Executive Summary

Q4 2023 delivered stable topline with revenue of $19.9M, flat versus Q3 and down year-over-year; diluted EPS was $0.63 (vs $0.64 in Q3 and $0.91 YoY), and ROAA remained above 1% .
Net interest margin held at 3.88%, slightly above Q3’s 3.86% but below 4.32% in Q4 2022 as higher deposit costs weighed on spreads .
Total deposits declined 5% quarter-over-quarter to $1.63B, with noninterest-bearing deposits at ~40%, while capital ratios and tangible book value per share improved sequentially; NPAs rose to 0.19% on one commercial relationship with no anticipated loss .
Management emphasized a strong deposit pipeline and conservative underwriting; no specific numeric guidance was provided, but 2024 priorities target stable NIM, expense discipline, and profitability enhancement .

What Went Well and What Went Wrong

What Went Well
- “Record level of earnings in 2023” and Q4 performance with ROA >1%, supported by strong franchise and balance sheet positioning .
- Net interest margin improved slightly QoQ (3.88% vs 3.86%) and capital/tangible book value increased (TBV/share +3% QoQ; Tier 1 leverage 9.61%) .
- Strong deposit pipeline with clients moving from larger banks to smaller commercial banks; management expects continued client additions and profitability .
What Went Wrong
- Revenue and EPS declined year-over-year as deposit costs increased; Q4 revenue $19.9M vs $23.8M in Q4 2022; EPS $0.63 vs $0.91 .
- Deposits fell 5% QoQ to $1.63B amid seasonal outflows; loans declined 1% QoQ with conservative new production and pricing discipline .
- NPAs increased to 0.19% driven by one commercial loan moving to non-accruals, though no loss is anticipated as of year-end .

Financial Results

Metric	Q2 2023	Q3 2023	Q4 2023
Revenue ($USD Millions)	$19.781	$19.872	$19.913
Net Interest Income ($USD Millions)	$18.646	$18.578	$18.574
Non-Interest Income ($USD Millions)	$1.135	$1.294	$1.339
Provision for Credit Losses ($USD Millions, total)	$0.444	$0.314	$0.181
Net Income ($USD Millions)	$5.440	$5.401	$5.341
Diluted EPS ($)	$0.65	$0.64	$0.63
Net Interest Margin (%)	3.93%	3.86%	3.88%
Efficiency Ratio (%)	58.66%	59.64%	61.36%

Metric	Q4 2022	Q4 2023
Revenue ($USD Millions)	$23.822	$19.913
Net Income ($USD Millions)	$7.669	$5.341
Diluted EPS ($)	$0.91	$0.63
Net Interest Margin (%)	4.32%	3.88%
Efficiency Ratio (%)	49.17%	61.36%

Period-End Balance Sheet	Q2 2023	Q3 2023	Q4 2023
Total Assets ($USD Millions)	$2,005.646	$1,983.917	$1,985.905
Gross Loans ($USD Millions)	$1,583.631	$1,573.115	$1,559.533
Total Deposits ($USD Millions)	$1,738.296	$1,707.081	$1,625.244
Loans / Deposits (%)	91.10%	92.15%	95.96%
Noninterest-Bearing Deposits / Total Deposits (%)	42.69%	40.23%	40.44%
Tangible Equity ($USD Millions)	$176.783	$182.673	$189.029
Tangible Book Value per Share ($)	$21.09	$21.76	$22.50
Tier 1 Leverage Ratio (%)	9.01%	9.27%	9.61%
Tier 1 Capital Ratio (%)	9.07%	9.34%	9.53%
Total Risk-Based Capital Ratio (%)	12.73%	13.00%	13.16%

Asset Quality & KPIs	Q2 2023	Q3 2023	Q4 2023
NPAs / Total Assets (%)	0.01%	0.06%	0.19%
Nonperforming Loans ($USD Millions)	$0.181	$1.236	$3.781
ACL / Gross Loans (%)	0.99%	1.01%	1.03%
ACL / NPLs (%)	8686%	1288%	424%
Net Quarterly Charge-offs / Gross Loans (%)	0.00%	0.00%	0.00%
Provision for Credit Losses on Loans ($USD Millions)	$0.340	$0.121	$0.087
ROAA (%)	1.10%	1.08%	1.07%
ROE (%)	11.91%	11.35%	10.88%
ROATCE (%)	12.41%	11.81%	11.31%

Notes:

Provision for credit losses reported in “Selected Financial Information” reflects total provision; management also disclosed loans-only provision of $87K (Q4), $121K (Q3) .
Non-GAAP measures used include operating expenses before capitalized loan origination costs and tangible equity; reconciliations provided in the press release .

Guidance Changes

Metric	Period	Previous Guidance (Q3 2023)	Current Guidance (Q4 2023)	Change
Net interest margin	2024	Adjust interest rate sensitivity as rate environment evolves to protect NIM when Fed starts to reduce rates	Relatively neutral interest rate sensitivity expected to result in fairly stable NIM as rates change during 2024	Maintained (qualitative)
Expense management	2024	Tight expense control; realize operating leverage; continue adding talent in high-value areas	Tightly manage expenses; realize operating leverage while adding talent; leverage improved treasury management platform	Maintained (qualitative)
Deposit strategy	2024	Continue adding lower-cost commercial deposit relationships; grow market share	Continue adding full banking relationships providing operating deposits; strong deposit pipeline	Maintained (qualitative)
Profitability	2024	Strong performance even in a more challenging environment	Expect continued strong performance in 2024 and increased franchise value	Maintained (qualitative)

No specific numeric revenue, margin, OpEx, OI&E, tax rate, or dividend guidance was provided in Q4 2023 materials .

Earnings Call Themes & Trends

No Q4 2023 earnings call transcript was available in the document catalog; themes are derived from Q2/Q3 press releases and investor presentations and Q4 press release/presentation.

Topic	Previous Mentions (Q2 & Q3)	Current Period (Q4)	Trend
Deposit base and pipeline	Stable deposit base; NIB >40%; adding commercial relationships; treasury management platform upgrades	NIB ~40%; seasonal outflows offset by new operating deposit accounts; strong pipeline	Stable to improving
Conservative loan production	Lower production due to underwriting/pricing discipline; loan declines; focus on high-quality C&I	Loans declined slightly; new production at attractive rates; focus on full relationships	Continued discipline
Asset quality	Exceptional asset quality; NPAs ~0.01–0.06%; net recoveries	NPAs increased to 0.19% due to one commercial loan; no anticipated loss; allowance robust	Slight deterioration but contained
Interest rate risk/NIM	Adjust sensitivity to protect NIM as rates evolve	Neutral rate sensitivity; expect stable NIM in 2024	Visibility improving
Capital and TBV	Sequential improvements in capital ratios and TBV/share	Further increases; TBV/share $22.50 (+3% QoQ); leverage 9.61%	Strengthening
Taking share from large banks	Opportunity to attract clients seeking responsiveness and service	Seeing more businesses moving deposit relationships from larger banks to CALB	Positive momentum

Management Commentary

CEO Steven Shelton: “Despite a challenging year for the banking industry, we generated a record level of earnings in 2023… we continued to deliver strong financial performance in the fourth quarter with our return on assets remaining above 1%… we have a strong deposit pipeline that we believe should result in continued growth… further improvement in our level of profitability in the years ahead, and an increase in the value of our franchise” .
CFO/President Thomas A. Sa: “With our strong financial performance and prudent balance sheet management, we continued to increase our capital ratios and tangible book value per share… our tangible book value per share increased 14% [in 2023]” .
2024 priorities: maintain exceptionally strong balance sheet; continue adding full banking relationships; expense management and operating leverage; expand treasury management; maintain relatively neutral interest rate sensitivity to support stable NIM; drive profitability .

Q&A Highlights

No Q4 2023 earnings call transcript was available; Q&A themes and clarifications could not be assessed from primary documents. Management’s prepared remarks and investor presentation provide qualitative direction for 2024 .

Estimates Context

Wall Street consensus (S&P Global/Capital IQ) for CALB Q4 2023 EPS and revenue was unavailable due to a mapping issue (Missing CIQ mapping for CALB in spgi_ciq_company_map). As a result, a beat/miss vs estimates cannot be determined at this time [GetEstimates error].

Key Takeaways for Investors

Profitability resilient: ROAA >1% in Q4; diluted EPS $0.63 despite higher funding costs; NIM modestly improved QoQ to 3.88% .
Funding cost pressure persists: YoY declines in revenue and EPS reflect the impact of higher deposit costs; watch deposit mix and brokered/time deposit dynamics .
Deposits and loans: deposits -5% QoQ to $1.63B (seasonal outflows), loans -1% QoQ; loans/deposits rose to ~96%—monitor balance sheet mix and liquidity .
Capital strength and TBV growth: leverage ratio 9.61%, total risk-based 13.16%, TBV/share up 3% QoQ—provides cushion for growth and macro uncertainty .
Asset quality: NPAs increased to 0.19% on one commercial non-accrual but no loss anticipated; allowance levels remain solid (ACL/gross loans 1.03%) .
Strategic pipeline: management cites growing opportunities to win deposits from larger banks and add full banking relationships—potential revenue stabilization and fee growth via treasury management .
Tactical focus for 2024: maintain neutral rate sensitivity for stable NIM, tighten expenses for operating leverage, and capitalize on deposit pipeline—key narrative drivers to monitor in upcoming quarters .

California BanCorp (CALB)·Q4 2023 Earnings Summary