Beach Cities Commercial Bank Announces Second Quarter 2024 Financial Results

IRVINE, Calif.--(BUSINESS WIRE)--Beach Cities Commercial Bank, www.beachcitiescb.com (OTCQB: BCCB) (the "Bank"), today announced financial results for the quarter ended, June 30, 2024.

Beach Cities Commercial Bank (the Bank) was incorporated under the laws of the State of California on April 11, 2022. The Bank opened for business on June 12, 2023, after receiving all necessary regulatory approvals, and it began providing a full range of banking services from its branch locations in Irvine and Encinitas, California. The Bank operates primarily in the Southern California commercial markets, offering business and personal deposit accounts. The lending products includes loans secured by commercial real estate, commercial and industrial loans, guidance lines of credit supporting bridge loans, lines of credit, SBA 7A and 504 loans, SBA express lines of credit, and State guaranteed loans. The Bank has a state-of-the-art technology platform and offers cash management products and services to allow its customers the ability to focus on their business and not worry about banking.

Significant items for the period include:

• Total assets were $81.2 million as of June 30, 2024, which increased by $33.2 million from December 31, 2023 (69.3% growth).
• Total loans were $63.1 million as of June 30, 2024, which increased by $41.1 million from December 31, 2023 (185.9% growth).
• Total deposits were $61.3 million as of June 30, 2024, which increased by $35.5 million from December 31, 2023 (124.7%).
• Total liquidity remains very high at $14.3 million, which equates to 17.7% of the Bank's total assets. The Bank also maintains contingent borrowing sources at $25.9 million which equates to 32% of total assets.
• The loan portfolio average yield was at 8% which is contributing to a healthy net interest margin at 4.14% as of June 30, 2024.
• The Bank maintains a reserve for credit losses of $726,000 which equates to 1.15% of total loans. As of June 30, 2024, the Bank had Zero dollars in delinquent, and non-performing loans.

The Bank reported second quarter net loss of $1.27 million and year-to-date net loss of $2.59 million. As the Bank continued to grow its loan portfolio, the interest income increased, which decreased the Bank's quarterly net loss. The second quarter's net loss of $1.27 million decreased from the first quarter's loss of $1.33 million by $62k or 4.7%.

During the second quarter, 2024, the total interest income was $1.27 million compared to $863,000 recorded during the first quarter, 2024, an increase of 47%. The Bank's interest expense mainly from the interest-bearing deposits was $557,882 for the second quarter, 2024, compared to $283,838 for the first quarter, 2024, an increase of 96%. The interest expense increased due to the growth in the short-term institutional CDs deposits. The Bank has launched a campaign to replace these high- cost institutional CD deposits with non-interest bearing deposits to reduce the interest cost. The second quarter, 2024, net interest income increased by $135,564 from the first quarter 2024, an increase of 23%.

Total non-interest expenses for the second quarter, 2024, were $1.8 million compared to $1.67 million incurred during the first quarter 2024, an increase of $137k (8.2%). The increases were in the data processing expense and professional/legal categories. This was the result of completing several technology-related projects using an outside consultant. As these buildout projects get fully implemented, the Bank's reliance on outside consultants is expected to phase out in the third quarter, 2024.

As noted above, the Bank's liquidity remains above 17% of total assets. The Bank has also established contingent lines of borrowings with its correspondent banks, including Federal home loan Bank of San Francisco. As of June 30, 2024, total contingent borrowing sources unused totaled $25.9 million or 32% of total assets outstanding.

"The Bank completed its first full year in operations in June 2024, and during this period, has made tremendous progress in growing the Bank," noted H. Kent Falk, CEO.

"During the first start-up quarter, the Bank invested its resources in implementing its technology platform, and as more products and services became live, we have seen incredible growth in lending and attracting good clients within the Southern California region. We have a great board of directors and a team of associates put together that continue to work diligently to offer excellent products and services to our clients. We are very excited about our future," stated Jeffrey Redeker, President.

About Beach Cities Commercial Bank

Beach Cities Commercial Bank is a full-service bank, serving the business, commercial and professional markets. The Bank meets the financial needs of its business clients with loans for working capital, equipment, owner-occupied and investment commercial real estate, and a full array of cash management services and deposit products for businesses and their owners. Beach cities Commercial Bank meets its clients' needs through its head office and branch in Irvine and regional office and branch in Encinitas, California. For more information, please visit www.beachcitiescb.com.

FORWARD-LOOKING STATEMENT: This news release contains a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These statements may be identified by use of words such as "anticipate." "Believe." "Continue," "could." "Estimate," "expect," "intend," "likely." "May," "outlook." "Plan," "potential," "predict." "Project." "Should," "will." "would" and similar terms and phrases. including references to assumptions. Forward-looking statements are based upon various assumptions and analyses made by the Bank (which includes the Bank) considering management's experience and its perception of historical trends. current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. These statements are not guaranteeing of future performance and are subject to risks, uncertainties, and other factors (many of which are beyond the Bank's control) that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Accordingly, you should not place undue reliance on such statements. factors that could affect the Bank's results include, without limitation, the following: the timing and occurrence or non-occurrence of events may be subject to circumstances beyond the Bank's control; there may be increases in competitive pressure among financial institutions or from non-financial institutions; changes in the interest rate environment may reduce interest margins; changes in deposit flows, loan demand or real estate values may adversely affect the business of the Bank; unanticipated or significant increases in loan losses; changes in accounting principles, policies or guidelines may cause the Bank's financial condition to be perceived differently; changes in corporate and/or individual income tax laws may adversely affect the Bank's financial condition or results of operations; general economic conditions, either nationally or locally in some or all areas in which the Bank conducts business, or conditions in the securities markets or the banking industry may be less favorable than the Bank currently anticipates; legislation or regulatory changes may adversely affect the Bank's business; technological changes may be more difficult or expensive than the Bank anticipates; there may be failures or breaches of information technology security systems; success or consummation of new business initiatives may be more difficult or expensive than the Bank anticipates; or litigation or other matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than the Bank anticipates.

BEACH CITIES COMMERCIAL BANK
UNAUDITED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands)
	As of June 30, 2024				As of December 31, 2023				Growth $			Growth %
ASSETS:
Cash and due from banks	$	136			$	996			$	(860	)	-86.3	%
Interest-bearing balance at the Federal Reserve Bank		14,210				20,985				(6,775	)	-32.3	%
Total Cash and Cash Equivalents		14,346				21,981				(7,635	)	-34.7	%
Debt Securities available for sale		993				980				13		1.3	%
Total Loans		63,136				22,081				41,055		185.9	%
Allowance for credit losses		(726	)			(301	)			(425	)	141.2	%
Net Loans		62,410				21,780				40,630		186.5	%
Premises and equipment, net		223				268				(45	)	-16.8	%
Right-of-use asset		1,566				1,741				(175	)	-10.1	%
Other assets		1,654				1,207				447		37.0	%
TOTAL ASSETS	$	81,192			$	47,957				33,235		69.3	%
LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits
Non-interest Bearing deposits	$	7,193			$	6,673				520		7.8	%
Interest -bearing deposits		54,145				19,186				34,959		182.2	%
Total Deposits		61,338				25,859				35,479		137.2	%
Other Liabilities		2,846				2,711				135		5.0	%
TOTAL LIABILITIES		64,184				28,570				35,614		124.7	%
Common Stock		25,019				25,019				-		0.0	%
Additional paid in capital		416				200				216		108.0	%
Accumulated deficit		(8,426	)			(5,831	)			(2,595	)	44.5	%
Accumulated other comprehensive loss		(1	)			(1	)			-		0.0	%
Total Shareholders' Equity		17,008				19,387				(2,379	)	-12.3	%
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	81,192			$	47,957			$	33,235		69.3	%

BEACH CITIES COMMERCIAL BANK
UNAUDITED STATEMENT OF OPERATIONS
(Dollars in thousands except share and per share amounts)
	For the Three Months Ended										For the Six Months Ended				For the twelve Months Ended
	June 30, 2024			March 31, 2024			December 31, 2023				June 30, 2024				December 31, 2023
Interest Income:
Loans	$	1,039,820		$	603,552		$	318,288			$	1,643,372			$	336,181
Investment Securities		13,216			13,043			13,013				26,259				17,320
Other Short-term investments		220,164			246,997			316,334				467,161				821,283
Total Interest Income		1,273,200			863,592			647,635				2,136,792				1,174,784
Interest Expense:
Deposits		557,882			283,838			204,495				841,720				348,702
Total Interest Expense		557,882			283,838			204,495				841,720				348,702
Net Interest Income		715,318			579,754			443,140				1,295,072				826,082
Provisions for credit losses		180,000			245,000			184,900				425,000				317,000
Net interest income after provisions for loan losses		535,318			334,754			258,240				870,072				509,082
Non-interest income:
Service charges, fees and other		4,117			5,147			1,606				9,264				1,706
Non-Interest expense:
Salaries and employee benefits		1,135,056			1,105,393			1,023,984				2,240,449				2,318,336
Occupancy and Equipment expenses		175,312			171,013			170,173				346,325				408,909
Organization Expenses		-			-			-				-				1,045,800
Data Processing		175,117			128,315			139,086				303,432				332,424
Professional and Legal		171,546			111,763			105,668				283,309				469,110
Other Expenses		147,836			151,366			129,696				299,202				294,946
Total Non-interest expense		1,804,867			1,667,850			1,568,607				3,472,717				4,869,525
												-
Income (Loss) before taxes		(1,265,432	)		(1,327,949	)		(1,308,761	)			(2,593,381	)			(4,358,737	)
Income tax expense		800			800			800				1,600				800
Net Income (Loss)	$	(1,266,232	)	$	(1,328,749	)	$	(1,309,561	)		$	(2,594,981	)		$	(4,359,537	)
Earnings per share ("EPS"): Basic	$	(0.50	)	$	(0.52	)	$	(0.51	)		$	(1.02	)		$	(1.71	)
Common Shares Outstanding		2,556,112			2,556,112			2,556,112				2,556,112				2,556,112

Contacts

H. Kent Falk, CEO
[e-mail]
949.704.0120

Jeffrey Redeker, President
[e-mail]
949.704.2080

Najam Saiduddin, CFO/EVP
[e-mail]
949.704.2275