Private Bancorp of America, Inc. Announces Strong Net Income and Earnings Per Share and Exceeds $2 Billion in Assets in the Third Quarter 2023
Third Quarter 2023 Highlights
- Net income for the third quarter of 2023 of $8.5 million, up from $8.3 million(1) (as adjusted) in the prior quarter and up from $6.4 million in the third quarter of 2022. Net income for the third quarter of 2023 represents a return on average assets of 1.68% and a return on average tangible common equity of 19.74%
- Diluted earnings per share for the third quarter of 2023 of $1.47, up from $1.43(1) (as adjusted) in the prior quarter and up from $1.12 in the third quarter of 2022
- Loans held-for-investment (“HFI”) totaled $1.76 billion as of September 30, 2023, an increase of $47.1 million or 2.7% from June 30, 2023 and $176.6 million or 11.1% from December 31, 2022
- Provision for credit losses for the third quarter of 2023 of $0.5 million, compared to net reversal of $7.1 million for the prior quarter and a provision of $1.3 million for the third quarter of 2022. The provision for the third quarter of 2023 primarily relates to a $1.25 million specific reserve for a loan placed on nonaccrual status during the quarter, partially offset by a $520 thousand release of reserve for unfunded commitments that was reclassified from noninterest expense
- Total deposits were $1.77 billion as of September 30, 2023, an increase of $70.5 million or 4.1% from June 30, 2023. Federal Home Loan Bank advances increased by $16.0 million as a consequence of funding loan growth. Core deposits were $1.52 billion as of September 30, 2023, a decrease of $12.3 million or 0.8% from June 30, 2023
- As of September 30, 2023, total available liquidity was $1.5 billion or 179% of uninsured deposits, net of collateralized and fiduciary deposit accounts. Total available liquidity is comprised of $274 million of on-balance sheet liquidity (cash and investment securities) and $1.2 billion of unused borrowing capacity
- Net interest margin was 4.67% for the third quarter of 2023, as compared to 4.73% for the prior quarter and 4.99% for the third quarter of 2022
- Total cost of deposits was 1.92% for the third quarter of 2023, an increase from 1.59% for the prior quarter and 0.27% in the third quarter of 2022. The spot rate for total deposits was 2.18% as of September 30, 2023, compared to 1.67% at June 30, 2023. Total cost of funding sources was 2.12% for the third quarter of 2023, an increase from 1.82% in the prior quarter and 0.36% in the third quarter of 2022
- Tangible book value per share was $30.20 as of September 30, 2023, an increase of $1.38 since June 30, 2023 as a result of strong earnings. Tangible book value per share increased 28.6% year-over-year
LA JOLLA, Calif., Oct. 20, 2023 (GLOBE NEWSWIRE) — Private Bancorp of America, Inc. (OTCQX:PBAM), (“Company”) and CalPrivate Bank (“Bank”) announced unaudited financial results for the third fiscal quarter ended September 30, 2023. The Company reported net income of $8.5 million, or $1.47 per diluted share, for the third quarter of 2023, which represents a 33.7% increase from $6.4 million, or $1.12 per diluted share, for the third quarter of 2022.
Rick Sowers, President and CEO of the Company and the Bank stated, “We are very pleased with the results of the third quarter and our continued growth of the balance sheet coupled with strong earnings and net interest margin. Loan demand remains soft but both our Commercial & Private Banking as well as our SBA Lending Teams remain active in the market. Competition for deposits is intense so we are focused on providing exceptional Client service and taking advantage of market disruptions to obtain new Clients who can benefit from our Distinctly Different Service model.”
Sowers added, “We look at this market as an opportunity for CalPrivate Bank as we hire exceptional bankers and make investments in product strategy and innovation to serve the needs of our Clients not only now, but into the future. Credit trends remain solid but we have increased our portfolio management activities to reflect the current economic and interest rate environment.”
“The Company continues to exhibit successful customer acquisition activity despite a challenging interest rate environment. Additionally, the Company continues to invest in people and infrastructure, including strong risk management, needed to support the continued growth of the CalPrivate franchise,” said Selwyn Isakow, Chairman of the Board of the Company and the Bank.
STATEMENT OF INCOME
Net Interest Income
Net interest income for the third quarter of 2023 totaled $23.3 million, an increase of $0.5 million or 2.4% from the prior quarter and an increase of $2.7 million or 12.9% from the third quarter of 2022. The increase from the prior quarter was driven primarily by an increase of $2.1 million in interest income, which resulted from a 2.6% increase in average earning assets and 20 basis point increase in yield on earning assets. Partially offsetting this was an increase of $1.6 million in interest expense, which resulted primarily from a 34 basis point increase in the cost of interest-bearing liabilities.
Net Interest Margin
Net interest margin for the third quarter of 2023 was 4.67% compared to 4.73% for the prior quarter and 4.99% in the third quarter of 2022. The 6 basis point decrease in net interest margin from the prior quarter was due primarily to higher rates paid on funding sources, partially offset by higher rates on new loan originations and variable rate loans and investment securities. The yield on earning assets was 6.60% for the third quarter of 2023 compared with 6.40% for the prior quarter and the cost of interest-bearing liabilities was 3.24% for the third quarter of 2023 compared to 2.90% in the prior quarter. The cost of total deposits was 1.92% for the third quarter of 2023 compared to 1.59% in the prior quarter. The cost of core deposits, which excludes brokered deposits, was 1.49% in the third quarter of 2023 compared to 1.24% in the prior quarter.
Provision for Credit Losses
The provision for credit losses for the third quarter of 2023 was $0.5 million, compared to a net reversal of $7.1 million in the prior quarter and a provision of $1.3 million for the third quarter of 2022. The provision for the third quarter of 2023 primarily relates to a $1.25 million specific reserve for a loan placed on nonaccrual status during the quarter, partially offset by a $520 thousand release of reserve for unfunded commitments that was reclassified from noninterest expense. The net reversal in the second quarter of 2023 reflects recoveries of $8.6 million partially offset by provision expense of $1.5 million for loan growth. For more details, please refer to the “Asset Quality” section below.
Noninterest Income
Noninterest income was $1.2 million for the third quarter of 2023, an increase from $1.1 million in the prior quarter and compared to $1.4 million in the third quarter of 2022. The change from the prior quarter as well as the third quarter of 2022 was primarily due to varying levels of gain on sale of SBA 7a loans. SBA loan sales for the third quarter of 2023 were $7.2 million with a 9.47% average trade premium resulting in a net gain on sale of $466 thousand, compared with $2.6 million with a 9.70% average trade premium resulting in a net gain on sale of $171 thousand in the prior quarter. Management expects continued softness in the market for SBA 7a loans.
Noninterest Expense
Noninterest expense was $11.8 million for the third quarter of 2023, an increase from $8.8 million in the prior quarter and $11.7 million in the third quarter of 2022. The increase from the prior quarter was primarily due to a $1.6 million benefit in professional services (legal expense specifically) in the second quarter resulting from legal fees waived as well as legal costs reimbursed by the participant bank in relation to the settled lawsuit with ANI Development, LLC/Gina Champion-Cain and Chicago Title. Additionally, other expenses increased by $1.1 million primarily due to a $520 thousand reclassification adjustment of the reversal of reserve for unfunded commitments which is now recorded in the provision (reversal) for credit losses line of the income statement as well as higher expenses for regulatory assessments. The efficiency ratio was 48.51% for the third quarter of 2023 compared to 37.04% in the prior quarter and 53.29% in the third quarter of 2022. The increase in the efficiency ratio from the prior quarter was due primarily to the aforementioned expense variances.
The Company remains committed to making investments in the business, including technology, marketing, and staffing. Inflationary pressures and low unemployment continue to have an impact on rising wages as well as increased costs related to third party service providers, which we proactively monitor and manage.
Provision for Income Tax Expense
Provision for income tax expense was $3.6 million for the third quarter of 2023, compared to $6.6 million for the prior quarter. The effective tax rate for the third quarter of 2023 was 29.8% compared to 29.7% in the prior quarter and 29.2% in the third quarter of 2022.
STATEMENT OF FINANCIAL CONDITION
As of September 30, 2023, total assets were $2.07 billion, an increase of $97.5 million since the prior quarter and $219.3 million since December 31, 2022. The increase in assets from the prior quarter was primarily due to higher cash balances and loans receivable. Total cash and due from banks was $198.3 million as of September 30, 2023, an increase of $62.5 million, or 46.0%, since June 30, 2023, primarily due to the timing of the settlement of $52 million of brokered certificates of deposit obtained at the end of September 2023 and subsequently used to pay off Federal Home Loan Bank Advances in early October 2023. Loans HFI totaled $1.76 billion as of September 30, 2023, an increase of $47.1 million or 2.7% since June 30, 2023. Total deposits were $1.77 billion as of September 30, 2023, an increase of $70.5 million since June 30, 2023. The growth in loans was also funded by wholesale borrowings (Federal Home Loan Bank advances), which increased by $16.0 million since June 30, 2023. During the quarter, core deposits decreased by $12.3 million, which was driven by a $63.0 million decrease in noninterest-bearing core deposits, partially offset by a $50.6 million increase in interest-bearing core deposits (including balances in the Intrafi ICS and CDARS programs). Noninterest-bearing deposits represent 39.1% of total core deposits. Uninsured deposits, net of collateralized and fiduciary deposit accounts, represent 47.7% of total deposits as of September 30, 2023. As of September 30, 2023, the net unrealized loss on the available-for-sale (“AFS”) investment securities portfolio, which is comprised mostly of US Treasury and Government Agency debt, was $15.8 million (pre-tax) compared to a loss of $14.1 million as of June 30, 2023. The average duration of the Bank’s AFS portfolio is 3.9 years. The Company has no held-to-maturity securities.
Asset Quality
As of September 30, 2023, the allowance for loan losses was $23.8 million or 1.35% of loans HFI, compared to 1.32% as of June 30, 2023 and 1.21% at December 31, 2022. The increase in the coverage ratio from December 31, 2022 primarily resulted from the adoption of CECL. The Company continues to have strong credit metrics and its nonperforming assets are 0.25% of total assets as of September 30, 2023. The reserve for unfunded commitments was $2.0 million as of September 30, 2023, compared to $2.2 million as of June 30, 2023 and the change was due to a decrease in commitment balances available. Given the credit quality of the loan portfolio, management believes we are sufficiently reserved.
As of September 30, 2023, there are no doubtful credits and classified assets were $11.0 million, down from $11.9 million as of June 30, 2023. Total classified assets as of September 30, 2023, consisted of 9 loans, of which 6 loans totaling $7.2 million were secured by real estate with a weighted average LTV of 58.5%. The remaining 3 loans were commercial and industrial loans, two of which were SBA loans with a balance of $1.4 million, which includes one loan that is 75% guaranteed and one loan that is 90% guaranteed by the SBA, and the third was a $2.5 million unsecured loan with a specific reserve of $1.3 million.
Capital Ratios (2)
The Bank’s capital ratios were in excess of the levels established for “well capitalized” institutions and are as follows:
| September 30, 2023 (2) | June 30, 2023 | |
| CalPrivate Bank | ||
| Tier I leverage ratio | 9.98% | 9.75% |
| Tier I risk-based capital ratio | 11.03% | 10.77% |
| Total risk-based capital ratio | 12.28% | 12.02% |
| (2) September 30, 2023 capital ratios are preliminary and subject to change. | ||
About Private Bancorp of America, Inc.
Private Bancorp of America, Inc. (OTCQX: PBAM), is the holding company for CalPrivate Bank. CalPrivate Bank provides a Distinctly Different banking experience through unparalleled service and creative funding solutions to high-net-worth individuals, professionals, locally owned businesses, and real estate entrepreneurs. Customers are serviced through offices in Coronado, San Diego, La Jolla, Newport Beach, El Segundo and Beverly Hills as well as efficient electronic banking offerings. The Bank also offers various portfolio and government guaranteed lending programs, including SBA and cross-border Export-Import Bank programs. CalPrivate Bank is an SBA Preferred Lender and a Bauer Financial 5-star rated bank.
CalPrivate Bank’s website is www.calprivate.bank.
Non-GAAP Financial Measures
This press release contains certain non-GAAP financial measures in addition to results presented in accordance with GAAP, including adjusted income before provision for income taxes, adjusted net income, adjusted diluted earnings per share (“Adjusted EPS”), efficiency ratio, adjusted efficiency ratio, pretax pre-provision net revenue, average tangible common equity, adjusted return on average assets, return on average tangible common equity and adjusted return on average tangible common equity. The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s results of operations and financial condition and to enhance investors’ overall understanding of such results of operations and financial condition, permit investors to effectively analyze financial trends of our business activities, and enhance comparability with peers across the financial services sector. These non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures prepared in accordance with GAAP and should be read in conjunction with the Company’s GAAP financial information. A reconciliation of the most comparable GAAP financial measures to non-GAAP financial measures is included in the accompanying financial tables.
Investor Relations Contacts
Rick Sowers
President and Chief Executive Officer
Private Bancorp of America, Inc., and CalPrivate Bank
(424) 303-4894
Cory Stewart
Executive Vice President and Chief Financial Officer
Private Bancorp of America, Inc., and CalPrivate Bank
(206) 293-3669
Safe Harbor Paragraph
This communication contains expressions of expectations, both implied and explicit, that are “forward-looking statements” within the meaning of such term in the Private Securities Litigation Reform Act of 1995. We caution you that a number of important factors could cause actual results to differ materially from those in the forward-looking statements, especially given the current turmoil in the banking and financial markets. These factors include the effects of depositors withdrawing funds unexpectedly, counterparties being unable to provide liquidity sources that we believe should be available, loan losses, economic conditions and competition in the geographic and business areas in which Private Bancorp of America, Inc. operates, including competition in lending and deposit acquisition, the unpredictability of fee income from participation in SBA loan programs, the effects of bank failures, liquidations and mergers in our markets and nationally, our ability to successfully integrate and develop business through the addition of new personnel, whether our efforts to expand loan, product and service offerings will prove profitable, system failures and data security, whether we can effectively secure and implement new technology solutions, inflation, fluctuations in interest rates, legislation and governmental regulation. You should not place undue reliance on forward-looking statements, and we undertake no obligation to update those statements whether as a result of changes in underlying factors, new information, future events or otherwise. These factors could cause actual results to differ materially from what we anticipate or project. You should not place undue reliance on any such forward-looking statement, which speaks only as of the date on which it was made. Although we in good faith believe the assumptions and bases supporting our forward-looking statements to be reasonable there can be no assurance that those assumptions and bases will prove accurate.
| PRIVATE BANCORP OF AMERICA, INC. CONSOLIDATED BALANCE SHEET (Unaudited) (Dollars in thousands) | ||||||||||||
| Sep 30, 2023 | Jun 30, 2023 | Sep 30, 2022 | ||||||||||
| Assets | ||||||||||||
| Cash and due from banks | $ | 20,013 | $ | 23,273 | $ | 13,506 | ||||||
| Interest-bearing deposits in other financial institutions | 20,508 | 27,566 | 44,776 | |||||||||
| Interest-bearing deposits at Federal Reserve Bank | 157,807 | 85,020 | 43,891 | |||||||||
| Total cash and due from banks | 198,328 | 135,859 | 102,173 | |||||||||
| Interest-bearing time deposits with other institutions | 1,500 | 7,661 | 6,157 | |||||||||
| Investment securities available for sale | 86,648 | 94,574 | 107,332 | |||||||||
| Loans held for sale | 4,071 | 1,982 | 7,789 | |||||||||
| Total loans held-for-investment | 1,764,846 | 1,717,705 | 1,487,098 | |||||||||
| Allowance for loan losses | (23,789 | ) | (22,588 | ) | (19,092 | ) | ||||||
| Loans held-for-investment, net of allowance | 1,741,057 | 1,695,117 | 1,468,006 | |||||||||
| Federal Home Loan Bank stock, at cost | 8,915 | 8,915 | 7,020 | |||||||||
| Right of use asset | 2,827 | 2,525 | 2,669 | |||||||||
| Premises and equipment, net | 1,447 | 1,539 | 2,040 | |||||||||
| Servicing assets, net | 2,449 | 2,875 | 3,502 | |||||||||
| Accrued interest receivable | 6,877 | 6,118 | 4,262 | |||||||||
| Other assets | 20,100 | 19,572 | 15,951 | |||||||||
| Total assets | $ | 2,074,219 | $ | 1,976,737 | $ | 1,726,901 | ||||||
| Liabilities and Shareholders’ Equity | ||||||||||||
| Liabilities | ||||||||||||
| Noninterest bearing | $ | 595,023 | $ | 657,980 | $ | 763,227 | ||||||
| Interest Bearing | 1,174,664 | 1,041,192 | 767,371 | |||||||||
| Total deposits | 1,769,687 | 1,699,172 | 1,530,598 | |||||||||
| FHLB borrowings | 82,000 | 66,000 | 30,000 | |||||||||
| Other borrowings | 17,959 | 17,958 | 17,952 | |||||||||
| Accrued interest payable and other liabilities | 29,894 | 26,396 | 13,417 | |||||||||
| Total liabilities | 1,899,540 | 1,809,526 | 1,591,967 | |||||||||
| Shareholders’ equity | ||||||||||||
| Common stock | 73,416 | 73,379 | 71,671 | |||||||||
| Additional paid-in capital | 3,584 | 3,405 | 3,568 | |||||||||
| Retained earnings | 108,757 | 100,281 | 70,386 | |||||||||
| Accumulated other comprehensive (loss) income, net | (11,078 | ) | (9,854 | ) | (10,691 | ) | ||||||
| Total shareholders’ equity | 174,679 | 167,211 | 134,934 | |||||||||
| Total liabilities and shareholders’ equity | $ | 2,074,219 | $ | 1,976,737 | $ | 1,726,901 | ||||||
| PRIVATE BANCORP OF AMERICA, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in thousands, except per share amounts) | ||||||||||||||||||||
| For the three months ended | Year to Date | |||||||||||||||||||
| Sep 30, 2023 | Jun 30, 2023 | Sep 30, 2022 | Sep 30, 2023 | Sep 30, 2022 | ||||||||||||||||
| Interest Income | ||||||||||||||||||||
| Loans | $ | 30,568 | $ | 28,270 | $ | 21,028 | $ | 85,066 | $ | 56,205 | ||||||||||
| Investment securities | 562 | 560 | 578 | 1,702 | 1,550 | |||||||||||||||
| Deposits in other financial institutions | 1,748 | 1,933 | 372 | 4,831 | 711 | |||||||||||||||
| Total interest income | 32,878 | 30,763 | 21,978 | 91,599 | 58,466 | |||||||||||||||
| Interest Expense | ||||||||||||||||||||
| Deposits | 8,210 | 6,581 | 1,011 | 19,715 | 1,748 | |||||||||||||||
| Borrowings | 1,413 | 1,474 | 364 | 3,753 | 991 | |||||||||||||||
| Total interest expense | 9,623 | 8,055 | 1,375 | 23,468 | 2,739 | |||||||||||||||
| Net interest income | 23,255 | 22,708 | 20,603 | 68,131 | 55,727 | |||||||||||||||
| Provision (reversal) for credit losses | 471 | (7,149 | ) | 1,316 | (6,605 | ) | 2,118 | |||||||||||||
| Net interest income after provision for credit losses | 22,784 | 29,857 | 19,287 | 74,736 | 53,609 | |||||||||||||||
| Noninterest income: | ||||||||||||||||||||
| Service charges on deposit accounts | 313 | 310 | 306 | 971 | 887 | |||||||||||||||
| Net gain on sale of loans | 466 | 171 | 647 | 1,111 | 3,886 | |||||||||||||||
| Other noninterest income | 380 | 573 | 452 | 1,596 | 1,184 | |||||||||||||||
| Total noninterest income | 1,159 | 1,054 | 1,405 | 3,678 | 5,957 | |||||||||||||||
| Noninterest expense: | ||||||||||||||||||||
| Compensation and employee benefits | 7,512 | 7,189 | 7,261 | 22,731 | 21,948 | |||||||||||||||
| Occupancy and equipment | 781 | 795 | 756 | 2,382 | 2,287 | |||||||||||||||
| Data processing | 1,064 | 878 | 993 | 2,886 | 2,469 | |||||||||||||||
| Professional services | 564 | (836 | ) | 1,493 | 166 | 4,243 | ||||||||||||||
| Other expenses | 1,922 | 776 | 1,224 | 4,037 | 4,222 | |||||||||||||||
| Total noninterest expense | 11,843 | 8,802 | 11,727 | 32,202 | 35,169 | |||||||||||||||
| Income before provision for income taxes | 12,100 | 22,109 | 8,965 | 46,212 | 24,397 | |||||||||||||||
| Provision for income taxes | 3,611 | 6,575 | 2,614 | 13,215 | 7,131 | |||||||||||||||
| Net income | $ | 8,489 | $ | 15,534 | $ | 6,351 | $ | 32,997 | $ | 17,266 | ||||||||||
| Net income available to common shareholders | $ | 8,422 | $ | 15,407 | $ | 6,306 | $ | 32,763 | $ | 17,115 | ||||||||||
| Earnings per share | ||||||||||||||||||||
| Basic earnings per share | $ | 1.49 | $ | 2.72 | $ | 1.14 | $ | 5.81 | $ | 3.08 | ||||||||||
| Diluted earnings per share | $ | 1.47 | $ | 2.69 | $ | 1.12 | $ | 5.75 | $ | 3.03 | ||||||||||
| Average shares outstanding | 5,658,340 | 5,654,435 | 5,549,480 | 5,640,764 | 5,559,122 | |||||||||||||||
| Diluted average shares outstanding | 5,709,994 | 5,726,522 | 5,640,841 | 5,697,911 | 5,657,117 | |||||||||||||||
| PRIVATE BANCORP OF AMERICA, INC. Consolidated average balance sheet, interest, yield and rates (Unaudited) (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||
| For the three months ended | ||||||||||||||||||||||||||||||||||||
| Sep 30, 2023 | Jun 30, 2023 | Sep 30, 2022 | ||||||||||||||||||||||||||||||||||
| Average Balance | Interest | Average Yield/Rate | Average Balance | Interest | Average Yield/Rate | Average Balance | Interest | Average Yield/Rate | ||||||||||||||||||||||||||||
| Interest-Earnings Assets | ||||||||||||||||||||||||||||||||||||
| Deposits in other financial institutions | $ | 130,583 | $ | 1,748 | 5.31 | % | $ | 140,939 | $ | 1,933 | 5.50 | % | $ | 77,353 | $ | 372 | 1.91 | % | ||||||||||||||||||
| Investment securities | 101,313 | 562 | 2.22 | % | 110,332 | 560 | 2.03 | % | 122,184 | 578 | 1.89 | % | ||||||||||||||||||||||||
| Loans, including LHFS | 1,745,113 | 30,568 | 6.95 | % | 1,675,790 | 28,270 | 6.77 | % | 1,438,489 | 21,028 | 5.80 | % | ||||||||||||||||||||||||
| Total interest-earning assets | 1,977,009 | 32,878 | 6.60 | % | 1,927,061 | 30,763 | 6.40 | % | 1,638,026 | 21,978 | 5.32 | % | ||||||||||||||||||||||||
| Noninterest-earning assets | 28,188 | 32,741 | 27,465 | |||||||||||||||||||||||||||||||||
| Total Assets | $ | 2,005,197 | $ | 1,959,802 | $ | 1,665,491 | ||||||||||||||||||||||||||||||
| Interest-Bearing Liabilities | ||||||||||||||||||||||||||||||||||||
| Interest bearing DDA, excluding brokered | 99,243 | 402 | 1.61 | % | 99,334 | 364 | 1.47 | % | 92,769 | 166 | 0.71 | % | ||||||||||||||||||||||||
| Savings & MMA, excluding brokered | 657,453 | 4,248 | 2.56 | % | 645,219 | 3,570 | 2.22 | % | 533,902 | 602 | 0.45 | % | ||||||||||||||||||||||||
| Time deposits, excluding brokered | 114,437 | 933 | 3.23 | % | 101,241 | 719 | 2.85 | % | 68,832 | 144 | 0.83 | % | ||||||||||||||||||||||||
| Total deposits, excluding brokered | 871,133 | 5,583 | 2.54 | % | 845,794 | 4,653 | 2.21 | % | 695,503 | 912 | 0.52 | % | ||||||||||||||||||||||||
| Total brokered deposits | 202,644 | 2,627 | 5.14 | % | 155,577 | 1,928 | 4.97 | % | 16,069 | 99 | 2.44 | % | ||||||||||||||||||||||||
| Total Interest-Bearing Deposits | 1,073,777 | 8,210 | 3.03 | % | 1,001,371 | 6,581 | 2.64 | % | 711,572 | 1,011 | 0.56 | % | ||||||||||||||||||||||||
| FHLB advances | 87,190 | 1,142 | 5.20 | % | 96,626 | 1,202 | 4.99 | % | 15,299 | 92 | 2.39 | % | ||||||||||||||||||||||||
| Other borrowings | 17,958 | 271 | 5.99 | % | 17,971 | 272 | 6.07 | % | 17,951 | 272 | 6.06 | % | ||||||||||||||||||||||||
| Total Interest-Bearing Liabilities | 1,178,925 | 9,623 | 3.24 | % | 1,115,968 | 8,055 | 2.90 | % | 33,250 | 364 | 4.34 | % | ||||||||||||||||||||||||
| Noninterest-bearing deposits | 625,115 | 655,169 | – | 771,167 | ||||||||||||||||||||||||||||||||
| Total Funding Sources | 1,804,040 | 9,623 | 2.12 | % | 1,771,137 | 8,055 | 1.82 | % | 1,515,989 | 1,375 | 0.36 | % | ||||||||||||||||||||||||
| Noninterest-bearing liabilities | 27,810 | 26,492 | 4,775 | |||||||||||||||||||||||||||||||||
| Shareholders’ equity | 173,347 | 162,173 | 144,727 | |||||||||||||||||||||||||||||||||
| Total Liabilities and Shareholders’ Equity | $ | 2,005,197 | $ | 1,959,802 | $ | 1,665,491 | ||||||||||||||||||||||||||||||
| Net interest income/spread | $ | 23,255 | 4.48 | % | $ | 22,708 | 4.58 | % | $ | 20,603 | 4.96 | % | ||||||||||||||||||||||||
| Net interest margin | 4.67 | % | 4.73 | % | 4.99 | % | ||||||||||||||||||||||||||||||
| PRIVATE BANCORP OF AMERICA, INC. Consolidated average balance sheet, interest, yield and rates (Unaudited) (Dollars in thousands) | ||||||||||||||||||||||||
| Year to Date | ||||||||||||||||||||||||
| Sep 30, 2023 | Sep 30, 2022 | |||||||||||||||||||||||
| Average Balance | Interest | Average Yield/Rate | Average Balance | Interest | Average Yield/Rate | |||||||||||||||||||
| Interest-Earnings Assets: | ||||||||||||||||||||||||
| Deposits in other financial institutions | $ | 131,621 | $ | 4,831 | 4.91 | % | $ | 97,946 | $ | 711 | 0.97 | % | ||||||||||||
| Investment securities | 108,071 | 1,702 | 2.10 | % | 119,042 | 1,550 | 1.74 | % | ||||||||||||||||
| Loans | 1,673,254 | 85,066 | 6.80 | % | 1,349,382 | 56,205 | 5.57 | % | ||||||||||||||||
| Total interest-earning assets | 1,912,946 | 91,599 | 6.40 | % | 1,566,370 | 58,466 | 4.99 | % | ||||||||||||||||
| Noninterest-earning assets | 28,581 | 25,751 | ||||||||||||||||||||||
| Total Assets | $ | 1,941,527 | $ | 1,592,121 | ||||||||||||||||||||
| Interest-Bearing Liabilities | ||||||||||||||||||||||||
| Interest bearing DDA, excluding brokered | 99,734 | 1,109 | 1.49 | % | 86,388 | 235 | 0.36 | % | ||||||||||||||||
| Savings & MMA, excluding brokered | 640,803 | 10,196 | 2.13 | % | 507,675 | 1,004 | 0.26 | % | ||||||||||||||||
| Time deposits, excluding brokered | 99,685 | 2,108 | 2.83 | % | 68,182 | 371 | 0.73 | % | ||||||||||||||||
| Total deposits, excluding brokered | 840,222 | 13,413 | 2.13 | % | 662,245 | 1,610 | 0.33 | % | ||||||||||||||||
| Total brokered deposits | 170,256 | 6,302 | 4.95 | % | 15,364 | 138 | 1.20 | % | ||||||||||||||||
| Total Interest-Bearing Deposits | 1,010,478 | 19,715 | 2.61 | % | 677,609 | 1,748 | 0.34 | % | ||||||||||||||||
| FHLB advances | 77,651 | 2,938 | 5.06 | % | 11,786 | 175 | 1.99 | % | ||||||||||||||||
| Other borrowings | 17,969 | 815 | 6.06 | % | 17,949 | 816 | 6.08 | % | ||||||||||||||||
| Total Interest-Bearing Liabilities | 1,106,098 | 23,468 | 2.84 | % | 29,735 | 991 | 4.46 | % | ||||||||||||||||
| Noninterest-bearing deposits | 649,863 | 737,578 | ||||||||||||||||||||||
| Total Funding Sources | 1,755,961 | 23,468 | 1.79 | % | 1,444,921 | 2,739 | 0.25 | % | ||||||||||||||||
| Noninterest-bearing liabilities | 24,718 | 12,955 | ||||||||||||||||||||||
| Shareholders’ equity | 160,848 | 134,245 | ||||||||||||||||||||||
| Total Liabilities and Shareholders’ Equity | $ | 1,941,527 | $ | 1,592,121 | ||||||||||||||||||||
| Net interest income/spread | $ | 68,131 | 4.61 | % | $ | 55,727 | 4.74 | % | ||||||||||||||||
| Net interest margin | 4.76 | % | 4.76 | % | ||||||||||||||||||||
| PRIVATE BANCORP OF AMERICA, INC. Condensed Balance Sheets (Unaudited) (Dollars in thousands, except per share amounts) | ||||||||||||||||||||
| Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | ||||||||||||||||
| Assets | ||||||||||||||||||||
| Cash and due from banks | $ | 198,328 | $ | 135,859 | $ | 211,812 | $ | 128,642 | $ | 102,173 | ||||||||||
| Interest-bearing time deposits with other institutions | 1,500 | 7,661 | 7,661 | 7,923 | 6,157 | |||||||||||||||
| Investment securities | 86,648 | 94,574 | 103,790 | 104,652 | 107,332 | |||||||||||||||
| Loans held for sale | 4,071 | 1,982 | 465 | 7,061 | 7,789 | |||||||||||||||
| Total loans held-for-investment | 1,764,846 | 1,717,705 | 1,623,028 | 1,588,248 | 1,487,098 | |||||||||||||||
| Allowance for loan losses | (23,789 | ) | (22,588 | ) | (21,135 | ) | (19,152 | ) | (19,092 | ) | ||||||||||
| Loans held-for-investment, net of allowance | 1,741,057 | 1,695,117 | 1,601,893 | 1,569,096 | 1,468,006 | |||||||||||||||
| Right of use asset | 2,827 | 2,525 | 2,889 | 3,265 | 2,669 | |||||||||||||||
| Premises and equipment, net | 1,447 | 1,539 | 1,744 | 1,742 | 2,040 | |||||||||||||||
| Other assets and interest receivable | 38,341 | 37,480 | 36,374 | 32,499 | 30,735 | |||||||||||||||
| Total assets | $ | 2,074,219 | $ | 1,976,737 | $ | 1,966,628 | $ | 1,854,880 | $ | 1,726,901 | ||||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||||||||||
| Liabilities | ||||||||||||||||||||
| Noninterest Bearing | $ | 595,023 | $ | 657,980 | $ | 639,664 | $ | 691,392 | $ | 763,227 | ||||||||||
| Interest Bearing | 1,174,664 | 1,041,192 | 944,102 | 983,730 | 767,371 | |||||||||||||||
| Total Deposits | 1,769,687 | 1,699,172 | 1,583,766 | 1,675,122 | 1,530,598 | |||||||||||||||
| Borrowings | 99,959 | 83,958 | 209,956 | 17,954 | 47,952 | |||||||||||||||
| Accrued interest payable and other liabilities | 29,894 | 26,396 | 20,592 | 18,480 | 13,417 | |||||||||||||||
| Total liabilities | 1,899,540 | 1,809,526 | 1,814,314 | 1,711,556 | 1,591,967 | |||||||||||||||
| Shareholders’ equity | ||||||||||||||||||||
| Common stock | 73,416 | 73,379 | 73,254 | 72,221 | 71,671 | |||||||||||||||
| Additional paid-in capital | 3,584 | 3,405 | 3,289 | 3,353 | 3,568 | |||||||||||||||
| Retained earnings | 108,757 | 100,281 | 84,751 | 77,810 | 70,386 | |||||||||||||||
| Accumulated other comprehensive (loss) income | (11,078 | ) | (9,854 | ) | (8,980 | ) | (10,060 | ) | (10,691 | ) | ||||||||||
| Total shareholders’ equity | 174,679 | 167,211 | 152,314 | 143,324 | 134,934 | |||||||||||||||
| Total liabilities and shareholders’ equity | $ | 2,074,219 | $ | 1,976,737 | $ | 1,966,628 | $ | 1,854,880 | $ | 1,726,901 | ||||||||||
| Book value per common share | $ | 30.63 | $ | 29.32 | $ | 26.83 | $ | 25.60 | $ | 24.12 | ||||||||||
| Tangible book value per common share (1) | $ | 30.20 | $ | 28.82 | $ | 26.30 | $ | 25.06 | $ | 23.49 | ||||||||||
| Shares outstanding | 5,703,350 | 5,702,637 | 5,676,017 | 5,599,025 | 5,594,380 | |||||||||||||||
| (1) Non-GAAP measure. See GAAP to non-GAAP Reconciliation table. | ||||||||||||||||||||
| PRIVATE BANCORP OF AMERICA, INC. Condensed Statements of Income (Unaudited) (Dollars in thousands, except per share amounts) | |||||||||||||||||||
| For the three months ended | |||||||||||||||||||
| Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | |||||||||||||||
| Interest income | $ | 32,878 | $ | 30,763 | $ | 27,958 | $ | 26,065 | $ | 21,978 | |||||||||
| Interest expense | 9,623 | 8,055 | 5,790 | 3,469 | 1,375 | ||||||||||||||
| Net interest income | 23,255 | 22,708 | 22,168 | 22,596 | 20,603 | ||||||||||||||
| Provision (reversal) for credit losses | 471 | (7,149 | ) | 73 | 60 | 1,316 | |||||||||||||
| Net interest income after provision for credit losses | 22,784 | 29,857 | 22,095 | 22,536 | 19,287 | ||||||||||||||
| Noninterest income | 1,159 | 1,054 | 1,465 | 1,084 | 1,405 | ||||||||||||||
| Compensation and employee benefits | 7,512 | 7,189 | 8,030 | 8,482 | 7,261 | ||||||||||||||
| Occupancy and equipment | 781 | 795 | 806 | 820 | 756 | ||||||||||||||
| Data processing | 1,064 | 878 | 944 | 942 | 993 | ||||||||||||||
| Professional services | 564 | (836 | ) | 438 | 1,018 | 1,493 | |||||||||||||
| Other expenses | 1,922 | 776 | 1,339 | 1,813 | 1,224 | ||||||||||||||
| Total noninterest expense | 11,843 | 8,802 | 11,557 | 13,075 | 11,727 | ||||||||||||||
| Income before provision for income taxes | 12,100 | 22,109 | 12,003 | 10,545 | 8,965 | ||||||||||||||
| Income taxes | 3,611 | 6,575 | 3,029 | 3,102 | 2,614 | ||||||||||||||
| Net income | $ | 8,489 | $ | 15,534 | $ | 8,974 | $ | 7,443 | $ | 6,351 | |||||||||
| Net income available to common shareholders | $ | 8,422 | $ | 15,407 | $ | 8,923 | $ | 7,394 | $ | 6,306 | |||||||||
| Earnings per share | |||||||||||||||||||
| Basic earnings per share | $ | 1.49 | $ | 2.72 | $ | 1.59 | $ | 1.33 | $ | 1.13 | |||||||||
| Diluted earnings per share | $ | 1.47 | $ | 2.69 | $ | 1.57 | $ | 1.31 | $ | 1.12 | |||||||||
| Average shares outstanding | 5,658,340 | 5,654,435 | 5,608,193 | 5,551,376 | 5,549,480 | ||||||||||||||
| Diluted average shares outstanding | 5,709,994 | 5,726,522 | 5,673,394 | 5,645,355 | 5,640,841 | ||||||||||||||
| Performance Ratios | |||||||||||||||||||
| Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | |||||||||||||||
| ROAA | 1.68 | % | 3.18 | % | 1.96 | % | 1.68 | % | 1.51 | % | |||||||||
| ROAE | 19.43 | % | 38.42 | % | 24.80 | % | 20.89 | % | 17.41 | % | |||||||||
| ROATCE (1) | 19.74 | % | 39.14 | % | 25.32 | % | 21.41 | % | 17.84 | % | |||||||||
| Net interest margin | 4.67 | % | 4.73 | % | 4.90 | % | 5.17 | % | 4.99 | % | |||||||||
| Net interest spread | 4.48 | % | 4.58 | % | 4.80 | % | 5.11 | % | 4.96 | % | |||||||||
| Efficiency ratio (1) | 48.51 | % | 37.04 | % | 48.90 | % | 55.22 | % | 53.29 | % | |||||||||
| Noninterest expense / average assets | 2.34 | % | 1.80 | % | 2.52 | % | 2.95 | % | 2.79 | % | |||||||||
| (1) Non-GAAP measure. See GAAP to non-GAAP Reconciliation table. | |||||||||||||||||||
| PRIVATE BANCORP OF AMERICA, INC. (Unaudited) | ||||||||||||||||||||
| Selected Quarterly Average Balances | ||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||
| For the three months ended | ||||||||||||||||||||
| Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | ||||||||||||||||
| Total assets | $ | 2,005,197 | $ | 1,959,802 | $ | 1,857,994 | $ | 1,759,204 | $ | 1,665,491 | ||||||||||
| Earning assets | $ | 1,977,009 | $ | 1,927,061 | $ | 1,833,089 | $ | 1,733,577 | $ | 1,638,026 | ||||||||||
| Total loans, including loans held for sale | $ | 1,745,113 | $ | 1,675,790 | $ | 1,597,236 | $ | 1,527,863 | $ | 1,438,489 | ||||||||||
| Total deposits | $ | 1,698,892 | $ | 1,656,540 | $ | 1,624,777 | $ | 1,574,002 | $ | 1,482,739 | ||||||||||
| Total shareholders’ equity | $ | 173,347 | $ | 162,173 | $ | 146,778 | $ | 141,330 | $ | 144,727 | ||||||||||
| Loan Balances by Type | ||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||
| Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | ||||||||||||||||
| Real estate – investor owned | $ | 495,450 | $ | 481,518 | $ | 472,315 | $ | 476,404 | $ | 403,950 | ||||||||||
| Real estate – owner occupied | 495,909 | 468,234 | 418,788 | 394,365 | 382,689 | |||||||||||||||
| Real estate – multifamily | 159,447 | 150,003 | 141,783 | 130,901 | 136,841 | |||||||||||||||
| Real estate – single family | 116,197 | 119,762 | 121,760 | 118,502 | 107,728 | |||||||||||||||
| Commercial business | 435,183 | 421,717 | 401,277 | 405,919 | 394,369 | |||||||||||||||
| Land and construction | 59,591 | 73,665 | 64,571 | 56,153 | 55,418 | |||||||||||||||
| Consumer | 3,069 | 2,806 | 2,534 | 6,004 | 6,103 | |||||||||||||||
| Total loans held for investment | $ | 1,764,846 | $ | 1,717,705 | $ | 1,623,028 | $ | 1,588,248 | $ | 1,487,098 | ||||||||||
| Deposits by Type | ||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||
| Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | ||||||||||||||||
| Noninterest-bearing DDA | $ | 595,023 | $ | 657,980 | $ | 639,664 | $ | 691,392 | $ | 763,227 | ||||||||||
| Interest-bearing DDA, excluding brokered | 108,508 | 101,064 | 99,988 | 109,130 | 95,677 | |||||||||||||||
| Savings & MMA, excluding brokered | 696,499 | 670,195 | 637,031 | 614,991 | 576,395 | |||||||||||||||
| Time deposits, excluding brokered | 122,622 | 105,757 | 77,052 | 54,887 | 56,341 | |||||||||||||||
| Total deposits, excluding brokered | 1,522,652 | 1,534,996 | 1,453,735 | 1,470,400 | 1,491,640 | |||||||||||||||
| Total brokered deposits | 247,035 | 164,176 | 130,031 | 204,722 | 38,958 | |||||||||||||||
| Total deposits | $ | 1,769,687 | $ | 1,699,172 | $ | 1,583,766 | $ | 1,675,122 | $ | 1,530,598 | ||||||||||
| PRIVATE BANCORP OF AMERICA, INC. (Unaudited) | ||||||||||||||||||||
| Rollforward of Allowance for Credit Losses | ||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||
| For the three months ended | ||||||||||||||||||||
| Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | ||||||||||||||||
| Allowance for loan losses: | ||||||||||||||||||||
| Beginning balance | $ | 22,588 | $ | 21,135 | $ | 19,152 | $ | 19,092 | $ | 17,776 | ||||||||||
| Impact of CECL adoption | – | – | 1,910 | – | – | |||||||||||||||
| Provision for loan losses | 1,194 | (7,149 | ) | 73 | 60 | 1,316 | ||||||||||||||
| Net (charge-offs) recoveries | 7 | 8,602 | – | – | – | |||||||||||||||
| Ending balance | 23,789 | 22,588 | 21,135 | 19,152 | 19,092 | |||||||||||||||
| Reserve for unfunded commitments (1) | 1,969 | 2,172 | 2,802 | 1,718 | 1,674 | |||||||||||||||
| Total allowance for credit losses | $ | 25,758 | $ | 24,760 | $ | 23,937 | $ | 20,870 | $ | 20,766 | ||||||||||
| (1) Includes $974 thousand related to the impact of CECL adoption on January 1, 2023. | ||||||||||||||||||||
| Asset Quality | ||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||
| Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | ||||||||||||||||
| Total loans held-for-investment | $ | 1,764,846 | $ | 1,717,705 | $ | 1,623,028 | $ | 1,588,248 | $ | 1,487,098 | ||||||||||
| Allowance for loan losses | $ | (23,789 | ) | $ | (22,588 | ) | $ | (21,135 | ) | $ | (19,152 | ) | $ | (19,092 | ) | |||||
| 30-89 day past due loans and still accruing | $ | – | $ | – | $ | – | $ | – | $ | – | ||||||||||
| 90+ day past due loans and still accruing | $ | – | $ | – | $ | – | $ | – | $ | – | ||||||||||
| Nonaccrual loans | $ | 5,105 | $ | 3,354 | $ | 4,384 | $ | 3,880 | $ | 4,593 | ||||||||||
| NPAs / Assets | 0.25 | % | 0.17 | % | 0.22 | % | 0.21 | % | 0.27 | % | ||||||||||
| NPLs / Total loans held-for-investment & OREO | 0.29 | % | 0.20 | % | 0.27 | % | 0.24 | % | 0.31 | % | ||||||||||
| Net quarterly charge-offs (recoveries) | $ | (7 | ) | $ | (8,602 | ) | $ | – | $ | – | $ | – | ||||||||
| Net charge-offs (recoveries) /avg loans (annualized) | 0.00 | % | (2.05 | )% | 0.00 | % | 0.00 | % | 0.00 | % | ||||||||||
| Allowance for loan losses to loans HFI | 1.35 | % | 1.32 | % | 1.30 | % | 1.21 | % | 1.28 | % | ||||||||||
| Allowance for loan losses to nonaccrual loans | 465.99 | % | 673.46 | % | 482.09 | % | 493.61 | % | 415.68 | % | ||||||||||
| PRIVATE BANCORP OF AMERICA, INC. (Unaudited) | ||||||||||||||||||||
| The following tables present a reconciliation of non-GAAP financial measures to GAAP measures for: adjusted income before provision for income taxes, adjusted net income and adjusted EPS. We believe the presentation of certain non-GAAP financial measures provides useful information to assess our consolidated financial condition and consolidated results of operations and to assist investors in evaluating our financial results relative to our peers. These non-GAAP financial measures complement our GAAP reporting and are presented below to provide investors and others with information that we use to manage the business each period. Because not all companies use identical calculations, the presentation of these non-GAAP financial measures may not be comparable to other similarly titled measures used by other companies. These non-GAAP measures should be taken together with the corresponding GAAP measures and should not be considered a substitute of the GAAP measures. | ||||||||||||||||||||
| GAAP to Non-GAAP Reconciliation | ||||||||||||||||||||
| (Dollars in thousands, except per share amounts) | ||||||||||||||||||||
| For the three months ended | Year to Date | |||||||||||||||||||
| Sep 30, 2023 | Jun 30, 2023 | Sep 30, 2022 | Sep 30, 2023 | Sep 30, 2022 | ||||||||||||||||
| Adjusted income before provision for income taxes | ||||||||||||||||||||
| Income before provision for income taxes | $ | 12,100 | $ | 22,109 | $ | 8,965 | $ | 46,212 | $ | 24,397 | ||||||||||
| ANI recovery (1) | – | (7,708 | ) | – | (7,708 | ) | – | |||||||||||||
| Settlement of legal fees related to ANI litigation (2) | – | (1,635 | ) | – | (1,635 | ) | – | |||||||||||||
| Recovery of principal and interest on a loan acquired with credit deterioration as part of a business combination (3) | – | (986 | ) | – | (986 | ) | – | |||||||||||||
| Adjusted income before provision for income taxes (non-GAAP) | $ | 12,100 | $ | 11,780 | $ | 8,965 | $ | 35,883 | $ | 24,397 | ||||||||||
| Adjusted net income | ||||||||||||||||||||
| Net income | $ | 8,489 | $ | 15,534 | $ | 6,351 | $ | 32,997 | $ | 17,266 | ||||||||||
| ANI recovery, net of tax (1)(4) | – | (5,430 | ) | – | (5,430 | ) | – | |||||||||||||
| Settlement of legal fees related to ANI litigation, net of tax (2)(4) | – | (1,152 | ) | – | (1,152 | ) | – | |||||||||||||
| Recovery of principal and interest on a loan acquired with credit deterioration as part of a business combination, net of tax(3)(4) | – | (694 | ) | – | (694 | ) | – | |||||||||||||
| Adjusted net income (non-GAAP) | $ | 8,489 | $ | 8,258 | $ | 6,351 | $ | 25,721 | $ | 17,266 | ||||||||||
| Adjusted diluted earnings per share (“Adjusted EPS”) | ||||||||||||||||||||
| Diluted earnings per share | $ | 1.47 | $ | 2.69 | $ | 1.12 | $ | 5.75 | $ | 3.03 | ||||||||||
| ANI recovery, net of tax (1)(4) | – | (0.94 | ) | – | (0.94 | ) | – | |||||||||||||
| Settlement of legal fees related to ANI litigation, net of tax (2)(4) | – | (0.20 | ) | – | (0.20 | ) | – | |||||||||||||
| Recovery of principal and interest on a loan previously acquired with credit deterioration as part of a business combination, net of tax(3)(4) | – | (0.12 | ) | – | (0.12 | ) | – | |||||||||||||
| Adjusted EPS (non-GAAP) | $ | 1.47 | $ | 1.43 | $ | 1.12 | $ | 4.49 | $ | 3.03 | ||||||||||
| Diluted average shares outstanding | 5,709,994 | 5,726,522 | 5,640,841 | 5,697,911 | 5,657,117 | |||||||||||||||
| (1) In the second quarter of 2023, the Company reached a settlement with the Receiver for ANI Investments and Gina Champion-Cain in which the Company recovered $7.7 million (or approximately $0.94 per diluted share after tax) plus certain rights to future recoveries from a guarantor of the charged off loan. This recovery amount represents 80% of the original principal charge-off and is net of the participant bank’s share. | ||||||||||||||||||||
| (2) In the second quarter of 2023, in conjunction with the resolution of the ANI litigation, the Company was reimbursed $0.6 million of legal costs by the participant bank. In addition, $0.5 million of previously invoiced legal fees were waived at settlement of the litigation. | ||||||||||||||||||||
| (3) In the second quarter of 2023, the Company received $1.0 million related to a loan that was originated and written off by San Diego Private Bank (“SDPB”) prior to SDPB merging with the Company in 2013. Accordingly, the Company recorded an allowance recovery of $0.9 million for the amount that would have been written off at the time of the merger under CECL and $0.1 million of interest income for recovered interest. | ||||||||||||||||||||
| (4) Net of tax effect of 29.6%, which is comprised of 21.0% for the statutory Federal tax rate plus 8.6% for state franchise taxes, net of Federal benefits. | ||||||||||||||||||||
| PRIVATE BANCORP OF AMERICA, INC. (Unaudited) | ||||||||||||||||||||
| The following tables present a reconciliation of non-GAAP financial measures to GAAP measures for: efficiency ratio, adjusted efficiency ratio, pretax pre-provision net revenue, average tangible common equity, adjusted return on average assets, return on average tangible common equity and adjusted return on average tangible common equity. We believe the presentation of certain non-GAAP financial measures provides useful information to assess our consolidated financial condition and consolidated results of operations and to assist investors in evaluating our financial results relative to our peers. These non-GAAP financial measures complement our GAAP reporting and are presented below to provide investors and others with information that we use to manage the business each period. Because not all companies use identical calculations, the presentation of these non-GAAP financial measures may not be comparable to other similarly titled measures used by other companies. These non-GAAP measures should be taken together with the corresponding GAAP measures and should not be considered a substitute of the GAAP measures. | ||||||||||||||||||||
| GAAP to Non-GAAP Reconciliation | ||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||
| For the three months ended | ||||||||||||||||||||
| Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | ||||||||||||||||
| Efficiency Ratio | ||||||||||||||||||||
| Noninterest expense | $ | 11,843 | $ | 8,802 | $ | 11,557 | $ | 13,075 | $ | 11,727 | ||||||||||
| Net interest income | 23,255 | 22,708 | 22,168 | 22,596 | 20,603 | |||||||||||||||
| Noninterest income | 1,159 | 1,054 | 1,465 | 1,084 | 1,405 | |||||||||||||||
| Total net interest income and noninterest income | 24,414 | 23,762 | 23,633 | 23,680 | 22,008 | |||||||||||||||
| Efficiency ratio (non-GAAP) | 48.51 | % | 37.04 | % | 48.90 | % | 55.22 | % | 53.29 | % | ||||||||||
| Adjusted Efficiency Ratio | ||||||||||||||||||||
| Noninterest expense | $ | 11,843 | $ | 8,802 | $ | 11,557 | $ | 13,075 | $ | 11,727 | ||||||||||
| Settlement of legal fees related to ANI litigation | – | 1,635 | – | – | – | |||||||||||||||
| Adjusted noninterest expense (non-GAAP) | 11,843 | 10,437 | 11,557 | 13,075 | 11,727 | |||||||||||||||
| Total net interest income and noninterest income | 24,414 | 23,762 | 23,633 | 23,680 | 22,008 | |||||||||||||||
| Recovery of interest on a loan acquired with credit deterioration as part of a business combination | – | (84 | ) | – | – | – | ||||||||||||||
| Adjusted total net interest income and noninterest income (non-GAAP) | 24,414 | 23,678 | 23,633 | 23,680 | 22,008 | |||||||||||||||
| Adjusted Efficiency ratio (non-GAAP) | 48.51 | % | 44.08 | % | 48.90 | % | 55.22 | % | 53.29 | % | ||||||||||
| Pretax pre-provision net revenue | ||||||||||||||||||||
| Net interest income | $ | 23,255 | $ | 22,708 | $ | 22,168 | $ | 22,596 | $ | 20,603 | ||||||||||
| Noninterest income | 1,159 | 1,054 | 1,465 | 1,084 | 1,405 | |||||||||||||||
| Total net interest income and noninterest income | 24,414 | 23,762 | 23,633 | 23,680 | 22,008 | |||||||||||||||
| Less: Noninterest expense | 11,843 | 8,802 | 11,557 | 13,075 | 11,727 | |||||||||||||||
| Pretax pre-provision net revenue (non-GAAP) | $ | 12,571 | $ | 14,960 | $ | 12,076 | $ | 10,605 | $ | 10,281 | ||||||||||
| Return and Adjusted Return on Average Assets, Average Equity, Average Tangible Equity | ||||||||||||||||||||
| Net income | $ | 8,489 | $ | 15,534 | $ | 8,974 | $ | 7,443 | $ | 6,351 | ||||||||||
| Adjusted net income (non-GAAP) (1) | 8,489 | 8,258 | 8,974 | 7,443 | 6,351 | |||||||||||||||
| Average assets | 2,005,197 | 1,959,802 | 1,857,994 | 1,759,204 | 1,665,491 | |||||||||||||||
| Average shareholders’ equity | 173,347 | 162,173 | 146,778 | 141,330 | 144,727 | |||||||||||||||
| Less: Average intangible assets | 2,709 | 2,975 | 3,026 | 3,385 | 3,599 | |||||||||||||||
| Average tangible common equity (non-GAAP) | 170,638 | 159,198 | 143,752 | 137,945 | 141,128 | |||||||||||||||
| Return on average assets | 1.68 | % | 3.18 | % | 1.96 | % | 1.68 | % | 1.51 | % | ||||||||||
| Adjusted return on average assets (non-GAAP) (1) | 1.68 | % | 1.69 | % | 1.96 | % | 1.68 | % | 1.51 | % | ||||||||||
| Return on average equity | 19.43 | % | 38.42 | % | 24.80 | % | 20.89 | % | 17.41 | % | ||||||||||
| Adjusted return on average equity (non-GAAP) (1) | 19.43 | % | 20.42 | % | 24.80 | % | 20.89 | % | 17.41 | % | ||||||||||
| Return on average tangible common equity (non-GAAP) | 19.74 | % | 39.14 | % | 25.32 | % | 21.41 | % | 17.85 | % | ||||||||||
| Adjusted return on average tangible common equity (non-GAAP) (1) | 19.74 | % | 20.81 | % | 25.32 | % | 21.41 | % | 17.85 | % | ||||||||||
| Tangible book value per share | ||||||||||||||||||||
| Total equity | 174,679 | 167,211 | 152,314 | 143,324 | 134,934 | |||||||||||||||
| Less: Total intangible assets | 2,449 | 2,875 | 3,057 | 3,007 | 3,502 | |||||||||||||||
| Total tangible equity | 172,230 | 164,336 | 149,257 | 140,317 | 131,432 | |||||||||||||||
| Shares outstanding | 5,703,350 | 5,702,637 | 5,676,017 | 5,599,025 | 5,594,380 | |||||||||||||||
| Tangible book value per share (non-GAAP) | $ | 30.20 | $ | 28.82 | $ | 26.30 | $ | 25.06 | $ | 23.49 | ||||||||||
| (1) A reconciliation of net income to adjusted net income is provided on page 13. | ||||||||||||||||||||
| PRIVATE BANCORP OF AMERICA, INC. (Unaudited) | ||||||||
| The following tables present a reconciliation of non-GAAP financial measures to GAAP measures for: efficiency ratio, adjusted efficiency ratio, pretax pre-provision net revenue, average tangible common equity, adjusted return on average assets, return on average tangible common equity and adjusted return on average tangible common equity. We believe the presentation of certain non-GAAP financial measures provides useful information to assess our consolidated financial condition and consolidated results of operations and to assist investors in evaluating our financial results relative to our peers. These non-GAAP financial measures complement our GAAP reporting and are presented below to provide investors and others with information that we use to manage the business each period. Because not all companies use identical calculations, the presentation of these non-GAAP financial measures may not be comparable to other similarly titled measures used by other companies. These non-GAAP measures should be taken together with the corresponding GAAP measures and should not be considered a substitute of the GAAP measures. | ||||||||
| GAAP to Non-GAAP Reconciliation | ||||||||
| (Dollars in thousands) | ||||||||
| Year to Date | ||||||||
| Sep 30, 2023 | Sep 30, 2022 | |||||||
| Efficiency Ratio | ||||||||
| Noninterest expense | $ | 32,202 | $ | 35,169 | ||||
| Net interest income | 68,131 | 55,727 | ||||||
| Noninterest income | 3,678 | 5,957 | ||||||
| Total net interest income and noninterest income | 71,809 | 61,684 | ||||||
| Efficiency ratio (non-GAAP) | 44.84 | % | 57.01 | % | ||||
| Adjusted Efficiency Ratio | ||||||||
| Noninterest expense | $ | 32,202 | $ | 35,169 | ||||
| Settlement of legal fees related to ANI litigation | 1,635 | – | ||||||
| Adjusted noninterest expense (non-GAAP) | 33,837 | 35,169 | ||||||
| Total net interest income and noninterest income | 71,809 | 61,684 | ||||||
| Recovery of interest on a loan acquired with credit deterioration as part of a business combination | (84 | ) | – | |||||
| Adjusted total net interest income and noninterest income (non-GAAP) | 71,725 | 61,684 | ||||||
| Adjusted Efficiency ratio (non-GAAP) | 47.18 | % | 57.01 | % | ||||
| Pretax pre-provision net revenue | ||||||||
| Net interest income | $ | 68,131 | $ | 55,727 | ||||
| Noninterest income | 3,678 | 5,957 | ||||||
| Total net interest income and noninterest income | 71,809 | 61,684 | ||||||
| Less: Noninterest expense | 32,202 | 35,169 | ||||||
| Pretax pre-provision net revenue (non-GAAP) | $ | 39,607 | $ | 26,515 | ||||
| Return and Adjusted Return on Average Assets, Average Equity, Average Tangible Equity | ||||||||
| Net income | $ | 32,997 | $ | 17,266 | ||||
| Adjusted net income (non-GAAP) (1) | 25,721 | 17,266 | ||||||
| Average assets | 1,941,527 | 1,592,121 | ||||||
| Average shareholders’ equity | 160,848 | 134,245 | ||||||
| Less: Average intangible assets | 2,879 | 2,903 | ||||||
| Average tangible common equity | 157,969 | 131,342 | ||||||
| Return on average assets | 2.27 | % | 1.45 | % | ||||
| Adjusted return on average assets (non-GAAP) (1) | 1.77 | % | 1.45 | % | ||||
| Return on average equity | 27.43 | % | 17.20 | % | ||||
| Adjusted return on average equity (non-GAAP) (1) | 21.38 | % | 17.20 | % | ||||
| Return on average tangible common equity (non-GAAP) | 27.93 | % | 17.58 | % | ||||
| Adjusted return on average tangible common equity (non-GAAP) (1) | 21.77 | % | 17.58 | % | ||||
| (1) A reconciliation of net income to adjusted net income is provided on page 13. | ||||||||
