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Private Bancorp of America, Inc. Announces Strong Net Income and Earnings Per Share for First Quarter 2024

First Quarter 2024 Highlights

  • Net income for the first quarter of 2024 of $7.9 million, compared to $7.9 million in the prior quarter and $9.0 million in the first quarter of 2023. Net income for the first quarter of 2024 represents a return on average assets of 1.48% and a return on average tangible common equity of 16.86%
  • Diluted earnings per share for the first quarter of 2024 of $1.36, compared to $1.36 in the prior quarter and $1.57 in the first quarter of 2023
  • Loans held-for-investment (“HFI”) totaled $1.91 billion as of March 31, 2024, an increase of $59.8 million or 3.2% (13.0% annualized) from December 31, 2023. Loans HFI increased 17.5% year over year
  • Provision for credit losses for the first quarter of 2024 was $0.2 million, compared to $0.5 million for the prior quarter and $0.1 million for the first quarter of 2023. The allowance for loan losses was 1.29% of loans HFI as of March 31, 2024
  • Total deposits were $1.90 billion as of March 31, 2024, an increase of $29.3 million or 1.6% (6.3% annualized) from December 31, 2023. Federal Home Loan Bank advances decreased by $4.0 million as a consequence of deposit growth. Core deposits were $1.61 billion as of March 31, 2024, an increase of $22.1 million or 1.4% from December 31, 2023
  • Net interest margin was 4.31% for the first quarter of 2024, as compared to 4.33% for the prior quarter and 4.90% for the first quarter of 2023
  • Total cost of funding sources was 2.70% for the first quarter of 2024, an increase from 2.53% in the prior quarter and 1.39% in the first quarter of 2023
  • Tangible book value per share was $33.55 as of March 31, 2024, an increase of $1.47 since December 31, 2023 as a result of strong earnings. Tangible book value per share increased 4.6% quarter-over-quarter and 27.6% year over year.

LA JOLLA, Calif., April 19, 2024 (GLOBE NEWSWIRE) -- Private Bancorp of America, Inc. (OTCQX: PBAM), (“Company”) and CalPrivate Bank (“Bank”) announced unaudited financial results for the first fiscal quarter ended March 31, 2024. The Company reported net income of $7.9 million, or $1.36 per diluted share, for the first quarter of 2024, compared to $7.9 million, or $1.36, in the prior quarter, and $9.0 million, or $1.57, in the first quarter of 2023.

Rick Sowers, President and CEO of the Company and the Bank stated, “We are pleased with our Team’s ability to continue to grow the balance sheet and bring on new Clients. By putting the Client at the center of what we do, we are able to exceed expectations and earn their Trust. Our Service and Relationship Teams continue to excel in a challenging environment. Our performance is a reflection of our Client focused, profit driven mindset. Our goal continues to be adding value for our Team, our Clients and our Shareholders.”

Sowers added, “We view this as an opportunistic market. We continue to hire great bankers who share our culture and passion for Client service. Disruption in our markets continues to provide opportunities for us to grow and we fully intend to take advantage of those. To support that growth, we continue to forge ahead with infrastructure and technology investments to support our business and private banking clients, both now and into the future.”

“The Company continues to exhibit successful customer acquisition activity despite a challenging interest rate environment. Additionally, the Company is investing in people and infrastructure, including strong risk management, product strategy and innovation 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 first quarter of 2024 totaled $22.8 million, an increase of $0.6 million or 2.6% from the prior quarter and an increase of $0.6 million or 2.7% from the first quarter of 2023. The increase from the prior quarter was driven primarily by 4.4% growth in interest-earning assets and a 14 basis point increase in asset yields as interest income increased by $1.7 million. Partially offsetting this was an increase of $1.1 million in interest expense, which resulted from a 8.2% increase in average interest bearing-liabilities and a 9 basis point increase in the cost of interest-bearing liabilities.

Net Interest Margin

Net interest margin for the first quarter of 2024 was 4.31%, compared to 4.33% for the prior quarter and 4.90% in the first quarter of 2023. The 2 basis point decrease in net interest margin from the prior quarter was due primarily to higher rates paid on deposits, partially offset by higher rates on new loan originations and variable rate loans and investment securities. The yield on earning assets was 6.78% for the first quarter of 2024 compared to 6.64% for the prior quarter, and the cost of interest-bearing liabilities was 3.77% for the first quarter of 2024 compared to 3.68% in the prior quarter. The cost of total deposits was 2.61% for the first quarter of 2024 compared to 2.41% in the prior quarter. The cost of core deposits, which excludes brokered deposits, was 2.14% in the first quarter of 2024 compared to 1.93% in the prior quarter. The spot rate for total deposits was 2.66% as of March 31, 2024, compared to 2.49% at December 31, 2023.

Provision for Credit Losses

Provision expense for credit losses for the first quarter of 2024 was $0.2 million, compared to $0.5 million in the prior quarter and $0.1 million for the first quarter of 2023. For more details, please refer to the “Asset Quality” section below.

Noninterest Income

Noninterest income was $1.4 million for the first quarter of 2024, compared to $1.2 million in the prior quarter and $1.5 million in the first quarter of 2023. SBA loan sales for the first quarter of 2024 were $8.9 million with a 10.84% average trade premium resulting in a net gain on sale of $681 thousand, compared with $6.7 million with a 9.62% average trade premium resulting in a net gain on sale of $436 thousand in the prior quarter. Management expects continued softness in the market for SBA 7a loans.

Noninterest Expense

Noninterest expense was $12.8 million for the first quarter of 2024, compared to $11.8 million in the prior quarter and $11.6 million in the first quarter of 2023. Compensation and employee benefits expense increased $919 thousand compared to the prior quarter driven by seasonal increases to benefit expenses and employer taxes, annual merit increases and adjustments to share-based compensation. The efficiency ratio was 52.84% for the first quarter of 2024 compared to 50.22% in the prior quarter and 48.90% in the first quarter of 2023. The increase in the efficiency ratio from the prior quarter was due primarily to the aforementioned increases in compensation and employee benefits expense.

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 $3.3 million for the first quarter of 2024, compared to $3.3 million for the prior quarter. The effective tax rate for the first quarter of 2024 was 29.5%, compared to 29.9% in the prior quarter and 25.2% in the first quarter of 2023.

STATEMENT OF FINANCIAL CONDITION

As of March 31, 2024, total assets were $2.19 billion, an increase of $35.3 million since December 31, 2023. The increase in assets from the prior quarter was primarily due to higher loans receivable and investment securities, partially offset by the decrease in cash balances. Total cash and due from banks was $141.5 million as of March 31, 2024, a decrease of $36.6 million or 20.5%, since December 31, 2023, primarily due to the use of funds that were deposited at the end of the prior quarter. Loans HFI totaled $1.91 billion as of March 31, 2024, an increase of $59.8 million or 3.2% since December 31, 2023. Investment securities available for sale (“AFS”) were $114.1 million as of March 31, 2024, an increase of $11.6 million or 11.3% since December 31, 2023 as a result of new securities purchased. As of March 31, 2024, the net unrealized loss on the AFS investment securities portfolio, which is comprised mostly of US Treasury and Government Agency debt, was $12.4 million (pre-tax) compared to a loss of $12.1 million (pre-tax) as of December 31, 2023. The average duration of the Bank’s AFS portfolio is 3.6 years. The Company has no held-to-maturity securities.

Total deposits were $1.90 billion as of March 31, 2024, an increase of $29.3 million since December 31, 2023. During the quarter, core deposits increased by $22.1 million, which was driven by a $78.5 million increase in interest-bearing core deposits (including balances in the Intrafi ICS and CDARS programs), partially offset by a $56.5 million decrease in noninterest-bearing core deposits. Deposit mix has continued to shift while short-term interest rates remain higher. Noninterest-bearing deposits represent 32.1% of total core deposits. Uninsured deposits, net of collateralized and fiduciary deposit accounts, represent 46.3% of total deposits as of March 31, 2024.

As of March 31, 2024, total available liquidity was $1.6 billion or 181% of uninsured deposits, net of collateralized and fiduciary deposit accounts. Total available liquidity is comprised of $247 million of on-balance sheet liquidity (cash and investment securities) and $1.4 billion of unused borrowing capacity.

Asset Quality and Allowance for Credit Losses ("ACL")

As of March 31, 2024, the allowance for loan losses was $24.7 million or 1.29% of loans HFI, compared to $24.5 million or 1.33% as of December 31, 2023. The decrease in the coverage ratio from December 31, 2023 primarily reflects improvements in the economic forecasts used for estimating credit losses. The Company continues to have strong credit metrics and its nonperforming assets are 0.21% of total assets as of March 31, 2024. The reserve for unfunded commitments was $1.7 million as of March 31, 2024, compared to $1.7 million as of December 31, 2023. Given the credit quality of the loan portfolio, management believes we are sufficiently reserved.

At March 31, 2024 and December 31, 2023, there are no doubtful credits and classified assets were $10.8 million and $11.0 million, respectively. Total classified assets consisted of nine loans as of March 31, 2024, which included six loans totaling $6.9 million secured by real estate with a weighted average LTV of 43.3%. The remaining three loans were commercial and industrial loans, the first of which was an SBA loan with a balance of $1.0 million, which is 90% guaranteed by the SBA, the second had a balance of $0.3 million and was secured by a UCC-1 lien and the third was a $2.5 million nonaccrual loan with a specific reserve of $1.75 million.

Capital Ratios (2)

The Bank’s capital ratios were in excess of the levels established for “well capitalized” institutions and are as follows:

  March 31, 2024 (2) December 31, 2023
CalPrivate Bank    
Tier I leverage ratio 10.08% 10.07%
Tier I risk-based capital ratio 11.20% 11.02%
Total risk-based capital ratio 12.45% 12.27%

(2) March 31, 2024 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)
 
    Mar 31, 2024     Dec 31, 2023     Mar 31, 2023  
Assets                  
Cash and due from banks   $ 13,136     $ 19,811     $ 13,347  
Interest-bearing deposits in other financial institutions     34,790       39,667       73,420  
Interest-bearing deposits at Federal Reserve Bank     93,575       118,622       125,045  
Total cash and due from banks     141,501       178,100       211,812  
Interest-bearing time deposits with other institutions     4,032       4,000       7,661  
Investment debt securities available for sale     114,067       102,499       103,790  
Loans held for sale     383       1,233       465  
Loans, net of deferred fees and costs and unaccreted discounts     1,906,992       1,847,161       1,623,028  
Allowance for loan losses     (24,693 )     (24,476 )     (21,135 )
Loans held-for-investment, net of allowance     1,882,299       1,822,685       1,601,893  
Federal Home Loan Bank stock, at cost     8,915       8,915       7,020  
Right of use asset     2,765       3,096       2,889  
Premises and equipment, net     1,804       1,700       1,744  
Servicing assets, net     2,203       2,318       3,057  
Accrued interest receivable     7,931       7,499       5,674  
Other assets     21,877       20,423       20,623  
Total assets   $ 2,187,777     $ 2,152,468     $ 1,966,628  
                   
Liabilities and Shareholders' Equity                  
Liabilities                  
Noninterest bearing   $ 516,294     $ 572,755     $ 639,664  
Interest bearing     1,388,381       1,302,615       944,102  
Total deposits     1,904,675       1,875,370       1,583,766  
FHLB borrowings     53,000       57,000       192,000  
Other borrowings     17,963       17,961       17,956  
Accrued interest payable and other liabilities     18,107       16,354       20,592  
Total liabilities     1,993,745       1,966,685       1,814,314  
                   
Shareholders' equity                  
Common stock     74,105       74,003       73,254  
Additional paid-in capital     4,108       3,679       3,289  
Retained earnings     124,464       116,604       84,751  
Accumulated other comprehensive (loss) income, net     (8,645 )     (8,503 )     (8,980 )
Total shareholders' equity     194,032       185,783       152,314  
Total liabilities and shareholders' equity   $ 2,187,777     $ 2,152,468     $ 1,966,628  


PRIVATE BANCORP OF AMERICA, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except per share amounts)
 
    For the three months ended  
    Mar 31, 2024     Dec 31, 2023     Mar 31, 2023  
Interest Income                  
Loans   $ 33,006     $ 31,482     $ 26,228  
Investment securities     979       655       580  
Deposits in other financial institutions     1,799       1,926       1,150  
Total interest income     35,784       34,063       27,958  
                   
Interest Expense                  
Deposits     12,130       10,874       4,924  
Borrowings     886       1,001       866  
Total interest expense     13,016       11,875       5,790  
                   
Net interest income     22,768       22,188       22,168  
Provision (reversal) for credit losses     233       459       73  
Net interest income after provision for credit losses     22,535       21,729       22,095  
                   
Noninterest income:                  
Service charges on deposit accounts     388       373       348  
Net gain on sale of loans     681       436       474  
Other noninterest income     357       435       643  
Total noninterest income     1,426       1,244       1,465  
                   
Noninterest expense:                  
Compensation and employee benefits     8,861       7,942       8,030  
Occupancy and equipment     770       790       806  
Data processing     1,058       1,001       944  
Professional services     488       410       438  
Other expenses     1,606       1,625       1,339  
Total noninterest expense     12,783       11,768       11,557  
Income before provision for income taxes     11,178       11,205       12,003  
Provision for income taxes     3,294       3,346       3,029  
Net income   $ 7,884     $ 7,859     $ 8,974  
Net income available to common shareholders   $ 7,832     $ 7,800     $ 8,923  
                   
Earnings per share                  
Basic earnings per share   $ 1.38     $ 1.38     $ 1.59  
Diluted earnings per share   $ 1.36     $ 1.36     $ 1.57  
                   
Average shares outstanding     5,679,843       5,664,028       5,608,193  
Diluted average shares outstanding     5,754,937       5,723,735       5,673,394  


PRIVATE BANCORP OF AMERICA, INC.
Consolidated average balance sheet, interest, yield and rates
(Unaudited)
(Dollars in thousands)
 
    For the three months ended  
    Mar 31, 2024     Dec 31, 2023     Mar 31, 2023  
    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   $ 135,511     $ 1,799       5.34 %   $ 144,265     $ 1,926       5.30 %   $ 123,159     $ 1,150       3.79 %
Investment securities     119,690       979       3.27 %     101,719       655       2.58 %     112,694       580       2.06 %
Loans, including LHFS     1,868,308       33,006       7.11 %     1,788,572       31,482       6.98 %     1,597,236       26,228       6.66 %
Total interest-earning assets     2,123,509       35,784       6.78 %     2,034,556       34,063       6.64 %     1,833,089       27,958       6.19 %
Noninterest-earning assets     25,469                   27,930                   24,905              
Total Assets   $ 2,148,978                 $ 2,062,486                 $ 1,857,994              
                                                       
Interest-Bearing Liabilities                                                      
Interest bearing DDA, excluding brokered     109,838       441       1.61 %     112,580       503       1.77 %     100,640       343       1.38 %
Savings & MMA, excluding brokered     765,770       6,421       3.37 %     713,754       5,811       3.23 %     619,316       2,378       1.56 %
Time deposits, excluding brokered     155,703       1,583       4.09 %     123,985       1,155       3.70 %     83,032       456       2.23 %
Total deposits, excluding brokered     1,031,311       8,445       3.29 %     950,319       7,469       3.12 %     802,988       3,177       1.60 %
Total brokered deposits     287,885       3,685       5.15 %     256,761       3,405       5.26 %     151,993       1,747       4.66 %
Total Interest-Bearing Deposits     1,319,196       12,130       3.70 %     1,207,080       10,874       3.57 %     954,981       4,924       2.09 %
                                                       
FHLB advances     49,935       614       4.95 %     56,511       728       5.11 %     48,711       594       4.95 %
Other borrowings     17,962       272       6.09 %     17,960       273       6.03 %     17,976       272       6.14 %
Total Interest-Bearing Liabilities     1,387,093       13,016       3.77 %     1,281,551       11,875       3.68 %     1,021,668       5,790       2.30 %
                                                       
Noninterest-bearing deposits     553,541                   581,579                   669,796              
Total Funding Sources     1,940,634       13,016       2.70 %     1,863,130       11,875       2.53 %     1,691,464       5,790       1.39 %
                                                       
Noninterest-bearing liabilities     18,018                   19,069                   19,752              
Shareholders' equity     190,326                   180,287                   146,778              
                                                       
Total Liabilities and Shareholders' Equity   $ 2,148,978                 $ 2,062,486                 $ 1,857,994              
                                                       
Net interest income/spread         $ 22,768       4.08 %         $ 22,188       4.11 %         $ 22,168       4.80 %
Net interest margin                 4.31 %                 4.33 %                 4.90 %


PRIVATE BANCORP OF AMERICA, INC.
Condensed Balance Sheets
(Unaudited)
(Dollars in thousands, except per share amounts)
 
    Mar 31, 2024     Dec 31, 2023     Sep 30, 2023     Jun 30, 2023     Mar 31, 2023  
Assets                              
Cash and due from banks   $ 141,501     $ 178,100     $ 198,328     $ 135,859     $ 211,812  
Interest-bearing time deposits with other institutions     4,032       4,000       1,500       7,661       7,661  
Investment securities     114,067       102,499       86,648       94,574       103,790  
Loans held for sale     383       1,233       4,071       1,982       465  
Total loans held-for-investment     1,906,992       1,847,161       1,764,846       1,717,705       1,623,028  
Allowance for loan losses     (24,693 )     (24,476 )     (23,789 )     (22,588 )     (21,135 )
Loans held-for-investment, net of allowance     1,882,299       1,822,685       1,741,057       1,695,117       1,601,893  
Right of use asset     2,765       3,096       2,827       2,525       2,889  
Premises and equipment, net     1,804       1,700       1,447       1,539       1,744  
Other assets and interest receivable     40,926       39,155       38,341       37,480       36,374  
Total assets   $ 2,187,777     $ 2,152,468     $ 2,074,219     $ 1,976,737     $ 1,966,628  
                               
Liabilities and Shareholders' Equity                              
Liabilities                              
Noninterest Bearing   $ 516,294     $ 572,755     $ 595,023     $ 657,980     $ 639,664  
Interest Bearing     1,388,381       1,302,615       1,174,664       1,041,192       944,102  
Total Deposits     1,904,675       1,875,370       1,769,687       1,699,172       1,583,766  
Borrowings     70,963       74,961       99,959       83,958       209,956  
Accrued interest payable and other liabilities     18,107       16,354       29,894       26,396       20,592  
Total liabilities     1,993,745       1,966,685       1,899,540       1,809,526       1,814,314  
Shareholders' equity                              
Common stock     74,105       74,003       73,416       73,379       73,254  
Additional paid-in capital     4,108       3,679       3,584       3,405       3,289  
Retained earnings     124,464       116,604       108,757       100,281       84,751  
Accumulated other comprehensive (loss) income     (8,645 )     (8,503 )     (11,078 )     (9,854 )     (8,980 )
Total shareholders' equity     194,032       185,783       174,679       167,211       152,314  
Total liabilities and shareholders' equity   $ 2,187,777     $ 2,152,468     $ 2,074,219     $ 1,976,737     $ 1,966,628  
                               
Book value per common share   $ 33.94     $ 32.48     $ 30.63     $ 29.32     $ 26.83  
Tangible book value per common share (1)   $ 33.55     $ 32.08     $ 30.20     $ 28.82     $ 26.30  
Shares outstanding     5,717,519       5,719,115       5,703,350       5,702,637       5,676,017  

(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  
  Mar 31, 2024     Dec 31, 2023     Sep 30, 2023     Jun 30, 2023     Mar 31, 2023  
Interest income $ 35,784     $ 34,063     $ 32,878     $ 30,763     $ 27,958  
Interest expense   13,016       11,875       9,623       8,055       5,790  
Net interest income   22,768       22,188       23,255       22,708       22,168  
Provision (reversal) for credit losses   233       459       471       (7,149 )     73  
Net interest income after provision for credit losses   22,535       21,729       22,784       29,857       22,095  
                             
Service charges on deposit accounts   388       373       313       310       348  
Net gain on sale of loans   681       436       466       171       474  
Other noninterest income   357       435       380       573       643  
Total noninterest income   1,426       1,244       1,159       1,054       1,465  
                             
Compensation and employee benefits   8,861       7,942       7,512       7,189       8,030  
Occupancy and equipment   770       790       781       795       806  
Data processing   1,058       1,001       1,064       878       944  
Professional services   488       410       564       (836 )     438  
Other expenses   1,606       1,625       1,922       776       1,339  
Total noninterest expense   12,783       11,768       11,843       8,802       11,557  
                             
Income before provision for income taxes   11,178       11,205       12,100       22,109       12,003  
Income taxes   3,294       3,346       3,611       6,575       3,029  
Net income $ 7,884     $ 7,859     $ 8,489     $ 15,534     $ 8,974  
Net income available to common shareholders $ 7,832     $ 7,800     $ 8,422     $ 15,407     $ 8,923  
                             
Earnings per share                            
Basic earnings per share $ 1.38     $ 1.38     $ 1.49     $ 2.72     $ 1.59  
Diluted earnings per share $ 1.36     $ 1.36     $ 1.47     $ 2.69     $ 1.57  
                             
Average shares outstanding   5,679,843       5,664,028       5,658,340       5,654,435       5,608,193  
Diluted average shares outstanding   5,754,937       5,723,735       5,709,994       5,726,522       5,673,394  


  Performance Ratios  
  Mar 31, 2024     Dec 31, 2023     Sep 30, 2023     Jun 30, 2023     Mar 31, 2023  
ROAA   1.48 %     1.51 %     1.68 %     3.18 %     1.96 %
ROAE   16.66 %     17.29 %     19.43 %     38.42 %     24.80 %
ROATCE (1)   16.86 %     17.53 %     19.74 %     39.14 %     25.32 %
Net interest margin   4.31 %     4.33 %     4.67 %     4.73 %     4.90 %
Net interest spread   4.08 %     4.11 %     4.48 %     4.58 %     4.80 %
Efficiency ratio (1)   52.84 %     50.22 %     48.51 %     37.04 %     48.90 %
Noninterest expense / average assets   2.39 %     2.26 %     2.34 %     1.80 %     2.52 %

(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  
    Mar 31, 2024     Dec 31, 2023     Sep 30, 2023     Jun 30, 2023     Mar 31, 2023  
Total assets   $ 2,148,978     $ 2,062,486     $ 2,005,197     $ 1,959,802     $ 1,857,994  
Earning assets   $ 2,123,509     $ 2,034,556     $ 1,977,009     $ 1,927,061     $ 1,833,089  
Total loans, including loans held for sale   $ 1,868,308     $ 1,788,572     $ 1,745,113     $ 1,675,790     $ 1,597,236  
Total deposits   $ 1,872,737     $ 1,788,659     $ 1,698,892     $ 1,656,540     $ 1,624,777  
Total shareholders' equity   $ 190,326     $ 180,287     $ 173,347     $ 162,173     $ 146,778  


    Loan Balances by Type  
    (Dollars in thousands)  
    Mar 31, 2024     Dec 31, 2023     Sep 30, 2023     Jun 30, 2023     Mar 31, 2023  
Commercial Real Estate (CRE):                              
Investor owned   $ 573,587     $ 583,069     $ 541,088     $ 527,819     $ 514,194  
Owner occupied     216,123       202,106       185,296       177,177       178,511  
Multifamily     175,629       168,324       159,700       158,082       151,262  
Secured by single family     157,092       146,370       153,132       148,464       147,813  
Land and construction     35,975       33,655       30,253       32,519       26,953  
SBA secured by real estate     385,416       349,676       343,576       329,403       272,059  
Total CRE     1,543,822       1,483,200       1,413,045       1,373,464       1,290,792  
Commercial business:                              
Commercial and industrial     352,417       350,879       337,815       332,394       319,154  
SBA non-real estate secured     8,657       9,807       11,081       9,121       10,591  
Total commercial business     361,074       360,686       348,896       341,515       329,745  
Consumer     2,096       3,275       2,905       2,726       2,491  
Total loans held for investment   $ 1,906,992     $ 1,847,161     $ 1,764,846     $ 1,717,705     $ 1,623,028  


    Deposits by Type  
    (Dollars in thousands)  
    Mar 31, 2024     Dec 31, 2023     Sep 30, 2023     Jun 30, 2023     Mar 31, 2023  
Noninterest-bearing DDA   $ 516,294     $ 572,755     $ 595,023     $ 657,980     $ 639,664  
Interest-bearing DDA, excluding brokered     117,129       121,829       108,508       101,064       99,988  
Savings & MMA, excluding brokered     812,841       742,617       696,499       670,195       637,031  
Time deposits, excluding brokered     160,605       147,583       122,622       105,757       77,052  
Total deposits, excluding brokered     1,606,869       1,584,784       1,522,652       1,534,996       1,453,735  
Total brokered deposits     297,806       290,586       247,035       164,176       130,031  
Total deposits   $ 1,904,675     $ 1,875,370     $ 1,769,687     $ 1,699,172     $ 1,583,766  


PRIVATE BANCORP OF AMERICA, INC.
(Unaudited)
 
    Rollforward of Allowance for Credit Losses  
    (Dollars in thousands)  
    For the three months ended  
    Mar 31, 2024     Dec 31, 2023     Sep 30, 2023     Jun 30, 2023     Mar 31, 2023  
Allowance for loan losses:                              
Beginning balance   $ 24,476     $ 23,789     $ 22,588     $ 21,135     $ 19,152  
Impact of CECL adoption     -       -       -       -       1,910  
Provision for loan losses     251       687       1,194       (7,149 )     73  
Net (charge-offs) recoveries     (34 )     -       7       8,602       -  
Ending balance     24,693       24,476       23,789       22,588       21,135  
Reserve for unfunded commitments (1)     1,723       1,741       1,969       2,172       2,802  
Total allowance for credit losses   $ 26,416     $ 26,217     $ 25,758     $ 24,760     $ 23,937  

(1) Includes $974 thousand related to the impact of CECL adoption on January 1, 2023.

    Asset Quality  
    (Dollars in thousands)  
    Mar 31, 2024     Dec 31, 2023     Sep 30, 2023     Jun 30, 2023     Mar 31, 2023  
Total loans held-for-investment   $ 1,906,992     $ 1,847,161     $ 1,764,846     $ 1,717,705     $ 1,623,028  
Allowance for loan losses   $ (24,693 )   $ (24,476 )   $ (23,789 )   $ (22,588 )   $ (21,135 )
30-89 day past due loans   $ -     $ 1,470     $ 2,500     $ -     $ -  
90+ day past due loans   $ 3,530     $ 3,874     $ 1,374     $ 3,701     $ 3,058  
Nonaccrual loans   $ 4,656     $ 5,053     $ 5,105     $ 3,354     $ 4,384  
NPAs / Assets     0.21 %     0.23 %     0.25 %     0.17 %     0.22 %
NPLs / Total loans held-for-investment & OREO     0.24 %     0.27 %     0.29 %     0.20 %     0.27 %
Net quarterly charge-offs (recoveries)   $ 34     $ -     $ (7 )   $ (8,602 )   $ -  
Net charge-offs (recoveries) /avg loans (annualized)     0.01 %     0.00 %     0.00 %     (2.05 )%     0.00 %
Allowance for loan losses to loans HFI     1.29 %     1.33 %     1.35 %     1.32 %     1.30 %
Allowance for loan losses to nonaccrual loans     530.35 %     484.39 %     465.99 %     673.46 %     482.09 %


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  
    Mar 31, 2024     Dec 31, 2023     Sep 30, 2023     Jun 30, 2023     Mar 31, 2023  
Adjusted income before provision for income taxes                              
Income before provision for income taxes   $ 11,178     $ 11,205     $ 12,100     $ 22,109     $ 12,003  
ANI recovery (1)     -       -       -       (7,708 )     -  
Settlement of legal fees related to ANI litigation (2)     -       -       -       (1,635 )     -  
Recovery of principal and interest on a loan acquired with credit deterioration as part of a business combination (3)     -       -       -       (986 )     -  
Adjusted income before provision for income taxes (non-GAAP)   $ 11,178     $ 11,205     $ 12,100     $ 11,780     $ 12,003  
                               
Adjusted net income                              
Net income   $ 7,884     $ 7,859     $ 8,489     $ 15,534     $ 8,974  
ANI recovery, net of tax (1)(4)     -       -       -       (5,430 )     -  
Settlement of legal fees related to ANI litigation, net of tax (2)(4)     -       -       -       (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 )     -  
Adjusted net income (non-GAAP)   $ 7,884     $ 7,859     $ 8,489     $ 8,258     $ 8,974  
                               
Adjusted diluted earnings per share ("Adjusted EPS")                              
Diluted earnings per share   $ 1.36     $ 1.36     $ 1.47     $ 2.69     $ 1.57  
ANI recovery, net of tax (1)(4)     -       -       -       (0.94 )     -  
Settlement of legal fees related to ANI litigation, net of tax (2)(4)     -       -       -       (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 )     -  
Adjusted EPS (non-GAAP)   $ 1.36     $ 1.36     $ 1.47     $ 1.43     $ 1.57  
                               
Diluted average shares outstanding     5,754,937       5,723,735       5,709,994       5,726,522       5,673,394  

(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 $0.9 million of legal costs by the participant bank. In addition, $0.7 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  
    Mar 31, 2024     Dec 31, 2023     Sep 30, 2023     Jun 30, 2023     Mar 31, 2023  
Efficiency Ratio                              
Noninterest expense   $ 12,783     $ 11,768     $ 11,843     $ 8,802     $ 11,557  
Net interest income     22,768       22,188       23,255       22,708       22,168  
Noninterest income     1,426       1,244       1,159       1,054       1,465  
Total net interest income and noninterest income     24,194       23,432       24,414       23,762       23,633  
Efficiency ratio (non-GAAP)     52.84 %     50.22 %     48.51 %     37.04 %     48.90 %
                               
Adjusted Efficiency Ratio                              
Noninterest expense   $ 12,783     $ 11,768     $ 11,843     $ 8,802     $ 11,557  
Settlement of legal fees related to ANI litigation     -       -       -       1,635       -  
Adjusted noninterest expense (non-GAAP)     12,783       11,768       11,843       10,437       11,557  
Total net interest income and noninterest income     24,194       23,432       24,414       23,762       23,633  
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)     24,194       23,432       24,414       23,678       23,633  
Adjusted Efficiency ratio (non-GAAP)     52.84 %     50.22 %     48.51 %     44.08 %     48.90 %
                               
Pretax pre-provision net revenue                              
Net interest income   $ 22,768     $ 22,188     $ 23,255     $ 22,708     $ 22,168  
Noninterest income     1,426       1,244       1,159       1,054       1,465  
Total net interest income and noninterest income     24,194       23,432       24,414       23,762       23,633  
Less: Noninterest expense     12,783       11,768       11,843       8,802       11,557  
Pretax pre-provision net revenue (non-GAAP)   $ 11,411     $ 11,664     $ 12,571     $ 14,960     $ 12,076  
                               
Return and Adjusted Return on Average Assets, Average Equity, Average Tangible Equity                              
Net income   $ 7,884     $ 7,859     $ 8,489     $ 15,534     $ 8,974  
Adjusted net income (non-GAAP) (1)     7,884       7,859       8,489       8,258       8,974  
Average assets     2,148,978       2,062,486       2,005,197       1,959,802       1,857,994  
Average shareholders' equity     190,326       180,287       173,347       162,173       146,778  
Less: Average intangible assets     2,208       2,451       2,709       2,975       3,026  
Average tangible common equity (non-GAAP)     188,118       177,836       170,638       159,198       143,752  
                               
Return on average assets     1.48 %     1.51 %     1.68 %     3.18 %     1.96 %
Adjusted return on average assets (non-GAAP) (1)     1.48 %     1.51 %     1.68 %     1.69 %     1.96 %
Return on average equity     16.66 %     17.29 %     19.43 %     38.42 %     24.80 %
Adjusted return on average equity (non-GAAP) (1)     16.66 %     17.29 %     19.43 %     20.42 %     24.80 %
Return on average tangible common equity (non-GAAP)     16.86 %     17.53 %     19.74 %     39.14 %     25.32 %
Adjusted return on average tangible common equity (non-GAAP) (1)     16.86 %     17.53 %     19.74 %     20.81 %     25.32 %
                               
Tangible book value per share                              
Total equity     194,032       185,783       174,679       167,211       152,314  
Less: Total intangible assets     2,203       2,318       2,449       2,875       3,057  
Total tangible equity     191,829       183,465       172,230       164,336       149,257  
Shares outstanding     5,717,519       5,719,115       5,703,350       5,702,637       5,676,017  
Tangible book value per share (non-GAAP)   $ 33.55     $ 32.08     $ 30.20     $ 28.82     $ 26.30  

(1) A reconciliation of net income to adjusted net income is provided on page 12.


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