California BanCorp, formerly Southern California Bancorp, reported significant changes in its financial performance for the three and nine months ended September 30, 2024, primarily driven by its recent merger with California BanCorp (CALB) completed on July 31, 2024. The company’s total assets surged to $4.36 billion, up from $2.36 billion at the end of 2023, largely due to the acquisition of $1.86 billion in assets from CALB.

Total deposits increased dramatically to $3.74 billion from $1.94 billion, reflecting a robust growth in both noninterest-bearing and reciprocal deposits. Noninterest-bearing demand deposits rose to $1.37 billion, representing 36.6% of total deposits, while reciprocal deposits accounted for 22.4% of total deposits, up from 14.1% at the end of 2023.

Despite these gains, California BanCorp reported a net loss of $16.5 million for Q3 2024, a stark contrast to a net income of $6.6 million in Q3 2023. The loss per share was $(0.59), compared to earnings of $0.36 in the prior year. For the nine months ended September 30, 2024, the net loss totaled $11.3 million, compared to a net income of $21.5 million for the same period in 2023. The increase in losses was attributed to a significant rise in noninterest expenses, primarily due to merger-related costs, and a substantial increase in the provision for credit losses, which reached $23 million for Q3 2024, compared to just $2.9 million in the previous quarter.

The company’s net interest income for Q3 2024 was $36.9 million, up from $21.0 million in Q2 2024, driven by higher average balances and yields on interest-earning assets. The net interest margin improved to 4.43%, up from 3.94% in the previous quarter. However, the overall net interest margin for the nine months decreased to 4.12% from 4.43% in the prior year, reflecting increased funding costs.

California BanCorp's allowance for loan losses increased significantly to $53.6 million as of September 30, 2024, from $22.6 million at the end of 2023, driven by the initial provision for credit losses on acquired loans. The company also reported a rise in nonaccrual loans to $25.7 million, up from $13.0 million at the end of 2023.

The merger has resulted in a substantial increase in goodwill, which rose to $112.5 million, and core deposit intangibles increased to $23.0 million. The company’s capital ratios remain strong, with a total risk-based capital ratio of 12.65%, exceeding the minimum requirements for well-capitalized status.

Overall, while California BanCorp has expanded its asset base and deposit growth significantly, it faces challenges related to increased credit loss provisions and merger-related expenses that have impacted profitability in the short term.