Investor Presentation Q2 2020 Ste teven E. E. Shelton President - - PowerPoint PPT Presentation

Investor Presentation

Q2 2020

Ste teven E.

• E. Shelton

President & & CEO EO Th Thomas A.

• A. Sa

Sa SEVP, CF , CFO & & CO COO Scot

• tt M

Mye yers, SEVP, P, C CLO

Forwa ward-Look

• oking S

Statements ts

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During the course of the presentation and any transcript that may result, written or otherwise, California BanCorp (the “Company”) may make projections or other forward-looking statements regarding a variety of items. Such forward-looking statements are based upon current expectations and involve risks and uncertainties. Actual results may differ materially from those stated in any forward-looking statement based on a number of important factors and risks. Although the Company may indicate and believe that the assumptions underlying the forward- looking statements are reasonable, any of the assumptions could prove inaccurate or incorrect and therefore, there can be no assurance that the results contemplated in the forward-looking statements will be realized. The Company undertakes no obligation to release publicly the results of any revisions to the forward-looking statements included herein to reflect events or circumstances after today, or to reflect the occurrence of unanticipated events. The Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act

• f 1995.

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Overvie iew of

• f C

Calif liforn rnia ia B Bancorp

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• Established in 2007 as a relationship focused commercial

business bank serving Northern California with assets of $1.9 billion and market cap of ~$121 million(1)

• Majority of executive management team joined the bank at

inception

• Robust commercial core deposits
• 21 Primary relationship managers with average banking

experience of over 25 years and average loan books of $46 million

• Positioned to leverage recent investments to enhance our

platform and extend our markets

(1) Based on CALB’s stock price of $14.90 as of 06/30/2020 (2) Acquisition of Pan Pacific Bank which closed on 12/31/2015

Company Overview Financial Snapshot – 06/30/20 Franchise Map

• CALB HQ and LPO
• Acquired Branch(2)
• CBoC HQ Branch
• LPOs

Walnut Creek

Balance Sheet ($mm) 2020Q2 Profitability (%) Assets 1,910 Core ROAA 0.35 Loans 1,299 Core ROATCE 4.95 Deposits 1,386 Net Interest Margin 2.59 Tangible Common Equity 126 Core Efficiency Ratio 55.70 Loans/ Deposits (%) 93.8 Cost of Deposits 0.46 Loan Composition (%) Deposit Composition (%) C&I Loans / Gross Loans 28.2 DDA/ Total Deposits 46.4 CRE Loans / Gross Loans 39.2 Core Deposits/ Total Deposits 87.3 Capital Ratios (Consolidated) (%) Credit Metrics (%) TCE / TA 6.62 NPAs / Loans & OREO 0.10 Leverage Ratio 8.13 NPAs / Assets 0.07 Tier 1 Ratio 11.27 Reserves / Gross Loans 0.96 TRBC Ratio 12.87 NCOs / Avg. Loans

0.35

Invest stment H Highlights

• Branch light, commercial focused business bank with strong middle market

relationships throughout Northern California

• Experienced management team and seasoned C&I relationship team with strong

ties to the local markets

• Proven organic and acquisitive growth story
• Quality core deposit franchise and commercial relationship strategy
• C&I focus provides asset sensitivity and ability to rebalance loan portfolio
• Disciplined underwriting standards with best in class asset quality metrics
• Strong earnings outlook as efficiencies from investments are realized

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Exper erien enced ed Managem ement T Team

• Served as Executive Vice President and CCO from 2007 through 2017
• Previously served in various executive management positions including Executive Vice

President and Senior Lending Officer for Wells Fargo’s corporate bank and President & CCO

• f CivicBank of Commerce

John Lindstedt, SEVP & CCO Emeritus Tom M. Dorrance, SEVP Technology & Operations

• Previously served as a Senior Vice President and Chief Information Officer for North Bay

Bancorp

• Has worked in financial management and commercial banking since 1992 including I.T.

Manager at CivicBank of Commerce

Michele Wirfel, SEVP & CBO

• Previously served as the Bank’s Executive Vice President & East Bay Market President
• Has worked in financial management and commercial banking since 1991 in various

executive management positions including regional manager for CivicBank of Commerce

Age: 84 Age: 57 Age: 51

• Previously served as an Executive Vice President of the Bank primarily responsible for

managing relationship officers and production since the Bank’s founding in 2007

• Served for thirteen years in various executive management positions including President of

CivicBank of Commerce Steven E. Shelton,

President & CEO

Age: 58

Years at CALB: 12 Years in Industry: 35 Years at CALB: 12 Years in Industry: 51 Years at CALB: 12 Years in Industry: 27 Years at CALB: 12 Years in Industry: 28

• Veteran banker with more than 15 years banking experience in the Sacramento area
• Previously served as Wells Fargo Senior Vice President and Sacramento Region Manager

Scott Myers SEVP & CLO

Age: 49

Joined 2019 Years in Industry: 23

• More than 30 years’ experience in executive finance and risk management roles, most recently

serving as Chief Risk Officer for Western Alliance Bank.

• Previously served in various executive and director roles at Bridge Bank and its holding company

Bridge Capital Holdings (BBNK), including Chief Financial Officer and Chief Strategy Officer. Thomas A. Sa,

SEVP, CFO & COO

Age: 57

Joined 2019 Years in Industry: 31

• Previously served as Deputy Chief Credit Officer and part of senior management from 2007

to 2018

• 17 years of experience in various positions including lending and credit administration at

Mechanics Bank

Vivian Mui, SEVP & CCO

Age: 40

Years at CALB: 12 Years in Industry: 18

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Our Hi History

Successful Expansion Throughout Northern California

$16 million common stock

• ffering at $9.90 per share to

fund growth in June 2014 $4 million private placement

• ffering at $12.86 per share to

payoff SBLF in May 2016 Completed acquisition of Pan Pacific Bank ($131 million in assets) in December 2015

2015 – Q2’20 Asset CAGR 22.69%

Practice Acquisition Division opened in March 2011 Tangible book value per share and capital offering price adjusted for historical stock splits Data as of 12/31 for each respective year and 06/30 for Q2-2020 Completed $25.0 million private offering of common stock in August 2018 Holding Company formed in June 2017 Walnut Creek LPO

• pened in July 2017

Bank founded in March 2007 with $27.5 million in capital Completed expansion into the Sacramento Region San Jose ABL Division opened in July 2011

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Entered the NASDAQ stock market

$53 $137 $194 $240 $299 $350 $365 $446 $653 $765 $866 $1,006 $1,152 $1,910 $8.58 $7.04 $6.70 $7.94 $8.21 $8.90 $9.61 $10.48 $10.19 $11.16 $12.01 $14.20 $15.16 $15.51 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q2-2020 Assets ($mm) TBVPS

Our B Busi siness M ss Model

Historical Loan & Deposit Growth

• Middle market commercial banking
• Target businesses with $20 million - $200 million in annual

revenue

• Target clients with minimum lending relationships of $2 million or

$1 million in deposits

• Portfolio managed to ~40% C&I loans and ~40% non-interest

bearing deposits

• Invest in other asset generating business lines
• Asset-based lending division with $50 million in loans as of

06/30/20

• Practice Acquisition division with $257 million in loans as
• f 06/30/20
• Construction lending division with $40 million in loans as of

06/30/20

• Sponsor Finance division launched in first quarter 2020
• Strong core commercial deposit generation strategy
• Utilize technology with minimal branches
• Provide commercial cash management services to middle

market clients

• Established Professional Banking division to target

specialty deposits primarily from law firms and non-profits

Business Model Overview

2015 – Q2’20 CAGR Loans: 18.2% Deposits: 18.6%

Dollars in millions Data as of 12/31 for each respective year and 06/30 for Q2-2020

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$518 $628 $733 $847 $950 $1,299 $542 $650 $760 $874 $988 $1,386 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 2015 2016 2017 2018 2019 Q2-2020 Loans Deposits

We e Ser erve e Cl Clients Throughout Nor

• rthern Cal

California

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• ~$50 million in annual revenue
• $5 million revolver with $2 million outstanding
• $1 million equipment financing
• $3 million commercial real estate loan
• $1 million demand deposit utilizing cash management services
• $3 million money market accounts to hold surplus deposits
• Fee income driven by commercial portfolio account analysis

(1) Acquisition of Pan Pacific Bank which closed on 12/31/15.

Our Middle Market Relationships Our “Typical Client” Franchise Map

• CALB HQ and LPO
• Acquired Branch(1)
• CBoC HQ Branch
• LPOs

Walnut Creek

Strong C Core De Deposi sit Base ase

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• Deposits grew $503 million in Q2-2020 from Q2-2019
• Core deposit base driven by commercial clients
• +95% of commercial relationships hold deposits at the bank
• 82% Core deposit of total deposit
• Utilize remote deposit capture and commercial cash management

to generate and retain deposits

• Established the Professional Banking Division in July 2018 to

target core deposit growth from professional firms including law firms, non-profits, etc.

• Treasury management division established in Q4-2019

Dollars in millions. Core deposits defined as total deposits less time deposits and brokered deposits. Data as of 12/31 for each respective year and 06/30 for Q2-2020.

2015 – Q2’20 CAGR DDA: 21.0% Core Deposits: 18.6% Total Deposits: 18.6%

Deposit Portfolio Highlights–06/30/20 Historical Deposit Composition Deposit Composition

0.23% 0.24% 0.35% Cost of Deposits 94% 93% 94% Core Deposits 0.80% 88% 0.55% 91% 0.46% 82%

Demand deposits 46% Interest bearing demand deposits 2% Money market & savings deposits 40% Time deposits 12% $542 $650 $761 $874 $988 $1,386 $225 $285 $315 $352 $387 $643 2015 2016 2017 2018 2019 Q2-2020 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 Total Deposits NIB Deposits

41% 39% 40% 44% 42% 46%

Overvie iew of

• f L

Loa

• an Composit

itio ion

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(1) Data as of 12/31 for each respective year and 06/30 for Q2-2020 (2) Impact from Pan Pacific Acquisition

Loan Portfolio Composition Operating LOC Usage Historical Loan Composition(1) Gross Loan Funding vs. Net Loan Funding

2015 – Q2’20 CAGR C&I: 11.3% CRE: 11.0% Total Loans: 18.2%

4.95% 5.08% 4.88% 96% 97% 96% 5.30% 96% 5.09% 97% 4.01% 94% Yield on Loans Loans / Deposits

$518 $628 $733 $847 $950 $1,299 $203 $254 $329 $341 $390 $366 2015 2016 2017 2018 2019 Q2-2020 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 Total Loans C&I

41% 40 45% 40%(2) 39%(2) 28%

Commercial 28% CRE - Owner Occupied 19% CRE - Non-Owner Occupied 20% Construction 4% PPP 28% Other 1%

$477 $507 $487 $475 $490 $160 $173 $150 $179 $119 34% 34% 31% 38% 24%

0% 10% 20% 30% 40% 50% $- $100 $200 $300 $400 $500 $600 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 Commitment Amount Gross Balance Usage

$68 $54 $43 $41 $50 $24 $23 $16 $19

• $31
• $50
• $25

$0 $25 $50 $75 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 Gross Loan Funding Net Loan Growth

Commercia cial a and C CRE L Loa

• an P

Port

• rtfolio
• lio

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• Well diversified loan portfolio to mitigate risk

Commercial Loan Portfolio(1) CRE Loan Portfolio(1)

(1) Data as a percent of total loans, $1.3 Million (2) Data as of 06/30/2020

Services 16% Contractors 4% Manufacturing 2% Wholesale 1% Real Estate & Leasing 2% Info, Finance & Insurance 2% Misc. 1% Retail 1% Industrial 11% Office 10% Retail 6% Other 4% Hotel/Motel & Gas Station 2% Mixed-Use 3% Residential 2% Land 2% Multi-Family 1%

Paycheck P ck Prot

• tecti

ction

• n P

Progr

• gram L

Loans 6 - 3 0

3 0 - 2 0 2 0 2 0 2 0

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As of Q2 ‘19 CALB had $621 thousand of loan discount on the acquired loans from Pan Pacific Bank

Segmentation by Loan Count Segmentation by Aggregate Balance

Services 56% Contractors 16% Retail 7% Manufacturing 6% Misc 6% Finance 3% Wholesale 3% Real Estate 3%

Services $121,421,942 Contractors $136,779,135 Retail $22,428,139 Manufacturing $22,674,727 Misc $12,417,415 Finance $24,733,665 Wholesale $16,297,003 Real Estate $4,879,733

PPP Loan Details # of Loans % % of Total Portfolio Principal Balance % % of Total Portfolio Totals 717 100% 35% 361,631,759 $ 100% 28% Services 398 56% 20% 121,421,942 $ 34% 9% Contractors 113 16% 6% 136,779,135 $ 38% 11% Retail 48 7% 2% 22,428,139 $ 6% 2% Manufacturing 43 6% 2% 22,674,727 $ 6% 2% Misc 44 6% 2% 12,417,415 $ 3% 1% Finance 23 3% 1% 24,733,665 $ 7% 2% Wholesale 24 3% 1% 16,297,003 $ 5% 1% Real Estate 24 3% 1% 4,879,733 $ 1% 0%

Loan P Paym yment D t Deferm rments ts 6 - 3 0 - 2 0 2 0

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As of Q2 ‘19 CALB had $621 thousand of loan discount on the acquired loans from Pan Pacific Bank

Segmentation by Loan Count

• June pa yme nts a re the la st mo nth to b e

de fe rre d fo r ma jo rity o f lo a n.

• 383 lo a ns re pre se nt a ppro xima te ly 29% o f

the c o re po rtfo lio .

• $324MM re pre se nts a ppro xima te ly 35% o f

the c o re po rtfo lio . (Co re po rtfo lio do e s no t inc lude PPP lo a ns)

Dental Total 77% Other CRE 18% Contractors 1% Other 4%

Deferred Loan Detail # of Loans % % of Total "Core" Principal Balance % % of Total "Core" Totals 383 100% 29% 323,902,956 $ 100% 35% Dental Total 295 77% 22% 175,794,614 $ 54% 19%

• Practice Acquisition

238 62% 18% 137,782,879 $ 43% 15%

• CRE

57 15% 4% 38,011,735 $ 12% 4% Other CRE 68 18% 5% 131,170,096 $ 40% 14%

• OO CRE

22 6% 2% 40,253,633 $ 12% 4%

• NOO CRE

46 12% 3% 90,916,463 $ 28% 10% Contractors 3 1% 0% 881,934 $ 0% 0% Other 17 4% 1% 16,056,312 $ 5% 2%

Historic ical P l Profit itabilit ility T y Trends

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(1) ROAA and ROATCE is for the last twelve months ended on 06/30/2020 Data as of 12/31 for each respective year

ROAA ROATCE Efficiency Ratio Net Interest Margin

EPS ($) ROAA (%)

0.47% 0.74% 0.69% 0.94% 0.66% 0.31%(1)

$0.47 $0.80 $0.85 $1.19 $0.86 $0.56(1)

$0.00 $0.40 $0.80 $1.20 $1.60 $2.00 0.00% 0.30% 0.60% 0.90% 1.20% 2015 2016 2017 2018 2019 2020 LTM ROAA (%) Earnings per Share ($) 3.84% 4.18% 4.15% 4.09% 4.12% 2.59% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 2015 2016 2017 2018 2019 Q2-2020 73.3% 64.4% 59.6% 66.7% 73.5% 55.7% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 2015 2016 2017 2018 2019 Q2-2020 4.26% 7.93% 7.71% 9.37% 5.87% 3.61%(1) 0.00% 3.00% 6.00% 9.00% 12.00% 15.00% 2015 2016 2017 2018 2019 2020 LTM

Asset Q t Quality ty Trends

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As of Q2 ‘19 CALB had $621 thousand of loan discount on the acquired loans from Pan Pacific Bank As of Q2 ‘20 CALB had $416 thousand of loan discount on the acquired loans from Pan Pacific Bank Data as of 12/31 for each respective year and 06/30 for Q2-YTD

Net (Charge Offs) / Recoveries ($000s) Reserves / Loans Nonperforming Assets (NCOs) Recoveries / Avg. Loans (%)

($35) ($247) $618 ($65) $2052 $1881 ($2500) ($2000) ($1500) ($1000) ($500) $0 $500 $1000 $1500 $2000 $2500 2015 2016 2017 2018 2019 Q2-YTD (0.01%) (0.04%) 0.09% (0.00%) 0.23% 0.35% (0.75%) (0.50%) (0.25%) 0.00% 0.25% 0.50% 0.75% 2015 2016 2017 2018 2019 Q2-YTD 1.13% 1.20% 1.27% 1.28% 1.17% 0.96% 0.40% 0.80% 1.20% 1.60% 2.00% 2015 2016 2017 2018 2019 Q2-YTD

$1.8 $0.7 $0.5 $4.5 $2.8 $1.2 0.46% 0.28% 0.25% 0.44% 0.24% 0.07% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% $0.0 $2.0 $4.0 $6.0 $8.0 $10.0

2015 2016 2017 2018 2019 Q2-YTD

NPAs / Total Assets NPAs ($mm) Nonaccruals NPAs / Total Assets

Cap apital R Ratios s – Ban ank O Only

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Data as of 12/31 for each respective year and 06/30 for Q2-2020

TCE / TA Leverage Ratio Total Capital Ratio Tier 1 Ratio

9.16% 9.08% 8.96% 11.37% 10.65% 6.62% 0.00% 4.00% 8.00% 12.00% 16.00% 2015 2016 2017 2018 2019 Q2-2020 13.25% 8.78% 9.92% 11.31% 10.44% 8.68% 0.00% 4.00% 8.00% 12.00% 16.00% 2015 2016 2017 2018 2019 Q2-2020 11.83% 10.63% 11.75% 12.52% 11.79% 13.63% 0.00% 4.00% 8.00% 12.00% 16.00% 2015 2016 2017 2018 2019 Q2-2020 10.88% 8.96% 10.09% 10.94% 10.38% 12.03% 0.00% 4.00% 8.00% 12.00% 16.00% 2015 2016 2017 2018 2019 Q2-2020

Summar ary

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Please send questions to ir@bankcbc.com Or Call 510.457.3751 CaliforniaBankofCommerce.com