What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-15 compared with 2021-08-16 · 165 added, 116 removed, 761 unchanged (27% of the section changed)

9 unchanged sentences

(In thousands, except for share data)

September 30,

Cash and due from banks

6 unchanged sentences

Loans held for sale

Loans, net of allowance for loan losses of $ 17,000 at June 30, 2021 and $ 17,500 December 31, 2020

Loans, net of allowance for loan losses of $ 17,300 at September 30, 2021 and $ 17,500 December 31, 2020

Premises and equipment, net

17 unchanged sentences

10,000,000 shares authorized;

no shares issued and outstanding at both June 30, 2021 and December 31, 2020

no shares issued and outstanding at both September 30, 2021 and December 31, 2020

Common stock, no par value;

100,000,000 shares authorized;

10,699,441 and 11,295,397 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

10,685,511 and 11,295,397 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

Additional paid in capital

7 unchanged sentences

Three months ended

Six months ended

Nine months ended

September 30,

Interest income:

9 unchanged sentences

Net interest income

(Reversal of) provision for loan losses

Provision for (reversal of) loan losses

Net interest income after provision for loan losses

3 unchanged sentences

Loan servicing and other loan fees

Gain on sale of premises

(Loss)/gain on sale of premises

Income on investment in Small Business Investment Company (“SBIC”) fund

Gain on sale of OREO

(Loss)/gain on sale of OREO

Other income and fees

17 unchanged sentences

Three months ended

Six months ended

Nine months ended

September 30,

Other comprehensive income:

Change in unrealized gain on available-for-sale securities

Deferred tax expense

Other comprehensive income, net of tax

Change in unrealized (loss) gain on available-for-sale securities

Deferred tax benefit (expense)

Other comprehensive (loss)/income, net of tax

Total comprehensive income

17 unchanged sentences

Balance, June 30, 2020

Other comprehensive loss, net

Restricted stock granted

Restricted stock forfeited

Stock based compensation

Repurchase of shares

Balance, September 30, 2020

Other comprehensive loss, net

Restricted stock granted

Restricted stock forfeited

Stock based compensation

Repurchase of shares

Balance, December 31, 2020

11 unchanged sentences

Balance, June 30, 2021

Other comprehensive loss, net

Restricted stock granted

Restricted stock forfeited

Stock based compensation

Repurchase of shares

Balance, September 30, 2021

BAYCOM CORP AND SUBSIDIARY

1 unchanged sentence

(In thousands)

Six months ended

Nine months ended

September 30,

Cash flows from operating activities:

4 unchanged sentences

Gain on sale of loans

Gain on sale of securities

Proceeds from sale of loans

Loans originated for sale

Gain on sale of premises, net

(Loss)/gain on sale of premises, net

Gain on sale of OREO

8 unchanged sentences

Increase in salary continuation plan, net

Increase (decrease) in interest payable and other liabilities

Decrease in interest payable and other liabilities

Net cash provided by operating activities

3 unchanged sentences

Proceeds from the maturities, repayments and calls of investment securities

Proceeds from the sales of investment securities

Purchase of Federal Home Loan Bank stock

5 unchanged sentences

Net cash paid out for acquisitions

Net cash provided by (used in) investing activities

Net cash used in investing activities

BAYCOM CORP AND SUBSIDIARY

1 unchanged sentence

(In thousands)

Six months ended

Nine months ended

September 30,

Cash flows from financing activities:

Increase in noninterest and interest bearing deposits, net

Increase in noninterest and interest bearing deposits in banks, net

Decrease in time deposits, net

Repayment of junior subordinated debentures

Proceeds from issuance of subordinated debt, net

Repayment of Federal Home Loan Bank borrowings

Increase in other borrowings

Repayment of other borrowings

Repurchase of common stock

Net cash provided by financing activities

Increase (decrease) in cash and cash equivalents

Increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

18 unchanged sentences

United Business Bank (the “Bank”), the Company’s wholly owned banking subsidiary, is a California state-chartered bank which provides a broad range of financial services primarily to local small and mid-sized businesses, service professionals and individuals.

In the 17 years of operation, the Bank has grown to 34 full-service banking branches.

The main headquarters and a branch office are located in Walnut Creek, California and additional branch offices are located in Oakland, Castro Valley, Mountain View, Napa, Stockton ( 2 ), Pleasanton, Livermore, San Jose, Long Beach, Sacramento, San Francisco, Buena Park, Los Angeles, and Garden Grove, California, and Seattle, Washington ( 2 ), New Mexico ( 5 ) and Colorado ( 11 ).

In the 17 years of operation, the Bank has grown to 33 full-service banking branches with 15 locations in California and two in Washington, five in Central New Mexico and 11 in Colorado.

The condensed consolidated financial statements include the accounts of the Company and the Bank.

71 unchanged sentences

NOTE 3 – ACQUISITIONS

Pending Acquisition of Pacific Enterprise Bancorp

On September 7, 2021, the Company entered into a definitive agreement with Pacific Enterprise Bancorp (“PEB”), which is headquartered in Irvine, California.

Pursuant to the merger agreement PEB will merge with and into the Company, with the Company as the surviving corporation in the merger.

Immediately after the merger, Pacific Enterprise Bank, a California state-chartered bank and wholly owned subsidiary of PEB, will merge with and into the Bank, with the Bank as the surviving bank.

Pacific Enterprise Bank originates commercial and consumer loans and receives deposits from its customers who are predominately small and middle-market businesses and individuals located primarily in Orange County, California.

Upon consummation of the merger, each PEB shareholder will receive 1.0292 shares of Company common stock (the “Exchange Ratio”) in exchange for each share of PEB common stock.

Options to purchase PEB common stock outstanding at the effective time of the merger will be cancelled for a cash payment equal to the product of (i) the total number of shares of PEB common stock underlying the PEB option multiplied by (ii) the amount, if any, that the product of the volume weighted average closing price per share of Company common stock, as reported on the NASDAQ for the 15 trading days immediately preceding the closing date multiplied by the Exchange Ratio, exceeds the exercise price per share of such PEB option.

The transaction is valued at approximately $ 53.1 million in aggregate based on the closing price of Company common stock of $ 17.28 on September 3, 2021.

The total value of the merger consideration will fluctuate until closing based on the value of the Company's stock price.

Upon consummation of the merger, the shareholders of PEB will own approximately 22.2 % of the combined company.

The transaction was approved and adopted by the Board of Directors of each company and is expected to be completed in the first calendar quarter of 2022, subject to customary closing conditions, regulatory approval, and approval of the Company’s and PEB’s shareholders.

Acquisition of Grand Mountain Bancshares, Inc.

On February 4, 2020 , the Company completed the GMB Merger.

48 unchanged sentences

Pro Forma Results of Operations

The operating results of the Company for the three and six months ended June 30, 2021 in the condensed consolidated statements of income include the operating results of GMB, since its acquisition date.

The operating results of the Company for the three and nine months ended September 30, 2021 in the condensed consolidated statements of income include the operating results of GMB, since its acquisition date.

The following table represents the net interest income, net income, basic and diluted earnings per share, as if the GMB Merger was effective January 1, 2020.

3 unchanged sentences

Three months ended

Six months ended

Nine months ended

Net interest income

7 unchanged sentences

Acquisition expenses are recognized as incurred and continue until all systems are converted and operational functions become fully integrated.

No third-party acquisition expenses were recognized in the consolidated statements of income for the three months ended June 30, 2021 and 2020 and for the six months ended June 30, 2021.

The Company recognized third-party acquisition expenses for the six months ended June 30, 2020 as follows:

No third-party acquisition expenses were recognized in the consolidated statements of income for the three months ended September 30, 2021 and 2020 and for the nine months ended September 30, 2021.

The Company recognized third-party acquisition expenses for the nine months ended September 30, 2020 as follows:

Professional fees

4 unchanged sentences

The amortized cost, gross unrealized gains and losses, and estimated fair values of securities available-for-sale at the dates indicated are summarized as follows:

June 30, 2021

September 30, 2021

Government Agencies

12 unchanged sentences

Corporate bonds

During the three and six months ended June 30, 2021 and 2020, the Company did not sell any securities available-for-sale.

During the three and nine months ended September 30, 2021, the Company sold six securities available-for-sale for gross realized gains of $ 22,000 and did not sell any securities available-for-sale for the three and nine months ended September 30, 2020.

BAYCOM CORP AND SUBSIDIARY

4 unchanged sentences

12 months or more

June 30, 2021

September 30, 2021

Mortgage-backed securities

11 unchanged sentences

Corporate bonds

At June 30, 2021, the Company held 314 investment securities, of which 18 were in an unrealized loss position for more than twelve months and 13 were in an unrealized loss position for less than twelve months.

At September 30, 2021, the Company held 324 investment securities, of which 18 were in an unrealized loss position for more than twelve months and 19 were in an unrealized loss position for less than twelve months.

These temporary unrealized losses relate principally to current interest rates for similar types of securities.

3 unchanged sentences

Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

June 30, 2021

September 30, 2021

December 31, 2020

9 unchanged sentences

The Company’s loan portfolio at the dates indicated is summarized below:

September 30,

Commercial and industrial

5 unchanged sentences

and industrial

June 30, 2021

September 30, 2021

Recorded investment in impaired loans:

9 unchanged sentences

Specific allowance on impaired loans

Three months ended June 30, 2021

Three months ended September 30, 2021

Average recorded investment in impaired loans

Interest recognized

Six months ended June 30, 2021

Nine months ended September 30, 2021

Average recorded investment in impaired loans

Interest recognized

Three months ended June 30, 2020

Three months ended September 30, 2020

Average recorded investment in impaired loans

Interest recognized

Six months ended June 30, 2020

Nine months ended September 30, 2020

Average recorded investment in impaired loans

10 unchanged sentences

These loans are returned to accrual status after the borrower demonstrates performance with the modified terms for a sustained period of time (generally six months) and has the capacity to continue to perform in accordance with the modified terms of the restructured debt.

For the three and six months ended June 30, 2021 and 2020, the Company recorded no charge-offs related to TDR loans.

During the three and six months ended June 30, 2021 and 2020, there were no TDR loans for which there was a payment default within the first 12 months of the modification.

As of June 30, 2021 and December 31, 2020, TDR loans had a related allowance of $ 31,000 and $ 35,000 , respectively.

As of June 30, 2021 and December 31, 2020, $ 776,000 and $ 798,000 , respectively, of TDR loans were performing in accordance with their modified terms.

For the three and nine months ended September 30, 2021 and 2020, the Company recorded no charge-offs related to TDR loans.

During the three and nine months ended September 30, 2021 and 2020, there were no TDR loans for which there was a payment default within the first 12 months of the modification.

As of September 30, 2021 and December 31, 2020, TDR loans had a related allowance of $ 130,000 and $ 35,000 , respectively.

As of September 30, 2021 and December 31, 2020, $ 765,000 and $ 798,000 , respectively, of TDR loans were performing in accordance with their modified terms.

All TDR loans are also included in the loans individually evaluated for impairment as part of the calculation of the allowance for loan losses.

There were no commitments to lend additional amounts to borrowers with outstanding loans that are classified as TDR loans at June 30, 2021.

There were no commitments to lend additional amounts to borrowers with outstanding loans that are classified as TDR loans at September 30, 2021.

A summary of TDR loans by type of concession and type of loan, as of the periods indicated:

June 30, 2021

September 30, 2021

Commercial and industrial

1 unchanged sentence

Commercial real estate

June 30, 2020

September 30, 2020

Commercial and industrial

1 unchanged sentence

Commercial real estate

There were no loans and one loan modified as a TDR during the three and six months ended June 30, 2021, respectively.

There was one loan modified as a TDR during the three and six months ended June 30, 2020, respectively.

The Bank continues to offer payment and financial relief programs for borrowers impacted by COVID-19 under the Coronavirus Aid, Relief and Economic Security Act of 2020, or CARES Act, and related regulatory guidance.

The primary relief for these borrowers is to allow interest only payments for up to 450 days.

In accordance with regulatory guidelines related to COVID-19, these modifications are not considered troubled debt restructurings through the earlier of January 1, 2022, or 60 days after the national emergency terminates.

Modified loans are re-evaluated at the end of the

There were no loans and one loan modified as a TDR during the three and nine months ended September 30, 2021, respectively.

There was one loan and two loans modified as a TDR during the three and nine months ended September 30, 2020, respectively.

During the third quarter of 2021, the Bank continued its participation in the U.S.

Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”), by processing applications for PPP loan forgiveness.

BAYCOM CORP AND SUBSIDIARY

1 unchanged sentence

(Tables in thousands, except for share and per share data)

initial deferral period and will either return to the original loan terms or be reassessed at that time to determine if a further modification should be granted and if a downgrade in risk rating is appropriate.

During the second quarter of 2021, the Bank continued its participation in the initial U.S.

Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”), which ended in August 2020, by processing applications for PPP loan forgiveness.

During the second quarter of 2021, the Bank continued to accept and process loan applications under the second PPP program enacted in December 2020, which ended on May 31, 2021.

Risk Rating System

28 unchanged sentences

● Inability to perform as agreed, but adequately protected by collateral;

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

● Necessity to renegotiate payments to a non-standard level to ensure performance;

2 unchanged sentences

Doubtful loans have a high probability of loss, yet certain important and reasonably specific pending factors may work toward the strengthening of the credit.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

Losses are recognized as charges to the allowance when the loan or portion of the loan is considered uncollectible or at the time of foreclosure.

1 unchanged sentence

The following tables present the internally assigned risk grade by class of loans at the dates indicated:

June 30, 2021

September 30, 2021

Commercial and industrial

6 unchanged sentences

The following tables provide an aging of the Company’s loans receivable as of the dates indicated:

June 30, 2021

September 30, 2021

Commercial and industrial

1 unchanged sentence

Commercial real estate

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

December 31, 2020

2 unchanged sentences

Commercial real estate

The balance of nonaccrual loans guaranteed by a government agency, which reduces the Company’s credit exposure, was $ 920,000 at June 30, 2021 compared to $ 850,000 at December 31, 2020.

At June 30, 2021 and December 31, 2020, nonaccrual loans included $ 637,000 and $ 620,000 of loans 30-89 days past due and $ 5.3 million and $ 4.1 million of loans less than 30 days past due, respectively.

Interest foregone on nonaccrual loans was approximately $ 69,000 and $ 157,300 for the three and six months ended June 30, 2021 compared to $ 119,500 and $ 221,000 for the three and six months ended June 30, 2020, respectively.

The balance of nonaccrual loans guaranteed by a government agency, which reduces the Company’s credit exposure, was $ 841,000 at September 30, 2021 compared to $ 850,000 at December 31, 2020.

At September 30, 2021 and

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

December 31, 2020, nonaccrual loans included $ 2.5 million and $ 620,000 of loans 30-89 days past due and $ 2.5 million and $ 4.1 million of loans less than 30 days past due, respectively.

At September 30, 2021, nonaccrual loans 30-89 days past due of $ 2.5 million primarily was comprised of two loans and the $ 2.5 million of loans less than 30 days past due was comprised of 13 small balance loans.

At December 31, 2020, nonaccrual loans 30-89 days past due of $ 620,000 primarily was comprised of four loans and the $ 4.1 million of loans less than 30 days past due are comprised of 12 small balance loans.

All of these loans were placed on nonaccrual due to concerns over the client’s financial condition.

Interest foregone on nonaccrual loans was approximately $ 61,000 and $ 157,500 for the three and nine months ended September 30, 2021 compared to $ 117,500 and $ 338,500 for the three and nine months ended September 30, 2020, respectively.

Purchased Credit Impaired Loans

7 unchanged sentences

The unpaid principal balance and carrying value of the Company’s PCI loans at the dates indicated are as follows:

June 30, 2021

September 30, 2021

December 31, 2020

2 unchanged sentences

Commercial real estate

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

The following table reflects the changes in the accretable yield of PCI loans for the periods indicated:

Three months ended

Six months ended

Nine months ended

September 30,

Balance at beginning of period

Balance at end of period

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

NOTE 6 – ALLOWANCE FOR LOAN LOSSES

The following tables summarize the Company’s allowance for loan losses and loan balances individually and collectively evaluated for impairment by type of loan as of or for the three and six months ended June 30, 2021 and 2020:

and industrial

Three months ended June 30, 2021

Three months ended September 30, 2021

Allowance for loan losses

Beginning balance

Provision for loan losses

Provision for (reversal of) loan losses

Ending balance

Six months ended June 30, 2021

Nine months ended September 30, 2021

Allowance for loan losses

Beginning balance

Provision (reclassification) for loan losses

Provision for (reversal of) loan losses

Ending balance

June 30, 2021

September 30, 2021

Allowance for loan losses by methodology:

8 unchanged sentences

and industrial

Three months ended June 30, 2020

Three months ended September 30, 2020

Allowance for loan losses

2 unchanged sentences

Ending balance

Six months ended June 30, 2020

Nine months ended September 30, 2020

Allowance for loan losses

2 unchanged sentences

Ending balance

June 30, 2020

September 30, 2020

Allowance for loan losses by methodology:

6 unchanged sentences

Premises and equipment consisted of the following at the dates indicated:

September 30,

Premises owned

3 unchanged sentences

Total premises and equipment, net

Depreciation and amortization included in occupancy and equipment expense totaled $ 502,000 and $ 1.0 million for the three and six months ended June 30, 2021 and $ 425,000 and $ 897,000 for the three and six months ended June 30, 2020, respectively.

Depreciation and amortization included in occupancy and equipment expense totaled $ 519,000 and $ 1.5 million for the three and nine months ended September 30, 2021 and $ 445,000 and $ 1.3 million for the three and nine months ended September 30, 2020, respectively.

NOTE 8 – LEASES

9 unchanged sentences

As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term.

The below maturity schedule represents the undiscounted lease payments for the five-year period and thereafter as of June 30, 2021:

The below maturity schedule represents the undiscounted lease payments for the five-year period and thereafter as of September 30, 2021:

For the remainder of 2021

2 unchanged sentences

The following table presents the weighted average lease term and discount rate at the date indicated:

June 30, 2021

September 30, 2021

Weighted-average remaining lease term

Weighted-average discount rate

Rental expense included in occupancy and equipment on the consolidated statements of income totaled $ 834,000 and $ 1.6 million for the three and six months ended June 30, 2021 and $ 854,000 and $ 1.7 million for the three and six months ended June 30, 2020, respectively.

Rental expense included in occupancy and equipment on the consolidated statements of income totaled $ 906,000 and $ 2.6 million for the three and nine months ended September 30, 2021 and $ 829,000 and $ 2.5 million for the three and nine months ended September 30, 2020, respectively.

NOTE 9 – GOODWILL AND INTANGIBLE ASSETS

4 unchanged sentences

Impairment exists when a reporting unit’s fair value is less than its carrying amount, including goodwill.

Due to the adverse and unknown economic impacts resulting from the COVID-19 pandemic, the Company performed a goodwill impairment qualitative assessment during the second quarter of 2021 to determine if it is not more likely than not that the fair value of the Company’s reporting unit exceeded its carrying value, including goodwill.

Due to the adverse and unknown economic impacts resulting from the COVID-19 pandemic, the Company performed a goodwill impairment qualitative assessment during the third quarter of 2021 to determine if it is not more likely than not that the fair value of the Company’s reporting unit exceeded its carrying value, including goodwill.

BAYCOM CORP AND SUBSIDIARY

1 unchanged sentence

(Tables in thousands, except for share and per share data)

As of June 30, 2021, the Company’s qualitative assessment which considered the Company’s continued profitability, positive equity, average community bank merger deal values realized during the first six months of 2021, net interest margin, allowance for loan loss, and the continued growth in its core deposit portfolio, the Company concluded that the goodwill of the Company’s reporting unit, the Bank, is not more likely than not to be impaired.

However, if adverse economic conditions or the recent decrease in the Company’s stock price and market capitalization as a result of the COVID-19 pandemic were to be deemed sustained rather than temporary, it may significantly affect the fair value of the Company’s goodwill and may require impairment charges.

As of September 30, 2021, the Company’s qualitative assessment which considered the Company’s continued profitability, positive equity, average community bank merger deal values realized during the first nine months of 2021, net interest margin, allowance for loan loss, and the continued growth in its core deposit portfolio, the Company concluded that the goodwill of the Company’s reporting unit, the Bank, is not more likely than not to be impaired.

Any impairment charge could have a material adverse effect on the Company’s results of operations and financial condition.

Changes in the Company's goodwill at June 30, 2021 and December 31, 2020 are as follows:

Changes in the Company's goodwill at September 30, 2021 and December 31, 2020 are as follows:

September 30,

Balance at beginning of period

2 unchanged sentences

Core Deposit Intangible

Changes in the Company’s core deposit intangible at June 30, 2021 and December 31, 2020 were as follows:

Changes in the Company’s core deposit intangible at September 30, 2021 and December 31, 2020 were as follows:

September 30,

Balance at beginning of period

1 unchanged sentence

Balance at end of period

Estimated annual amortization expense at June 30, 2021 is as follows:

Estimated annual amortization expense at September 30, 2021 is as follows:

For the remainder of 2021

4 unchanged sentences

The Company’s interest receivable and other assets at the dates indicated consisted of the following:

September 30,

Tax assets, net

Accrued interest receivable

Investment in SBIC Funds

Investment in SBIC Fund

Prepaid assets

4 unchanged sentences

The Company’s deposits consisted of the following at the dates indicated:

September 30,

Demand deposits

5 unchanged sentences

At December 31, 2020, the first tranche was repaid.

At June 30, 2021, the second tranche was repaid and the Bank had no borrowings outstanding from the FHLB of San Francisco at that date.

At September 30, 2021, the second tranche was repaid and the Bank had no borrowings outstanding from the FHLB of San Francisco at that date.

The Bank has Federal Funds lines with four corresponding banks.

Cumulative available commitments totaled $ 75.0 million at both June 30, 2021 and December 31, 2020.

There were no amounts outstanding under these facilities at June 30, 2021 and December 31, 2020.

Junior subordinated deferrable interest debentures – In connection with its previous acquisitions, the Company acquired junior subordinated deferrable interest debentures, totaling $ 8.4 million net of mark-to-market adjustments at June 30, 2021 with a weighted average interest rate of 2.41 % , compared to $ 8.3 million with a weighted average rate of 2.80 % at December 31, 2020 .

Cumulative available commitments totaled $ 75.0 million at both September 30, 2021 and December 31, 2020.

There were no amounts outstanding under these facilities at September 30, 2021 and December 31, 2020.

Junior subordinated deferrable interest debentures – In connection with its previous acquisitions, the Company acquired junior subordinated deferrable interest debentures, totaling $ 8.4 million net of mark-to-market adjustments at September 30, 2021 with a weighted average interest rate of 2.70 % , compared to $ 8.3 million with a weighted average rate of 2.80 % at December 31, 2020 .

The junior subordinated deferrable interest debentures have a stated maturity term of 30 years .

9 unchanged sentences

The Company, at its option, may redeem the Notes, in whole or in part, on any interest payment date on or after September 15, 2025, without a premium.

At June 30, 2021, the Company had outstanding Notes, net of cost to issue, totaling $ 63.5 million.

At September 30, 2021, the Company had outstanding Notes, net of cost to issue, totaling $ 63.5 million.

NOTE 13 – INTEREST PAYABLE AND OTHER LIABILITIES

The Company’s interest payable and other liabilities at the dates indicated consisted of the following:

September 30,

Accrued expenses

2 unchanged sentences

Accrued interest payable

Other liabilities

NOTE 14 – OTHER EXPENSES

1 unchanged sentence

Three months ended

Six months ended

Nine months ended

September 30,

Professional fees

9 unchanged sentences

The Company expenses marketing and promotions costs as they are incurred.

Advertising expense included in marketing and promotions totaled $ 26,000 and $ 42,000 for the three and six months ended June 30, 2021 and $ 68,000 and $ 133,000 for the three and six months ended June 30, 2020, respectively.

Advertising expense included in marketing and promotions totaled $ 13,000 and $ 55,000 for the three and nine months ended September 30, 2021 and $ 59,000 and $ 193,000 for the three and nine months ended September 30, 2020, respectively.

NOTE 15 – EQUITY INCENTIVE PLANS

14 unchanged sentences

Awarded shares of restricted stock vest over (i) a one-year period following the date of grant, in the case of the non-employee directors, and (ii) a three-year or five-year period following the date of grant, with the initial vesting occurring on the one-year anniversary of the date of grant, in the case of the executive officers.

As of June 30, 2021, a total of 127,060 shares were available for future issuance under the 2017 Plan.

As of September 30, 2021, a total of 117,322 shares were available for future issuance under the 2017 Plan.

2014 Omnibus Equity Incentive Plan

4 unchanged sentences

The Company recognizes compensation expense for the restricted stock awards based on the fair value of the shares at the award date.

Total compensation expense for these plans was $ 351,000 and $ 764,000 for the three and six months ended June 30, 2021 and $ 363,000 and $ 672,000 for the three and six months ended June 30, 2020, respectively.

As of June 30, 2021, there was $ 1.8 million of total unrecognized compensation cost related to non-vested shares granted as restricted stock awards.

Total compensation expense for these plans was $ 325,000 and $ 1.1 million for the three and nine months ended September 30, 2021 and 2020 and $ 385,000 and $ 1.1 million for the three and nine months ended September 30, 2020, respectively.

As of September 30, 2021, there was $ 1.7 million of total unrecognized compensation cost related to non-vested shares granted as restricted stock awards.

The cost is expected to be recognized over the remaining weighted-average vesting period of approximately three years .

5 unchanged sentences

Non-Vested, at June 30,

NOTE 16 – FAIR VALUE MEASUREMENT

ASC Topic 820, “Fair Value Measurement,” defines fair value, establishes a framework for measuring fair value including a three-level valuation hierarchy, and expands disclosures about fair value measurements.

Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between

Non-Vested, at September 30,

BAYCOM CORP AND SUBSIDIARY

1 unchanged sentence

(Tables in thousands, except for share and per share data)

market participants at the measurement date reflecting assumptions that a market participant would use when pricing an asset or liability.

NOTE 16 – FAIR VALUE MEASUREMENT

Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date reflecting assumptions that a market participant would use when pricing an asset or liability.

The hierarchy uses three levels of inputs to measure the fair value of assets and liabilities as follows:

13 unchanged sentences

The following assets are measured at fair value on a recurring basis as of the dates indicated:

June 30, 2021

September 30, 2021

Government Agencies

5 unchanged sentences

Corporate bonds

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

December 31, 2020

5 unchanged sentences

Corporate bonds

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

The following assets are measured at fair value on a nonrecurring basis as of the dates indicated:

June 30, 2021

September 30, 2021

Performing impaired loans

22 unchanged sentences

Fair value measurements

June 30, 2021

September 30, 2021

Financial assets:

41 unchanged sentences

The following table presents a summary of commitments described above as of the dates indicated:

September 30,

Commitments to extend credit

5 unchanged sentences

The Company’s outstanding loan commitments are made using the same underwriting standards as comparable outstanding loans.

The reserve associated with these commitments included in interest payable and other liabilities on the consolidated balance sheets was $ 415,000 at both June 30, 2021 and December 31, 2020.

The reserve associated with these commitments included in interest payable and other liabilities on the consolidated balance sheets was $ 415,000 at both September 30, 2021 and December 31, 2020.

Commercial Real Estate Concentrations

At June 30, 2021 and December 31, 2020, in management’s judgment, a concentration of loans existed in commercial real estate related loans.

At September 30, 2021 and December 31, 2020, in management’s judgment, a concentration of loans existed in commercial real estate related loans.

The Company’s commercial real estate loans are secured by owner-occupied and non-owner occupied commercial real estate and multifamily properties.

Although management believes that loans within these concentrations have no more than the normal risk of collectability, a decline in the performance of the economy in general or a decline in real estate value in the Company’s primary market areas in particular, could have an adverse impact on collectability .

The Company has commitments to fund Low Income Housing Tax Credit Partnerships (“LIHTC”) and a Small Business Investment Company (“SBIC”).

During the second quarter of June 30, 2021, the Company entered into a new LIHTC with a total commitment of $ 2.0 million.

The Company’s net investment in LIHTC was $ 3.3 million and $ 1.1 million at June 30, 2021 and December 31, 2020, respectively.

At June 30, 2021, the remaining commitments to the LIHTC

The Company has commitments to fund Low Income Housing Tax Credit Partnerships (“LIHTC”) and a SBIC.

During the second quarter of 2021, the Company entered into a new LIHTC with a total commitment of $ 2.0 million.

The Company’s net investment in LIHTC was $ 3.2 million and $ 1.1 million at September 30, 2021 and December 31, 2020, respectively.

At September 30, 2021, the remaining commitments to the LIHTC and SBIC were approximately $ 3.3

BAYCOM CORP AND SUBSIDIARY

1 unchanged sentence

(Tables in thousands, except for share and per share data)

and SBIC were approximately $ 2.4 million and $ 122,000 , respectively.

million and $ 122,000 , respectively.

At December 31, 2020, the remaining commitments to the LIHTC and SBIC were approximately $ 899,000 and $ 122,000 , respectively.

At June 30, 2021, approximately $ 184.7 million, or 9.3 %, of the Company's deposits were derived from its top ten depositors.

At September 30, 2021, approximately $ 182.7 million, or 9.1 %, of the Company's deposits were derived from its top ten depositors.

At December 31, 2020, approximately $ 170.1 million, or 8.8 %, of the Company's deposits were derived from its top ten depositors.

2 unchanged sentences

The Company is required to provide collateral for certain local agency deposits in the states of California, Colorado, New Mexico and Washington.

As of June 30, 2021 and December 31, 2020, the FHLB issued letters of credit on behalf of the Company totaling $ 41.5 million and $ 30.1 million, respectively, as collateral for local agency deposits.

As of September 30, 2021 and December 31, 2020, the FHLB issued letters of credit on behalf of the Company totaling $ 41.5 million and $ 30.1 million, respectively, as collateral for local agency deposits.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements