Board Declares Quarterly Cash Dividend SANTA CRUZ, Calif., April 23, 2024 /PRNewswire/ -- West Coast Community Bancorp ((", Bancorp", , OTCQX:SCZC), the parent company of Santa Cruz County Bank (the "Bank"), announced unaudited earnings for the first quarter ended March 31, 2024. Net income for the quarter was $9.3 million, an increase of 5% both from $8.8 million in the prior quarter and $8.9 million in the quarter ended March 31, 2023. Basic and diluted earnings per share in the first quarter of 2024 were $1.11 and $1.10 and increased over the prior quarter by $0.06 and $0.05, respectively. Basic and diluted earnings per share in the first quarter of 2024 also increased over the prior year comparative quarter by $0.06 and $0.05, respectively. President and CEO, Krista Snelling commented: "Once again, our entire team is to be congratulated for our consistently strong financial performance. For a 12th consecutive year, we were voted Best Bank in Santa Cruz County by Good Times readers. In addition to reporting over $9.3 million in income for the quarter, which is the second highest earnings in our history, we recorded significant improvement in the reduction of nonperforming loans to under $90 thousand or 0.01% of total loans." On April 20, 2024, the Board of Directors of Bancorp declared a quarterly cash dividend of $0.17 per common share, payable on May 13, 2024, to shareholders of record at the close of business on May 7, 2024.   Financial Highlights Performance highlights as of and for the quarter ended March 31, 2024, included the following: Quarterly net income of $9.3 million increased 5% from $8.8 million in the prior quarter and $8.9 million in the quarter ended March 31, 2023. Total assets of $1.71 billion as of March 31, 2024, decreased $81.7 million or 5%, compared to $1.79 billion as of December 31, 2023, and decreased $14.8 million or 1% compared to March 31, 2023. The Bank's liquidity position remains healthy. Primary liquidity ratio, defined as cash and equivalents, deposits held in other banks and unpledged available-for-sale ("AFS") securities as a percentage of total assets, was 11.7% and 13.6% at March 31, 2024 and December 31, 2023, respectively. Deposits totaled $1.46 billion at March 31, 2024, a decrease of $59.1 million or 4%, compared to December 31, 2023, and a decrease of $6.0 million compared to March 31, 2023. Relationship deposits, i.e. deposits gathered outside of wholesale channels, decreased $48.7 million compared to December 31, 2023. A decrease of $40.8 million from the prior quarter-end can be attributed to distributions of proceeds resulting from the sale of businesses, properties, and investment in real estate by our large depositors. The remainder of the decrease from the prior quarter-end reflected depositors seeking higher return from other investment opportunities. The decreases were partially offset by cyclical fluctuation of deposits from our local agency depositors. Total uninsured deposits, excluding collateralized deposits, represented approximately 43% and 44% of total deposits as of March 31, 2024 and December 31, 2023, respectively. Gross loans totaled $1.38 billion at March 31, 2024, a decrease of $32.5 million or 2%, compared to December 31, 2023, and an increase of $60.0 million or 5%, compared to March 31, 2023. The decrease from year-end 2023 reflected commercial borrowers paying down their revolving lines, as well as payoffs of real estate loans. In addition, a $3.0 million commercial real estate loan delinquent in the fourth quarter of 2023 was paid off in January 2024. Nonaccrual loans totaled $90 thousand, or 0.01% of gross loans, as of March 31, 2024, compared to $6.5 million, or 0.46% of total loans as of December 31, 2023. The decrease during the first quarter is due to a previously delinquent $6.5 million commercial real estate loan returned to accrual status in March 2024 after collection of past due payments. The allowance for credit losses ("ACL"), reflecting management's estimate of credit losses for the expected life of the loans in the portfolio, totaled $23.0 million, or 1.67% of total loans at March 31, 2024, compared to $23.9 million, or 1.70% at December 31, 2023. The decrease in the ACL as a percentage of total loans was due to the paydowns of revolving lines, which are subject to higher reserve rates relative to other loan categories, as well as declines in the reserve rates in the commercial real estate and multi-family pools from a decrease in estimated life of loan (reflecting the market's expectation for declining rates). In addition, the allowance on unfunded credit commitments, presented as part of other liabilities, decreased to 0.35% of total unfunded in the first quarter of 2024 due to lower reserve factors for unfunded commitments, mainly attributable to reduction in the estimated life of the construction, commercial, and commercial real estate unfunded commitment pools. Provision for credit losses, including funded and unfunded credit commitments, was a reversal of $1 million in the first quarter of 2024 due to the reasons discussed above as well as decreases in loan balances. In comparison, a $246 thousand reversal was booked in the fourth quarter of 2023 and $315 thousand provision for the first quarter in 2023. Unfunded commitments increased during the first quarter of 2024 (mainly SBA real estate credit commitments); however, the estimated life of the commitments decreased allowing for the release of the reserve for unfunded commitment of $100 thousand during the first quarter of 2024. Net interest margin was 4.86% in the first quarter of 2024, compared to 4.83% in the prior quarter and 5.10% for the first quarter in 2023. In the first quarter of 2024, higher yields on interest-earning assets were more than offset by increased funding costs. The recognition of interest recovered for two previously nonaccrual commercial real estate loans totaling $436 thousand and $263 thousand contributed to increases of net interest margin by 10 basis points during the first quarter of 2024 and 6 basis points during the fourth quarter of 2023, respectively. For the quarters ended March 31, 2024 and December 31, 2023, return on average assets was 2.14% and 1.99%, respectively, return on average equity was 15.99% and 15.72%, respectively, and return on average tangible equity was 18.10% and 17.93%, respectively. The efficiency ratio was 42.81% for the first quarter of 2024, as compared to 43.37% in the prior quarter and 39.78% in the first quarter of 2023. All capital ratios were above regulatory requirements for a well-capitalized institution with a total risk-based capital ratio of 15.87% at March 31, 2024 compared to 14.98% at December 31, 2023. Tangible common equity to tangible asset ratio increased from 11.47% at December 31, 2023 to 12.50% at March 31, 2024. Tangible book value per share increased to $25.05 at March 31, 2024 from $24.10 at December 31, 2023 and $20.91 at March 31, 2023. Liquidity Position The following table summarizes the Bank's liquidity as of March 31, 2024 and December 31, 2023: As of (Dollars in thousands) 3/31/2024 12/31/2023 Cash and due from banks $       39,148 $       44,395 Unencumbered AFS securities 160,934 198,876                 Total on-balance-sheet liquidity 200,082 243,271 Line of credit from the Federal Home Loan Bank of San Francisco - collateralized 452,866 434,961 Line of credit from the Federal Reserve Bank of San Francisco-collateralized 261,008 251,641 Lines at correspondent banks-unsecured 80,000 80,000                 Total external contingency liquidity capacity 793,874 766,602 Less: overnight borrowings -- (32,500)                 Net available liquidity sources $     993,956 $     977,373 As of March 31, 2024, net liquidity exceeded uninsured and uncollateralized deposits of $627.2 million, with a coverage ratio greater than 158%. U.S. Treasury bonds, securities issued by U.S. Government sponsored agencies and SBA accounted for 70%, 21% and 4% of the investment portfolio as of March 31, 2024, respectively, and thus presented minimal credit or liquidity risk. The investment portfolio of $227.1 million at March 31, 2024 has an average life of 2.8 years, and the Bank expects to receive principal, in full, when the investments mature. Net unrealized losses on AFS securities totaled $14.9 million ($10.5 million after-tax) at March 31, 2024. Held-to-maturity securities totaled $7.3 million at March 31, 2024 with $249 thousand of unrealized losses. As of March 31, 2024, the Bank had no borrowings outstanding from the Federal Reserve's discount window or its Bank Term Funding Program. No overnight borrowing was outstanding as of March 31, 2024 under unsecured lines of credit from our correspondent banks, compared to $32.5 million overnight borrowings outstanding at December 31, 2023. Quarterly Earnings For the first quarter of 2024, net income was $9.3 million, compared to $8.8 million in the fourth quarter of 2023 and $8.9 million in the first quarter of 2023. Major factors impacting earnings in the first quarter of 2024 included: interest expense on deposits and borrowings, reversal of the provision for credit losses, and interest income on loans. Reversal of the provision for credit losses increased $754 thousand during the first quarter of 2024 compared to the prior quarter. A reduction in the size of the loan portfolio combined with a shorter estimated average life on the commercial real estate portfolio, necessitated a release of reserves from the ACL during the first quarter of 2024. Interest income on loans increased $574 thousand compared to prior quarter, primarily attributable to recognition of interest recovered from the resolution of a previously nonaccrual commercial real estate credit. However, market interest rate pressure resulted in a $853 thousand interest expense increase during the first quarter of 2024. Interest Income / Interest Expense and Net Interest Margin Net interest income of $20.3 million in the first quarter of 2024 decreased $321 thousand from $20.6 million for the quarter ended December 31, 2023, primarily due to the impact of continued upward pressure on funding costs partially offset by additional interest income from increased loan yields. Increased rates on interest-bearing deposits caused a larger increase in funding costs than the corresponding increase in loan yields. The Bank's cost of funds increased 26 basis points from the fourth quarter of 2023 of 1.17%, to 1.43% in the first quarter of 2024. For the first quarter of 2024, net interest margin was 4.86%, compared to 4.83% in the fourth quarter of 2024 and 5.10% for the corresponding quarter in 2023. The increase from the prior quarter was primarily due to the recognition of $436 thousand interest recovered for a commercial real estate loan and, to a lesser extent, a shift in the composition of earning assets from lower yielding investment securities to higher yielding loans, partially offset by the rising cost of funds. The following tables compare interest income, average interest-earning assets, interest expense, average interest-bearing liabilities, net interest income, net interest margin and cost of funds for each period reported.   For the Quarter Ended March 31, 2024 December 31, 2023 (Dollars in thousands) AverageBalance InterestIncome/Expense AvgYield/Cost AverageBalance InterestIncome/Expense AvgYield/Cost ASSETS Interest-earning due from banks $      29,870 $          212 2.85 % $      28,290 $          167 2.34 % Investments* 253,054 1,064 1.69 % 284,062 1,151 1.61 % Loans 1,397,298 24,381 7.02 % 1,381,579 23,807 6.84 % Total interest-earning assets* 1,680,222 25,657 6.14 % 1,693,931 25,125 5.88 % Noninterest-earning assets 71,198 70,359 Total assets $ 1,751,420 $ 1,764,290 LIABILITIES Interest-bearing deposits $    933,288 5,276 2.27 % $    894,514 4,457 1.98 % Borrowings 4,797 68 5.74 % 2,375 34 5.71 % Total interest-bearing liabilities 938,085 5,344 2.29 % 896,889 4,491 1.99 % Noninterest-bearing deposits 560,864 625,930 Other noninterest-bearing liabilities 17,870