California Bancorp · NASDAQ:BCAL
California Bancorp — Debt Investor Presentation (August 2021)
28 slides from California Bancorp's debt investor presentation, Aug 17, 2021
Slide 1: Confidential Investor Presentation
Exhibit 99.2 CONFIDENTIAL INVESTOR PRESENTATION 1Exhibit 99.2 CONFIDENTIAL INVESTOR PRESENTATION 1
Slide 2: Forward-Looking Statements and Disclaimer
FORWARD-LOOKING STATEMENTS AND DISCLAIMER This document and any accompanying oral presentation for California BanCorp (the “Company”) may contain statements regarding expectations and beliefs about future financial performance and financial condition, as well as trends in the Company’s business and
Slide 3: Terms of the Proposed Offering
TERMS OF THE PROPOSED OFFERING Issuer California BanCorp Security Subordinated Notes Due 2031 Amount $35 Million Security Rating Egan-Jones Rating of BBB Issuance Type Regulation D Private Placement with Registration Rights Structure Fixed-to-Floating Rate (Fixed During First Five Years) Term 10 Yea
Slide 4: Investment Highlights
INVESTMENT HIGHLIGHTS Branch light, commercial- Experienced management focused business bank with team and seasoned C&I Proven organic and strong middle market relationship teams with strong acquisitive growth story relationships throughout ties to the local markets Northern California Strong earnin
Slide 5: Overview of California BanCorp
OVERVIEW OF CALIFORNIA BANCORP FOCUSED REGIONAL OFFICE FOOTPRINT COMPANY OVERVIEW ► Established in 2007 as a relationship focused commercial business bank serving Northern California with $1.9 billion in assets and (1) market cap of ~$154 million ► Majority of executive management joined the bank at
Slide 6: Experienced Management Team
EXPERIENCED MANAGEMENT TEAM ► Previously served as an Executive Vice President of the Bank primarily responsible for managing production since the Bank’s founding in 2007 Years at CALB: 14 Steven E. Shelton, Age : 58 ► Served for thirteen years in various executive management positions including Pre
Slide 7: Branch Light, Commercial Focused Business Bank
BRANCH LIGHT, COMMERCIAL FOCUSED BUSINESS BANK IMPRESSIVE LOAN GROWTH BUSINESS MODEL OVERVIEW 2015 – 2Q21 CAGR $1,600 Total gross loans = 19.1% ► Middle market commercial banking focus $1,400 Gross loans (ex. PPP) = 15.8% • Privately owned companies with $30 million - $300 million in $194 $306 $1,20
Slide 8: Taking Share from National/Regional Banks
TAKING SHARE FROM NATIONAL/REGIONAL BANKS PRODUCT AND SERVICE DIFFERENTIATION OUR “TYPICAL CLIENT” Combine Capabilities of a Big Bank with the $8M ~$75M $3M High Service Levels of a Community Bank revolving line in annual equipment with $3M average ► Attract top talent with deep market experience to
Slide 9: Demonstrated Growth Track Record
DEMONSTRATED GROWTH TRACK RECORD 2015 – 2Q21 Asset CAGR of SUCCESSFUL EXPANSION THROUGHOUT NORTHERN CALIFORNIA 21.1% $16.55 Assets ($mm) TBVPS $15.77 $15.16 $14.20 $1,906 $1,869 $12.01 10 $11.16 $10.48 $10.19 9 11 $9.61 $8.90 8 $8.58 $8.21 $7.94 $1,152 7 12 6 $7.04 $1,006 $6.70 5 $866 4 $765 $653 2
Slide 10: 2nd Quarter 2021 Highlights
nd 2 QUARTER 2021 HIGHLIGHTS Balance Sheet Growth and § Net income of $4.2 million, up from $2.8 million in Q1 2021 Increasing Operating Leverage § EPS of $0.50, up from $0.34 in Q1 2021 Driving Improved Profitability § ROA of 0.87%, up from 0.59% in Q1 2021 Strong Core Loan and § Core loans (ex. PP
Slide 11: 2021 Outlook and Priorities
2021 OUTLOOK AND PRIORITIES Fully capitalize on the infrastructure put in place to generate additional balance EFFICIENCY sheet growth and realize increased operating leverage Continue growing loans and deposits as new banking talent added over past two GROWTH years attracts new clients in our targe
Slide 12: Historical Profitability Trends
HISTORICAL PROFITABILITY TRENDS PRE-PROVISION NET REVENUE ROAA $16.0 0.94% 1.00% $13.95 $13.59 $14.0 $12.69 $11.96 0.74% 0.73% $12.0 $10.69 0.69% 0.75% 0.66% $10.0 $8.88 $8.0 0.50% $6.0 0.25% 0.25% $4.0 $2.0 0.00% $0.0 (1) (1) 2016 2017 2018 2019 2020 2021-YTD 2016 2017 2018 2019 2020 2021-YTD EFFIC
Slide 13: Diversified Commercial Loan Portfolio
DIVERSIFIED COMMERCIAL LOAN PORTFOLIO (1) LOAN PORTFOLIO COMPOSITION (6/30/2021) HISTORICAL LOAN COMPOSITION 2016 – 2Q21 CAGR $1,600 $1,369 $1,353 Other 6% C&I: 12.2% (6% ex. PPP) Total Loans: 18.6% PPP $952 $1,100 $847 14% $733 $628 $426 Commercial 31% $415 $600 $390 $341 $329 $254 (37% ex. PPP) Co
Slide 14: Commercial and CRE Loan Portfolios
COMMERCIAL AND CRE LOAN PORTFOLIOS WELL-DIVERSIFIED LOAN PORTFOLIO MITIGATES RISK (1) (1) COMMERCIAL LOAN PORTFOLIO CRE LOAN PORTFOLIO Average loan balance of $500K Average loan balance of $1.48M Weighted Avg. LTV of 47% Average loan commitment of $1.1M 3% 3% 1% < 1% 2% Multi-Family Info, Finance Re
Slide 15: Top Borrowing Relationships
TOP 20 BORROWING RELATIONSHIPS Net Principal Balance Rank DESCRIPTION # of Notes % of Total Loans¹ Risk Rating ($000) 1 Multifamily 3 $23,915 1.8% Pass 2 Industrial CRE /Retail CRE 14 21,095 1.6% Pass 3 Mixed Use / Residential 1 18,209 1.3% Pass 4 Multifamily 1 17,450 1.3% Pass 5 Gas Station 8 17,08
Slide 16: Asset Quality Trends
ASSET QUALITY TRENDS RESERVES / LOANS NET CHARGE-OFFS (RECOVERIES) ($000S) $10,000 1.40% $8,000 1.20% 1.14% ex. PPP 1.28% 1.27% 1.20% 1.17% 1.00% $6,000 1.03% 0.98% 0.80% $4,000 0.60% $2,051 $1,844 $2,000 0.40% $618 $71 $0 0.20% -$247 -$65 -$2,000 0.00% (1) 2016 2017 2018 2019 2020 2021-YTD 2016 201
Slide 17: Paycheck Protection Program (PPP) Detail
PAYCHECK PROTECTION PROGRAM (PPP) DETAIL ► 581 PPP loans with balances of $194 million (15% of total loans) as of 6/30/21 compared to 806 PPP loans with balances of $353 million (24% of total loans) as of 3/31/21 • 200 first round PPP loans with balances of $76 million (6% of total loans) • 381 seco
Slide 18: COVID-19 Loan Deferral Program Detail
COVID-19 LOAN DEFERRAL PROGRAM DETAIL ► Total number of loans on deferral or having a structure modification under the CARES Act guidelines was unchanged from the prior quarter at 4 as of June 30, 2021 ► Balances of loans on deferral or having a structure modification under the CARES Act guidelines
Slide 19: Strong and Growing Core Deposit Base
STRONG AND GROWING CORE DEPOSIT BASE DEPOSIT COMPOSITION (6/30/21) HISTORICAL DEPOSIT COMPOSITION Time deposits 2015 – 2Q21 CAGR 11% $1,800 $1,680 DDA: 25.7% Demand $1,532 $1,600 Total Deposits: 22.8% deposits Money market 47% $1,400 & savings deposits $1,200 40% Interest $988 $1,000 bearing $874 $7
Slide 20: Top Depositor Relationships
TOP 20 DEPOSITOR RELATIONSHIPS Rank Type Balance ($000) % of Total Deposits # of Accounts 1 Contractor $62,672 3.9% 8 2 Contractor 48,250 3.0% 14 3 Public 33,500 2.1% 4 4 Contractor 32,758 2.0% 6 5 Insurance Brokerage 30,299 1.9% 3 6 Accounting Services 30,035 1.9% 4 7 Contractor 25,801 1.6% 2 8 Non
Slide 21: Securities Portfolio & Interest Rate Sensitivity
SECURITIES PORTFOLIO & INTEREST RATE SENSITIVITY Securities Portfolio Characteristics (6/30/21) ► Book Value: $54.7 Million SBA (Float) MBS ► Market Value: $55.5 Million 4% 21% ► Total securities only represents ~3% of total assets ► Yield on Securities: 2.69% Agency- ► Effective Duration: 4.8 Years
Slide 22: Capitalization and Sources of Liquidity
CAPITALIZATION AND SOURCES OF LIQUIDITY Funding and Sources of Liquidity ► $25.0 million principal balance of subordinated debt outstanding • $5.0 million issued at bank in 2016 with a 5.875% coupon; currently callable; matures in 2026 • $20.0 million issued at holding company in 2020 with a 5.00% c
Slide 23: Capital Ratios – Consolidated
CAPITAL RATIOS – CONSOLIDATED TCE / TA LEVERAGE RATIO 16% 16% 12% 12% 11.57% 11.34% 10.64% 10.69% 8% 8% 8.78% 8.74% 9.08% 8.96% 7.49% 7.53% 7.32% 6.77% 4% 4% 0% 0% 2016 2017 2018 2019 2020 2021Q2 2016 2017 2018 2019 2020 2021Q2 TOTAL CAPITAL RATIO TIER 1 RATIO 16% 16% 12% 13.22% 12% 12.76% 11.99% 11
Slide 24: Capital Ratios – Bank Only
CAPITAL RATIOS – BANK ONLY TCE / TA LEVERAGE RATIO 16% 16% 12% 12% 11.31% 10.44% 10.95% 9.92% 10.35% 10.08% 8% 8% 8.78% 8.36% 8.81% 8.02% 8.01% 7.20% 4% 4% 0% 0% 2016 2017 2018 2019 2020 2021Q2 2016 2017 2018 2019 2020 2021Q2 TOTAL CAPITAL RATIO TIER 1 RATIO 16% 16% 12% 12% 12.52% 12.32% 11.79% 11.7
Slide 25: Pro Forma Regulatory Capital
PRO FORMA REGULATORY CAPITAL $ in thousands Debt / Equity Q2 2021 Adjustments Pro Forma Subordinated Debt $24,745 $34,288 $59,033 Total Consolidated Debt $24,745 $34,288 $59,033 Consolidated Equity $143,741 -- $143,741 Total Debt / Equity 17% -- 41% Bank-Level Tier 1 Capital $150,239 $25,000 $175,23
Slide 26: Double Leverage and Interest Coverage
DOUBLE LEVERAGE AND INTEREST COVERAGE $ in thousands Assumptions Amount of Net Proceeds Downstreamed to Bank $25,000 Net Proceeds from Subordinated Debt Issuance $34,288 Illustrative Interest Rate 3.50% For the Twelve Months Ended Year-to-Date 12/31/2018 12/31/2019 12/31/2020 6/30/2021 Investment in
Slide 27: Summary
SUMMARY Northern California Strong commercial loan Experienced management commercial business bank portfolio with corresponding team and seasoned C&I with a disciplined approach commercial relationship relationship managers to credit underwriting deposits Keen focus on relationship Proven organic an
Slide 28: Thank You
THANK YOU CALIFORNIA BANCORP
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