On July 29, 2024, Southern Calif Bancorp (BCAL, Financial) released its 8-K filing reporting financial results for the second quarter of 2024. Southern Calif Bancorp, a financial institution serving the Southern California region, provides a comprehensive range of banking services to individuals, professionals, and small- to medium-sized businesses.
Performance Overview
Southern Calif Bancorp reported a net income of $190 thousand, or $0.01 per diluted share, for Q2 2024. This represents a significant decline from the $4.9 million, or $0.26 per diluted share, reported in Q1 2024, and the $6.7 million, or $0.36 per diluted share, in Q2 2023. The company's performance was impacted by the sale of other real estate owned (OREO) properties, resulting in a $4.8 million charge to OREO expense.
Key Financial Metrics
Despite the challenges, Southern Calif Bancorp saw improvements in several financial metrics:
- Net interest margin increased to 3.94% from 3.80% in Q1 2024.
- Yield on total interest-earning assets rose to 5.97%, up 18 basis points from the previous quarter.
- Yield on average total loans increased by 19 basis points to 6.21%.
Income Statement Highlights
Net interest income for Q2 2024 was $21.0 million, up from $20.5 million in Q1 2024. This increase was driven by a $585 thousand rise in total interest and dividend income, partially offset by a $72 thousand increase in total interest expense. Noninterest income decreased to $1.2 million from $1.4 million in the previous quarter, primarily due to the absence of gains on SBA 7A loan sales.
Balance Sheet and Asset Quality
Total assets at June 30, 2024, were $2.29 billion, a slight increase from $2.29 billion at March 31, 2024. Total loans held for investment decreased by $5.7 million to $1.88 billion. Non-performing assets decreased significantly to $4.7 million, or 0.20% of total assets, from $19.3 million, or 0.84%, in the previous quarter, largely due to the sale of OREO properties.
Challenges and Future Outlook
The company's Q2 results were negatively impacted by a $3.4 million after-tax loss on the sale of OREO properties and $412 thousand in after-tax merger expenses. Excluding these merger-related expenses, the company would have reported a net income of $602 thousand, or $0.03 per diluted share.
"Our second quarter of 2024 financial results were impacted by the sale of other real estate owned properties that sold for $8.3 million, net of selling costs and taxes, resulting in an additional $4.8 million charge to OREO expense in the second quarter," said David Rainer, Chairman and CEO of the Company and the Bank.
Conclusion
Southern Calif Bancorp's Q2 2024 earnings fell short of analyst estimates, primarily due to significant charges related to real estate sales and merger expenses. However, the company showed resilience with improvements in key financial metrics such as net interest margin and yield on interest-earning assets. As the company moves forward with its merger with California BanCorp, it aims to build a premier commercial banking franchise in California.
| Metric | Q2 2024 | Q1 2024 | Q2 2023 |
|---|---|---|---|
| Net Income | $190 thousand | $4.9 million | $6.7 million |
| Earnings Per Share | $0.01 | $0.26 | $0.36 |
| Net Interest Income | $21.0 million | $20.5 million | $23.4 million |
| Net Interest Margin | 3.94% | 3.80% | 4.36% |
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Southern Calif Bancorp for further details.
