Beach Cities Commercial Bank Announces Fourth Quarter 2024 Financial Results
Beach Cities Commercial Bank, OTCQB: BCCB, located in Southern California, has announced its financial results for the fourth quarter of 2024, marking a significant year of growth since its inception. Established in April 2022, the bank opened its doors for business in June 2023 after receiving all necessary regulatory approvals. Since then, Beach Cities Commercial Bank has been providing a full range of banking services, including business and personal deposit accounts, as well as a variety of loan products.
The bank operates in the thriving Southern California commercial markets, offering products such as commercial real estate loans, commercial and industrial loans, SBA 7A and 504 loans, and lines of credit. With a focus on innovation and technology, Beach Cities Commercial Bank is also able to provide cash management services, allowing businesses to streamline their financial operations.
Key Financial Highlights for Q4 2024
As of December 31, 2024, the bank showed a substantial increase in growth compared to the previous year. Here are some key highlights:
- Total Assets: $130.8 million, up by 173% from $47.8 million on December 31, 2023.
- Total Loans: $105.6 million, representing a 378% increase from $22.4 million a year ago.
- Total Deposits: $112.9 million, an increase of 337% from $25.9 million in December 2023.
- Liquidity: The bank maintains a robust liquidity position of $22.1 million, which represents 16.9% of total assets. Additionally, it has contingent borrowing sources totaling $33.2 million, or 25.3% of total assets.
The bank’s impressive loan growth and asset expansion are indicative of its strong position in the market and its ability to attract new business.
Net Interest Margin and Credit Loss Reserve
The Beach Cities Commercial Bank’s net interest margin stood at a healthy 4.21% as of December 31, 2024. The average yield on loans in the portfolio was 8.05%, contributing significantly to the overall margin. This robust performance highlights the bank’s ability to generate income from its lending operations while maintaining profitability in a competitive market.
Furthermore, the reserve for credit losses was set at $1.214 million, which equates to 1.15% of total loans. The bank reported zero delinquent or non-performing loans as of the close of the year, indicating strong credit quality and effective risk management practices.
Shareholder Equity and Capital Position
As of the end of Q4 2024, shareholders’ equity stood at $15.2 million, reflecting a reduction of $4.2 million compared to December 31, 2023. This decline was mainly attributed to provisions for credit losses totaling $927,000 and operating losses of $3.3 million. Despite these challenges, theBeach Cities Commercial Bank’s Tier 1 capital ratio remains strong at 14.2%, which is considered well-capitalized under regulatory guidelines.
Financial Performance and Losses
For the fourth quarter of 2024, Beach Cities Commercial Bank reported a net loss of $989,000, primarily driven by credit loss provisions and operating expenses. The bank has focused on scaling its operations and increasing its loan portfolio, which grew by $27.5 million during the quarter. The increase in the loan portfolio necessitated higher provisions for credit losses, which amounted to $371,000 in the fourth quarter, compared to $117,000 in the third quarter of 2024.
On a year-to-date basis, the bank reported a net loss of $4.52 million for 2024. This was mainly due to ongoing investments in the bank’s infrastructure, as well as provisions for credit losses and operational expenses. Despite the reported losses, the bank’s strong asset growth and liquidity position indicate that it is well-positioned for future profitability.
Interest Income and Expense
In Q4 2024, interest income amounted to $1.86 million, a 16% increase from $1.61 million in Q3 2024. This growth was driven by the bank’s expanding loan portfolio, which continues to generate strong returns. However, the bank’s interest expense from interest-bearing deposits rose to $847,000 in the fourth quarter, compared to $716,000 in Q3. This increase was primarily due to the growth in short-term institutional certificates of deposit (CDs), which carry higher interest rates.
To mitigate these higher interest costs, the bank has initiated a strategy to replace high-cost institutional CD deposits with non-interest-bearing deposits. This move is expected to reduce the overall interest expense in the coming quarters, contributing to better profitability.
SBA Loan Sale and Non-Interest Expenses
The bank also recorded a gain on the sale of SBA loans, amounting to $127,000 in Q4 2024. This gain underscores the bank’s successful involvement in the Small Business Administration (SBA) loan market, providing vital financial support to small businesses across Southern California.
Total non-interest expenses for the fourth quarter 2024 were $1.735 million, slightly up from $1.721 million in the previous quarter. The modest increase in operating expenses reflects the bank’s ongoing investments in staffing, technology, and compliance. The management team remains focused on controlling costs while scaling operations efficiently to support long-term growth.
Liquidity and Borrowing Sources
Liquidity is a cornerstone of Beach Cities Commercial Bank’s operations, and the bank continues to maintain a healthy liquidity profile. As of December 31, 2024, the bank’s liquidity ratio was 16.9% of total assets, reflecting ample resources to meet customer demands and sustain its growth trajectory. Additionally, the bank has access to contingent borrowing sources totaling $33 million, or 25% of its total assets. These borrowing lines from correspondent banks, including the Federal Home Loan Bank of San Francisco, provide a safety net to ensure that the bank has sufficient resources to navigate any short-term liquidity challenges.
Strategic Focus for 2025
Looking ahead to 2025, Beach Cities Commercial Bank remains optimistic about its future prospects. The bank’s leadership team is committed to achieving profitability in the coming year, with a focus on expanding its commercial and real estate lending operations. The bank plans to apply for Preferred Lending Status (PLP) with the Small Business Administration (SBA) in the first quarter of 2025. This designation would significantly enhance the bank’s ability to offer SBA loans, giving it a competitive edge in the small business lending market.
CEO H. Kent Falk expressed his excitement for the future, saying, “The Bank’s balance sheet continues to grow in a safe and sound manner. As we wrap up 2024, we are excited about 2025 and our goal of achieving profitability. Our team is focused on executing our strategic objectives and achieving sustainable growth.”
Jeffrey Redeker, the bank’s President, echoed this sentiment, emphasizing the importance of the SBA loan program: “Our commercial and real estate lending is off to a great start. Securing PLP status will be a game-changer for us, allowing us to offer SBA loans more efficiently and with greater flexibility. This will provide us with a substantial competitive advantage.”
