WALNUT CREEK, Calif.–(BUSINESS WIRE)–BayCom Corp (“BayCom” or the “Company”) (NASDAQ: BCML), the holding company for United Business Bank (the “Bank” or “UBB”), announced earnings of $6.4 million, or $0.58 per diluted common share, for the second quarter of 2025, compared to earnings of $5.7 million, or $0.51 per diluted common share, for the first quarter of 2025 and $5.6 million, or $0.50 per diluted common share, for the second quarter of 2024.
Net income for the second quarter of 2025 increased $662,000, or 11.6%, compared to the first quarter of 2025. This increase was primarily the result of a $439,000 decrease in provision for credit losses, a $280,000 increase in net interest income, a $235,000 decrease in noninterest expense, and a $73,000 increase in noninterest income, partially offset by a $365,000 increase in provision for income taxes. Compared to the second quarter of 2024, net income for the second quarter of 2025 increased $764,000, or 13.6%, primarily as a result of an $865,000 increase in net interest income, a $258,000 decrease in noninterest expense, and a $30,000 increase in noninterest income, partially offset by a $357,000 increase in provision for income taxes and a $32,000 increase in provision for credit losses.
Net income for the six months ended June 30, 2025 increased $589,000, or 5.1%, compared to the same period in 2024 primarily as a result of a $1.4 million increase in net interest income and a $340,000 decrease in noninterest expense, partially offset by a $592,000 decrease in noninterest income, a $422,000 increase in provision for credit losses, and a $75,000 increase in provision for income taxes.
George Guarini, President and Chief Executive Officer, commented, “Our financial results for the second quarter of 2025 continued a positive trend, supported by new lending activity and deposit growth. In addition, our key financial metrics remain strong and show continued improvement. Overall, our financial condition remains resilient, and we have not observed any signs of systemic credit weakness.”
Looking ahead, Guarini expressed cautious optimism, stating, “We recognize the potential for economic conditions to deteriorate. In response, we remain focused on managing operating expenses, maintaining strong credit discipline, and closely monitoring the quality of our new loan originations.”
He concluded, “We remain committed to the strategic repurchase of shares and the payment of cash dividends, reinforcing our dedication to delivering long-term value to both our clients and shareholders.”
Second Quarter Performance Highlights:
- Annualized net interest margin was 3.77% for the current quarter, compared to 3.83% for the preceding quarter and 3.69% for the same quarter a year ago.
- Annualized return on average assets was 0.98% for current quarter, compared to 0.89% for the preceding quarter and 0.87% for the same quarter a year ago.
- Total assets remained steady at $2.6 billion at June 30, 2025, March 31, 2025 and June 30, 2024.
- Loans, net of deferred fees, totaled $2.0 billion at both June 30, 2025 and March 31, 2025, and $1.9 billion at June 30, 2024.
- Nonperforming loans totaled $16.4 million or 0.82% of total loans, at June 30, 2025, compared to $10.0 million or 0.51% of total loans, at March 31, 2025, and $16.1 million, or 0.87% of total loans, at June 30, 2024.
- The allowance for credit losses for loans totaled $18.7 million, or 0.93% of total loans outstanding, at June 30, 2025, compared to $18.5 million, or 0.94% of total loans outstanding, at March 31, 2025, and $19.0 million, or 1.02% of total loans outstanding, at June 30, 2024.
- A $203,000 provision for credit losses was recorded during the current quarter, compared to a $642,000 provision for credit losses in the prior quarter and a $171,000 provision for credit losses in the same quarter a year ago.
- Deposits totaled $2.2 billion at June 30, 2025, compared to $2.1 billion at March 31, 2025 and $2.2 billion at June 30, 2024. At June 30, 2025, noninterest-bearing deposits totaled $616.1 million, or 28.2% of total deposits, compared to $589.5 million, or 27.7% of total deposits, at March 31, 2025, and $618.6 million, or 28.4% of total deposits, at June 30, 2024.
- The Company repurchased 148,450 shares of common stock at an average cost of $25.88 per share during the second quarter of 2025, compared to 50,793 shares of common stock repurchased at an average cost of $25.82 per share during the first quarter of 2025, and 204,794 shares of common stock repurchased at an average cost of $20.17 per share during the second quarter of 2024.
- On May 21, 2025, the Company announced the declaration of a cash dividend on the Company’s common stock of $0.20 per share, which was paid on July 10, 2025 to shareholders of record as of June 12, 2025.
- The Bank remained a “well-capitalized” institution for regulatory capital purposes at June 30, 2025.
Earnings
Net interest income increased $280,000, or 1.2%, to $23.2 million for the second quarter of 2025 from $22.9 million for the prior quarter, and increased $865,000, or 3.9%, from $22.3 million for the same quarter a year ago. The increase from the prior quarter was primarily driven by an increase in interest income on loans, including fees, and to a lesser extent an increase in interest income on fed funds sold and interest-bearing balances in banks. These increases were partially offset by an increase in interest expense on deposits and a decrease in interest income on investment securities.
The increase in net interest income compared to the same quarter in 2024 primarily reflects increases in interest income on loans and investment securities. These increases were partially offset by a decrease in interest income on fed funds sold and interest-bearing balances in banks, as well as higher interest expense on deposits. Average interest-earning assets increased $38.6 million, or 1.6%, compared to the first quarter of 2025, and $33.7 million, or 1.4%, compared to the second quarter of 2024.
The average yield earned (annualized) on interest earning assets for the second quarter of 2025 was 5.45%, down from 5.46% for the first quarter of 2025 and up from 5.37% for the second quarter of 2024. The decrease from the prior quarter reflects decreased yield on interest-bearing balances in banks. This increase from the second quarter of 2024 reflects the repricing of adjustable-rate loans and securities to higher rates, as well as the origination of new loans at higher rates. The average rate paid (annualized) on interest-bearing liabilities increased to 2.54% for the second quarter of 2025, compared to 2.49% for the prior quarter, and was unchanged from 2.54% for the second quarter of 2024. The increase in liability costs was due to higher cost of premium money market interest-bearing deposits during the second quarter of 2025 as compared to the first quarter of 2025. As interest-bearing liabilities tend to have shorter durations, they generally reprice or reset faster than interest-earning assets.
Interest income on loans, including fees, increased $813,000, or 3.0%, to $28.0 million for the three months ended June 30, 2025 from $27.1 million for the prior quarter, due to a $39.5 million increase in the average balance of loans, partially offset by a one basis point decrease in the average loan yield. Interest income on loans, including fees, increased $2.9 million, or 11.8%, for the three months ended June 30, 2025 from $25.0 million for three months ended June 30, 2024, due to a $133.4 million increase in the average balance of loans and a 22 basis point increase in the average loan yield. The average balance of loans was $2.0 billion for the second and first quarters of 2025, compared to $1.9 billion for the second quarter of 2024. The average yield on loans was 5.63% for the second quarter of 2025, compared to 5.64% for the first quarter of 2025 and 5.41% for the second quarter of 2024.
Interest income on loans included $110,000 in accretion of the net discount on acquired loans for the three months ended June 30, 2025, compared to $215,000 and $124,000 for the three months ended March 31, 2025 and June 30, 2024, respectively. Accretion of the net discount had minimal to no impact on the average yield on loans during the reported periods. The balance of the net discounts on these acquired loans totaled $319,000, $223,000, and $540,000 at June 30, 2025, March 31, 2025, and June 30, 2024, respectively. Interest income included fees related to prepayment penalties of $109,000 for the three months ended June 30, 2025, compared to $162,000 and $70,000 for the three months ended March 31, 2025 and June 30, 2024, respectively.
Interest income on investment securities decreased $47,000, or 2.0%, and was $2.4 million for the three months ended June 30, 2025, compared to $2.5 million for the three months ended March 31, 2025, and increased $225,000, or 10.3%, from $2.2 million for the three months ended June 30, 2024. The average yield on investment securities decreased five basis points to 4.68% for the three months ended June 30, 2025, compared to 4.73% for the three months ended March 31, 2025, and increased 18 basis points from 4.50% for the three months ended June 30, 2024. The decrease in the average yield from the prior quarter was due to paydowns and calls on higher variable-rate securities. The increase in the average yield from the same quarter a year ago was due to higher market interest rates on newly purchased securities and rate resets on variable rate investment securities. The average balance of investment securities totaled $206.5 million for the three months ended June 30, 2025, compared to $210.2 million and $195.1 million for the three months ended March 31, 2025 and June 30, 2024, respectively. In addition, during the second quarter of 2025, we received $392,000 in cash dividends on our FRB and FHLB stock, compared to $393,000 in the first quarter of 2025 and $395,000 in the second quarter of 2024.
Interest income on federal funds sold and interest-bearing balances in banks increased $44,000, or 1.7%, to $2.7 million for the three months ended June 30, 2025, compared to $2.6 million for the three months ended March 31, 2025, and decreased $2.1 million, or 44.1%, from $4.8 million for the three months ended June 30, 2024, as a result of changes in the average yield and average balance. The average yield on federal funds sold and interest-bearing balances in banks decreased two basis points to 4.45% for the three months ended June 30, 2025, compared to 4.47% for the three months ended March 31, 2025, and decreased 102 basis points from 5.47% for the three months ended June 30, 2024. The decrease in the average yield was due to a lowering of the Federal Reserve rates during 2024. The average balance of federal funds sold and interest-bearing balance in banks totaled $242.8 million for the three months ended June 30, 2025, compared to $240.3 million and $354.3 million for the three months ended March 31, 2025 and June 30, 2024, respectively.
Interest expense increased $527,000, or 5.4%, to $10.3 million for the three months ended June 30, 2025, compared to $9.8 million for the three months ended March 31, 2025, and increased $611,000, or 3.1%, compared to $10.1 million for the three months ended June 30, 2024. The increase from the prior quarter reflects higher average balances and funding costs on money market accounts. The increase from the same quarter of 2024 was due to higher deposit rates, reflecting increased market rates and competitive pricing pressures. The average balance of deposits totaled $2.2 billion for the second quarter of 2025, compared to $2.1 billion for both the first quarter of 2025 and the second quarter of 2024. The average cost of interest-bearing liabilities for the second quarter of 2025 was 2.54%, up from to 2.49% for the first quarter of 2025 and unchanged from second quarter of 2024. The increase from the prior quarter was due to higher rates paid on money market deposits. Compared to the same quarter last year, the increase also reflects higher rates on money market and time deposits, competitive pricing pressures, and a shift in deposit mix from noninterest-bearing to higher-costing accounts. The average cost of deposits (including noninterest-bearing deposits) for the three months ended June 30, 2025 was 1.71%, up from 1.66% for the three months ended March 31, 2025 and 1.69% for the three months ended June 30, 2024. The average balance of noninterest-bearing deposits increased $1.2 million, or 0.2%, to $604.9 million for the three months ended June 30, 2025, compared to $603.7 million for the three months ended March 31, 2025 and decreased $15.5 million, or 2.5%, compared to $620.5 million for the three months ended June 30, 2024.
Annualized net interest margin was 3.77% for the second quarter of 2025, compared to 3.83% for the first quarter of 2025 and 3.69% for the second quarter of 2024. The average yield on interest-earning assets for the second quarter of 2025 decreased by one basis point from the prior quarter and increased eight basis points from the second quarter of 2024. The average rate paid on interest-bearing liabilities increased five basis points from the first quarter of 2025 and remained unchanged compared to the second quarter of 2024. The decline in net interest margin from the prior quarter reflects higher funding costs, particularly on money market and time deposits, which more than offset the modest decline in asset yields. Compared to the same quarter last year, the increase in net interest margin was primarily driven by higher yields on loans and investment securities, reflecting the ongoing benefit of asset repricing in a higher rate environment. For the second quarter of 2025, the average yield on loans increased to 5.63%, while the average yield on investment securities rose to 4.68%, both contributing to the year-over-year improvement in asset yields.
The Company recorded a $203,000 provision for credit losses for the second quarter of 2025, compared to a $642,000 and a $171,000 provision for credit losses for the first quarter of 2025 and the second quarter of 2024, respectively. The decrease in the provision during the current quarter compared to the prior quarter was primarily driven by a decrease in the specific reserves on individually evaluated loans, partially offset by loan growth and an increase in the overall required level of allowance for credit loss reserve. Net charge-offs were $13,000 for the second quarter of 2025, compared to net charge-offs of $102,000 in the prior quarter of 2025 and $76,000 in the second quarter of 2024.
Noninterest income for the second quarter of 2025 increased $73,000, or 5.1%, to $1.5 million compared to $1.4 million for the prior quarter of 2025, and increased $30,000, or 2.0%, compared to $1.5 million for the second quarter of 2024. The increase in noninterest income for the current quarter compared to the prior quarter of 2025 was primarily due to a $262,000 decrease in loss on equity securities, reflecting positive fair value adjustments due to improved market conditions, and a $127,000 increase in loan servicing and other fees. These increases were partially offset by a $144,000 decrease in gain on sale of loans, a $118,000 increase in loss on investment in Small Business Investment Company (“SBIC”) fund, a $32,000 decrease in service charges and other fees, and a $22,000 decrease in other income and fees.
The increase in noninterest income for the current quarter compared to the same quarter of 2024 was primarily due to a $328,000 decrease in loss on equity securities as a result of positive fair value adjustments on these securities due to changes in market conditions, a $179,000 increase in loan servicing and other fees, and a $75,000 increase in service charges and other fees partially offset by a $233,000 decrease in gain on sale of loans, a $298,000 increase in loss on investment in SBIC fund, and a $21,000 decrease in other income and fees.
Noninterest expense for the second quarter of 2025 decreased $235,000, or 1.5%, to $15.8 million, compared to $16.0 million for the first quarter of 2025, and decreased $258,000, or 1.6%, compared to $16.0 million for the second quarter of 2024. The decrease from the prior quarter primarily reflected a $207,000 decrease in salaries and employee benefits, as the first quarter included slightly higher incentive expense, and a $135,000 reduction in other expense. The decrease in other expense was due in part to excess funds returned to the Bank from a loss reserve account previously established under the California Capital Access Program (CalCap), which is designed to support small business lending by requiring contributions to a reserve fund that covers potential loan losses. These funds were no longer needed due to strong loan performance and were returned to the Bank. These decreases were partially offset by a $47,000 increase in occupancy and equipment expense and a $60,000 increase in data processing expense. Compared to the second quarter of 2024, the decrease in noninterest expense was primarily due to a $657,000 decrease in other expense due to reduction in legal and professional service costs as well as the return of unused CalCap reserve funds. These decreases were partially offset by a $263,000 increase in data processing expense due to newly implemented services in 2025, an $86,000 increase in salaries and wages, and a $50,000 increase in occupancy and equipment expense.
The provision for income taxes increased $365,000, or 18.4%, and was $2.4 million for the second quarter of 2025, as compared to $2.0 million for the first quarter of 2025 and increased $357,000, or 17.9%, from $2.0 million for the second quarter of 2024. The effective tax rate for the second quarter of 2025 was 27.0%, compared to 25.8% for the prior quarter of 2025 and 26.3% for the second quarter of 2024. The effective tax rate increased from the prior quarter of 2025 due to year-end true-ups recorded in the first quarter of 2025, and was lower compared to the second quarter of 2024 due to higher low income housing tax credits.
Loans and Credit Quality
Loans, net of deferred fees, increased $33.6 million from March 31, 2025, and increased $136.1 million from June 30, 2024, and totaled $2.0 billion at both June 30, 2025 and March 31, 2025, compared to $1.9 billion at June 30, 2024. The increase in loans at June 30, 2025 compared to March 31, 2025 was primarily due to $155.1 million of new loan originations and $13.1 million of loan purchases, partially offset by $134.4 million of loan repayments and $564,000 of loan sales during the current quarter.
Nonperforming loans, consisting of non-accrual loans and accruing loans 90 days or more past due, totaled $16.4 million, or 0.82% of total loans, at June 30, 2025, compared to $10.0 million, or 0.51% of total loans, at March 31, 2025, and $16.1 million, or 0.87% of total loans, at June 30, 2024. The increase in nonperforming loans from the prior quarter-end was primarily due to seven new commercial real estate loans totaling $5.2 million being placed on non-accrual during the current quarter and a $2.8 million increase in loans 90 days or most past due, still accruing, and in the process of collection, partially offset by payoffs of four non-accrual loans totaling $1.9 million and one fully charged off nonaccrual loan of $105,000. The seven commercial real estate loans placed on non-accrual are secured by various types of real estate.
The portion of nonaccrual loans guaranteed by government agencies totaled $610,000 at June 30, 2025, compared to $618,000 at March 30, 2025 and $2.2 million at June 30, 2024. As of June 30, 2025, there were three loans totaling $2.9 million that were 90 days or more past due, still accruing, and in the process of collection. Of the $2.9 million, $2.8 million are fully guaranteed by government agencies. This compares to one loan totaling $150,000 at March 31, 2025, and no such loans at June 30, 2024. Accruing loans past due between 30 and 89 days at June 30, 2025, totaled $9.2 million, compared to $10.8 million at March 31, 2025 and $1.5 million at June 30, 2024. The $1.6 million decrease in accruing loans past due between 30-89 days at June 30, 2025 as compared to March 31, 2025, was primarily due to one commercial real estate loan for $1.9 million which was 30-89 days past due at March 31, 2025 and was paid off during the current quarter.
At June 30, 2025, the Company’s allowance for credit losses for loans was $18.7 million, or 0.93% of total loans, compared to $18.5 million, or 0.94% of total loans, at March 31, 2025 and $19.0 million, or 1.02% of total loans, at June 30, 2024. We recorded net charge-offs of $13,000 for the second quarter of 2025, compared to net charge-offs of $102,000 in the prior quarter of 2025 and net charge-offs of $76,000 in the second quarter of 2024. The modest increase in the allowance for loan losses at June 30, 2025, as compared to March 31, 2025, was primarily attributable to an increase of $662,000 in the reserve for pooled loans, partially offset by a $462,000 decrease in specific reserves on individually evaluated loans. During the second quarter of 2025, the increase in the reserve for pooled loans was attributable to an increase in qualitative reserves as a result of changes in the risk level of one qualitative factor, as well as an increase in quantitative reserves tied to forecasted economic conditions. Specifically, the model incorporated a higher forecasted national unemployment rate, partially offset by an improved outlook for national gross domestic product, both of which are key macroeconomic variables used in the Company’s credit loss estimation process.
As of June 30, 2025, acquired loans net of their discount totaled $141.7 million, with a remaining net discount on these loans of $319,000, compared to $152.4 million of acquired loans with a remaining net discount of $223,000 at March 31, 2025, and $186.3 million of acquired loans with a remaining net discount of $540,000 at June 30, 2024. The change in the net discount from March 31, 2025, was due to payoff activity during the current quarter. The net discount includes a credit discount based on estimated losses on the acquired loans, partially offset by a premium, if any, based on market interest rates on the date of acquisition.
Deposits and Borrowings
Deposits increased $57.8 million, or 2.6%, to $2.2 billion at June 30, 2025, compared to $2.1 billion at March 31, 2025 and increased $11.6 million, or 0.6%, compared to $2.2 billion at June 30, 2024. The increase in deposits during the current quarter as compared to prior quarter is due to organic growth. In addition, during 2025, the overall deposit mix shifted, in part, due to interest-rate sensitive clients moving a portion of their non-operating deposit balances from lower costing deposits, including noninterest-bearing deposits, into higher costing money market accounts and time deposits. At June 30, 2025, noninterest-bearing deposits totaled $616.1 million, or 28.2% of total deposits, compared to $589.5 million, or 27.7% of total deposits, at March 31, 2025, and $618.6 million, or 28.4% of total deposits, at June 30, 2024.
We consider our deposit base to be seasoned, stable and well-diversified, and we do not have any significant industry concentrations among our non-insured deposits. We also offer an insured cash sweep (ICS) product that allows customers to insure deposits above FDIC insurance limits. At June 30, 2025 and March 31, 2025, our average deposit account size (excluding public funds), calculated by dividing period-end deposits by the population of accounts with balances, was approximately $61,000 and $60,000, respectively.
The Bank has an approved secured borrowing facility with the FHLB of San Francisco for up to 25% of total assets for a term not to exceed five years under a blanket lien of certain types of loans, with no FHLB advances outstanding at June 30, 2025, March 31, 2025 or June 30, 2024.
Contacts
BayCom Corp
Keary Colwell, 925-476-1800
[email protected]
