West Coast Community Bancorp, Parent Company of Santa Cruz County Bank, Reports Earnings for the Quarter Ended March 31, 2024
Board Declares Quarterly Cash Dividend
President and CEO,
On
Financial Highlights
Performance highlights as of and for the quarter ended
- Quarterly net income of
$9.3 million increased 5% from$8.8 million in the prior quarter and$8.9 million in the quarter endedMarch 31, 2023 . - Total assets of
$1.71 billion as ofMarch 31, 2024 , decreased$81.7 million or 5%, compared to$1.79 billion as ofDecember 31, 2023 , and decreased$14.8 million or 1% compared toMarch 31, 2023 . - The Bank's liquidity position remains healthy. Primary liquidity ratio, defined as cash and equivalents, deposits held in other banks and unpledged available-for-sale ("AFS") securities as a percentage of total assets, was 11.7% and 13.6% at
March 31, 2024 andDecember 31, 2023 , respectively. - Deposits totaled
$1.46 billion atMarch 31, 2024 , a decrease of$59.1 million or 4%, compared toDecember 31, 2023 , and a decrease of$6.0 million compared toMarch 31, 2023 . Relationship deposits, i.e. deposits gathered outside of wholesale channels, decreased$48.7 million compared toDecember 31, 2023 . A decrease of$40.8 million from the prior quarter-end can be attributed to distributions of proceeds resulting from the sale of businesses, properties, and investment in real estate by our large depositors. The remainder of the decrease from the prior quarter-end reflected depositors seeking higher return from other investment opportunities. The decreases were partially offset by cyclical fluctuation of deposits from our local agency depositors. Total uninsured deposits, excluding collateralized deposits, represented approximately 43% and 44% of total deposits as ofMarch 31, 2024 andDecember 31, 2023 , respectively. - Gross loans totaled
$1.38 billion atMarch 31, 2024 , a decrease of$32.5 million or 2%, compared toDecember 31, 2023 , and an increase of$60.0 million or 5%, compared toMarch 31, 2023 . The decrease from year-end 2023 reflected commercial borrowers paying down their revolving lines, as well as payoffs of real estate loans. In addition, a$3.0 million commercial real estate loan delinquent in the fourth quarter of 2023 was paid off inJanuary 2024 . - Nonaccrual loans totaled
$90 thousand , or 0.01% of gross loans, as ofMarch 31, 2024 , compared to$6.5 million , or 0.46% of total loans as ofDecember 31, 2023 . The decrease during the first quarter is due to a previously delinquent$6.5 million commercial real estate loan returned to accrual status inMarch 2024 after collection of past due payments. - The allowance for credit losses ("ACL"), reflecting management's estimate of credit losses for the expected life of the loans in the portfolio, totaled
$23.0 million , or 1.67% of total loans atMarch 31, 2024 , compared to$23.9 million , or 1.70% atDecember 31, 2023 . The decrease in the ACL as a percentage of total loans was due to the paydowns of revolving lines, which are subject to higher reserve rates relative to other loan categories, as well as declines in the reserve rates in the commercial real estate and multi-family pools from a decrease in estimated life of loan (reflecting the market's expectation for declining rates). In addition, the allowance on unfunded credit commitments, presented as part of other liabilities, decreased to 0.35% of total unfunded in the first quarter of 2024 due to lower reserve factors for unfunded commitments, mainly attributable to reduction in the estimated life of the construction, commercial, and commercial real estate unfunded commitment pools. - Provision for credit losses, including funded and unfunded credit commitments, was a reversal of
$1 million in the first quarter of 2024 due to the reasons discussed above as well as decreases in loan balances. In comparison, a$246 thousand reversal was booked in the fourth quarter of 2023 and$315 thousand provision for the first quarter in 2023. Unfunded commitments increased during the first quarter of 2024 (mainly SBA real estate credit commitments); however, the estimated life of the commitments decreased allowing for the release of the reserve for unfunded commitment of$100 thousand during the first quarter of 2024. - Net interest margin was 4.86% in the first quarter of 2024, compared to 4.83% in the prior quarter and 5.10% for the first quarter in 2023. In the first quarter of 2024, higher yields on interest-earning assets were more than offset by increased funding costs. The recognition of interest recovered for two previously nonaccrual commercial real estate loans totaling
$436 thousand and$263 thousand contributed to increases of net interest margin by 10 basis points during the first quarter of 2024 and 6 basis points during the fourth quarter of 2023, respectively. - For the quarters ended
March 31, 2024 andDecember 31, 2023 , return on average assets was 2.14% and 1.99%, respectively, return on average equity was 15.99% and 15.72%, respectively, and return on average tangible equity was 18.10% and 17.93%, respectively. - The efficiency ratio was 42.81% for the first quarter of 2024, as compared to 43.37% in the prior quarter and 39.78% in the first quarter of 2023.
- All capital ratios were above regulatory requirements for a well-capitalized institution with a total risk-based capital ratio of 15.87% at
March 31, 2024 compared to 14.98% atDecember 31, 2023 . Tangible common equity to tangible asset ratio increased from 11.47% atDecember 31, 2023 to 12.50% atMarch 31, 2024 . - Tangible book value per share increased to
$25.05 atMarch 31, 2024 from$24.10 atDecember 31, 2023 and$20.91 atMarch 31, 2023 .
Liquidity Position
The following table summarizes the Bank's liquidity as of
|
As of |
|
(Dollars in thousands) |
|
|
Cash and due from banks |
$ 39,148 |
$ 44,395 |
Unencumbered AFS securities |
160,934 |
198,876 |
Total on-balance-sheet liquidity |
200,082 |
243,271 |
|
|
|
Line of credit from the |
452,866 |
434,961 |
Line of credit from the |
261,008 |
251,641 |
Lines at correspondent banks-unsecured |
80,000 |
80,000 |
Total external contingency liquidity capacity |
793,874 |
766,602 |
|
|
|
Less: overnight borrowings |
-- |
(32,500) |
Net available liquidity sources |
$ 993,956 |
$ 977,373 |
As of
As of
Quarterly Earnings
For the first quarter of 2024, net income was
Interest Income / Interest Expense and Net Interest Margin
Net interest income of
For the first quarter of 2024, net interest margin was 4.86%, compared to 4.83% in the fourth quarter of 2024 and 5.10% for the corresponding quarter in 2023. The increase from the prior quarter was primarily due to the recognition of
The following tables compare interest income, average interest-earning assets, interest expense, average interest-bearing liabilities, net interest income, net interest margin and cost of funds for each period reported.
|
For the Quarter Ended |
||||||
|
|
|
|
||||
(Dollars in thousands) |
Average |
Interest |
Avg |
|
Average |
Interest |
Avg |
ASSETS |
|
|
|
|
|
|
|
Interest-earning due from banks |
$ 29,870 |
$ 212 |
2.85 % |
|
$ 28,290 |
$ 167 |
2.34 % |
Investments* |
253,054 |
1,064 |
1.69 % |
|
284,062 |
1,151 |
1.61 % |
Loans |
1,397,298 |
24,381 |
7.02 % |
|
1,381,579 |
23,807 |
6.84 % |
Total interest-earning assets* |
1,680,222 |
25,657 |
6.14 % |
|
1,693,931 |
25,125 |
5.88 % |
Noninterest-earning assets |
71,198 |
|
|
|
70,359 |
|
|
Total assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
Interest-bearing deposits |
$ 933,288 |
5,276 |
2.27 % |
|
$ 894,514 |
4,457 |
1.98 % |
Borrowings |
4,797 |
68 |
5.74 % |
|
2,375 |
34 |
5.71 % |
Total interest-bearing liabilities |
938,085 |
5,344 |
2.29 % |
|
896,889 |
4,491 |
1.99 % |
Noninterest-bearing deposits |
560,864 |
|
|
|
625,930 |
|
|
Other noninterest-bearing liabilities |
17,870 |
|
|
|
18,353 |
|
|
Total liabilities |
1,516,819 |
|
|
|
1,541,172 |
|
|
|
|
|
|
|
|
|
|
EQUITY |
234,601 |
|
|
|
223,118 |
|
|
Total liabilities and equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income /margin |
|
$ 20,313 |
4.86 % |
|
|
$ 20,634 |
4.83 % |
Cost of funds |
|
|
1.43 % |
|
|
|
1.17 % |
|
*Effective |
Noninterest Income / Expense
Noninterest income for the quarter ended
Noninterest expense was
Loans and Asset Quality
Gross loans decreased
The allowance for credit losses was
The following tables summarize the Bank's loan mix and delinquent/nonperforming loans:
Loan Mix |
|
|
|
|
|
|
As of |
Change % vs. |
|||
(Dollars in thousands) |
|
|
|
|
|
Loans held for sale |
$ 27,225 |
$ 33,696 |
$ 41,456 |
-19 % |
-34 % |
SBA and B&I loans |
140,915 |
137,586 |
144,818 |
2 % |
-3 % |
PPP loans |
271 |
313 |
3,079 |
-13 % |
-91 % |
Commercial term loans |
105,309 |
107,509 |
115,850 |
-2 % |
-9 % |
Revolving commercial lines |
111,420 |
117,251 |
120,318 |
-5 % |
-7 % |
Asset-based lines of credit |
17,674 |
27,174 |
5,468 |
-35 % |
223 % |
Construction loans |
137,460 |
138,309 |
164,234 |
-1 % |
-16 % |
Commercial real estate loans |
805,218 |
813,597 |
688,519 |
-1 % |
17 % |
Home equity lines of credit |
29,378 |
31,849 |
28,687 |
-8 % |
2 % |
Consumer and other loans |
1,793 |
1,849 |
3,281 |
-3 % |
-45 % |
Deferred loan expenses, net of fees |
2,098 |
2,160 |
3,017 |
-3 % |
-30 % |
Total gross loans |
$ 1,378,761 |
$ 1,411,293 |
|
-2 % |
5 % |
Delinquent and Nonperforming Loans |
|
|
|||
|
As of or for the Quarter Ended |
||||
(Dollars in thousands) |
|
|
|
||
Loans past due 30-89 days, excluding PPP loans |
$ 143 |
$ -- |
$ 1,041 |
||
PPP loans past due 30-89 days |
-- |
-- |
1,168 |
||
Delinquent loans (past due 90+ days still accruing) |
-- |
2,999 |
-- |
||
Nonaccrual loans |
90 |
6,526 |
2,616 |
||
Other real estate owned |
-- |
-- |
-- |
||
Nonperforming assets |
90 |
9,525 |
2,616 |
||
Net loan charge-offs QTD |
-- |
1,172 |
-- |
||
Net loan charge-offs YTD |
-- |
2,167 |
-- |
Deposits
Deposits were
The ten largest deposit relationships, excluding fully collateralized government agency deposits, represent approximately 12% of total deposits as of
|
Deposit Mix |
|
|
|
|
|
|||
|
|
|
As of |
|
Change % vs. |
||||
|
(Dollars in thousands) |
|
|
|
|
|
|||
|
Noninterest-bearing demand |
$ 564,595 |
$ 576,456 |
$ 619,178 |
-2 % |
-9 % |
|||
|
Interest-bearing demand |
213,494 |
209,584 |
217,270 |
2 % |
-2 % |
|||
|
Money markets |
408,026 |
434,287 |
346,074 |
-6 % |
18 % |
|||
|
Savings |
95,670 |
105,012 |
122,261 |
-9 % |
-22 % |
|||
|
Time certificates of deposit |
137,251 |
142,413 |
128,755 |
-4 % |
7 % |
|||
|
Brokered deposits |
36,940 |
47,338 |
28,388 |
-22 % |
30 % |
|||
|
Total deposits |
$ 1,455,976 |
|
|
-4 % |
0 % |
|||
|
|
|
|
|
|
|
|||
|
Deposits – personal |
$ 515,499 |
$ 545,920 |
$ 545,269 |
-6 % |
-5 % |
|||
|
Deposits – business |
$ 903,537 |
$ 921,832 |
$ 888,269 |
-2 % |
2 % |
|||
|
Deposits – brokered |
$ 36,940 |
$ 47,338 |
$ 28,388 |
-22 % |
30 % |
|||
Total deposits |
$ 1,455,976 |
|
|
-4 % |
0 % |
Shareholders' Equity
Total shareholders' equity was
ABOUT
Founded in 2004,
NATIONAL, STATE, AND LOCAL RATINGS AND AWARDS
- 2024 OTCQX Best 50: West Coast Community Bancorp "SCZC" stock ranked 37th for stock performance based on total return and growth in average daily dollar volume in 2023.
-
American Banker Magazine : The Bank has ranked in the Top 200Community Banks list for 9 consecutive years based upon 3-year average equity for banks under$2 billion in assets. -
The Findley Reports, Inc. : The Bank has received the top ranking of Super Premier for 14 consecutive years. -
Bauer Financial Reports, Inc. : The Bank is rated 5-star "Superior" based upon its financial performance. -
Silicon Valley Business Journal : The Bank is the top ranked, #1 lender by number of SBA loans and #3 ranked by total dollar volume lent toSilicon Valley businesses fromOctober 1, 2022 toSeptember 30, 2023 . - Good
Times , 2023 Best of Santa Cruz County Award, Voted "Best Bank" for 12 consecutive years. -
Santa Cruz Sentinel , 2022 Reader's Choice Award, number one bank inSanta Cruz County as voted bySanta Cruz Sentinel readers for 9 years.
Forward-Looking Statements
This release may contain forward-looking statements that are subject to risks and uncertainties. Such risks and uncertainties may include but are not necessarily limited to fluctuations in interest rates (including but not limited to changes in depositor behavior in relation thereto), inflation, government regulations and general economic conditions, and competition within the business areas in which the Bank is conducting its operations, health of the real estate market in California, Bancorp's ability to effectively execute its business plans, and other factors beyond Bancorp and the Bank's control. Such risks and uncertainties could cause results for subsequent interim periods or for the entire year to differ materially from those indicated. Readers should not place undue reliance on the forward-looking statements, which reflect management's view only as of the date hereof. Bancorp undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.
Concurrent with this earnings release, Bancorp issued presentation slides providing supplemental information, intended to be reviewed together with this release and can be found online at: https://www.sccountybank.com/investor_relations.cfm
Selected Unaudited Financial Information |
||||||||
(Dollars in thousands, |
As of or for the Quarter |
|
|
|
As of or for the |
|
|
|
|
2024 |
2023 |
Change $ |
Change % |
|
2023 |
Change $ |
Change % |
Balance Sheet |
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Cash and due from banks |
$ 39,148 |
$ 37,006 |
$ 2,142 |
6 % |
|
$ 44,395 |
$ (5,247) |
-12 % |
Securities – AFS |
219,727 |
298,960 |
(79,233) |
-27 % |
|
262,566 |
(42,839) |
-16 % |
Securities – HTM |
7,346 |
2,780 |
4,566 |
164 % |
|
7,585 |
(239) |
-3 % |
Gross loans |
1,378,761 |
1,318,727 |
60,034 |
5 % |
|
1,411,293 |
(32,532) |
-2 % |
Allowance for credit losses |
(23,043) |
(25,879) |
2,836 |
-11 % |
|
(23,943) |
900 |
-4 % |
Goodwill and other intangibles |
27,350 |
27,705 |
(355) |
-1 % |
|
27,433 |
(83) |
0 % |
Other assets |
63,355 |
68,115 |
(4,760) |
-7 % |
|
65,033 |
(1,678) |
-3 % |
Total assets |
|
$ 1,727,414 |
$ (14,770) |
-1 % |
|
$ 1,794,362 |
$ (81,718) |
-5 % |
|
|
|
|
|
|
|
|
|
Liabilities and Equity |
|
|
|
|
|
|
|
|
Noninterest-bearing deposits |
$ 564,595 |
$ 619,178 |
$ (54,583) |
-9 % |
|
$ 576,456 |
$ (11,861) |
-2 % |
Interest-bearing non-brokered deposits |
854,441 |
814,360 |
40,081 |
5 % |
|
891,296 |
(36,855) |
-4 % |
Brokered deposits |
36,940 |
28,388 |
8,552 |
30 % |
|
47,338 |
(10,398) |
-22 % |
Total deposits |
1,455,976 |
1,461,926 |
(5,950) |
0 % |
|
1,515,090 |
(59,114) |
-4 % |
Borrowings |
-- |
43,500 |
(43,500) |
-100 % |
|
32,500 |
(32,500) |
-100 % |
Other liabilities |
18,579 |
17,748 |
831 |
5 % |
|
16,736 |
1,843 |
11 % |
Shareholders' equity |
238,089 |
204,240 |
33,849 |
17 % |
|
230,036 |
8,053 |
4 % |
Total liabilities and equity |
$ 1,712,644 |
$ 1,727,414 |
$ (14,770) |
-1 % |
|
$ 1,794,362 |
$ (81,718) |
-5 % |
|
|
|
|
|
|
|
|
|
Income Statement |
|
|
|
|
|
|
|
|
Interest income |
$ 25,657 |
$ 22,098 |
$ 3,559 |
16 % |
|
$ 25,125 |
$ 532 |
2 % |
Interest expense |
5,344 |
1,412 |
3,932 |
278 % |
|
4,491 |
853 |
19 % |
Net interest income |
20,313 |
20,686 |
(373) |
-2 % |
|
20,634 |
(321) |
-2 % |
(Reversal of) provision for credit losses |
(1,000) |
315 |
(1,315) |
-417 % |
|
(246) |
(754) |
307 % |
Noninterest income |
1,034 |
781 |
253 |
32 % |
|
1,018 |
16 |
2 % |
Noninterest expense |
9,138 |
8,552 |
586 |
7 % |
|
9,389 |
(251) |
-3 % |
Net income before taxes |
13,209 |
12,600 |
609 |
5 % |
|
12,509 |
700 |
6 % |
Income tax expense |
3,885 |
3,721 |
164 |
4 % |
|
3,668 |
217 |
6 % |
Net income after taxes |
$ 9,324 |
$ 8,879 |
$ 445 |
5 % |
|
$ 8,841 |
$ 483 |
5 % |
|
|
|
|
|
|
|
|
|
Basic earnings per share |
$ 1.11 |
$ 1.05 |
$ 0.06 |
6 % |
|
$ 1.05 |
$ 0.06 |
6 % |
Diluted earnings per share |
$ 1.10 |
$ 1.05 |
$ 0.05 |
5 % |
|
$ 1.05 |
$ 0.05 |
5 % |
Book value per share |
$ 28.30 |
$ 24.19 |
$ 4.11 |
17 % |
|
$ 27.36 |
$ 0.94 |
3 % |
Tangible book value per share |
$ 25.05 |
$ 20.91 |
$ 4.14 |
20 % |
|
$ 24.10 |
$ 0.95 |
4 % |
|
|
|
|
|
|
|
|
|
Shares outstanding |
8,413,913 |
8,442,240 |
|
|
|
8,406,680 |
|
|
|
|
|
|
|
|
|
|
|
Ratios |
|
|
|
|
|
|
|
|
Net interest margin |
4.86 % |
5.10 % |
|
|
|
4.83 % |
|
|
Cost of funds |
1.43 % |
0.38 % |
|
|
|
1.17 % |
|
|
Efficiency ratio |
42.81 % |
39.78 % |
|
|
|
43.37 % |
|
|
Return on: |
|
|
|
|
|
|
|
|
Average assets |
2.14 % |
2.08 % |
|
|
|
1.99 % |
|
|
Average equity |
15.99 % |
18.00 % |
|
|
|
15.72 % |
|
|
Average tangible equity |
18.10 % |
20.90 % |
|
|
|
17.93 % |
|
|
Tier 1 leverage ratio |
12.68 % |
10.99 % |
|
|
|
12.09 % |
|
|
Total risk-based capital ratio |
15.87 % |
14.71 % |
|
|
|
14.98 % |
|
|
Tangible common equity ratio |
12.50 % |
10.39 % |
|
|
|
11.47 % |
|
|
ACL / Non-PPP loans |
1.67 % |
1.97 % |
|
|
|
1.70 % |
|
|
Noninterest-bearing deposits to total deposits |
38.78 % |
42.35 % |
|
|
|
38.05 % |
|
|
Gross loans to deposits |
94.70 % |
90.20 % |
|
|
|
93.15 % |
|
|
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