Private Bancorp's third-quarter profit falls to $11.4 million as criticized loans climb

Private Bancorp of America, Inc. reported third-quarter 2026 net income of $11.4 million, or $1.97 per diluted share, up 17.53% from $9.7 million a year earlier but down from $13.1 million, or $2.27 a share, in the second quarter. The La Jolla, California-based parent of CalPrivate Bank recorded a $1.3 million credit-loss provision after a $200,000 reversal in the prior quarter, and criticized loans rose to $71.9 million, or 3.29% of total loans.

A $1.3 million provision and NASDAQ costs weigh on the quarter

Net interest income of $34.1 million rose $600,000, or 1.7%, from the second quarter and $4.8 million, or 16.3%, from a year earlier, but the gain was more than absorbed by the $1.3 million provision expense, against a $200,000 reversal in the prior quarter, and by noninterest expense of $18.4 million, up from $16.9 million. The provision comprised $400,000 for loans HFI and $900,000 for unfunded commitments, and net recoveries were $900,000. Noninterest income was $1.4 million, compared with $1.0 million in the second quarter and $2.2 million a year earlier; the company sold $6.1 million of SBA loans at a 10.72% average trade premium, producing a net gain of $337,000. The efficiency ratio was 51.68%, against 48.81% in the second quarter, and the effective tax rate rose to 28.3% from 26.7%. NASDAQ listing costs accounted for about $900,000 of the quarter's expenses and roughly $1.4 million year to date.

Criticized loans climb after a Chapter 11 filing and SBA 504 delinquencies

Criticized loans totaled $71.9 million, or 3.29% of total loans, at September 30, 2026, up from $58.0 million, or 2.72%, at June 30, and above the $70.5 million, or 3.39%, reported a year earlier. Classified loans were $67.7 million, against $51.0 million. The increase is primarily attributable to a Chapter 11 bankruptcy filing impacting two related real estate investor loans totaling $8.8 million and delinquent payments for two SBA 504 real estate loans totaling $3.7 million. Of the 54 classified loans, 42 are real estate secured and total $57.5 million with a 62.0% weighted-average LTV; 12 are commercial and industrial loans totaling $10.2 million. Nonperforming assets were $43.3 million, or 1.58% of total assets, from $40.5 million, or 1.50%, and nonaccrual loans rose to $28.8 million from $26.9 million. The allowance for loan losses was $31.7 million, or 1.45% of loans HFI, after a new CECL model took effect on July 1, 2026 and raised the unfunded-commitment reserve by about $800,000.

Margin eases as deposit costs edge up

Net interest margin was 5.05%, compared with 5.18% in the second quarter and 4.65% a year earlier. The decrease of 13 basis points from the prior quarter was primarily a result of the 15 bps positive impact from net nonaccrual interest adjustments in the second quarter, partially offset by approximately 4 bps from higher prepayment penalties and 2 bps from a special FHLB stock dividend recorded in the third quarter. The cost of total deposits rose to 1.66% from 1.63%, and was below the 2.02% of a year earlier. Core deposits increased $31.8 million, or 1.4%, from 2Q26 and $171.5 million, or 7.8%, since 3Q25, to $2.36 billion; total deposits were $2.41 billion, with brokered deposits unchanged at $49.3 million. Uninsured deposits, net of collateralized and fiduciary accounts, represented 52.8% of total deposits.

Book value builds while the $10 million buyback sits unused

Total assets were $2.75 billion, an increase of $39.9 million from the second quarter, as loans HFI rose $54.0 million, or 2.5%, from the second quarter to $2.19 billion and available-for-sale securities rose $30.6 million, or 12.9%, from the second quarter to $267.7 million, partly offset by a $49.1 million decrease in cash. The pre-tax unrealized loss on the AFS portfolio widened to $17.7 million from $8.9 million as market rates rose. Tangible book value per share was $50.56, against $49.57 at June 30 and $44.11 a year earlier, and the investor update put the tangible common equity ratio at 10.55%. CalPrivate Bank's preliminary total risk-based capital ratio was 15.20%, and total available liquidity was $2.4 billion, or 191.8% of uninsured deposits. The board authorized up to $10.0 million of share repurchases in the second quarter; as of September 30, 2026, no shares had been repurchased under the program.

The next filing is the test for reserves and capital

Management argued the reserve position is adequate. "Although criticized assets increased in the quarter, we are dedicating the appropriate resources to improve our credit metrics and believe that reserves are more than adequate", Chief Executive Rick Sowers said in the release. Chairman Selwyn Isakow tied the NASDAQ listing to capital access, saying "The listing also creates additional strategic options and flexibility in pursuing external growth opportunities" and that "the potential of being included in the reconstitution of the Russell 2000 Index provides additional momentum." The release contains no financial outlook and describes the results as unaudited. The Form 10-Q for the quarter ended September 30, 2026 will be the next filing that can confirm whether classified balances stabilize and whether the repurchase authorization is drawn; the release does not give its filing date.