Mission Bancorp Reports Record Annual Earnings Of $30.5 Million, Annual Loan Growth Of 13.2% And Annual Deposit Growth Of 7.3%

(MENAFN- PR Newswire) BAKERSFIELD, Calif., Jan. 29, 2024 /PRNewswire/ --
Mission Bancorp ("Mission" or the "Company") (OTC Pink: MSBC), a bank holding company and parent of Mission Bank (the "Bank"), reported unaudited net income available to common shareholders of $7.8 million, or $3.14 per basic common share, for the fourth quarter of 2023, compared to net income available to common shareholders of $7.6 million, or $3.13 per basic common share, for the fourth quarter of 2022, and net income available to common shareholders of $8.0 million, or $3.22 per basic common share, for the linked quarter. Unaudited net income for the year 2023 reached $30.5 million, or $12.37 per basic common share, compared to net income available to common shareholders of $24.3 million for 2022, or $10.02 per basic common share.

"We are extremely proud of our record results in 2023. In a difficult year for the banking industry as a whole, Mission Bank thrived. While many of our peers faced shrinking net interest margins, deposits, and profits, Mission experienced an expanding margin, deposit growth, and record annual earnings. Additionally, our conservative balance sheet management allowed us to meet strong loan demand," said A.J. Antongiovanni, President, and Chief Executive Officer of Mission Bancorp. Mr. Antongiovanni continued, "The battle for deposits was one of the defining characteristics of the banking industry in 2023. Between higher deposit rates and increased competition, driving deposit growth has not been easy but our team rose to the challenge. This is a tribute to our business banking model which focuses on building and maintaining deep relationships while providing high touch customer service. As we look towards an uncertain economic future, we are confident our strong culture and conservative principles will keep us on this track of success. Thank you to the team and our customers, your commitment to Mission Bank allows us to continue our core purpose, to fuel and grow vibrant and prosperous communities."

Fourth Quarter 2023 Financial Highlights

• Gross loans increased by $141.0 million, or 13.2%, to $1.21 billion as of December 31, 2023, compared to $1.07 billion at December 31, 2022, and increased by $50.1 million, or 4.3%, compared to $1.16 billion at September 30, 2023.
  
• Total deposits increased by $97.7 million, or 7.3%, to $1.44 billion as of December 31, 2023, compared with $1.34 billion a year earlier, and increased by $31.0 million, or 2.2%, from $1.41 billion as of September 30, 2023. Noninterest-bearing deposits were $645.3 million and represent 44.9% of total deposits at December 31, 2023.
  
• The allowance for credit losses ("ACL") as a percentage of gross loans increased from 1.39% at December 31, 2022, to 1.50% at December 31, 2023.
  
• Credit quality remains strong with nonaccrual loans representing 0.03% of total gross loans at December 31, 2023, up from 0.01% as of December 31, 2022.
  
• The Community Bank Leverage Ratio for the Bank as of December 31, 2023, was 11.33%, compared to 10.09% at December 31, 2022.

Net Income Available to Common Shareholders

Net income available to common shareholders for the fourth quarter of 2023 was $7.8 million, or $3.14 per basic common share, compared with $8.0 million, or $3.22 per basic common share, for the linked quarter ended September 30, 2023. Net income available to common shareholders was $7.6 million, or $3.13 per basic common share, for the fourth quarter of 2022. Net income available to common shareholders decreased $0.2 million, or 2.4%, compared to the linked quarter, and increased $0.2 million, or 2.6%, compared to the same prior year period.

Notable variances comparing to the linked quarter include decreases in net interest income and non-interest income, which were offset by decreases in the provision for income taxes and non-interest expense. Compared to the fourth quarter of 2022, net interest income increased and the provision for credit losses decreased, which were partially offset by an increase in non-interest expense, and lower non-interest income.

Net income available to common shareholders for the twelve months ended December 31, 2023, increased by $6.2 million, or 25.6%, and was $30.5 million, or $12.37 per basic common share, compared to $24.3 million, or $10.02 per basic common share for the twelve months ended December 31, 2022. Compared to the twelve months ended December 31, 2022, an increase in net interest income and decline in the provision for credit losses more than offset an increase in non-interest expense and decline in non-interest income. If the net income available to common shareholders for the twelve months ended December 31, 2022, was adjusted to remove the gain on sale of our Ridgecrest Business Banking Center, recorded in June of 2022, net income available to common shareholders for the twelve months ended December 31, 2023, would have increased by $7.4 million, or 31.8%, compared to the twelve months ended December 31, 2022.

Net Interest Income

Net interest income was $17.8 million, or 4.58%, of average earning assets ("net interest margin"), for the fourth quarter of 2023, compared with $17.1 million, or a net interest margin of 4.64%, for the same period a year earlier, and $17.9 million, or a net interest margin of 4.67%, for the quarter ended September 30, 2023.

Net interest income increased by $0.7 million, or 4.3%, compared to the same prior year period driven by a shift in the Company's earning asset mix to higher yielding loans along with a significant increase in yields on earning assets. Loan interest income and fee accretion from the fourth quarter of 2022 to the current quarter increased by $3.7 million. In addition to the increase in loan interest income, the Company also experienced increased interest income from investment securities of $0.9 million. Offsetting these increases, interest expense for the current quarter increased $4.0 million, compared to the same prior year period, attributable to a $3.8 million increase in interest expense on deposits and a $0.2 million increase in other borrowing expenses.

Net interest income decreased for the quarter ended December 31, 2023, compared to the linked quarter by $0.1 million, or 0.5%, due primarily to increased interest expense on deposits which outpaced increased interest income. Interest expense on deposits increased $0.8 million, for the current quarter, compared to the linked quarter, due to increased costs on interest bearing deposits and higher average balances. Interest income increased $0.7 million, for the current quarter, compared to the linked quarter, primarily due to higher earning asset rates and average balances.

The net interest margin was 4.58% for the quarter ended December 31, 2023, compared to 4.64% for the same prior year period, and 4.67% for the linked quarter ended September 30, 2023. Asset yields have increased 96 basis points, but the cost of funds has risen 108 basis points leading to the year-over-year 6 basis point decline in the quarterly net interest margin. Average interest-bearing liabilities have grown $154.8 million outpacing the growth in average interest-earning assets of $84.4 million, when compared to the same prior year period. The yield on loans, investment securities, and interest earning deposits in other banks have increased by 63 basis points to 6.25%, 140 basis points to 4.37%, and 194 basis points to 5.53%, respectively. Additionally, average balances on loans increased $130.9 million, or 12.5%, average balances on investment securities increased $6.8 million, or 2.96%, and average balances on interest bearing deposits in other banks declined $54.8 million, or 30.5%, when compared to the same prior year period.

The 9 basis point decrease in the net interest margin for the fourth quarter of 2023, compared to the linked quarter is primarily attributable to both higher average balances and costs of interest-bearing liabilities. While the Company remains asset sensitive and yields on earning assets increased 10 basis points since the third quarter, average interest-bearing liabilities balances and costs increased by $35.7 million, and 29 basis points, respectively, which led to net interest margin compression during the quarter. The average interest earning deposits in other banks increased by $18.4 million and average balances on loans increased $16.9 million, funded by strong deposit growth during the quarter.

The cost of interest-bearing deposits increased 31 basis points to 2.40% for the quarter ended December 31, 2023, compared to the linked quarter ended September 30, 2023, and 184 basis points, compared to the same prior year period.

For the twelve months ended December 31, 2023, the Company's net interest margin increased 87 basis points to 4.67%, compared to 3.80% for the twelve months ended December 31, 2022. The increase in net interest margin is the result of a 167 basis point increase in earning asset yields and the growth in average earning asset balances, which outpaced the 84 basis point increase and growth in the cost of total funding.

In the third quarter of 2023 the Company entered into two pay-fixed, receive floating, interest rate swap contracts with notional balances totaling $108.0 million, to hedge future interest rate increases. These swap contracts consist of a $50.0 million hedge on the commercial real estate loan portfolio with a three-year maturity and a $58.0 million hedge on the municipal investment security portfolio with a five-year maturity. For the quarter ending on December 31, 2023, the interest rate swap contract associated with the loan portfolio generated an additional $0.2 million in loan interest income and added 5 basis points to the yield on loans, compared to $0.1 million and 4 basis points for the linked quarter, respectively. The interest rate swap contract on the investment securities portfolio added $0.2 million in investment securities interest income and added 42 basis points to the yield on investment securities, compared to $0.2 million and 28 basis points for the prior quarter ended September 30, 2023, respectively. Combined, the interest rate swap contracts generated $0.4 million of additional interest income and 10 basis points of additional earning asset yield during the quarter ended December 31, 2023.

Provision for Credit Losses

A $0.3 million provision for credit losses was recorded for the quarter ended December 31, 2023, compared to $0.2 million for the linked-quarter and $0.4 million for the same period a year ago. The Company's quarterly credit loss provisions over the past year have been recorded primarily to account for growth in the loan portfolio and changes in macro-economic conditions which impact the calculated ACL under the current expected credit loss ("CECL") model, rather than in response to changing conditions in the Company's loan portfolio, which have remained stable, demonstrating a low credit risk profile during the past twelve months.

Non-Interest Income

Non-interest income for the fourth quarter of 2023 was $1.3 million, compared to $1.4 million for the linked quarter, and $1.6 million for the same period a year earlier. The decrease in non-interest income when compared to the linked quarter is primarily attributable to loss on sale of securities, which were partially offset by increased service charges, fees, and other income, and farmer mac referral and servicing fees. The decrease in non-interest income when compared to the same period a year earlier was primarily due to the loss on sale of securities, which was partially offset by increased service charges, fees and other income.

Non-interest income decreased $2.6 million, or 32.4%, to $5.4 million during the twelve months ended December 31, 2023, compared to the twelve months ended December 31, 2022. The decrease in non-interest income is primarily due to the recording of the $1.6 million gain on sale of our Ridgecrest Business Banking Center in the prior year period. When adjusted for the gain on sale of the business banking center, non-interest income decreased $1.0 million, which is primarily due to the loss on sale of securities and decreased service charges, fees, and other income, which were partially offset by increased gain on sale premises and equipment, and SBA servicing fees and the gain on sale of loans.

Non-Interest Expense

Non-interest expense increased nominally and ended the current quarter at $8.0 million, up $0.1 million, or 0.9%, when compared to the linked quarter, and increased by $0.4 million, or 4.6%, compared to $7.6 million for the quarter ended December 31, 2022. Notable variances comparing to the linked quarter were decreased salaries and benefits expense, offset by increases in other expenses and data processing and communication. The increase in non-interest expense for the fourth quarter of 2023 compared to the fourth quarter of 2022 was primarily due to a $0.2 million increase in other expenses.

Non-interest expense increased $5.0 million, or 18.6%, to $31.6 million, for the twelve months ended December 31, 2023, compared to $26.7 million for 2022. The increase in non-interest expense is primarily attributable to an increase of $2.5 million in salaries and benefits expense, a $1.4 million increase in professional services expense, and a $0.9 million increase in other non-interest expense. The increase in salaries and benefits expense is primarily due to increases in base compensation expense, associated payroll taxes and benefits expense, which includes a fully contributed annual increase of $0.7 million associated with the new Visalia business banking team compared to the partial annual expense in the prior year. The annual increase in professional services is primarily attributable to an increase in legal expenses and business development and bank meeting expenses.

Operating Efficiency

The Company's operating efficiency ratio increased to 41.7% for the fourth quarter of 2023, compared to 40.8% for the fourth quarter of 2022, and increased from 40.9% compared to the linked quarter. Total non-interest expense as a percentage of average assets, another measure of the Company's efficiency, was 1.94% for the fourth quarter of 2023, compared to 1.96% for the fourth quarter of 2022, and 1.95% for the quarter ended September 30, 2023.

The Company's operating efficiency ratio for the twelve months ended December 31, 2023, was 42.2%, up from 42.1% for the prior twelve months ended December 31, 2022. Total non-interest expense as a percentage of average assets, increased to 2.01% for the twelve months ended December 31, 2023, compared to 1.74% for the prior year, due in part to the impacts of the fully contributed expense and phased in average asset growth associated with the new Visalia business banking center.

Income Taxes

Income tax expense was $3.1 million for the fourth quarter of 2023, relatively unchanged when compared to the same prior year period, and $3.3 million for the linked quarter ended September 30, 2023. The Company's effective tax rate for the fourth quarter of 2023 was 28.8%, compared to 29.2% for the same period a year ago, and 29.1% for the quarter ended September 30, 2023.

Income tax expense was $11.5 million for the twelve months December 31,2023, compared to $9.4 million from the prior year. The Company's effective tax rate for the year ended December 31, 2023, was 27.4%, compared to 27.9% for the prior year.

Asset and Equity Returns

The return on average equity for the fourth quarter of 2023 was 20.9%, down from 25.6% for the same prior year period, and down from 22.1% for the linked quarter. The quarterly return on average assets for the fourth quarter of 2023 was 1.89%, declining from 1.95% for the same prior year period, and declining from 1.97% for the linked quarter.

The decline in quarterly returns on both average equity and average assets for the quarter ended December 31, 2023, compared to the fourth quarter of 2022, is primarily attributable to the 5.9% growth in average assets and the 25.6% growth in average equity, which significantly outpaced the 2.6% increase in quarterly net income.

The decrease in quarterly returns on both average equity and average assets for the quarter ended December 31, 2023, compared to the linked quarter, is primarily attributable to average asset and average equity growth, compared to the 2.4% decrease in net income.

The annual return on average equity for the twelve months ended December 31, 2023, was 22.0%, up from 20.7% for the twelve months ended December 31, 2023. The annual return on average assets for the twelve months ended December 31, 2023, was 1.93%, up from 1.58% for the prior year. The increase in returns is primarily attributable to the 25.6% increase in net income, which outpaced the growth in average assets and equity, for the twelve months ended December 31, 2023, compared to the prior year.

Balance Sheet

Total assets increased by $155.4 million, or 10.4%, to $1.65 billion at December 31, 2023, compared to December 31, 2022, and increased by $36.9 million, or 2.3%, compared to September 30, 2023. Cash and cash equivalents increased by $17.5 million, or 13.2%, to $149.8 million at December 31, 2023, compared to the same prior year period, and decreased by $17.4 million, or 10.4%, compared to September 30, 2023. The increase in the Company's cash position over the last year is primarily the result of deposit growth, earnings, and new borrowings, which outpaced the significant loan portfolio growth. The decrease in the Company's cash position over the past quarter is primarily due to loan growth, which outpaced deposit growth for the quarter.

Investment securities decreased by $7.6 million or 3.1%, to $242.7 million at December 31, 2023, compared to $250.3 million at December 31, 2022, and increased by $4.6 million, or 1.9%, compared to $238.1 million at September 30, 2023. The increase in the investment securities portfolio during the fourth quarter of 2023, compared to the linked quarter, is primarily attributable to the decrease in unrealized losses on the investment portfolio attributable to the recent decrease in capital market interest rates of various terms across the yield curve, and capitalizing on historically tight municipal credit spreads which allowed for the sale of long dated municipal securities and simultaneous purchase of higher yielding intermediate duration bonds, net of repayments and amortization of the bond portfolio. The decrease in the investment securities portfolio over the past year is attributable to repayments and amortization of the bond portfolio to supplement significant lending demand.

Loans increased by $141.0 million, or 13.2%, to $1.21 billion at December 31, 2023, compared to December 31, 2022, and increased by $50.1 million, or 4.3%, compared to September 30, 2023.
Loan growth during the last year has been concentrated in the owner and non-owner occupied commercial real estate, commercial and industrial, and secured by farmland segments of the loan portfolio, which were partially offset by the contraction in construction and land development loans. Loans increased during the current quarter with increases diversified across the portfolio, with notable growth primarily concentrated in owner and non-owner occupied commercial real estate, agricultural production, and construction and land development segments of the loan portfolio.

Total deposits increased by $97.7 million, or 7.3%, to $1.44 billion as of December 31, 2023, from $1.34 billion as of December 31, 2022, and increased by $31.0 million, or 2.2%, from $1.41 billion at September 30, 2023. Noninterest-bearing deposits decreased by $72.5 million, or 10.1%, during the last year, and by $10.2 million, or 1.6%, since September 30, 2023.
The decrease in noninterest bearing deposits experienced over the last year is attributable to both cash utilization by business customers as well as the migration of funds in search of higher yields. Noninterest-bearing deposits represented 44.9% of total deposits on December 31, 2023.

Total shareholders' equity was $156.7 million at December 31, 2023, an increase of $32.9 million, or 26.6%, compared to December 31, 2022, and an increase of $12.0 million, or 8.3%, compared to September 30, 2023, due primarily to quarterly earnings, net of changes in accumulated other comprehensive income or loss. The accumulated other comprehensive loss component of equity decreased $4.0 million during the past quarter, due to a $5.5 million decrease in the accumulated other comprehensive loss on the investment securities portfolio, partially offset by a $1.4 million increase in the accumulated other comprehensive loss associated with the interest rate swap contract on the investment securities portfolio. The accumulated other comprehensive loss decreased by $2.6 million during the past year. The decrease in accumulated other comprehensive loss is the result of an increase in the fair market value of our securities portfolio, attributable to the rise in interest rates and not related to credit quality, offset by a decrease in the fair market of the interest rate swap contract on the investment securities portfolio.

The Company continues to have excellent credit quality with $0.4 million of nonperforming assets at December 31, 2023, up from $0 nonperforming assets at September 30, 2023, and up from $0.1 million at December 31, 2022. Nonperforming assets as a percentage of total assets were 0.02% at December 31, 2023, up from 0.00% at both September 30, 2023 and December 31, 2022.

Allowance for Credit Losses

The Company recognized a one-time cumulative adjustment to retained earnings of $1.4 million associated with the January 1, 2023, transition to the current expected credit loss ("CECL") model. The transition adjustment is the difference between the allowance for loan losses and allowance for unfunded commitments calculated under the incurred loss model at December 31, 2022, and the new allowance for credit losses ("ACL") and allowance for unfunded commitments calculated under the CECL methodology at the beginning of 2023. The ACL transition adjustment represents 4.7% of the total allowance for credit losses, or 7 basis points as a percentage of gross loans, as of the quarter ended December 31, 2023.

The ACL as a percentage of gross loans decreased to 1.50% at December 31, 2023, from 1.53% at September 30, 2023, and increased from 1.39% at December 31, 2023 calculated according to the previous incurred loss model methodology. The decline in our ACL when compared to the linked quarter was due to relatively stable economic conditions and loan portfolio credit quality over the past quarter. The rise in our ACL as a percentage of gross loans over the last twelve months is primarily due to the transition from the incurred loss model to the new CECL model.

Regulatory Capital

The Bank's reported regulatory capital ratio exceeded the ratio generally required to be considered a "well capitalized" financial institution for regulatory purposes.
The Community Bank Leverage Ratio for the Bank was 11.33%, at December 31, 2023, compared with the requirement of 9.00% to generally be considered a "well capitalized" financial institution for regulatory purposes.
The Bank's Community Bank Leverage ratio has increased by 124 basis points from 10.09%, and increased by 28 basis points from 11.05%, as of the periods ended December 31, 2022, and September 30, 2023, respectively. Strong earnings over the past year and quarter outpaced the growth in average assets, resulting in an increase in regulatory capital ratios.

Stock Repurchase Program

The Company announced on October 27, 2023, the extension of its plan Rule 10b5-1 (the "2022 10b5-1 Plan") to facilitate the repurchase of its common stock. Pursuant to the 2022 10b5-1 Plan, a maximum of $1.0 million of the Company's common stock may be repurchased by the Company. The previous extension under the Plan expired on October 27, 2023, and the Company extended the Plan for an additional six months, through April 26, 2024. The Company may suspend or discontinue the Plan at any time. Hilltop Securities, Inc. is acting as the Company's agent to purchase its shares on pre-arranged terms pursuant to the 2022 10b5-1 Plan.

During the fourth quarter of 2023 the Company repurchased 500 shares under the 2022 10b5-1 Plan at an average price of $79.50. Since Plan inception the Company has repurchased 4,066 shares at an average price of $82.62.

About Mission Bancorp and Mission Bank

With $1.7 billion in assets, Mission Bancorp is headquartered in Bakersfield, California and is the holding company of four wholly owned subsidiaries, Mission Bank, Mission 1031 Exchange, LLC, Mission Community Development, LLC, and Nosbig 88, Inc. Mission Bank has eight Business Banking Centers, serving the greater areas of Bakersfield, Lancaster, San Luis Obispo, Stockton, Ventura, and Visalia, California. Visit Mission Bank online at By including the foregoing website address, Mission Bancorp does not intend to, and shall not be deemed to incorporate by reference any material contained therein.

Forward Looking Statements

This press release may contain forward-looking statements that are subject to risks and uncertainties. Such risks and uncertainties may include but
are not necessarily limited to fluctuations in interest rates, inflation, rapid and/or unanticipated deposit withdrawals, the unavailability of sources of liquidity, additional regulatory requirements that may be imposed on community banks or banks in general, general and industry-specific changes in market conditions, investor reaction to industry developments, government regulations and general economic conditions, and competition
within the business areas in which the bank is conducting its operations, including the real estate market in California and other factors beyond the
bank's control. Such risks and uncertainties could cause results for subsequent interim periods or for the entire year to differ materially from those
indicated. Readers should not place undue reliance on the forward-looking statements, which reflect management's view only as of the date hereof.
The Company undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.

MISSION BANCORP
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
															Variance
							December 31, 2023		September 30, 2023		June 30, 2023		December 31, 2022		12/23 - 09/23		12/23 - 12/22
Assets
	Cash and due from banks			$ 39,679		$ 55,737		$ 56,373		$ 43,224		$ (16,058)		$ (3,545)
	Interest earning deposits in other banks		110,104		111,459		62,349		89,062		(1,355)		21,042
		Total cash and cash equivalents		149,783		167,196		118,722		132,286		(17,413)		17,497
	Interest earning deposits maturing over ninety days	490		490		980		1,721		-		(1,231)
	Investment securities available-for-sale, at fair value	242,681		238,090		252,205		250,328		4,591		(7,647)
	Loans					1,210,416		1,160,351		1,163,416		1,069,384		50,065		141,032
	Allowance for credit losses			(18,206)		(17,804)		(17,203)		(14,849)		(402)		(3,357)
	Loan, net				1,192,210		1,142,547		1,146,213		1,054,535		49,663		137,675
	Premises and equipment, net			3,175		3,246		3,282		3,112		(71)		63
	Bank owned life insurance			21,285		21,139		21,006		20,606		146		679
	Deferred tax asset, net			15,594		16,543		15,280		15,250		(949)		344
	Interest receivable and other assets		26,751		25,862		21,732		18,688		889		8,063
Total Assets				$ 1,651,969		$ 1,615,113		$ 1,579,420		$ 1,496,526		$ 36,856		$ 155,443
Liabilities and Shareholders' Equity
	Deposits
		Noninterest-bearing demand		$ 645,256		$ 655,459		$ 663,396		$ 717,754		$ (10,203)		$ (72,498)
		Interest bearing			791,511		750,260		717,952		621,289		41,251		170,222
			Total deposits			1,436,767		1,405,719		1,381,348		1,339,043		31,048		97,724
		Other borrowings			20,000		20,000		20,000		-		-		20,000
		Subordinated debentures, net of issuance costs	21,863		21,845		21,828		21,792		18		71
		Interest payable and other liabilities		16,625		22,883		17,070		11,906		(6,258)		4,719
Total Liabilities				1,495,255		1,470,447		1,440,246		1,372,741		24,808		122,514
Shareholders' Equity
		Common stock			76,965		76,738		76,464		65,272		227		11,693
		Retained earnings			98,605		90,823		82,847		79,986		7,782		18,619
		Accumulated other comprehensive loss		(18,856)		(22,895)		(20,137)		(21,473)		4,039		2,617
			Total shareholders' equity		156,714		144,666		139,174		123,785		12,048		32,929
	Total Liabilities and Shareholders' Equity	$ 1,651,969		$ 1,615,113		$ 1,579,420		$ 1,496,526		$ 36,856		$ 155,443
SBA Paycheck Protection Program Loans		645		693		741		836		(48)		(191)

MISSION BANCORP
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands)
						Three Months Ended						Twelve Months Ended
							Variance			Variance
						December 31, 2023		September 30, 2023		December 31, 2022		12/23 - 09/23		12/23 - 12/22		December 31, 2023		December 31, 2022		12/23 - 12/22
Interest and Dividend Income
	Loans				$ 18,521		$ 18,273		$ 14,789		$ 248		$ 3,732		$ 69,950		$ 49,822		$ 20,128
	Investment securities		2,583		2,503		1,709		80		874		9,605		4,806		4,799
	Other				1,925		1,547		1,750		378		175		5,243		3,872		1,371
		Total interest and dividend income	23,029		22,323		18,248		706		4,781		84,798		58,500		26,298
Interest Expense
	Other deposits			4,241		3,615		888		626		3,353		12,474		2,093		10,381
	Time deposits			466		296		15		170		451		852		68		784
		Total interest expense on deposits	4,707		3,911		903		796		3,804		13,326		2,161		11,165
	Other borrowings			237		237		-		-		237		811		-		811
	Subordinated debentures		268		268		268		-		-		1,071		1,071		-
		Total interest expense		5,212		4,416		1,171		796		4,041		15,208		3,232		11,976
Net Interest Income			17,817		17,907		17,077		(90)		740		69,590		55,268		14,322
Provision for Credit Losses		(250)		(170)		(350)		(80)		100		(1,420)		(2,994)		1,574
Net Interest Income After Provision
	for Credit Losses			17,567		17,737		16,727		(170)		840		68,170		52,274		15,896
Non-Interest Income
	Gain (loss) on sale of premises and equipment	26		26		(14)		-		40		306		65		241
	Gain on sale of branch		-		-		-		-		-		-		1,623		(1,623)
	Service charges, fees and other income	1,200		1,016		1,066		184		134		4,155		4,726		(571)
	Farmer Mac referral and servicing fees	389		280		361		109		28		1,163		1,155		8
	SBA servicing fees and gain on sale of loans	146		115		207		31		(61)		528		444		84
	Loss on sale of securities		(417)		-		-		(417)		(417)		(737)		-		(737)
		Total non-interest income		1,344		1,437		1,620		(93)		(276)		5,415		8,013		(2,598)
Non-Interest Expense
	Salaries and benefits		4,498		4,608		4,476		(110)		22		18,719		16,220		2,499
	Professional services		1,319		1,296		1,255		23		64		4,887		3,518		1,369
	Occupancy and equipment		587		604		592		(17)		(5)		2,349		2,166		183
	Data processing and communication	431		366		406		65		25		1,510		1,480		30
	Other				1,151		1,043		907		108		244		4,162		3,283		879
		Total non-interest expense		7,986		7,917		7,636		69		350		31,627		26,667		4,960
Net Income Before Provision for Income Taxes	10,925		11,257		10,711		(332)		214		41,958		33,620		8,338
Provision for Income Taxes		3,143		3,281		3,127		138		(16)		11,489		9,367		2,122
Net Income			$ 7,782		$ 7,976		$ 7,584		$ (194)		$ 198		$ 30,469		$ 24,253		$ 6,216

MISSION BANCORP
FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in thousands, except per share data)
				As of or for the Three Months Ended		As of or for the Twelve Months Ended
				December 31, 2023		September 30, 2023		June 30, 2023		December 31, 2022		December 31, 2023		December 31, 2022
Ratio of total loans to total deposits	84.25 %		82.54 %		84.22 %		79.86 %		84.25 %		79.86 %
Return on average assets		1.89 %		1.97 %		1.99 %		1.95 %		1.93 %		1.58 %
Return on average equity		20.87 %		22.12 %		22.69 %		25.56 %		21.96 %		20.73 %
Net interest margin			4.58 %		4.67 %		4.68 %		4.64 %		4.67 %		3.80 %
Efficiency ratio			41.68 %		40.93 %		42.86 %		40.84 %		42.17 %		42.14 %
Non-interest expense as a percent of average assets	1.94 %		1.95 %		2.06 %		1.96 %		2.01 %		1.74 %
Non-interest income as a percent of average assets	0.33 %		0.35 %		0.37 %		0.42 %		0.34 %		0.52 %
Community Bank Leverage Ratio		11.33 %		11.05 %		10.97 %		10.09 %		11.33 %		10.09 %
Weighted average shares outstanding - basic*	2,475,946		2,476,278		2,465,034		2,426,557		2,463,657		2,421,552
Shares outstanding at period end - basic*	2,475,744		2,476,308		2,476,295		2,427,692		2,475,744		2,427,692
Earnings per share - basic		$ 3.14		$ 3.22		$ 3.12		$ 3.13		$ 12.37		$ 10.02
Total assets			$ 1,651,969		$ 1,615,113		$ 1,579,420		$ 1,496,526		$ 1,651,969		$ 1,496,526
Loans and leases net of deferred fees	$ 1,210,416		$ 1,160,351		$ 1,163,416		$ 1,069,384		$ 1,210,416		$ 1,069,384
Noninterest-bearing demand deposits	$ 645,256		$ 655,459		$ 663,396		$ 717,754		$ 645,256		$ 717,754
Total deposits			$ 1,436,767		$ 1,405,719		$ 1,381,348		$ 1,339,043		$ 1,436,767		$ 1,339,043
Noninterest-bearing deposits as a percentage total deposits	44.91 %		46.63 %		48.03 %		53.60 %		44.91 %		53.60 %
Average total assets			$ 1,633,606		$ 1,608,872		$ 1,545,957		$ 1,542,912		$ 1,575,266		$ 1,536,035
Average total equity			$ 147,914		$ 143,026		$ 135,776		$ 117,738		$ 138,739		$ 116,990
Shareholders' equity / total assets		9.49 %		8.96 %		8.81 %		8.27 %		9.49 %		8.27 %
Book value per share			$ 63.30		$ 58.42		$ 56.20		$ 50.99		$ 63.30		$ 50.99
*Outstanding shares adjusted for 5% dividend declared on April 27, 2023.

MISSION BANCORP
AVERAGE BALANCES AND RATES
(Unaudited)
(Dollars in thousands)
					For the Quarter Ended		For the Quarter Ended		For the Quarter Ended
					December 31, 2023				September 30, 2023				December 31, 2022
					Average	Income /	Yield /		Average	Income /	Yield /		Average	Income /	Yield /
					Balance	Expense	Rate		Balance	Expense	Rate		Balance	Expense	Rate
Assets
	Interest earning deposits in other banks		$ 124,623	$ 1,736	5.53 %		$ 106,227	$ 1,418	5.30 %		$ 179,399	$ 1,615	3.59 %
	Investment securities			234,766	2,583	4.37 %		247,655	2,503	4.01 %		228,009	1,709	2.97 %
	Loans				1,175,505	18,521	6.25 %		1,158,638	18,273	6.26 %		1,044,563	14,789	5.62 %
	Other earning assets			8,926	189	8.42 %		8,843	129	5.77 %		7,436	135	7.22 %
		Total Earning Assets		1,543,820	23,029	5.92 %		1,521,363	22,323	5.82 %		1,459,407	18,248	4.96 %
	Non-interest earning assets		89,786				87,509				83,505
		Total Assets			$ 1,633,606				$ 1,608,872				$ 1,542,912
Liabilities and Capital
	Interest-bearing deposits
		Interest-bearing transaction accounts		$ 682,671	$ 4,145	2.41 %		$ 670,458	$ 3,590	2.12 %		$ 562,617	$ 885	0.62 %
		Time deposits		57,985	466	3.19 %		44,157	296	2.66 %		21,833	15	0.27 %
		1031 Exchange deposits		37,324	96	1.02 %		27,650	25	0.36 %		58,831	3	0.02 %
			Total interest-bearing deposits		777,980	4,707	2.40 %		742,265	3,911	2.09 %		643,281	903	0.56 %
	Borrowed funds
		Other borrowings		20,000	237	4.70 %		20,000	237	4.70 %		-	-	0.00 %
		Subordinated debt		21,852	268	4.86 %		21,835	268	4.86 %		21,782	268	4.88 %
			Total interest-bearing liabilities		819,832	5,212	2.52 %		784,100	4,416	2.23 %		665,063	1,171	0.70 %
	Noninterest-bearing deposits		648,784				662,222				747,733
			Total Funding		1,468,616	5,212	1.41 %		1,446,322	4,416	1.21 %		1,412,796	1,171	0.33 %
	Other noninterest-bearing liabilities		17,076				19,524				12,378
		Total Liabilities		1,485,692				1,465,846				1,425,174
		Total Capital		147,914				143,026				117,738
			Total Liabilities and Capital		$ 1,633,606				$ 1,608,872				$ 1,542,912
	Net Interest Margin			4.58 %				4.67 %				4.64 %
	Net Interest Spread			4.51 %				4.61 %				4.63 %

MISSION BANCORP
AVERAGE BALANCES AND RATES
(Unaudited)
(Dollars in thousands)
					For the Twelve Months Ended		For the Twelve Months Ended
					December 31, 2023		December 31, 2022
					Average	Income /	Yield /		Average	Income /	Yield /
					Balance	Expense	Rate		Balance	Expense	Rate
Assets
	Interest earning deposits in other banks		$ 91,211	$ 4,697	5.15 %		$ 243,820	$ 3,488	1.43 %
	Investment securities			247,936	9,605	3.87 %		227,528	4,806	2.11 %
	Loans				1,141,641	69,950	6.13 %		978,202	49,822	5.09 %
	Other earning assets			8,442	546	6.46 %		7,071	384	5.43 %
		Total Earning Assets		1,489,230	84,798	5.69 %		1,456,621	58,500	4.02 %
	Non-interest earning assets		86,036				79,413
		Total Assets			$ 1,575,266				$ 1,536,034
Liabilities and Capital
	Interest-bearing deposits
		Interest-bearing transaction accounts		$ 641,231	$ 12,324	1.92 %		$ 544,057	$ 2,090	0.38 %
		Time deposits		38,216	852	2.23 %		22,426	68	0.30 %
		1031 Exchange deposits		32,049	150	0.47 %		75,261	3	0.00 %
			Total interest-bearing deposits		711,496	13,326	1.87 %		641,744	2,161	0.34 %
	Borrowed funds
		Other borrowings		16,855	811	4.81 %		-	-	0.00 %
		Subordinated debt		21,826	1,071	4.91 %		21,755	1,071	4.92 %
			Total interest-bearing liabilities		750,177	15,208	2.03 %		663,499	3,232	0.49 %
	Noninterest-bearing deposits		669,768				744,976
			Total Funding		1,419,945	15,208	1.07 %		1,408,475	3,232	0.23 %
	Other noninterest-bearing liabilities		16,582				10,569
		Total Liabilities		1,436,527				1,419,044
		Total Capital		138,739				116,990
			Total Liabilities and Capital		$ 1,575,266				$ 1,536,034
	Net Interest Margin			4.67 %				3.80 %
	Net Interest Spread			4.62 %				3.79 %

MISSION BANCORP
LOAN DETAIL
(Unaudited)
(Dollars in thousands)
			Variance
						December 31, 2023		September 30, 2023		June 30, 2023		December 31, 2022		12/23 - 09/23		12/23 - 12/22
Loans
	Construction and land development		$ 49,682		$ 41,970		$ 53,393		$ 61,621		$ 7,712		$ (11,939)
	Secured by farmland			142,778		139,630		138,581		118,085		3,148		24,693
	Residential 1 to 4 units			49,299		48,059		45,210		44,595		1,240		4,704
	Home equity lines of credit		-		-		-		53		-		(53)
	Multi-family				35,808		36,084		34,370		31,590		(276)		4,218
	Owner occupied commercial real estate	493,706		484,497		475,269		450,721		9,209		42,985
	Non-owner occupied commercial real estate	183,047		175,520		180,206		157,343		7,527		25,704
	Commercial and industrial			165,455		159,993		155,507		130,222		5,462		35,233
	Agricultural production			88,918		75,620		79,470		75,771		13,298		13,147
	Other loans				1,723		(1,022)		1,410		(617)		2,745		2,340
		Total Loans			$ 1,210,416		$ 1,160,351		$ 1,163,416		$ 1,069,384		$ 50,065		$ 141,032

MISSION BANCORP
Credit Quality
(Unaudited)
(Dollars in thousands)
						December 31, 2023		September 30, 2023		June 30, 2023		December 31, 2022
Asset quality
Loans past due 90 days or more and accruing interest		$ -		$ -		$ 104		$ -
Nonaccrual loans					$ 350		$ -		$ -		$ 58
Restructured loans
	Nonperforming restructured loans			$ -		$ -		$ -		$ 58
	Performing restructured loans			$ -		$ -		$ -		$ -
Other real estate owned				$ -		$ -		$ -		$ -
Total nonperforming assets				$ 350		$ -		$ -		$ 58
Allowance for credit losses to total loans			1.50 %		1.53 %		1.48 %		1.39 %
Allowance for credit losses to nonperforming loans		5201.71 %		N/A		N/A		25602 %
Nonaccrual loans to total loans				0.03 %		0.00 %		0.00 %		0.01 %
Nonperforming assets to total assets			0.02 %		0.00 %		0.00 %		0.00 %

SOURCE Mission Bank

MENAFN29012024003732001241ID1107783540