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REGULATORY MATTERS
 3 Months Ended
Mar. 31, 2025
Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract]  
REGULATORY MATTERS REGULATORY MATTERS
The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Prior to the merger with CALB during the third quarter of 2024, the Company qualified for treatment under the Small Bank Holding Company Policy Statement (Regulation Y, Appendix C) and, therefore, was not subject to consolidated capital rules at the bank holding company level. Beginning in the third quarter of 2024, the Company became subject to the consolidated capital rules at the bank holding company level.
Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and Bank must meet specific capital guidelines that involve quantitative measures of their respective assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. These capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. The Company and Bank also elected to exclude the effects of credit loss accounting under CECL from common equity Tier 1 capital ratio for a three-year transitional period.
A bank holding company and bank considered to be “adequately capitalized” is required to maintain a minimum total capital ratio of 8.0%, a minimum Tier 1 capital ratio of 6.0%, a minimum common equity Tier 1 capital ratio of 4.5%, and a minimum leverage ratio of 4.0%. A holding company and bank considered to be “well capitalized” must maintain a minimum total capital ratio of 10.0%, a minimum Tier 1 capital ratio of 8.0%, a minimum common equity Tier 1 capital ratio of 6.5%, and a minimum leverage ratio of 5.0%. As of March 31, 2025 and December 31, 2024, the Company and the Bank exceeded the minimums necessary to qualify as “well capitalized” under the regulatory framework for prompt corrective action (“PCA”). Management believes, as of March 31, 2025 and December 31, 2024, that the Company and the Bank met all capital adequacy requirements to which we are subject.
Basel III, the comprehensive regulatory capital rules for U.S. banking organizations, requires all banking organizations to maintain a capital conservation buffer above the minimum risk-based capital requirements in order to avoid certain limitations on capital distributions, stock repurchases and discretionary bonus payments to executive officers. The capital conservation buffer is exclusively comprised of common equity Tier 1 capital, and it applies to each of the three risk-based capital ratios but not to the leverage ratio. Effective January 1, 2019, the capital conservation buffer increased by 0.625% to its fully phased-in 2.5%, such that the common equity Tier 1, Tier 1 and total capital ratio minimums inclusive of the capital conservation buffers were 7.0%, 8.5%, and 10.5%, respectively, at March 31, 2025. At March 31, 2025, the Company and the Bank were in compliance with the capital conservation buffer requirements. To be categorized as well capitalized, the Company and the Bank must maintain minimum ratios as set forth in the table below.
The following table also sets forth the Company’s actual capital amounts and ratios:
Amount of Capital Required
To beTo be Well-
AdequatelyCapitalized under
ActualCapitalizedPCA Provisions
(dollars in thousands)AmountRatioAmountRatioAmountRatio
As of March 31, 2025:
California BanCorp:
Total Capital (to Risk-Weighted Assets)$514,076 14.53 %$283,126 8.0 %N/AN/A
Tier 1 Capital (to Risk-Weighted Assets)403,726 11.41 %212,345 6.0 %N/AN/A
CET1 Capital (to Risk-Weighted Assets)403,726 11.41 %159,258 4.5 %N/AN/A
Tier 1 Capital (to Average Assets)403,726 10.44 %154,745 4.0 %N/AN/A
California Bank of Commerce, N.A.:
Total Capital (to Risk-Weighted Assets)$510,028 14.42 %$282,949 8.0 %$353,686 10.0 %
Tier 1 Capital (to Risk-Weighted Assets)469,986 13.29 %212,212 6.0 %282,949 8.0 %
CET1 Capital (to Risk-Weighted Assets)469,986 13.29 %159,159 4.5 %229,896 6.5 %
Tier 1 Capital (to Average Assets)469,986 12.15 %154,698 4.0 %193,372 5.0 %
As of December 31, 2024:
California BanCorp:
Total Capital (to Risk-Weighted Assets)$496,912 13.67 %$290,897 8.0 %N/AN/A
Tier 1 Capital (to Risk-Weighted Assets)$385,354 10.60 %$218,173 6.0 %N/AN/A
CET1 Capital (to Risk-Weighted Assets)$385,354 10.60 %$163,630 4.5 %N/AN/A
Tier 1 Capital (to Average Assets)$385,354 9.53 %$161,710 4.0 %N/AN/A
California Bank of Commerce, N.A.:
Total Capital (to Risk-Weighted Assets)$492,433 13.55 %$290,753 8.0 %$363,441 10.0 %
Tier 1 Capital (to Risk-Weighted Assets)450,600 12.40 %218,065 6.0 %290,753 8.0 %
CET1 Capital (to Risk-Weighted Assets)450,600 12.40 %163,548 4.5 %236,237 6.5 %
Tier 1 Capital (to Average Assets)450,600 11.15 %161,689 4.0 %202,111 5.0 %

The primary source of funds for the Company is dividends from the Bank. Under federal law, the Bank may not declare a dividend in excess of its undivided profits and, absent the approval of the OCC, the Bank’s primary banking regulator, if the total amount of dividends declared by the Bank in any calendar year exceeds the total of the Bank’s retained net income of that current period, year to date, combined with its retained net income for the preceding two years. The Bank is also prohibited from declaring or paying any dividend if, after making
the dividend, the Bank would be considered “undercapitalized” (as defined by reference to other OCC regulations). Federal bank regulatory agencies have authority to prohibit banking institutions from paying dividends if those agencies determine that, based on the financial condition of the bank, such payment will constitute an unsafe or unsound practice.
The Federal Reserve limits the amount of dividends that bank holding companies may pay on common stock to income available over the past year, and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition. It is also the Federal Reserve’s policy that bank holding companies should not maintain dividend levels that undermine their ability to be a source of strength to its banking subsidiaries. Additionally, in consideration of the current financial and economic environment, the Federal Reserve has indicated that bank holding companies should carefully review their dividend policies.