2024 2nd Quarter Earnings

OAKLAND, CA – August 2, 2024 — Bay Community Bancorp, (OTCPink: CBOBA) (the “Company”), parent company of Community Bank of the Bay, (the “Bank”) a San Francisco Bay Area commercial bank and California’s first certified FDIC-insured Community Development Financial Institution (“CDFI”) with full-service offices in Oakland, Danville, San Jose and San Mateo, and a loan production office in San Francisco, today reported net income of $2.08 million for the second quarter of 2024, compared to $1.66 million for the first quarter of 2024 and $1.85 million for the second quarter of 2023. All financial results are unaudited.

On July 24, the Company’s Board of Directors declared a quarterly cash dividend of $0.055 per share. The dividend is payable September 4, 2024, to shareholders of record on August 23, 2024. This marks the fourteenth consecutive cash dividend payment since the Company initiated quarterly cash dividends on April 30, 2021.

On May 20, 2024, the Company announced that it had entered into a definitive merger agreement the (“Merger Agreement”) with CBC Bancorp, the holding company for Commercial Bank of California. Under the terms of the agreement, CBC Bancorp will acquire Bay Community Bancorp in an all-cash transaction valued at $14.00 per common share, subject to the conditions of the Merger Agreement. This acquisition merges institutions from two of California’s largest banking markets, resulting in approximately $3.5 billion in combined assets. The acquisition of Bay Community Bancorp will transition Community Bank of the Bay to a privately held bank owned by a limited number of shareholders, and its shares will no longer be traded on the OTC Pink Sheets. As a privately held bank upon consummation of the merger, Community Bank of the Bay will maintain its name recognition and San Francisco Bay Area branch operations while officially becoming a division of Commercial Bank of California.

“This transaction brings together two complementary institutions with long standing ties to their communities, similar cultures and a relationship-based approach to banking,” said William S. Keller, CEO. “One of the many benefits of this combination is that the combined bank’s greater scale will allow for increased investments in qualified lending through the products and services that will directly benefit our clients and the communities we serve. Both institutions are committed to growth and we’re excited to work together.”

The transaction is expected to close in the fourth quarter of 2024 upon receipt of required regulatory approvals, shareholder approvals from CBC Bancorp and Bay Community Bancorp and the satisfaction of all closing conditions.

“In addition to announcing the definitive agreement with CBC Bancorp, our second quarter was highlighted by continued earnings momentum as earlier investments in core deposit generating capabilities drove a $23.5 million increase in non-interest-bearing deposits that lowered our cost of funds, while revenues increased 12.1% driven by the repricing of $15.8 million of lower yielding securities, modest loan growth, and the recognition of $817 thousand of accrued interest from the successful resolution of a non-performing loan. Non-interest expenses increased $105 thousand including an estimated $589 thousand of merger related expenses,” said William S. Keller, CEO. “Last year’s loss of five Bay Area competitors created an unprecedented market opportunity that allowed us to expand our branch network and attract key talent. Now the pending combination with CBC provides us with the infrastructure needed to support continued growth and the opportunity to make an even greater impact on the communities we serve.”

“In April we successfully resolved our sole non-performing asset that accounted for 93% of our classified assets. Our commercial real estate loan portfolio continues to perform well,” said Mukhtar Ali, President and Chief Credit Officer. “The major price declines and foreclosures in commercial real estate in our markets so far have been centered in the larger downtown office properties where we have no direct exposure, so our loan portfolio remains strong. Commercial real estate loans against office properties totaled $79.0 million at June 30, 2024, and represented 38.4% of capital. The nonowner-occupied office segment consisted of 23 notes totaling $54.6 million and carried a weighted average loan-to-value of 40.6% at quarter end. All relationships in this category are performing as agreed.”

Second Quarter 2024 Financial Highlights (at or for the period ended June 30, 2024)

• Net income available to common shareholders was $2.02 million in the second quarter of 2024, compared to $1.85 million in the second quarter a year ago, and $1.66 million in the preceding quarter. Earnings per common share were $0.24 in the second quarter of 2024, compared to $0.21 in the second quarter a year ago, and $0.19 in the preceding quarter.
• Total assets decreased $53.2 million, or 5.0%, to $1.007 billion at June 30, 2024, compared to $1.061 billion a year earlier, and increased $25.1 million, or 2.6%, compared to $982.4 million three months earlier. Average assets for the quarter totaled $1.004 billion, a decrease of $26.0 million, or 2.7%, from the second quarter a year ago and an increase of $17.6 million, or 1.7%, compared with $977.9 million the prior quarter.
• Net interest income, before the provision for credit losses, increased 22.9% to $9.59 million in the second quarter of 2024, compared to $7.81 million in the second quarter a year ago, and increased 16.2% compared to $8.26 million in the preceding quarter. A loan loss of $2,000 was recorded in the second quarter of 2024. This compared to a $96,000 negative provision for credit losses in the second quarter of 2023, and a $433,000 provision for credit losses recorded for the preceding quarter.
• Noninterest income was $366,000 in the second quarter of 2024, compared to $233,000 in the second quarter of 2023. Noninterest income during the preceding quarter was $946,000, which included $685,000 from a gain on the repayment of the FHLB advance.
• Operating revenue (net interest income before the provision for loan losses plus non-interest income) was $9.96 million in the second quarter of 2024, a 23.9% increase compared to $8.04 million in the second quarter a year ago, and an 8.2% increase compared to $9.20 million in the first quarter of 2024.
• Net interest margin was 3.90% in the second quarter, compared to 3.46% in the preceding quarter, and 3.19% in the second quarter a year ago. The 44 basis point increase in net interest margin during the second quarter of 2024 was due to an improved deposit mix and the decrease in deposit costs compared to the linked quarter. The average interest yield on loans in the second quarter of 2024 was 5.72%, compared to 5.03% in the year ago quarter and 5.29% in the prior quarter. The average cost of funds in the second quarter was 2.22%, a 4 basis point increase compared to the second quarter a year ago and a 3 basis point decrease compared to the prior quarter.
• Noninterest expense was $7.00 million in the second quarter of 2024, compared to $5.50 million in the second quarter of 2023, and $6.41 million in the first quarter of 2024. Noninterest expense during the current quarter reflected costs associated with the merger, as well as expenses associated with the Company’s market expansion.
• Loans, net of unearned income, increased $21.3 million, or 3.1%, to $701.3 million at June 30, 2024, compared to $680.0 million a year ago, and increased $8.7 million, or 1.3%, compared to $692.6 million three months earlier. In addition, at June 30, 2024, the unused portion of credit commitments totaled $133.8 million compared to $140.8 million in the prior quarter and $123.1 million a year ago.