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California BanCorp \ CA (BCAL)·Q2 2025 Earnings Summary

Executive Summary

  • Net income was $14.1 million and diluted EPS was $0.43; total revenue (net interest income + noninterest income) was $44.27 million; NIM held at 4.61%, efficiency ratio was 56.1% .
  • EPS beat consensus by $0.02 ($0.43 vs $0.41*) while revenue was slightly below ($44.27M vs $45.03M*); beats/misses driven by lower average loan balances and modestly lower accretion offset by stable deposit costs and higher noninterest income .
  • Asset quality improved: nonperforming assets fell to 0.46% of assets (from 0.68% in Q1), ALL/loans declined to 1.37% as the company continued to derisk the Sponsor Finance exposure and sold OREO .
  • Capital actions: redeemed $18.0M subordinated notes in June and grew tangible book value per share to $12.82; total liquidity stood at $1.09B in borrowing capacity plus $169.9M unpledged securities and $430.1M cash .
  • Management reiterated balance sheet derisking (Sponsor Finance run-off expected by year end) and minimal expected tariff impact; focus on organic growth via relationship banking footprint across California .

What Went Well and What Went Wrong

What Went Well

  • Asset quality metrics improved: NPA/Assets fell to 0.46% (from 0.68%), NPL/Loans fell to 0.61% (from 0.74%); special mention and substandard loans declined quarter-over-quarter .
  • Stable funding costs: cost of deposits remained 1.59% Q/Q; cost of funds only +1bp to 1.73% despite higher borrowings cost; NIM held at 4.61% .
  • Strategic execution: completed wind-down of brokered deposits and redeemed $18M subordinated notes; tangible book value per share increased to $12.82; strong liquidity and well-capitalized status maintained .

Management quotes:

  • “Sponsor Finance portfolio continued to decline… remainder will likely run off by year end” — David Rainer, Executive Chairman .
  • “We successfully completed the winding down of our brokered deposits… focused on organic loan and deposit growth” — David Rainer .
  • “We do not expect to see an impact on client operations from [tariffs]… some clients have expressed hesitancy given the uncertain economic environment” — Steven Shelton, CEO .

What Went Wrong

  • Sequential earnings compressed: net income decreased to $14.1M from $16.9M; net interest income fell $0.8M Q/Q as average loans declined and accretion was lower .
  • Noninterest-bearing demand deposits fell $74.6M Q/Q, lowering NIB mix to 36.8% from 38.7%; deposit mix shift can pressure funding costs if sustained .
  • OREO sale incurred an $862K loss, negative 1.9% impact to the efficiency ratio; total net charge-offs rose to $4.1M as part of active derisking .

Financial Results

P&L and Profitability (oldest → newest)

MetricQ2 2024Q1 2025Q2 2025
Net interest income ($USD)$21.007M $42.255M $41.417M
Noninterest income ($USD)$1.169M $2.566M $2.856M
Revenue (Net interest + Noninterest) ($USD)$22.176M $44.821M $44.273M
Diluted EPS ($USD)$0.01 $0.52 $0.43
Net interest margin (%)3.94% 4.65% 4.61%
Efficiency ratio (%)85.70% 55.60% 56.09%
ROA (%)0.03% 1.71% 1.45%
ROE (%)0.26% 13.18% 10.50%

Estimates vs Actuals (Q2 2025)

MetricActualConsensusBeat/Miss
EPS ($USD)$0.43$0.41Beat by $0.02*
Revenue ($USD)$44.27M$45.03MMiss by ~$0.76M*

Values retrieved from S&P Global.*

Segment/Composition – Loans by Type

Loans ($USD ‘000s)Mar 31, 2025Jun 30, 2025
Construction & land development221,437 184,744
1-4 family residential157,442 139,855
Multifamily237,896 258,395
Other commercial real estate1,755,962 1,777,940
Commercial & industrial672,468 607,836
Other consumer23,569 22,790
Total loans HFI3,068,774 2,991,560

KPIs and Balance Sheet (oldest → newest)

KPIQ2 2024Q1 2025Q2 2025
Cost of deposits (%)2.12% 1.59% 1.59%
Cost of funds (%)2.21% 1.72% 1.73%
Yield on loans (%)6.21% 6.61% 6.58%
NPLs / Loans (%)0.85% 0.74% 0.61%
NPAs / Assets (%)0.76% 0.68% 0.46%
ALL / Loans (%)1.27% 1.49% 1.37%
ACL / Loans (%)1.31% 1.57% 1.46%
Deposits ($USD)—$3.342B $3.312B
Noninterest-bearing deposits ($USD)—$1.293B $1.218B
NIB share of deposits (%)—38.7% 36.8%
Tangible BV/share ($USD)$11.71 (Dec-24) $12.29 $12.82

Guidance Changes

MetricPeriodPrevious Guidance/CommentaryCurrent Guidance/CommentaryChange
Sponsor Finance exposure2025Strategy to decrease exposure (Q1) “Remainder will likely run off by year end” (Q2) Raised confidence (timing specified)
Brokered deposits2025Ongoing paydown (Q1) “Successfully completed the winding down” (Q2) Achieved
Subordinated notes2025Expected redemption of $18M (May 1 PR) Redeemed at par in June (Q2) Executed
Formal financial guidance2025Not providedNot providedMaintained (no quantitative ranges)

Earnings Call Themes & Trends

Note: A Q2 2025 earnings call transcript for BCAL was not available in our sources; themes reflect press releases.

TopicQ4 2024 (two quarters ago)Q1 2025 (prior quarter)Q2 2025 (current)Trend
Derisking Sponsor FinanceSignificant reduction; day-one CECL impacts from merger discussed Continued reduction; strategy reiterated Continued decline; expect full run-off by year end Improving risk profile
Brokered deposits relianceRapid reduction; deposit repricing strategy Ongoing pay off of high cost brokered deposits Wind-down completed Completed initiative
Tariffs/macro impact on clientsWildfires impact minimal to portfolio; macro noted Monitoring tariff changes, client outreach Minimal expected impact; some client hesitancy Stable, cautious
Asset qualityNPA/Assets 0.76%; building TBV NPA/Assets 0.68%; OREO present NPA/Assets 0.46%; OREO sold; lower delinquencies Improving
Capital/tangible book valueTBV $11.71; equity strengthened TBV $12.29; TCE/TTA 10.34% TBV $12.82; TCE/TTA 10.89% Accretive

Management Commentary

  • David Rainer, Executive Chairman: “Sponsor Finance portfolio continued to decline… we expect the remainder will likely run off by year end… reduction in credit risk… reflected in a significant decrease in our non-performing assets to total assets ratio to 0.46%” .
  • David Rainer: “Successfully completed the winding down of our brokered deposits… focused on organic loan and deposit growth” .
  • Steven Shelton, CEO: “We do not expect to see an impact on client operations from [tariffs]… some clients have expressed hesitancy… Regardless, we continue to develop new relationships… high-touch, relationship-based service” .

Q&A Highlights

  • The Q2 2025 earnings call transcript for BCAL was not available in our document and internet sources within the specified window; thus, Q&A themes and guidance clarifications could not be extracted. We reviewed the 8-K and press releases in full for qualitative commentary .

Estimates Context

  • EPS beat consensus by $0.02 ($0.43 vs $0.41*); revenue (total net interest + noninterest) was modestly below ($44.27M vs $45.03M*).
  • Implications: modest upward bias to EPS estimates if asset quality improvements and stable funding costs persist; revenue revisions may hinge on average loan balance trajectory and accretion trends (purchase accounting accretion decreased $0.5M Q/Q) .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Sequential earnings compression was modest and primarily due to lower average loan balances and lower accretion income; cost of deposits held at 1.59% and NIM remained resilient at 4.61% .
  • Asset quality trends are a positive catalyst: NPA/Assets down to 0.46%, NPL/Loans down to 0.61%, delinquencies significantly lower; supports lower required provisioning if macro remains stable .
  • Funding mix shifted as NIB deposits declined 5.8% Q/Q; watch deposit mix and competitive pricing to avoid funding cost creep if NIB share drifts lower .
  • Capital actions de-risked the balance sheet and improved optics: brokered deposits wound down; $18M sub debt redeemed; TBV/share increased to $12.82 .
  • Liquidity robust: $1.09B borrowing capacity plus $169.9M unpledged securities and $430.1M cash; provides flexibility for organic growth and opportunistic capital deployment .
  • Management’s derisking strategy (Sponsor Finance run-off by year end) reduces credit volatility; continued focus on relationship-based growth should stabilize core earnings .
  • Near-term: EPS slightly above Street* while revenue slightly below*; estimate revisions will track loan growth, accretion normalization, and deposit mix — monitor NIB trends and fee income trajectory .

Values retrieved from S&P Global.*