What changed in this filing

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Item 1. Financial Statements

2022-08-15 compared with 2022-05-16 · 170 added, 127 removed, 694 unchanged (30% of the section changed)

2 unchanged sentences

Condensed Consolidated Statements of Income (unaudited)

Condensed Consolidated Statements of Comprehensive (Loss) Income (unaudited)

Condensed Consolidated Statements of Comprehensive Income (unaudited)

Condensed Consolidated Statements of Changes in Shareholders’ Equity (unaudited)

12 unchanged sentences

Loans held for sale

Loans, net of allowance for loan losses of $ 17,700 at March 31, 2022 and $ 17,700 December 31, 2021

Loans, net of allowance for loan losses of $ 17,800 at June 30, 2022 and $ 17,700 December 31, 2021

Premises and equipment, net

16 unchanged sentences

10,000,000 shares authorized;

no shares issued and outstanding at both March 31, 2022 and December 31, 2021

no shares issued and outstanding at both June 30, 2022 and December 31, 2021

Common stock, no par value;

100,000,000 shares authorized;

13,677,729 and 10,680,386 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

13,471,363 and 10,680,386 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

Additional paid in capital

Accumulated other comprehensive income, net of tax

Accumulated other comprehensive (loss) income, net of tax

Retained earnings

5 unchanged sentences

Three months ended

Six months ended

Interest income:

9 unchanged sentences

Net interest income

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

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

Gain on sale of OREO

Bargain purchase gain

15 unchanged sentences

BAYCOM CORP AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

Three months ended

Other comprehensive loss:

Change in unrealized loss on available-for-sale securities

Deferred tax benefit

Other comprehensive loss, net of tax

Total comprehensive (loss) income

Six months ended

Other comprehensive income (loss):

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

Deferred tax benefit (expense)

Other comprehensive (loss) income, net of tax

Total comprehensive income

BAYCOM CORP AND SUBSIDIARY

10 unchanged sentences

Balance, March 31, 2021

Other comprehensive income, net

Stock based compensation

Repurchase of shares

Balance, June 30, 2021

Balance, December 31, 2021

7 unchanged sentences

Balance, March 31, 2022

Other comprehensive loss, net

Restricted stock forfeited

Cash dividends of $ 0.05 per share

Stock based compensation

Repurchase of shares

Balance, June 30, 2022

BAYCOM CORP AND SUBSIDIARY

1 unchanged sentence

(In thousands)

Three months ended

Six months ended

Cash flows from operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Provision for loan losses

Provision for (reversal of) loan losses

Increase (decrease) in deferred tax assets

22 unchanged sentences

Proceeds from the sales of investment securities

Redemption (purchase) of Federal Reserve Bank stock

Increase in loans, net

Purchase of Federal Home Loan Bank stock

Purchase of Federal Reserve Bank stock

Decrease in loans, net

Proceeds from sale of premises

6 unchanged sentences

(In thousands)

Three months ended

Six months ended

Cash flows from financing activities:

Increase in noninterest and interest bearing deposits in banks, net

(Decrease) increase in noninterest and interest bearing deposits in banks, net

Decrease in time deposits, net

Repayment of Federal Home Loan Bank borrowings

Repurchase of common stock

Net cash (used in) provided by financing activities

Increase in cash and cash equivalents

(Decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

5 unchanged sentences

Non-cash investing and financing activities:

Change in unrealized loss on available-for-sale securities, net of tax

Change in unrealized (loss) gain on available-for-sale securities, net of tax

Transfer of loans to other real estate owned

59 unchanged sentences

however, the Company is still in the process of determining the magnitude of the change and its impact on the Company's consolidated financial statements.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

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

In March 2020, the FASB issued ASU No.

11 unchanged sentences

The ASU eliminates the accounting guidance for loans modified as troubled debt restructurings (“TDR loans”) by creditors while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty.

Additionally, the ASU requires public business entities to disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases.

This ASU will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, upon the Corporation’s adoption of the amendments in ASU 2016-13, which is commonly referred to as the current expected credit loss methodology.

Additionally, the ASU requires disclosure of current-period gross write-offs by year of origination for financing receivables and net investments in leases.

This ASU will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, upon the Corporation’s adoption of the amendments in ASU 2016-13, which is referred to as the current expected credit loss model.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

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

NOTE 3 – ACQUISITIONS

5 unchanged sentences

Noninterest income for the current quarter included $ 1.6 million in bargain purchase gain, offset by $ 3.1 million of nonrecurring acquisition-related expenses included in noninterest expense related to the Company’s acquisition of PEB.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

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

The following table summarizes the fair value of the assets acquired and liabilities assumed at the acquisition date:

38 unchanged sentences

Pro Forma Results of Operations

The operating results of the Company for the three months ended March 31, 2022 in the condensed consolidated statements of income include the operating results of PEB, since its acquisition date.

The operating results of the Company for the three and six months ended June 30, 2022 in the condensed consolidated statements of income include the operating results of PEB, since its acquisition date.

The following table represents the net interest income, net income, basic and diluted earnings per share, as if the PEB Merger was effective January 1, 2021.

2 unchanged sentences

Unaudited pro forma net interest income, net income and earnings per share are presented below:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Net interest income

8 unchanged sentences

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

income for the three months ended March 31, 2021.

The Company recognized third-party acquisition expenses for the three months ended March 31, 2022, as follows:

income for the three and six months ended June 30, 2021.

The Company recognized third-party acquisition expenses for the three and six months ended June 30, 2022, as follows:

Three months ended

Six months ended

Severance expense

5 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:

March 31, 2022

June 30, 2022

Government Agencies

13 unchanged sentences

Corporate bonds

During the three months ended March 31, 2022, the Company sold one available-for-sale securities for minimal realized gains and did not sell any securities available-for-sale for the three months ended March 31, 2021.

During the three and six months ended June 30, 2022, the Company sold no ne and one available-for-sale securities for minimal realized gains, respectively, and did not sell any securities available-for-sale during the three and six months ended June 30, 2021.

BAYCOM CORP AND SUBSIDIARY

4 unchanged sentences

12 months or more

March 31, 2022

Government Agencies

June 30, 2022

Preferred Equity Securities

12 unchanged sentences

Corporate bonds

At March 31, 2022, the Company held 348 investment securities, of which 20 were in an unrealized loss position for more than twelve months and 163 were in an unrealized loss position for less than twelve months.

At June 30, 2022, the Company held 347 investment securities, of which 19 were in an unrealized loss position for more than twelve months and 237 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.

2 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.

March 31, 2022

June 30, 2022

December 31, 2021

14 unchanged sentences

Allowance for loan losses

During the first quarter of 2022, the Bank continued its participation in the U.S.

(1) During the second quarter of 2022, the Bank continued its participation in the U.S.

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

Includes $ 68.8 million and $ 69.6 million of PPP loans as of June 30, 2022 and December 31, 2021, respectively.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

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

The Company’s total impaired loans, including nonaccrual loans TDR loans, and accreting purchase credit impaired (“PCI”) loans that have experienced post-acquisition declines in cash flows expected to be collected are summarized as follows:

and industrial

March 31, 2022

June 30, 2022

Recorded investment in impaired loans:

9 unchanged sentences

Specific allowance on impaired loans

Three months ended March 31, 2022

Three months ended June 30, 2022

Average recorded investment in impaired loans

Interest recognized

Three months ended March 31, 2021

Six months ended June 30, 2022

Average recorded investment in impaired loans

Interest recognized

Three months ended June 30, 2021

Average recorded investment in impaired loans

Interest recognized

Six months ended June 30, 2021

Average recorded investment in impaired loans

Interest recognized

Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired.

1 unchanged sentence

Nonaccrual loans are loans where principal and interest have been determined to not be fully collectible.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

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

In situations where, for economic or legal reasons related to a borrower’s financial difficulties, the Company grants a concession to the borrower that it would not otherwise consider, the related loan is classified as a TDR loan.

1 unchanged sentence

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 months ended March 31, 2022 and 2021, the Company recorded no charge-offs related to TDR loans.

During the three months ended March 31, 2022 and 2021, there were no TDR loans for which there was a payment default within the first 12 months of the modification.

As of March 31, 2022 and December 31, 2021, TDR loans had a related allowance of $ 878,000 and $ 31,000 , respectively.

As of March 31, 2022 and December 31, 2021, $ 794,000 and $ 805,000 , respectively, of TDR loans were performing in accordance with their modified terms.

For the three and six months ended June 30, 2022, the Company recorded a $ 2.4 million charge-off related to one TDR loan and no charge-offs related to TDR loans, respectively.

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

During the three and six months ended June 30, 2022 and 2021, there were no TDR loans for which there was a payment default within the first 12 months of the modification.

As of June 30, 2022 and December 31, 2021, TDR loans had a related allowance of $ 279,000 and $ 259,000 , respectively.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

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

As of June 30, 2022 and December 31, 2021, $ 746,000 and $ 765,000 , 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 March 31, 2022.

There were no commitments to lend additional amounts to borrowers with outstanding loans that are classified as TDR loans at June 30, 2022.

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

March 31, 2022

June 30, 2022

Commercial and industrial

1 unchanged sentence

Commercial real estate

March 31, 2021

June 30, 2021

Commercial and industrial

1 unchanged sentence

Commercial real estate

There was one loan modified as a TDR during the three months ended March 31, 2022.

There were two loans modified as TDRs during the three months ended March 31, 2021.

There was no loans and one loan modified as a TDR during the three and six months ended June 30, 2022, respectively.

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

Risk Rating System

6 unchanged sentences

The Company’s Pass loans includes loans with acceptable business or individual credit risk where the borrower’s operations, cash flow or financial condition provides evidence of low to average levels of risk.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

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

Loans that are assigned higher risk grades are loans that exhibit the following characteristics:

3 unchanged sentences

A Special Mention rating is a temporary rating, pending the occurrence of an event that would cause the risk rating either to improve or to be downgraded.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

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

Loans in this category would be characterized by any of the following situations:

20 unchanged sentences

Recoveries on loans previously charged off are credited to the allowance for loan losses.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

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

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

March 31, 2022

June 30, 2022

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, 2021

3 unchanged sentences

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

March 31, 2022

June 30, 2022

Commercial and industrial

5 unchanged sentences

Commercial real estate

The balance of nonaccrual loans guaranteed by a government agency, which reduces the Company’s credit exposure, was $ 822,000 at March 31, 2022 compared to $ 841,000 at December 31, 2021.

At March 31, 2022 and December 31, 2021, nonaccrual loans included $ 5.6 million and $ 6.9 million, respectively, of loans 30-89 days past due and $ 2.2 million and $ 2.5 million of loans less than 30 days past due, respectively.

At March 31, 2022, nonaccrual loans 30-89 days past due of $ 5.6 million was primarily comprised of one $ 4.9 million commercial and industrial loan

The balance of nonaccrual loans guaranteed by a government agency, which reduces the Company’s credit exposure, was $ 780,000 at June 30, 2022 compared to $ 822,000 at December 31, 2021.

At June 30, 2022, nonaccrual loans included $ 2.6 million of loans 30-89 days past due and $2.3 million of loans less than 30 days past due.

At December 31, 2021, nonaccrual loans included $ 113,000 of loans 30-89 days past due and $ 2.5 million of loans less than 30 days past due.

At June 30, 2022, nonaccrual loans 30-89 days past due of $ 2.6 million primarily was comprised of one $ 2.5 million commercial and industrial loan restructured as a TDR during the six months ended June 30, 2022, and the $ 2.3 million of loans less than 30 days past due are comprised of 13 loans.

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

There was one loan totaling $ 255,000 that was 90 days or more past due and still accruing interest at June 30, 2022, compared to no loans at December 31, 2021.

Interest foregone on nonaccrual loans was approximately $ 72,700 and $ 157,000 for the three and six months ended June 30, 2022 compared to $ 69,000 and $ 157,300 for the three and six months ended June 30, 2021, respectively.

Purchased Credit Impaired Loans

In connection with the Company's acquisitions, the contractual amount and timing of undiscounted principal and interest payments and the estimated amount and timing of undiscounted expected principal and interest payments were

BAYCOM CORP AND SUBSIDIARY

1 unchanged sentence

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

restructured as a TDR during the three months ended March 31, 2022 and seven smaller loans, and the $ 2.2 million of loans less than 30 days past due are comprised of 11 loans.

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

There was one loan totaling $ 117,000 that was 90 days or more past due and still accruing at March 31, 2022, compared to no loans at December 31, 2021.

Interest foregone on nonaccrual loans was approximately $ 84,600 for the three months ended March 31, 2022 compared to $ 88,300 for the three months ended March 31, 2021.

Purchased Credit Impaired Loans

used to estimate the fair value of PCI loans at the acquisition date.

The difference between these two amounts represented the nonaccretable difference.

5 unchanged sentences

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

March 31, 2022

June 30, 2022

December 31, 2021

4 unchanged sentences

Three months ended

Six months ended

Balance at beginning of period

4 unchanged sentences

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 months ended March 31, 2022 and 2021:

and industrial

March 31, 2022

Three months ended June 30, 2022

Allowance for loan losses

2 unchanged sentences

Ending balance

Six months ended June 30, 2022

Allowance for loan losses

Beginning balance

Provision for (reversal of) loan losses

Ending balance

June 30, 2022

Allowance for loan losses by methodology:

4 unchanged sentences

Collectively evaluated for impairment

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

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

and industrial

March 31, 2021

Three months ended June 30, 2021

Allowance for loan losses

2 unchanged sentences

Ending balance

Six months ended June 30, 2021

Allowance for loan losses

Beginning balance

Provision for (reversal of) loan losses

Ending balance

June 30, 2021

Allowance for loan losses by methodology:

4 unchanged sentences

Collectively evaluated for impairment

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

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

NOTE 7 – PREMISES AND EQUIPMENT

5 unchanged sentences

Total premises and equipment, net

Depreciation and amortization included in occupancy and equipment expense totaled $ 507,000 and $ 502,000 for the three months ended March 31, 2022 and 2021, respectively.

Depreciation and amortization included in occupancy and equipment expense totaled $ 503,000 and $ 1.0 million for the three and six months ended June 30, 2022 and $ 502,000 and $ 1.0 million for the three and six months ended June 30, 2021, respectively.

NOTE 8 – LEASES

1 unchanged sentence

These leases expire on various dates through 2030.

The Company’s leases often have an option to renew one or more times, at the Company’s discretion, following the expiration of the initial term.

The Company’s leases often have an option to renew one or more times, at the Company’s discretion,

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

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

following the expiration of the initial term.

If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability.

1 unchanged sentence

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 March 31, 2022:

The below maturity schedule represents the undiscounted lease payments for the five-year period and thereafter as of June 30, 2022:

For remainder of 2022

2 unchanged sentences

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

March 31, 2022

June 30, 2022

Weighted-average remaining lease term

Weighted-average discount rate

Rental expense included in occupancy and equipment on the consolidated statements of income totaled $ 1.3 million and $ 810,000 for the three months ended March 31, 2022 and 2021, respectively.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

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

Rental expense included in occupancy and equipment expense totaled $ 893,000 and $ 2.2 million for the three and six months ended June 30, 2022 and $ 834,000 and $ 1.6 million for three and six months ended June 30, 2021, respectively.

NOTE 9 – GOODWILL AND INTANGIBLE ASSETS

5 unchanged sentences

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

Changes in the Company's goodwill at March 31, 2022 and December 31, 2021 are as follows:

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

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

Changes in the Company's goodwill at June 30, 2022 and December 31, 2021 are as follows:

Balance at beginning of period

2 unchanged sentences

Core Deposit Intangible

Changes in the Company’s core deposit intangible at March 31, 2022 and December 31, 2021 were as follows:

Changes in the Company’s core deposit intangible at June 30, 2022 and December 31, 2021 were as follows:

Balance at beginning of period

1 unchanged sentence

Balance at end of period

Estimated annual amortization expense at March 31, 2022 is as follows:

Estimated annual amortization expense at June 30, 2022 is as follows:

For remainder of 2022

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

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

NOTE 10 – INTEREST RECEIVABLE AND OTHER ASSETS

8 unchanged sentences

Investment in statutory trusts

At March 31, 2022, the Company had remaining commitments to the LIHTC partnerships and the SBIC fund of $ 3.2 million and $ 122,000 , respectively.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

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

At June 30, 2022, the Company had remaining commitments to the LIHTC partnerships and the SBIC fund of $ 3.1 million and $ 122,000 , respectively.

At June 30, 2021, the Company had remaining commitments to the LIHTC partnerships and the SBIC fund of $ 2.4 million and $ 122,000 , respectively.

NOTE 11 – DEPOSITS

5 unchanged sentences

Other borrowings – The Bank has an approved secured borrowing facility with the Federal Home Loan Bank of San Francisco (the “FHLB”) for up to 25 % of total assets for a term not to exceed five years under a blanket lien of certain types of loans.

At both March 31, 2022 and December 31, 2021, the Company had no FHLB advances outstanding.

At both June 30, 2022 and December 31, 2021, the Company had no FHLB advances outstanding.

The Company has Federal Funds lines with four corresponding banks.

Cumulative available commitments totaled $ 65.0 million at both March 31, 2022 and December 31, 2021.

There were no amounts outstanding under these facilities at both March 31, 2022 and December 31, 2021.

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 March 31, 2022 with a weighted average interest rate of 3.44 % , compared to $ 8.4 million with a weighted average rate of 2.79 % at December 31, 2021 .

Cumulative available commitments totaled $ 65.0 million at both June 30, 2022 and December 31, 2021.

There were no amounts outstanding under these facilities at either June 30, 2022 or December 31, 2021.

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 June 30, 2022 with a weighted average interest rate of 4.48 % , compared to $ 8.4 million with a weighted average rate of 2.79 % at December 31, 2021 .

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

Subordinated debt – On August 6, 2020, the Company issued and sold $ 65.0 million aggregate principal amount of 5.25 % Fixed-to-Floating Rate Subordinated Notes due 2030 (the “Notes”) at a public offering price equal to 100 % of

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

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

the aggregate principal amount of the Notes.

The offering of the Notes closed on August 10, 2020.

3 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 March 31, 2022 and December 31, 2021, the Company had outstanding Notes, net of cost to issue, totaling $ 63.6 million and $ 63.5 million, respectively.

At June 30, 2022 and December 31, 2021, the Company had outstanding Notes, net of cost to issue, totaling $ 63.6 million and $ 63.5 million, respectively.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

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

NOTE 13 – INTEREST PAYABLE AND OTHER LIABILITIES

8 unchanged sentences

Three months ended

Six months ended

Professional fees

9 unchanged sentences

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

Advertising expense included in marketing and promotions totaled $ 21,000 and $ 17,000 for the three months ended March 31, 2022 and 2021, respectively.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

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

Advertising expense included in marketing and promotions totaled $ 21,000 and $ 42,000 for the three and six months ended June 30, 2022 and $ 26,000 and $ 42,000 for the three and six months ended June 30, 2021, respectively.

NOTE 15 – EQUITY INCENTIVE PLANS

4 unchanged sentences

An equity incentive award may be an option, stock appreciation rights, restricted stock units, stock award, other stock-based award or performance award granted under the 2017 Plan.

Factors considered by the Board in awarding equity incentives to officers and employees include the performance of the Company, the employee’s or officer’s job performance, the importance of his or her position, and his or her contribution to the organization’s goals for the award period.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

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

Generally, awards are restricted and have a vesting period of no longer than ten years.

4 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 March 31, 2022, a total of 95,381 shares were available for future issuance under the 2017 Plan.

As of June 30, 2022, a total of 96,703 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.

For the three months ended March 31, 2022 and 2021, total compensation expense for these plans was $ 324,000 and $ 413,000 , respectively.

As of March 31, 2022, there was $ 1.5 million of total unrecognized compensation cost related to non-vested shares granted as restricted stock awards.

Total compensation expense for these plans was $ 233,000 and $ 557,000 for the three and six months ended June 30, 2022 and $ 351,000 and $ 764,000 for the three and six months ended June 30, 2021, respectively.

As of June 30, 2022, there was $ 1.2 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 .

4 unchanged sentences

Non-Vested, at March 31,

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

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

Non-Vested, at June 30,

NOTE 16 – FAIR VALUE MEASUREMENT

3 unchanged sentences

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the reporting entity has the ability to access at the measurement date.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

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

Level 2 – Observable prices in active markets for similar assets and liabilities;

11 unchanged sentences

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

March 31, 2022

June 30, 2022

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, 2021

7 unchanged sentences

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

March 31, 2022

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS – (continued)

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

June 30, 2022

Performing impaired loans

22 unchanged sentences

Fair value measurements

March 31, 2022

June 30, 2022

Financial assets:

3 unchanged sentences

Investment in FHLB and FRB Stock

Loans held for sale

Accrued interest receivable

40 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 $ 315,000 at both March 31, 2022 and December 31, 2021.

The reserve associated with these commitments included in interest payable and other liabilities on the consolidated balance sheets was $ 315,000 at both June 30, 2022 and December 31, 2021.

Commercial Real Estate Concentrations

At March 31, 2022 and December 31, 2021, in management’s judgment, a concentration of loans existed in commercial real estate related loans.

At June 30, 2022 and December 31, 2021, 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.

1 unchanged sentence

The Company has commitments to fund investments in LIHTC partnerships and an SBIC fund.

At March 31, 2022, the remaining commitments to the LIHTC partnerships and the SBIC fund were approximately $ 3.2 million and $ 122,000 , respectively.

At June 30, 2022, the remaining commitments to the LIHTC partnerships and the SBIC fund were approximately $ 3.1 million and $ 122,000 , respectively.

At December 31, 2021, the remaining commitments to the LIHTC partnerships and the SBIC fund were $ 2.3 million and $ 122,000 , respectively.

2 unchanged sentences

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

At March 31, 2022, approximately $ 265.9 million, or 11.4 %, of the Company's deposits were derived from its top ten depositors.

At June 30, 2022, approximately $ 247.1 million, or 11.2 %, of the Company's deposits were derived from its top ten depositors.

At December 31, 2021, approximately $ 198.6 million, or 10.0 %, 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.

At both March 31, 2022 and December 31, 2021, the FHLB issued letters of credit on behalf of the Company totaling $ 42.0 million as collateral for local agency deposits.

At both June 30, 2022 and December 31, 2021, the FHLB issued letters of credit on behalf of the Company totaling $ 42.0 million 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