CALB California BanCorp

California BanCorp (NASDAQ: CALB), whose subsidiary is California Bank of Commerce, announced today its financial results for the second quarter and six months ended June 30, 2023.

The Company reported net income of $5.4 million for the second quarter of 2023, representing a decrease of $11,000, or 0%, compared to $5.5 million for the first quarter of 2023 and an increase of $1.2 million, or 28%, compared to $4.2 million in the second quarter of 2022. For the six months ended June 30, 2023, net income was $10.9 million representing an increase of $3.0 million, or 38%, compared to $7.9 million for the same period in 2022.    

Diluted earnings per share of $0.65 for the second quarter of 2023 compared to $0.64 for the first quarter of 2023 and $0.51 for the second quarter of 2022.   For the six months ended June 30, 2023, diluted earnings per share of $1.29 compared to $0.94 for the same period in 2022.

“We executed well in the second quarter and continued to generate strong financial performance with our return on average assets remaining above 1% while maintaining a prudent approach to risk management with a high level of capital, liquidity and reserves,” said Steven Shelton, Chief Executive Officer of California BanCorp. “We continued to see good stability in our deposit base and noninterest-bearing deposits remained above 40% of our total deposits, which reflects the strength of our relationship-oriented approach and the loyalty of the client base we have built. Due to the stability in our deposit base, we were able to repay the borrowings we added towards the end of the first quarter, which helped limit the amount of compression that we had in our net interest margin and support profitability. We also maintained disciplined expense control, which enabled us to continue realizing more operating leverage and improve our efficiency ratio.”

“Given our conservative approach in the current environment, we expect our balance sheet to be relatively flat over the remainder of the year. However, given the strength of the franchise we have built and the reputation we have developed for providing a superior level of service and expertise, we continue to believe that we have good opportunities to continue adding deposit relationships with high quality commercial clients. While we will continue to maintain disciplined expense control, our strong financial performance enables us to continue to make investments in our technology platform, including our treasury management solutions, that will further enhance our level of client service and improve our ability to add new client relationships. We believe these investments will help us to continue growing our client base, add more scale and improve our efficiencies, and further increase the value of our franchise,” said Mr. Shelton.

Financial Highlights:

Profitability - three months ended June 30, 2023 compared to March 31, 2023

• Net income of $5.4 million and $0.65 per diluted share, compared to $5.5 million and $0.64 per diluted share, respectively.
• Revenue of $19.8 million decreased $83,000, or 0%, compared to $19.9 million for the first quarter of 2023.
• Net interest income of $18.6 million decreased $111,000, or 1%, compared to $18.8 million for the first quarter of 2023.
• Provision for credit losses of $444,000 increased $86,000, or 24%, from $358,000 for the first quarter of 2023.
• Non-interest income of $1.1 million remained consistent with the first quarter of 2023.
• Non-interest expense, excluding capitalized loan origination costs, of $12.3 million decreased $197,000, or 2%, compared to $12.5 million for the first quarter of 2023.

Profitability - six months ended June 30, 2023 compared to June 30, 2022

• Net income of $10.9 million and $1.29 per diluted share, compared to $7.9 million and $0.94 per diluted share, respectively.
• Revenue of $39.6 million increased $4.9 million, or 14%, compared to $34.7 million in the prior year.
• Net interest income of $37.4 million increased $6.7 million, or 22%, compared to $30.7 million for the same period in the prior year.
• Provision for credit losses of $802,000 decreased $1.1 million, or 57%, from $1.9 million for the six months ended June 30, 2022.
• Non-interest income of $2.2 million decreased $1.7 million, or 43%, from $3.9 million for the same period in the prior year.
• Non-interest expense, excluding capitalized loan origination costs, of $24.8 million increased $1.0 million, or 4%, compared to $23.8 million for the six months ended June 30, 2022.

Financial Position – June 30, 2023 compared to March 31, 2023

• Total assets decreased by $45.1 million, or 2%, to $2.01 billion; average total assets increased by $9.6 million to $1.98 billion.
• Total gross loans decreased by $33.6 million, or 2%, to $1.58 billion.  
• Total deposits increased by $20.7 million, or 1%, to $1.74 billion.
• Excluding junior subordinated debt securities, the Company had no other borrowings outstanding compared to $75.0 million at March 31, 2023.
• Capital ratios remain healthy with a tier I leverage ratio of 9.01%, tier I capital ratio of 9.07% and total risk-based capital ratio of 12.73%.
• Tangible book value per share of $21.09 increased by $0.61, or 3%.

Net Interest Income and Margin:

Net interest income for the quarter ended June 30, 2023 was $18.6 million, a decrease of $111,000 or 1%, from $18.8 million for the three months ended March 31, 2023, and an increase of $2.4 million, or 15%, from $16.2 million for the quarter ended June 30, 2022. The decrease in net interest income from the first quarter of 2023 was a result of lower net interest margin. The increase in net interest income compared to the second quarter of 2022 was primarily attributable to the growth of the loan portfolio and an increase in net interest margin.    

Net interest income for the six months ended June 30, 2023 was $37.4 million, an increase of $6.7 million, or 22% over $30.7 million for the six months ended June 30, 2022. The increase in net interest income was primarily attributable to an increase in interest income as the result of a more favorable mix of earning assets combined with higher yields on those assets.

The Company’s net interest margin for the second quarter of 2023 was 3.93%, compared to 4.02% for the first quarter of 2023 and 3.65% for the same period in 2022. The decrease in margin compared to the prior quarter was primarily due to an increase in the cost of deposits and other borrowings. The increase in margin from the same period last year was primarily the result of a more favorable mix of earning assets combined with higher yields, partially offset by an increase in cost of deposits.  

The Company’s net interest margin for the six months ended June 30, 2023 was 3.98% compared to 3.42% for the same period in 2022.   The increase in margin compared to prior year was primarily due to loan growth and increased yields on earnings assets, partially offset by an increase in the cost of deposits and other borrowings.

Non-Interest Income:

The Company’s non-interest income for the quarters ended June 30, 2023, March 31, 2023, and June 30, 2022 was $1.1 million, $1.1 million and $1.4 million, respectively. The decrease in non-interest income from the second quarter of 2022 was primarily due to a decrease in service charges and other fee income.

For the six months ended June 30, 2023, non-interest income of $2.2 million compared to $3.9 million for the same period of 2022. The decrease in non-interest income from prior year was the result of a decrease in service charges and loan related fees and a gain recognized in the first quarter of 2022 on the sale of a portion of our solar loan portfolio.

Net interest income and non-interest income comprised total revenue of $19.8 million, $19.9 million, and $17.6 million for the quarters ended June 30, 2023, March 31, 2023, and June 30, 2022, respectively. Total revenue for the six months ended June 30, 2023 and 2022 was $39.6 million and $34.7 million, respectively.

Non-Interest Expense:

The Company’s non-interest expense for the quarters ended June 30, 2023, March 31, 2023, and June 30, 2022 was $11.6 million, $11.8 million, and $10.8 million, respectively. The increase in non-interest expense from the second quarter of 2022 was primarily due to an increase in salaries and benefits related to investments to support the continued growth of the business, partially offset by a reduction in capitalized loan origination costs. Excluding capitalized loan origination costs, non-interest expense for the second quarter of 2023, the first quarter of 2023 and the second quarter of 2022 was $12.3 million, $12.5 million, and $11.9 million, respectively.

Non-interest expense of $23.4 million for the six months ended June 30, 2023 increased by $1.7 million, or 8%, compared to $21.7 million for the same period of 2022. Excluding capitalized loan origination costs, non-interest expense was $24.8 million for the six months ended June 30, 2023 and $23.8 million for the same period in 2022 which reflects investment in infrastructure to support the continued growth of the Company.   The Company’s efficiency ratio, the ratio of non-interest expense to revenues, was 58.66%, 59.62%, and 61.41% for the quarters ended June 30, 2023, March 31, 2023, and June 30, 2022, respectively. For the six months ended June 30, 2023 and 2022, the Company’s efficiency ratio was 59.14% and 62.68%, respectively.

Balance Sheet:

Total assets of $2.01 billion as of June 30, 2023, represented a decrease of $45.1 million, or 2%, compared to $2.05 billion at March 31, 2023 and an increase of $120.3 million, or 6%, compared to $1.89 billion at June 30, 2022.   The decrease in total assets from the prior quarter was primarily the result of a modest reduction in line utilization in our commercial loan portfolio. Compared to the same period in the prior year, total assets increased primarily due to strong loan growth in the commercial and real estate portfolios.

Total gross loans decreased by $33.6 million, or 2%, to $1.58 billion at June 30, 2023, from $1.62 billion at March 31, 2023 and increased by $83.3 million, or 6%, compared to $1.50 billion at June 30, 2022. During the second quarter of 2023, the reduction in gross loans was primarily the result of commercial loans decreasing by $34.2 million, or 5%. Compared to the same period in the prior year, commercial loans increased by $32.7 million, or 6%, and real estate other loans increased by $61.8 million, or 8%, primarily due to organic growth. These increases were partially offset by a decrease in SBA loans of $8.4 million, or 63%, primarily due to PPP loan forgiveness.

Total deposits increased by $20.7 million, or 1%, to $1.74 billion at June 30, 2023 from $1.72 billion at March 31, 2023, and increased by $186.2 million, or 12%, from $1.55 billion at June 30, 2022. The increase in total deposits from the end of the first quarter of 2023 was primarily due to an increase in money market and savings deposits of $16.8 million.   Compared to the same period last year, the increase in total deposits was primarily concentrated in time deposits as a result of higher balances of short-term brokered certificates of deposits which were added to temporarily increase liquidity. Non-interest bearing deposits, primarily commercial business operating accounts, represented 42.7% of total deposits at June 30, 2023, compared to 43.1% at March 31, 2023 and 46.1% at June 30, 2022.

As of June 30, 2023, the Company had no outstanding borrowings, excluding junior subordinated debt securities, compared to $75.0 million at March 31, 2023 and $100.0 million at June 30, 2022. The decrease in borrowings during the second quarter of 2023 compared to the prior periods was primarily due to increased liquidity generated from the deposit portfolio.

Asset Quality:

The provision for credit losses on loans decreased to $340,000 for the second quarter of 2023 compared to $464,000 for the first quarter of 2023, and $925,000 for the second quarter of 2022. The Company did not have any loan charge-offs or recoveries during the second quarter of 2023, a loan charge-off of $247,000, or 0.02% of gross loans, and no recoveries during the first quarter of 2023, and no loan charge-offs or recoveries during the second quarter of 2022.  

Non-performing assets (“NPAs”) to total assets of 0.01% at June 30, 2023 and March 31, 2023 compared to 0.03% at June 30, 2022, with non-performing loans of $181,000, $222,000 and $549,000, respectively, on those dates.

The allowance for credit losses on loans increased by $340,000 to $15.7 million, or 0.99% of total loans, at June 30, 2023, compared to $15.4 million, or 0.95% of total loans, at March 31, 2023 and $16.0 million, or 1.06% of total loans, at June 30, 2022. On January 1, 2023, the Company adopted the new current expected credit losses (CECL) standard. The Company’s allowance for credit losses on loans was 0.95% upon adoption on January 1, 2023 compared to 1.07% at December 31, 2022.

The allowance for credit losses on unfunded loan commitments increased by $156,000 to $1.9 million, or 0.31% of total unfunded loan commitments, at June 30, 2023, compared to $1.7 million, or 0.29% of total unfunded loan commitments, at March 31, 2023 and $430,000, or 0.7% of total unfunded loan commitments at June 30, 2022. The Company’s allowance for credit losses on unfunded loan commitments was 0.28% upon the adoption of CECL on January 1, 2023 compared to 0.07% at December 31, 2022.

Capital Adequacy:

At June 30, 2023, shareholders’ equity totaled $184.2 million compared to $178.6 million at March 31, 2023 and $158.7 million one year ago. As a result, the Company’s total risk-based capital ratio, tier I capital ratio and tier I leverage ratio of 12.73%, 9.07%, and 9.01%, respectively, were all above the regulatory standards for “well-capitalized” institutions of 10.00%, 8.00% and 5.00% respectively.

“Our strong financial performance and prudent balance sheet management resulted in an increase in all of our capital ratios and a 3% increase in our tangible book value per share during the second quarter,” said Thomas A. Sa, President, Chief Financial Officer and Chief Operating Officer of California BanCorp. “We also continue to have exceptional asset quality with non-performing assets remaining at just 0.01% of total assets.  Further, our exposure to investor office commercial real estate, excluding medical offices, sits at just 4.0% of total loans, with no exposure in downtown San Francisco. With our high level of capital and liquidity, stable deposit base, strong asset quality, and well managed interest rate sensitivity, we believe we are well positioned to effectively manage through the current challenging environment and create long-term value for our shareholders.”

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 webite at www.californiabankofcommerce.com.

Contacts:

Steven E. Shelton, (510) 457-3751                        Chief Executive Officer                        seshelton@bankcbc.com                                                                                                 Thomas A. Sa, (510) 457-3775President, Chief Financial Officer and Chief Operating Officertsa@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.

Forward-Looking Information:

Statements in this news release regarding expectations and beliefs about future financial performance and financial condition, as well as trends in the Company’s business and markets are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements often include words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "project," "outlook," or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could," or "may." The forward-looking statements in this news release are based on current information and on assumptions that the Company makes about future events and circumstances that are subject to a number of risks and uncertainties that are often difficult to predict and beyond the Company’s control. As a result of those risks and uncertainties, the Company’s actual financial results in the future could differ, possibly materially, from those expressed in or implied by the forward-looking statements contained in this news release and could cause the Company to make changes to future plans. Those risks and uncertainties include, but are not limited to, the risk of incurring loan losses, which is an inherent risk of the banking business; the risk that the Company will not be able to continue its internal growth rate; the risk that the United States economy will experience slowed growth or recession or will be adversely affected by domestic or international economic conditions and risks associated with the Federal Reserve Board taking actions with respect to interest rates, any of which could adversely affect, among other things, the values of real estate collateral supporting many of the Company’s loans, interest income and interest rate margins and, therefore, the Company’s future operating results; risks associated with changes in income tax laws and regulations; and risks associated with seeking new client relationships and maintaining existing client relationships. 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, 2022 which is on file with the Securities and Exchange Commission (the “SEC”). Additional information will be set forth in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, which we expect to file with the SEC during the third quarter of 2023, and readers of this release are urged to review the additional information that will be contained in that report.

Due to these and other possible uncertainties and risks, readers are cautioned not to place undue reliance on the forward-looking statements contained in this news release, which speak only as of today's date, or to make predictions based solely on historical financial performance. The Company disclaims any obligation to update forward-looking statements contained in this news release, whether as a result of new information, future events or otherwise, except as may be required by law.

CALIFORNIA BANCORP AND SUBSIDIARY
SELECTED FINANCIAL INFORMATION (UNAUDITED) - PROFITABILITY
(Dollars in Thousands, Except Per Share Data)
										Change												Change
QUARTERLY HIGHLIGHTS:		Q2 2023				Q1 2023				$				%				Q2 2022				$				%
Interest income		$	27,172			$	25,539			$	1,633			6	%			$	17,706			$	9,466			53	%
Interest expense			8,526				6,782				1,744			26	%				1,483				7,043			475	%
Net interest income			18,646				18,757				(111	)		-1	%				16,223				2,423			15	%
Provision for credit losses			444				358				86			24	%				925				(481	)		-52	%
Net interest income after
provision for credit losses			18,202				18,399				(197	)		-1	%				15,298				2,904			19	%
Non-interest income			1,135				1,107				28			3	%				1,394				(259	)		-19	%
Non-interest expense			11,603				11,843				(240	)		-2	%				10,819				784			7	%
Income before income taxes			7,734				7,663				71			1	%				5,873				1,861			32	%
Income tax expense			2,294				2,212				82			4	%				1,629				665			41	%
Net income		$	5,440			$	5,451			$	(11	)		-0	%			$	4,244			$	1,196			28	%
Diluted earnings per share		$	0.65			$	0.64			$	0.01			2	%			$	0.51			$	0.14			27	%
Net interest margin			3.93	%			4.02	%		-9 Basis Points									3.65	%		+28 Basis Points
Efficiency ratio			58.66	%			59.62	%		-96 Basis Points									61.41	%		-275 Basis Points
										Change
YEAR-TO-DATE HIGHLIGHTS:		Q2 2023				Q2 2022				$				%
Interest income		$	52,711			$	33,630			$	19,081			57	%
Interest expense			15,308				2,881				12,427			431	%
Net interest income			37,403				30,749				6,654			22	%
Provision for loan losses			802				1,875				(1,073	)		-57	%
Net interest income after
provision for loan losses			36,601				28,874				7,727			27	%
Non-interest income			2,242				3,928				(1,686	)		-43	%
Non-interest expense			23,446				21,735				1,711			8	%
Income before income taxes			15,397				11,067				4,330			39	%
Income tax expense			4,506				3,150				1,356			43	%
Net income		$	10,891			$	7,917			$	2,974			38	%
Diluted earnings per share		$	1.29			$	0.94			$	0.35			37	%
Net interest margin			3.98	%			3.42	%		+56 Basis Points
Efficiency ratio			59.14	%			62.68	%		-354 Basis Points

CALIFORNIA BANCORP AND SUBSIDIARY
SELECTED FINANCIAL INFORMATION (UNAUDITED) - FINANCIAL POSITION
(Dollars in Thousands, Except Per Share Data)
										Change												Change
PERIOD-END HIGHLIGHTS:		Q2 2023				Q1 2023				$				%				Q2 2022				$			%
Total assets		$	2,005,646			$	2,050,774			$	(45,128	)		-2	%			$	1,885,352			$	120,294		6	%
Gross loans			1,583,631				1,617,263				(33,632	)		-2	%				1,500,379				83,252		6	%
Deposits			1,738,296				1,717,610				20,686			1	%				1,552,139				186,157		12	%
Tangible equity			176,783				171,099				5,684			3	%				151,251				25,532		17	%
Tangible book value per share		$	21.09			$	20.48			$	0.61			3	%			$	18.19			$	2.90		16	%
Tangible equity / total assets			8.81	%			8.34	%		+47 Basis Points									8.02	%		+79 Basis Points
Gross loans / total deposits			91.10	%			94.16	%		-306 Basis Points									96.67	%		-557 Basis Points
Noninterest-bearing deposits /
total deposits			42.69	%			43.12	%		-43 Basis Points									46.09	%		-340 Basis Points
QUARTERLY AVERAGE										Change												Change
HIGHLIGHTS:		Q2 2023				Q1 2023				$				%				Q2 2022				$			%
Total assets		$	1,983,877			$	1,974,285			$	9,592			0	%			$	1,864,196			$	119,681		6	%
Total earning assets			1,900,918				1,893,940				6,978			0	%				1,783,017				117,901		7	%
Gross loans			1,577,529				1,582,332				(4,803	)		-0	%				1,464,922				112,607		8	%
Deposits			1,684,008				1,699,930				(15,922	)		-1	%				1,567,412				116,596		7	%
Tangible equity			175,783				169,454				6,329			4	%				150,176				25,607		17	%
Tangible equity / total assets			8.86	%			8.58	%		+28 Basis Points									8.06	%		+80 Basis Points
Gross loans / total deposits			93.68	%			93.08	%		+60 Basis Points									93.46	%		+50 Basis Points
Noninterest-bearing deposits /
total deposits			42.65	%			42.88	%		-23 Basis Points									46.86	%		-421 Basis Points
YEAR-TO-DATE AVERAGE										Change
HIGHLIGHTS:		Q2 2023				Q2 2022				$				%
Total assets		$	1,979,107			$	1,896,191			$	82,916			4	%
Total earning assets			1,897,448				1,814,448				83,000			5	%
Gross loans			1,579,917				1,418,315				161,602			11	%
Deposits			1,691,925				1,609,478				82,447			5	%
Tangible equity			172,636				148,115				24,521			17	%
Tangible equity / total assets			8.72	%			7.81	%		+91 Basis Points
Gross loans / total deposits			93.38	%			88.12	%		+526 Basis Points
Noninterest-bearing deposits /
total deposits			42.76	%			45.85	%		-309 Basis Points

CALIFORNIA BANCORP AND SUBSIDIARY
SELECTED INTERIM FINANCIAL INFORMATION (UNAUDITED) - ASSET QUALITY
(Dollars in Thousands)
ALLOWANCE FOR CREDIT LOSSES (LOANS):		06/30/23				03/31/23				12/31/22				09/30/22				06/30/22
Balance, beginning of period		$	15,382			$	17,005			$	16,555			$	15,957			$	15,032
CECL adjustment			-				(1,840	)			-				-				-
Provision for credit losses, quarterly			340				464				1,100				800				925
Charge-offs, quarterly			-				(247	)			(650	)			(202	)			-
Recoveries, quarterly			-				-				-				-				-
Balance, end of period		$	15,722			$	15,382			$	17,005			$	16,555			$	15,957
NONPERFORMING ASSETS:		06/30/23				03/31/23				12/31/22				09/30/22				06/30/22
Loans accounted for on a non-accrual basis		$	181			$	222			$	1,250			$	182			$	549
Loans with principal or interest contractually
past due 90 days or more and still accruing
interest			-				-				-				161				-
Nonperforming loans		$	181			$	222			$	1,250			$	343			$	549
Other real estate owned			-				-				-				-				-
Nonperforming assets		$	181			$	222			$	1,250			$	343			$	549
Loans restructured and in compliance with
modified terms			-				-				-				-				-
Nonperforming assets and restructured loans		$	181			$	222			$	1,250			$	343			$	549
Nonperforming loans by asset type:
Commercial		$	-			$	-			$	1,028			$	161			$	-
Real estate other			-				-				-				-				-
Real estate construction and land			-				-				-				-				-
SBA			181				222				222				182				549
Other			-				-				-				-				-
Nonperforming loans		$	181			$	222			$	1,250			$	343			$	549
ASSET QUALITY:		06/30/23				03/31/23				12/31/22				09/30/22				06/30/22
Allowance for credit losses (loans) / gross loans			0.99	%			0.95	%			1.07	%			1.04	%			1.06	%
Allowance for credit losses (loans) / nonperforming loans			8686.19	%			6928.83	%			1360.40	%			4826.53	%			2906.56	%
Nonperforming assets / total assets			0.01	%			0.01	%			0.06	%			0.02	%			0.03	%
Nonperforming loans / gross loans			0.01	%			0.01	%			0.08	%			0.02	%			0.04	%
Net quarterly charge-offs / gross loans			0.00	%			0.02	%			0.04	%			0.01	%			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
		06/30/23				03/31/23				06/30/22				06/30/23				06/30/22
INTEREST INCOME
Loans		$	23,476			$	22,472			$	16,298			$	45,948			$	31,184
Federal funds sold			2,238				1,760				280				3,998				416
Investment securities			1,458				1,307				1,128				2,765				2,030
Total interest income			27,172				25,539				17,706				52,711				33,630
INTEREST EXPENSE
Deposits			7,493				6,022				796				13,515				1,602
Other			1,033				760				687				1,793				1,279
Total interest expense			8,526				6,782				1,483				15,308				2,881
Net interest income			18,646				18,757				16,223				37,403				30,749
Provision for credit losses			444				358				925				802				1,875
Net interest income after provision
for credit losses			18,202				18,399				15,298				36,601				28,874
NON-INTEREST INCOME
Service charges and other fees			867				863				1,134				1,730				2,023
Gain on sale of loans			-				-				-				-				1,393
Other non-interest income			268				244				260				512				512
Total non-interest income			1,135				1,107				1,394				2,242				3,928
NON-INTEREST EXPENSE
Salaries and benefits			7,831				7,876				7,146				15,707				14,239
Premises and equipment			1,168				1,180				1,267				2,348				2,569
Other			2,604				2,787				2,406				5,391				4,927
Total non-interest expense			11,603				11,843				10,819				23,446				21,735
Income before income taxes			7,734				7,663				5,873				15,397				11,067
Income taxes			2,294				2,212				1,629				4,506				3,150
NET INCOME		$	5,440			$	5,451			$	4,244			$	10,891			$	7,917
EARNINGS PER SHARE
Basic earnings per share		$	0.65			$	0.65			$	0.51			$	1.30			$	0.96
Diluted earnings per share		$	0.65			$	0.64			$	0.51			$	1.29			$	0.94
Average common shares outstanding			8,369,907				8,339,080				8,295,014				8,354,564				8,285,950
Average common and equivalent
shares outstanding			8,414,213				8,492,067				8,395,701				8,442,607				8,393,776
PERFORMANCE MEASURES
Return on average assets			1.10	%			1.12	%			0.91	%			1.11	%			0.84	%
Return on average equity			11.91	%			12.50	%			10.80	%			12.19	%			10.26	%
Return on average tangible equity			12.41	%			13.05	%			11.34	%			12.72	%			10.78	%
Efficiency ratio			58.66	%			59.62	%			61.41	%			59.14	%			62.68	%

CALIFORNIA BANCORP AND SUBSIDIARY
INTERIM CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in Thousands)
		06/30/23				03/31/23				12/31/22				09/30/22				06/30/22
ASSETS
Cash and due from banks		$	19,763			$	15,121			$	16,686			$	24,709			$	20,378
Federal funds sold			187,904				198,804				215,696				216,345				138,057
Investment securities			151,129				153,769				155,878				157,531				165,309
Loans:
Commercial			622,270				656,519				634,535				643,131				589,562
Real estate other			856,344				853,431				848,241				824,867				794,504
Real estate construction and land			60,595				63,928				63,730				71,523				63,189
SBA			4,936				5,610				7,220				8,565				13,310
Other			39,486				37,775				39,695				39,815				39,814
Loans, gross			1,583,631				1,617,263				1,593,421				1,587,901				1,500,379
Unamortized net deferred loan costs (fees)			1,637				1,765				2,040				1,902				2,570
Allowance for credit losses			(15,722	)			(15,382	)			(17,005	)			(16,555	)			(15,957	)
Loans, net			1,569,546				1,603,646				1,578,456				1,573,248				1,486,992
Premises and equipment, net			2,625				2,848				3,072				3,382				3,736
Bank owned life insurance			25,519				25,334				25,127				24,955				24,788
Goodwill and core deposit intangible			7,452				7,462				7,472				7,483				7,493
Accrued interest receivable and other assets			41,708				43,790				39,828				40,848				38,599
Total assets		$	2,005,646			$	2,050,774			$	2,042,215			$	2,048,501			$	1,885,352
LIABILITIES
Deposits:
Demand noninterest-bearing		$	742,160			$	740,650			$	811,671			$	758,716			$	715,432
Demand interest-bearing			29,324				30,798				37,815				35,183				45,511
Money market and savings			633,620				616,864				671,016				597,244				626,156
Time			333,192				329,298				271,238				317,935				165,040
Total deposits			1,738,296				1,717,610				1,791,740				1,709,078				1,552,139
Junior subordinated debt securities			54,221				54,186				54,152				54,117				54,097
Other borrowings			-				75,000				-				100,000				100,000
Accrued interest payable and other liabilities			28,894				25,417				24,069				21,248				20,372
Total liabilities			1,821,411				1,872,213				1,869,961				1,884,443				1,726,608
SHAREHOLDERS' EQUITY
Common stock			112,167				111,609				111,257				110,786				110,289
Retained earnings			73,423				68,082				62,297				54,628				49,106
Accumulated other comprehensive loss			(1,355	)			(1,130	)			(1,300	)			(1,356	)			(651	)
Total shareholders' equity			184,235				178,561				172,254				164,058				158,744
Total liabilities and shareholders' equity		$	2,005,646			$	2,050,774			$	2,042,215			$	2,048,501			$	1,885,352
											-				-				-
CAPITAL ADEQUACY
Tier I leverage ratio			9.01	%			8.76	%			7.98	%			8.21	%			8.27	%
Tier I risk-based capital ratio			9.07	%			8.54	%			8.23	%			7.98	%			8.09	%
Total risk-based capital ratio			12.73	%			12.08	%			11.77	%			11.57	%			11.84	%
Total equity/ total assets			9.19	%			8.71	%			8.43	%			8.01	%			8.42	%
Book value per share		$	21.98			$	21.37			$	20.67			$	19.70			$	19.09
Common shares outstanding			8,383,772				8,355,378				8,332,479				8,327,781				8,317,161

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,
		2023									2023
					Yields			Interest						Yields			Interest
		Average			or			Income/			Average			or			Income/
		Balance			Rates			Expense			Balance			Rates			Expense
ASSETS
Interest earning assets:
Loans (1)		$	1,577,529		5.97	%		$	23,476		$	1,582,332		5.76	%		$	22,472
Federal funds sold			170,608		5.26	%			2,238			156,941		4.55	%			1,760
Investment securities			152,781		3.83	%			1,458			154,667		3.43	%			1,307
Total interest earning assets			1,900,918		5.73	%			27,172			1,893,940		5.47	%			25,539
Noninterest-earning assets:
Cash and due from banks			19,207									18,098
All other assets (2)			63,752									62,247
TOTAL		$	1,983,877								$	1,974,285
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Deposits:
Demand		$	30,346		0.16	%			12		$	34,032		0.08	%		$	7
Money market and savings			609,200		2.50	%			3,793			626,666		2.01	%			3,104
Time			326,291		4.53	%			3,688			310,246		3.81	%			2,911
Other			90,188		4.59	%			1,033			71,108		4.33	%			760
Total interest-bearing liabilities			1,056,025		3.24	%			8,526			1,042,052		2.64	%			6,782
Noninterest-bearing liabilities:
Demand deposits			718,171									728,986
Accrued expenses and
other liabilities			26,441									26,326
Shareholders' equity			183,240									176,921
TOTAL		$	1,983,877								$	1,974,285
Net interest income and margin (3)					3.93	%		$	18,646					4.02	%		$	18,757
(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 $175,000 and $226,000, respectively.
(2) Other noninterest-earning assets includes the allowance for credit losses of $15.4 million and $17.0 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,
		2023									2022
					Yields			Interest						Yields			Interest
		Average			or			Income/			Average			or			Income/
		Balance			Rates			Expense			Balance			Rates			Expense
ASSETS
Interest earning assets:
Loans (1)		$	1,577,529		5.97	%		$	23,476		$	1,464,922		4.46	%		$	16,298
Federal funds sold			170,608		5.26	%			2,238			145,329		0.77	%			280
Investment securities			152,781		3.83	%			1,458			172,766		2.62	%			1,128
Total interest earning assets			1,900,918		5.73	%			27,172			1,783,017		3.98	%			17,706
Noninterest-earning assets:
Cash and due from banks			19,207									19,735
All other assets (2)			63,752									61,444
TOTAL		$	1,983,877								$	1,864,196
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Deposits:
Demand		$	30,346		0.16	%			12		$	42,380		0.08	%		$	8
Money market and savings			609,200		2.50	%			3,793			636,692		0.37	%			582
Time			326,291		4.53	%			3,688			153,859		0.54	%			206
Other			90,188		4.59	%			1,033			119,970		2.30	%			687
Total interest-bearing liabilities			1,056,025		3.24	%			8,526			952,901		0.62	%			1,483
Noninterest-bearing liabilities:
Demand deposits			718,171									734,481
Accrued expenses and
other liabilities			26,441									19,139
Shareholders' equity			183,240									157,675
TOTAL		$	1,983,877								$	1,864,196
Net interest income and margin (3)					3.93	%		$	18,646					3.65	%		$	16,223
(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) fees of $(175,000) and $83,000, respectively.
(2) Other noninterest-earning assets includes the allowance for credit losses of $15.4 million and $15.0 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,
		2023									2022
					Yields			Interest						Yields			Interest
		Average			or			Income/			Average			or			Income/
		Balance			Rates			Expense			Balance			Rates			Expense
ASSETS
Interest earning assets:
Loans (1)		$	1,579,917		5.86	%		$	45,948		$	1,418,314		4.43	%		$	31,184
Federal funds sold			163,812		4.92	%			3,998			244,809		0.34	%			416
Investment securities			153,719		3.63	%			2,765			151,324		2.71	%			2,030
Total interest earning assets			1,897,448		5.60	%			52,711			1,814,447		3.74	%			33,630
Noninterest-earning assets:
Cash and due from banks			18,656									19,244
All other assets (2)			63,003									62,500
TOTAL		$	1,979,107								$	1,896,191
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Deposits:
Demand		$	32,179		0.12	%			19		$	40,300		0.09	%			17
Money market and savings			617,885		2.25	%			6,897			679,662		0.37	%			1,247
Time			318,313		4.18	%			6,599			151,588		0.45	%			338
Other			80,701		4.48	%			1,793			110,370		2.34	%			1,279
Total interest-bearing liabilities			1,049,078		2.94	%			15,308			981,920		0.59	%			2,881
Noninterest-bearing liabilities:
Demand deposits			723,548									737,928
Accrued expenses and
other liabilities			26,383									20,724
Shareholders' equity			180,098									155,619
TOTAL		$	1,979,107								$	1,896,191
Net interest income and margin (3)					3.98	%		$	37,403					3.42	%		$	30,749
(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) fees of $(401,000) and $402,000, respectively.
(2) Other noninterest-earning assets includes the allowance for loan losses of $16.2 million and $14.6 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)
REVENUE:		Three months ended									Six months ended
		06/30/23			03/31/23			06/30/22			06/30/23			06/30/22
Net interest income		$	18,646		$	18,757		$	16,223		$	37,403		$	30,749
Non-interest income			1,135			1,107			1,394			2,242			3,928
Total revenue		$	19,781		$	19,864		$	17,617		$	39,645		$	34,677
NON-INTEREST EXPENSE:		Three months ended									Six months ended
		06/30/23			03/31/23			06/30/22			06/30/23			06/30/22
Total non-interest expense		$	11,603		$	11,843		$	10,819		$	23,446		$	21,735
Total capitalized loan origination costs			694			651			1,073			1,345			2,057
Total operating expenses, before capitalization
of loan origination costs		$	12,297		$	12,494		$	11,892		$	24,791		$	23,792