California BanCorp (BCAL) Q1 2023 earnings summary

Executive summary

• Q1 2023 net income was $5.5 million and diluted EPS was $0.64; ROA was 1.12% and NIM was 4.02%.

• Loan growth continued at a conservative pace, while seasonal deposit outflows eased in March and capital ratios and tangible book value per share increased.

Financial highlights

• Total loans increased at a 6% annualized rate, primarily from commercial loan growth; newly funded loans totaled $42 million in Q1.

• Deposits declined $74 million from Dec. 31, 2022, mainly from January and February seasonal outflows; net deposits grew in March.

• Newly funded loans carried a 7.72% weighted average rate, versus 6.72% in Q4 2022; Q1 production mix was 59% commercial and 41% CRE.

Outlook and guidance

• Keep new loan production conservative until economic conditions improve, with a near-term focus on high-quality C&I loans.

• Grow deposit market share through new commercial relationships and lower-cost deposits; use the treasury management platform to support relationships and fee income.

• Manage expenses and interest-rate sensitivity to preserve NIM as rates evolve; past investments in talent and technology are expected to support operating leverage.