Rick Sowers, President and CEO of the Company and the Bank stated, “For the third quarter we produced record net income and net interest income. We continued our strong momentum from the first half of the year and delivered Return on Equity of over 18% while Tangible Book Value is up over 22% year over year. The Company continued its strong growth in core deposits which yielded an increase of 19% year over year. The recent Fed rate cut allowed for an overall reduction in our cost of deposits while loan yields remain strong. We attribute this success to our Team and our Client centric Distinctly Different Service Model.”

Sowers added, “Our Team was proud to be recognized on The Best U.S. Banks 2024 list, sponsored by Crowe. The Bank ranked #1 for both Return on Assets (ROA) and Return on Equity (ROE) among banks with less than $5 billion in assets. This accolade highlights CalPrivate Bank’s dedication to excellence, innovation, and delivering Client-focused banking solutions. Additionally, our SBA Team was rated the #1 504 Lender in the US for 2024.”

“The Company continues to outperform financially through unparalleled client service. This quarter’s Bank Director’s Magazine, rated PBAM as the 10th Best Bank of any size in the country. The Bank continues to expand its customer base and grow existing client relationships, despite a challenging interest rate environment. Superior financial results have created the ability to grow the balance sheet, invest in exceptional people, innovation, and technology, including infrastructure, risk management systems, and new products, while still maintaining solid capital ratios. This has enhanced CalPrivate's franchise value,” said Selwyn Isakow, Chairman of the Board of the Company and the Bank.

STATEMENT OF INCOME

Net Interest Income

Net interest income for the third quarter of 2024 totaled $25.7 million, an increase of $1.0 million or 4.2% from the prior quarter and an increase of $2.5 million or 10.5% from the third quarter of 2023. The increase from the prior quarter was driven primarily by 3.9% growth in interest-earning assets as interest income increased by $1.4 million, partially offset by an 11 basis point decrease in asset yields. Interest income in the third quarter of 2024 was reduced by $0.3 million due to the reversal of interest income on a loan placed on nonaccrual status during the quarter, which decreased asset yields by 6 basis points. Additionally, interest income in the prior quarter included $0.6 million from nonaccrual interest recognized upon the payoff of a loan during that quarter, contributing 11 basis points to asset yields in the prior quarter. Partially offsetting the increase in interest income was an increase of $0.3 million in interest expense, which resulted from a 2.4% increase in average interest bearing-liabilities, partially offset by a 5 basis point decrease in the cost of interest-bearing liabilities.

Net Interest Margin

Net interest margin for the third quarter of 2024 was 4.44%, compared to 4.48% for the prior quarter and 4.67% in the third quarter of 2023. The 4 basis point decrease in net interest margin from the prior quarter was primarily due to lower yields on loans, including a 6 basis point impact from the reversal of interest income on a loan placed on nonaccrual status during the quarter. This was partially offset by a lower cost of total deposits. In addition, the prior quarter included 11 basis points from nonaccrual interest recognized upon the payoff of a loan during that quarter. The yield on earning assets was 6.91% for the third quarter of 2024 compared to 7.02% for the prior quarter, and the cost of interest-bearing liabilities was 3.73% for the third quarter of 2024 compared to 3.78% in the prior quarter. The cost of total deposits was 2.62% for the third quarter of 2024 compared to 2.67% in the prior quarter. The cost of core deposits, which excludes brokered deposits, was 2.27% in the third quarter of 2024 compared to 2.28% in the prior quarter. The spot rate for total deposits was 2.42% as of September 30, 2024, compared to 2.61% at June 30, 2024.

Provision for Credit Losses

Provision expense for credit losses for the third quarter of 2024 was $0.3 million, compared to $2.1 million in the prior quarter and $0.5 million in the third quarter of 2023. The provision expense for the current quarter was primarily driven by a $32.7 million increase in loans HFI and a $0.5 million increase in the specific reserve on a nonaccrual loan. These factors were largely offset by lower reserve rates on commercial real estate loans, mainly due to improvements in the real gross domestic product ("GDP") and commercial real estate ("CRE") price index growth forecasts used in our Current Expected Credit Losses ("CECL") model. For more details, please refer to the “Asset Quality” section below.

Noninterest Income

Noninterest income was $1.4 million for the third quarter of 2024, compared to $1.5 million in the prior quarter and $1.2 million in the third quarter of 2023. SBA loan sales for the third quarter of 2024 were $9.1 million with a 10.96% average trade premium resulting in a net gain on sale of $587 thousand, compared with $8.0 million with a 12.16% average trade premium resulting in a net gain on sale of $661 thousand in the prior quarter.

Noninterest Expense

Noninterest expense was $13.4 million for the third quarter of 2024, compared to $13.0 million in the prior quarter and $11.8 million in the third quarter of 2023. The efficiency ratio was 49.46% for the third quarter of 2024 compared to 49.46% in the prior quarter and 48.51% in the third quarter of 2023. The relatively unchanged efficiency ratio from the prior quarter reflects that noninterest expense increased proportionally to the increase in net interest income described above.

The Company remains committed to making investments in the business, including technology, marketing, and staffing. Inflationary pressures and low unemployment continue to have an impact on rising wages as well as increased costs related to third party service providers, which we proactively monitor and manage.

Provision for Income Tax Expense

Provision for income tax expense was $4.0 million for the third quarter of 2024, compared to $3.3 million for the prior quarter. The effective tax rate for the third quarter of 2024 was 29.5%, compared to 29.5% in the prior quarter and 29.8% in the third quarter of 2023.

STATEMENT OF FINANCIAL CONDITION

As of September 30, 2024, total assets were $2.39 billion, an increase of $100.7 million since June 30, 2024. The increase in assets from the prior quarter was primarily due to higher cash balances, loans receivable, and investment securities. Total cash and due from banks was $207.2 million as of September 30, 2024, an increase of $48.8 million or 30.8%, since June 30, 2024, primarily due to strong core deposit growth. Loans HFI totaled $2.01 billion as of September 30, 2024, an increase of $32.7 million or 1.7% since June 30, 2024. Investment securities available-for-sale (“AFS”) were $141.1 million as of September 30, 2024, an increase of $19.4 million or 15.9% since June 30, 2024, primarily as a result of new securities purchased. As of September 30, 2024, the net unrealized loss on the AFS investment securities portfolio, which is comprised mostly of US Treasury and Government Agency debt, was $9.1 million (pre-tax) compared to a loss of $13.0 million (pre-tax) as of June 30, 2024. The average duration of the Bank’s AFS portfolio is 3.2 years. The Company has no held-to-maturity securities.

Total deposits were $2.11 billion as of September 30, 2024, an increase of $105.4 million since June 30, 2024. During the quarter, core deposits increased by $129.9 million, which was driven by a $102.6 million increase in interest-bearing core deposits (including balances in the Intrafi ICS and CDARS programs) and a $27.2 million increase in noninterest-bearing core deposits. The deposit mix has continued to shift as short-term interest rates, though still elevated, began to decline during the quarter. Noninterest-bearing deposits represent 31.2% of total core deposits. Uninsured deposits, net of collateralized and fiduciary deposit accounts, represent 47.8% of total deposits as of September 30, 2024.

As of September 30, 2024, total available liquidity was $1.9 billion or 191.2% of uninsured deposits, net of collateralized and fiduciary deposit accounts. Total available liquidity is comprised of $340 million of on-balance sheet liquidity (cash and investment securities) and $1.6 billion of unused borrowing capacity.

Asset Quality and Allowance for Credit Losses ("ACL")

As of September 30, 2024, the allowance for loan losses was $26.6 million or 1.32% of loans HFI, compared to $26.6 million or 1.34% of loans HFI as of June 30, 2024. The decrease in the coverage ratio from June 30, 2024 primarily reflects lower reserve rates on commercial real estate loans, mainly due to improvements in the real GDP and CRE price index growth forecasts used in our CECL model. The Company continues to have strong credit metrics and its nonperforming assets are 0.48% of total assets as of September 30, 2024 compared to 0.11% as of June 30, 2024. The increase in nonperforming assets was due to $9.0 million in commercial real estate loans related to a single borrower relationship that were placed on nonaccrual status during the quarter. These loans are secured by real estate collateral, with the current estimated fair value of collateral exceeding the outstanding loan amounts. Some of the loans also include partial SBA guarantees. The reserve for unfunded commitments was $2.2 million as of September 30, 2024, compared to $1.9 million as of June 30, 2024. Given the credit quality of the loan portfolio, management believes we are sufficiently reserved.

At September 30, 2024 and June 30, 2024, there were no doubtful credits and classified assets were $14.9 million and $10.1 million, respectively. Total classified assets consisted of eight loans as of September 30, 2024, which included seven loans totaling $12.4 million secured by real estate with a weighted average LTV of 45.0%. The remaining loan was a $2.5 million unsecured commercial and industrial loan on nonaccrual status with a specific reserve of $2.0 million.

Capital Ratios ⁽²⁾

The Bank’s capital ratios were in excess of the levels established for “well capitalized” institutions and are as follows:

(2) September 30, 2024 capital ratios are preliminary and subject to change.

About Private Bancorp of America, Inc. (OTCQX: PBAM)

PBAM is the holding company for CalPrivate Bank, which operates offices in Coronado, San Diego, La Jolla, Newport Beach, El Segundo, and Beverly Hills, as well as through efficient digital banking services. CalPrivate Bank is driven by its core values of building client Relationships based on superior funding Solutions, unparalleled Service, and mutual Trust. The Bank caters to high-net-worth individuals, professionals, closely-held businesses, and real estate entrepreneurs, delivering a Distinctly Different? personalized banking experience while leveraging cutting-edge technology to enhance our clients’ evolving needs. CalPrivate Bank is in the top tier of customer service survey ratings in the nation, scoring almost 3x higher than the median domestic bank. The Bank offers comprehensive deposit and treasury services, rapid and creative loan options including various portfolio and government-guaranteed lending programs,  cross border banking, and innovative, unique technologies that drive enhanced  client performance. CalPrivate Bank has been recognized by Bank Director's RankingBanking? as the 10^th best bank in the country and the #1 bank in its asset class for both return on assets (ROA) and return on equity (ROE). CalPrivate Bank was also ranked in the top 5% of banks in the U.S. with assets between $2B and $10B by American Banker. Additionally, CalPrivate Bank is a Bauer Financial 5-star rated bank, an SBA Preferred Lender, and has been honored as Community Bank 504 Lender of the Year by the NADCO Community Impact Awards, exemplifying excellence in the banking industry. These prestigious rankings highlight the Bank’s commitment to delivering exceptional banking services and setting new industry standards.

CalPrivate Bank’s website is www.calprivate.bank.

Non-GAAP Financial Measures

This press release contains certain non-GAAP financial measures in addition to results presented in accordance with GAAP, including adjusted income before provision for income taxes, adjusted net income, adjusted diluted earnings per share (“Adjusted EPS”), efficiency ratio, adjusted efficiency ratio, pretax pre-provision net revenue, average tangible common equity, adjusted return on average assets, return on average tangible common equity and adjusted return on average tangible common equity. The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company's results of operations and financial condition and to enhance investors’ overall understanding of such results of operations and financial condition, to permit investors to effectively analyze financial trends of our business activities, and to enhance comparability with peers across the financial services sector. These non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures prepared in accordance with GAAP and should be read in conjunction with the Company’s GAAP financial information. A reconciliation of the most comparable GAAP financial measures to non-GAAP financial measures is included in the accompanying financial tables.

Safe Harbor Paragraph

This communication contains expressions of expectations, both implied and explicit, that are “forward-looking statements” within the meaning of such term in the Private Securities Litigation Reform Act of 1995. We caution you that a number of important factors could cause actual results to differ materially from those in the forward-looking statements, especially given the current turmoil in the banking and financial markets. These factors include the effects of depositors withdrawing funds unexpectedly, counterparties being unable to provide liquidity sources that we believe should be available, loan losses, economic conditions and competition in the geographic and business areas in which Private Bancorp of America, Inc. operates, including competition in lending and deposit acquisition, the unpredictability of fee income from participation in SBA loan programs, the effects of bank failures, liquidations and mergers in our markets and nationally, our ability to successfully integrate and develop business through the addition of new personnel, whether our efforts to expand loan, product and service offerings will prove profitable, system failures and data security, whether we can effectively secure and implement new technology solutions, inflation, fluctuations in interest rates, legislation and governmental regulation. You should not place undue reliance on forward-looking statements, and we undertake no obligation to update those statements whether as a result of changes in underlying factors, new information, future events or otherwise. These factors could cause actual results to differ materially from what we anticipate or project. You should not place undue reliance on any such forward-looking statement, which speaks only as of the date on which it was made. Although we believe in good faith the assumptions and bases supporting our forward-looking statements to be reasonable, there can be no assurance that those assumptions and bases will prove accurate.

(1) Non-GAAP measure. See GAAP to non-GAAP Reconciliation table.

(1) Non-GAAP measure. See GAAP to non-GAAP Reconciliation table.

PRIVATE BANCORP OF AMERICA, INC.
(Unaudited)

The following tables present a reconciliation of non-GAAP financial measures to GAAP measures for: adjusted income before provision for income taxes, adjusted net income and adjusted EPS. We believe the presentation of certain non-GAAP financial measures provides useful information to assess our consolidated financial condition and consolidated results of operations and to assist investors in evaluating our financial results relative to our peers. These non-GAAP financial measures complement our GAAP reporting and are presented below to provide investors and others with information that we use to manage the business each period. Because not all companies use identical calculations, the presentation of these non-GAAP financial measures may not be comparable to other similarly titled measures used by other companies. These non-GAAP measures should be taken together with the corresponding GAAP measures and should not be considered a substitute of the GAAP measures.

(1) In the second quarter of 2023, the Company reached a settlement with the Receiver for ANI Investments and Gina Champion-Cain in which the Company recovered $7.7 million (or approximately $0.94 per diluted share after tax) plus certain rights to future recoveries from a guarantor of the charged off loan. This recovery amount represents 80% of the original principal charge-off and is net of the participant bank’s share.
(2) In the second quarter of 2023, in conjunction with the resolution of the ANI litigation, the Company was reimbursed $0.9 million of legal costs by the participant bank. In addition, $0.7 million of previously invoiced legal fees were waived at settlement of the litigation.
(3) In the second quarter of 2023, the Company received $1.0 million related to a loan that was originated and written off by San Diego Private Bank ("SDPB") prior to SDPB merging with the Company in 2013. Accordingly, the Company recorded an allowance recovery of $0.9 million for the amount that would have been written off at the time of the merger under CECL and $0.1 million of interest income for recovered interest.
(4) Net of tax effect of 29.6%, which is comprised of 21.0% for the statutory Federal tax rate plus 8.6% for state franchise taxes, net of Federal benefits.

PRIVATE BANCORP OF AMERICA, INC.
(Unaudited)

The following tables present a reconciliation of non-GAAP financial measures to GAAP measures for: efficiency ratio, pretax pre-provision net revenue, average tangible common equity, and return on average tangible common equity. We believe the presentation of certain non-GAAP financial measures provides useful information to assess our consolidated financial condition and consolidated results of operations and to assist investors in evaluating our financial results relative to our peers. These non-GAAP financial measures complement our GAAP reporting and are presented below to provide investors and others with information that we use to manage the business each period. Because not all companies use identical calculations, the presentation of these non-GAAP financial measures may not be comparable to other similarly titled measures used by other companies. These non-GAAP measures should be taken together with the corresponding GAAP measures and should not be considered a substitute of the GAAP measures.

PRIVATE BANCORP OF AMERICA, INC.
(Unaudited)

The following tables present a reconciliation of non-GAAP financial measures to GAAP measures for: efficiency ratio, adjusted efficiency ratio, pretax pre-provision net revenue, average tangible common equity, adjusted return on average assets, return on average tangible common equity and adjusted return on average tangible common equity. We believe the presentation of certain non-GAAP financial measures provides useful information to assess our consolidated financial condition and consolidated results of operations and to assist investors in evaluating our financial results relative to our peers. These non-GAAP financial measures complement our GAAP reporting and are presented below to provide investors and others with information that we use to manage the business each period. Because not all companies use identical calculations, the presentation of these non-GAAP financial measures may not be comparable to other similarly titled measures used by other companies. These non-GAAP measures should be taken together with the corresponding GAAP measures and should not be considered a substitute of the GAAP measures.

(1) A reconciliation of net income to adjusted net income is provided on page 13.

CONTACT: Investor Relations Contacts Rick Sowers President and Chief Executive Officer Private Bancorp of America, Inc., and CalPrivate Bank (424) 303-4894 Cory Stewart Executive Vice President and Chief Financial Officer Private Bancorp of America, Inc., and CalPrivate Bank (206) 293-3669