PPP loans, the Bank has ample liquidity resources to meet its customers’ needs.
The significant production in PPP loans in 2020 and 2021 was funded through a combination of increased DDA accounts, generally associated directly with the PPP Loans, borrowings under PPPLF, and other sources. At December 31, 2021, the Bank’s PPP loan portfolio was entirely funded by Bank deposits.
PPP loans are considered zero risk-weighted assets and, as such, have helped maintain the Bank’s preliminary leverage capital ratio and total risk-based capital ratio at 9.95% and 15.03%, respectively, at December 31, 2021.
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 San Diego, Orange, Los Angeles, and Ventura counties, as well as the Inland Empire. The Bank's solution-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.
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, or other measures of economic performance. As well, forward-looking statements may relate to future outlook and anticipated events, such as Southern California Bancorp's plans and protocols with regard to managing potential impacts related to the ongoing COVID-19 pandemic. 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
Quarterly and YTD Financial Highlights
(Unaudited)
At or for the Three Months Ended
At or for the
Twelve Months Ended
($ in thousands except share and per share data)
Dec 31, 2021
Sept 30, 2021
Dec 31, 2020
2021
2020
EARNINGS
Net interest income
$
20,333
16,027
13,144
64,411
45,945
Provision for loan losses
$
1,200
0
0
1,200
4,552
Noninterest income
$
526
1,686
436
4,514
2,297
Noninterest expense
$
14,866
12,679
16,433
53,539
36,921
Income tax expense (benefit)
$
1,418
1,532
(856
)
3,477
2,046
Net income (loss)
$
3,375
3,502
(1,997
)
10,709
4,722
Pre-tax pre-provision income
$
5,994
5,034
(2,853
)
15,387
11,320
Diluted earnings (loss) per share
$
0.19
0.25
(0.21
)
0.72
0.49
Ending shares outstanding
17,707,737
13,509,081
13,267,380
17,707,737
13,267,380
PERFORMANCE RATIOS
Return on average assets
0.58
%
0.76
%
-0.50
%
0.57
%
0.36
%
Return on average common equity
5.47
%
7.92
%
-6.06
%
5.61
%
3.75
%
Yield on loans
5.49
%
5.29
%
4.36
%
4.88
%
4.55
%
Yield on earning assets
3.89
%
3.84
%
3.83
%
3.83
%
4.13
%
Cost of deposits
0.09
%
0.11
%
0.25
%
0.13
%
0.39
%
Cost of funding
0.15
%
0.18
%
0.38
%
0.20
%
0.50
%
Net interest margin
3.74
%
3.67
%
3.47
%
3.64
%
3.66
%
Efficiency ratio
71.3
%
71.6
%
121.0
%
77.7
%
76.5
%
CAPITAL
Tangible equity to tangible assets
9.35
%
8.87
%
9.46
%
9.35
%
9.46
%
Book value (BV) per common share
$
13.92
13.15
12.73
13.92
12.73
Tangible BV per common share
$
11.73
11.57
11.10
11.73
11.10
ASSET QUALITY
Net loan (recoveries) charge-offs
$
(92
)
(75
)
41
(202
)
(340
)
Allowance for loan losses (ALLL)
$
11,657
10,365
10,255
11,657
10,255
ALLL to total loans
0.77
%
0.84
%
0.83
%
0.77
%
0.83
%
ALLL to total loans (excl PPP)
0.81
%
0.99
%
1.24
%
0.81
%
1.24
%
Nonperforming loans
$
809
666
896
809
896
Other real estate owned
$
-
-
-
-
-
Nonperforming assets to total assets
0.04
%
0.04
%
0.06
%
0.04
%
0.06
%
END OF PERIOD BALANCES
Total loans
$
1,504,748
1,232,642
1,233,881
1,504,748
1,233,881
Total assets
$
2,259,865
1,784,186
1,579,048
2,259,865
1,579,048
Deposits
$
1,973,097
1,566,360
1,194,739
1,973,097
1,194,739
Loans to deposits
76.3
%
78.7
%
103.3
%
76.3
%
103.3
%
Shareholders' equity
$
246,528
177,636
168,885
246,528
168,885
Southern California Bancorp and Subsidiary
Balance Sheets
(Unaudited)
Dec 31, 2021
Sept 30, 2021
Dec 31, 2020
ASSETS
Cash and due from banks
$
81,795,089
$
12,166,356
$
11,950,639
Fed funds & int-bearing balances
498,211,021
435,475,700
238,866,116
Total cash and cash equivalents
580,006,110
447,642,056
250,816,755
Debt securities (AFS)
55,566,560
24,905,267
24,702,467
FRB, FHLB and other equity stock
12,842,516
11,270,350
8,872,900
Construction & land development
77,629,461
34,438,305
31,375,236
1-4 Family Residential
133,993,768
108,632,444
103,367,391
Multifamily
175,751,365
142,220,706
111,815,776
Other commercial real estate
766,823,986
529,062,592
404,856,966
Commercial & industrial
349,021,603
413,758,869
577,608,374
Other consumer
1,528,236
4,528,805
4,857,563
Total loans
1,504,748,419
1,232,641,721
1,233,881,306
Allowance for loan losses
(11,657,121
)
(10,364,693
)
(10,255,005
)
Total loans and leases, net
1,493,091,298
1,222,277,028
1,223,626,301
Premises, equipment, and ROU, net
27,707,334
15,237,117
15,051,487
Other real estate owned
-
-
-
Goodwill and core deposit intangible
38,806,311
21,334,833
21,599,001
Bank owned life insurance
37,848,951
27,973,099
17,990,765
Accrued interest and other assets
13,995,682
13,546,434
16,388,640
Total Assets
$
2,259,864,762
$
1,784,186,184
$
1,579,048,316
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand
$
986,934,581
$
760,492,115
$
533,923,009
Interest bearing checking
193,524,630
136,851,252
83,566,875
Money market and savings
690,348,061
593,255,255
458,529,872
Time deposits
102,290,095
75,761,818
118,719,534
Total deposits
1,973,097,367
1,566,360,440
1,194,739,290
Other borrowings
20,408,791
20,377,355
199,648,070
Accrued interest and other liabilities
19,831,038
19,812,618
15,775,916
Total liabilities
2,013,337,196
1,606,550,413
1,410,163,276
Shareholders' Equity:
Common stock and APIC
214,162,682
148,384,701
146,895,943
Retained earnings
32,403,019
29,027,837
21,693,933
Accum. other comprehensive (loss) income
(38,135
)
223,233
295,164
Total shareholders' equity
246,527,566
177,635,771
168,885,040
Total Liabilities and Shareholders' Equity
$
2,259,864,762
$
1,784,186,184
$
1,579,048,316
Southern California Bancorp and Subsidiary
Income Statements - Quarterly
(Unaudited)
Three Months Ended
Dec 31, 2021
Sept 30, 2021
Dec 31, 2020
INTEREST INCOME
Loans, including fees
$20,568,279
$16,373,790
$14,255,623
Debt securities and equity stock
329,327
245,527
222,737
Fed funds & int-bearing balances
216,522
159,972
41,094
Total interest income
21,114,128
16,779,289
14,519,454
INTEREST EXPENSE
Deposits
452,995
451,181
726,717
Other borrowings
327,791
300,705
648,616
Total interest expense
780,786
751,886
1,375,333
Net interest income
20,333,342
16,027,403
13,144,121
Provision for loan losses
1,200,000
-
-
Net interest income after provision
19,133,342
16,027,403
13,144,121
NONINTEREST INCOME
Service charges, fees and other income
597,597
503,839
421,803
Income on bank owned life insurance
219,255
164,979
107,310
Gains on loan sales
-
-
-
OREO, investment, other (losses) gains
(290,912
)
1,017,273
(92,856
)
Total noninterest income
525,940
1,686,091
436,257
NONINTEREST EXPENSE
Salaries and benefits
9,157,954
7,751,397
11,120,598
Occupancy and equipment
1,348,191
1,323,747
1,048,852
Strategic and other non-operating expense
970,800
614,695
2,369,649
Other expense
3,388,676
2,989,590
1,894,352
Total noninterest expense
14,865,621
12,679,429
16,433,451
Income (loss) before income tax expense (benefit)
4,793,661
5,034,065
(2,853,073
)
Income tax expense (benefit)
1,418,478
1,532,000
(855,623
)
Net Income (Loss)
$3,375,183
$3,502,065
($1,997,450
)
Diluted earnings (loss) per share
$0.19
$0.25
($0.21
)
Average shares outstanding
16,931,041
13,509,081
9,661,860
Pre-tax, pre-provision income (loss)
$5,993,660
$5,034,065
(2,853,073
)
Southern California Bancorp and Subsidiary
Income Statements - Year-to-Date
(Unaudited)
Twelve Months Ended
Dec 31, 2021
Dec 31, 2020
INTEREST INCOME
Loans, including fees
$
66,213,473
$
50,476,782
Investment securities
1,089,957
859,462
Fed funds & int-bearing balances
469,752
478,724
Total interest income
67,773,182
51,814,968
INTEREST EXPENSE
Deposits
2,053,686
3,880,133
Other borrowings
1,308,369
1,989,988
Total interest expense
3,362,055
5,870,121
Net interest income
64,411,127
45,944,847
Provision for loan losses
1,200,000
4,552,000
Net interest income after provision for loan losses
63,211,127
41,392,847
NONINTEREST INCOME
Service charges, fees and other income
2,031,506
1,454,912
Income on bank owned life insurance
785,606
360,780
Gains on loan sales
919,722
-
OREO, investment, other gains
777,201
481,016
Total noninterest income
4,514,035
2,296,708
NONINTEREST EXPENSE
Salaries and benefits
34,883,298
21,690,611
Occupancy and equipment
4,883,908
3,784,946
Strategic and other non-operating expense
3,088,514
4,618,053
Other expense
10,682,877
6,827,703
Total noninterest expense
53,538,597
36,921,313
Income before income tax expense
14,186,565
6,768,242
Income tax expense
3,477,478
2,045,754
Net Income
$
10,709,087
$
4,722,488
Diluted earnings per share
$
0.72
$
0.49
Average shares outstanding
14,250,653
9,480,736
Pre-tax, pre-provision income
$
15,386,564
$
11,320,242
Southern California Bancorp
and Subsidiary
Average Balance Sheets and Yield Analysis
(Unaudited)
Three Months Ended
December 31, 2021
September 30, 2021
Average
Income/
Yield/
Average
Income/
Yield/
Balance
Expense
Cost
Balance
Expense
Cost
Assets
Interest-earning assets:
Total loans-non-PPP
$
1,366,239,712
$
15,771,875
4.58
%
$
967,043,748
$
11,210,529
4.60
%
Total loans-PPP
120,480,607
4,796,404
15.79
%
259,808,941
5,163,261
7.88
%
Total loans
1,486,720,319
20,568,279
5.49
%
1,226,852,689
16,373,790
5.29
%
Debt securities
43,192,089
137,149
1.26
%
23,610,793
84,908
1.43
%
Deposits in other financial institutions
594,957,465
210,588
0.14
%
460,391,353
155,497
0.13
%
Fed fund sold/resale agreements
17,572,522
5,933
0.13
%
12,889,916
4,475
0.14
%
Restricted stock investments and other bank stock
12,927,516
192,179
5.90
%
11,270,350
160,618
5.65
%
Total interest-earning assets
2,155,369,910
21,114,128
3.89
%
1,735,015,102
16,779,288
3.84
%
Total non-interest-earning assets
138,007,235
88,530,081
Total assets
$
2,293,377,145
$
1,823,545,183
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing NOW accounts
$
186,207,318
99,900
0.21
%
$
131,864,224
32,392
0.10
%
Money market and savings accounts
694,506,117
219,684
0.13
%
609,193,692
263,782
0.17
%
Time deposits
109,745,218
133,411
0.48
%
89,376,853
155,008
0.69
%
Total interest-bearing deposits
990,458,653
452,995
0.18
%
830,434,768
451,181
0.22
%
Borrowings:
FHLB advances
6,652,174
24,879
1.48
%
-
-
0.00
%
PPPLF
-
-
0.00
%
-
-
0.00
%
Subordinated debts
17,663,737
271,261
6.09
%
17,640,063
271,261
6.10
%
TruPS
2,729,792
31,651
4.60
%
2,722,144
29,445
4.29
%
Total borrowings
27,045,702
327,791
4.81
%
20,362,206
300,706
5.86
%
Total Interest-bearing liabilities
1,017,504,356
780,786
0.30
%
850,796,974
751,886
0.35
%
Non-interest-bearing liabilities:
Avg NIB/Avg TTL Deposits
Avg NIB/Avg TTL Deposits
Demand deposits
1,007,192,235
777,972,703
Other liabilities
23,886,118
50.4%
19,480,875
48.4%
Shareholders' equity
244,794,436
175,294,630
Total Liabilities and Shareholders' Equity
$
2,293,377,145
$
1,823,545,183
Net interest spread
3.58
%
3.49
%
Net interest income and margin
$
20,333,342
3.74
%
$
16,027,402
3.67
%
Cost of deposits
0.09
%
0.11
%
Cost of funds
0.15
%
0.18
%
Southern California Bancorp and Subsidiary
Average Balance Sheets and Yield Analysis
(Unaudited)
Twelve Months Ended
December 31, 2021
December 31, 2020
Average
Income/
Yield/
Average
Income/
Yield/
Balance
Expense
Cost
Balance
Expense
Cost
Assets
Interest-earning assets:
Total loans-non-PPP
$
1,029,701,618
$
48,523,110
4.71
%
$
784,700,111
$
38,464,077
4.90
%
Total loans-PPP
326,063,957
17,690,363
5.43
%
325,036,933
12,012,706
3.70
%
Total loans
1,355,765,575
66,213,473
4.88
%
1,109,737,044
50,476,782
4.55
%
Debt securities
28,751,129
454,641
1.58
%
21,477,174
421,958
1.96
%
Deposits in other financial institutions
358,905,466
452,427
0.13
%
88,388,796
334,841
0.38
%
Fed fund sold/resale agreements
15,559,390
17,325
0.11
%
26,816,485
143,883
0.54
%
Restricted stock investments and other bank stock
11,185,576
635,316
5.68
%
8,596,857
437,504
5.09
%
Total interest-earning assets
1,770,167,136
67,773,182
3.83
%
1,255,016,356
51,814,969
4.13
%
Total non-interest-earning assets
97,435,768
68,602,952
Total assets
$
1,867,602,904
$
1,323,619,307
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing NOW accounts
$
135,765,096
206,655
0.15
%
$
77,699,989
109,393
0.14
%
Money market and savings accounts
589,383,979
1,112,670
0.19
%
351,700,863
1,537,042
0.44
%
Time deposits
105,101,253
734,361
0.70
%
144,697,500
2,233,699
1.54
%
Total interest-bearing deposits
830,250,328
2,053,686
0.25
%
574,098,352
3,880,133
0.68
%
Borrowings:
FHLB advances
5,169,863
24,879
0.48
%
42,825,126
794,350
1.85
%
PPPLF
17,149,983
59,834
0.35
%
133,530,317
468,646
0.35
%
Subordinated debts
17,628,403
1,085,042
6.16
%
11,060,730
666,972
6.03
%
TruPS
2,718,230
138,613
5.10
%
1,843,817
60,020
3.26
%
Total borrowings
42,666,479
1,308,369
3.07
%
189,259,990
1,989,988
1.05
%
Total Interest-bearing liabilities
872,916,807
3,362,055
0.39
%
763,358,342
5,870,122
0.77
%
Non-interest-bearing liabilities:
Avg NIB/Avg TTL Deposits
Avg NIB/Avg TTL Deposits
Demand deposits
783,753,552
421,387,811
Other liabilities
19,787,736
48.6%
11,030,772
42.3%
Shareholders' equity
191,144,809
127,842,383
Total liabilities and shareholders' equity
$
1,867,602,904
$
1,323,619,307
Net interest spread
3.44
%
3.36
%
Net interest income and margin
$
64,411,127
3.64
%
$
45,944,847
3.66
%
Cost of deposits
0.13
%
0.39
%
Cost of funds
0.20
%
0.50
%
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