California BanCorp — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net income was $14.0 million ($0.43 per diluted share), down from $14.3 million ($0.44 per share) in the second quarter of 2026 and $15.7 million ($0.48 per share) in the third quarter of 2025.
• Net interest income increased to $44.1 million from $43.4 million in the prior quarter.
• Net interest margin decreased to 4.61% from 4.71% in the prior quarter.
• Provision for credit losses was $3.2 million, compared to $714 thousand in the prior quarter.
• Noninterest income was $1.9 million, up from $1.6 million in the prior quarter.
• Noninterest expense was $24.4 million, up $57 thousand from the prior quarter.
• Return on average assets was 1.35%, down from 1.43% in the prior quarter.
• Return on average common equity was 9.45%, down from 9.84% in the prior quarter.
• Return on average tangible common equity (non-GAAP) was 12.07%, down from 12.62% in the prior quarter.
• Efficiency ratio (non-GAAP) improved to 53.00% from 54.22% in the prior quarter.
• Total assets were $4.11 billion, an increase of $80.4 million from June 30, 2026.
• Total loans, including loans held for sale, increased to $3.16 billion, up $53.3 million (1.7%) from the prior quarter.
• Total deposits increased to $3.48 billion, up $117.4 million (3.5%) from the prior quarter.
• Noninterest-bearing deposits represented 36.3% of total deposits, down from 37.4% in the prior quarter.
• Cost of deposits was 1.33%, up from 1.31% in the prior quarter.
• Cost of funds was 1.39%, up from 1.38% in the prior quarter.
• Allowance for credit losses (ACL) was $35.5 million, or 1.13% of total loans held for investment, down from 1.18% in the prior quarter.
• Allowance for loan losses (ALL) was $33.7 million, or 1.07% of total loans held for investment, down from 1.13% in the prior quarter.
• Net charge-offs were $4.6 million, primarily related to the full charge-off of two commercial and industrial loans.
• Nonperforming loans were $9.3 million, up $407 thousand (4.6%) from the prior quarter.
• Tangible book value per common share (non-GAAP) was $14.22, down $0.07 from $14.29 in the prior quarter.

Guidance and Future Outlook:

• No specific forward guidance or quantitative future outlook was provided in the press release.
• Management expressed confidence in continued momentum, citing steady loan and deposit growth, disciplined credit management, and a solid pipeline of new opportunities.
• Management indicated a focus on attracting high-quality clients and building a foundation for sustainable, long-term growth.

Business Segments and Product Lines:

• Opened a new loan production office in downtown San Francisco on October 1, 2026, to expand commercial banking presence in Northern California.
• New loans totaled $241.5 million, including $159.9 million in new loan fundings, $10.8 million in CRA-eligible small business loan participation purchases, and $70.8 million in short-term participation purchases in fully collateralized mortgage loans.
• Total loans secured by real estate increased by $44.1 million, driven by increases in construction and land development loans ($19.9 million), other commercial real estate loans ($19.1 million), multifamily loans ($8.9 million), and commercial and industrial loans ($10.8 million).
• Loans held for sale were $15.4 million at September 30, 2026, consisting entirely of consumer solar loans.
• Total reciprocal deposits were $740.3 million, or 21.3% of total deposits.

Market and Competitive Landscape:

• Increased competition for deposits drove market deposit rates upward in the third quarter of 2026.
• Management monitors macroeconomic variables including interest rate changes, economic uncertainty, and elevated geopolitical risks related to conflicts in the Middle East.

Risks and Challenges:

• Provision for credit losses increased significantly due to $4.6 million in net charge-offs, updates to economic forecasts for California, revised scenario weighting assumptions, continued loan growth, and changes in portfolio composition.
• Two commercial and industrial loans totaling $4.6 million were fully charged off due to a long-term online advertisement client ceasing operations following unauthorized third-party use of proprietary software.
• Nonperforming loans increased due to downgrades of a commercial and industrial loan and a commercial real estate loan.
• Net of tax unrealized losses on available-for-sale debt securities increased by $11.8 million to $17.1 million, attributed to a decrease in bond prices at the long end of the yield curve and the general interest rate environment.

Management Commentary and Tone:

• David Rainer, Chairman and CEO, stated that results reflect continued momentum across the franchise, with strong deposit growth reflecting the strength of the business model and deepening client relationships.
• Richard Hernandez, President, highlighted encouraging business development activity supported by a solid pipeline and dedication of teams across markets.
• Management emphasized a commitment to relationship banking and disciplined credit management in a changing interest rate environment.

Other Key Points:

• Redeemed all $35.0 million of its 3.50% fixed-to-floating rate subordinated debt due September 1, 2031, at par value.
• Repurchased 209,348 shares of common stock at an average price of $21.81 for a total cost of $4.6 million in the third quarter, compared to 102,594 shares at $19.46 for $2.0 million in the second quarter.
• Declared a dividend of $0.12 per common share, totaling $3.8 million, paid in October 2026.
• The Company's preliminary capital ratios exceeded the minimums required to be "well-capitalized" at September 30, 2026.
• Total available borrowing capacity was $1.16 billion at September 30, 2026, including $752.5 million from FHLB secured lines, $317.5 million from the Federal Reserve Discount Window, and $90.5 million from unsecured credit lines.
• Unpledged liquid securities were approximately $215.7 million, and cash and cash equivalents were $266.7 million at September 30, 2026.
• For the nine months ended September 30, 2026, the Company repurchased 721,857 shares for a total cost of $14.0 million.
• The remaining maximum number of shares authorized to be repurchased under the stock repurchase program was 666,215 shares at September 30, 2026.