BayCom Corp

What they do

BayCom Corp operates through its wholly owned subsidiary, United Business Bank, which provides commercial banking services to businesses, business owners, and consumers. The bank has 34 full-service branches: 16 in California, 11 in Colorado, 5 in New Mexico, 1 in Nevada, and 1 in Washington. As of December 31, 2025, the company had $2.6 billion in assets, $2.0 billion in loans (net of allowances), $2.2 billion in deposits, and $338.6 million in shareholders' equity. The loan portfolio is primarily originated, with acquired loans at 10.9% of total loans.

Revenue drivers

• Net interest income — The primary source of profitability is net interest income after provision for credit losses, derived from the difference between interest earned on earning assets and interest paid on interest-bearing liabilities.
• Labor union deposits — Deposits from labor unions are a significant funding source, representing 26.7% of total deposits ($590.9 million) at December 31, 2025, with 785 local unions and an average balance of approximately $753,000 each.
• Commercial loans — The loan portfolio, totaling $2.0 billion net at fiscal year-end 2025, includes commercial real estate and commercial loans, which generate interest income; originations made up 89.1% of the portfolio.

Recent performance

For the second quarter of 2026, BayCom reported a net loss of $7.0 million, or $(0.64) per diluted share, compared to net income of $8.2 million in the prior quarter and $6.4 million in the year-ago quarter. The loss included $10.5 million of severance and related employee benefit costs from executive departures, a $5.2 million provision for credit losses, and $2.8 million of net charge-offs. Total loans increased 3.2% in the quarter, and the average cost of deposits fell to 1.56%, down 7 basis points. Nonperforming loans decreased by $6.9 million to $9.8 million (0.47% of total loans). Annual net income has ranged from $20.7 million in 2021 to $23.9 million in 2025, with diluted EPS of $2.18 in 2025.

Strategy

Management's stated objective is to enhance shareholder value through strategic acquisitions and organic growth, expanding the commercial banking franchise. Since 2010, the company has completed ten acquisitions, diversifying loan portfolios and expanding into new markets. In 2026, under new executive leadership, the company is focusing on capturing new business opportunities, exiting loan relationships that do not fit its go-forward model, and positioning the balance sheet for future growth. The strategy emphasizes leveraging low-cost core deposits in community markets to fund commercial loan growth while maintaining relationship-based service.

Risks

• Deposit concentration and withdrawal risk — Large depositors, including labor unions, account for a significant portion of deposits; 20 labor unions held 17.4% of total deposits, and any coordinated withdrawal could force reliance on more expensive funding.
• Executive transition costs — The second quarter of 2026 included $10.5 million in severance and benefit costs from the departure of three senior executives, highlighting key-person dependencies and the potential for future disruptions.
• Credit risk in the loan portfolio — The bank recorded a $5.2 million provision for credit losses in Q2 2026 due to loan growth, increased reserves on individually evaluated loans, and $2.8 million of net charge-offs, indicating potential asset quality deterioration.
• Interest rate and deposit cost sensitivity — Labor union deposits are primarily demand or short-term deposits, which may be sensitive to interest rate changes; rising rates could increase interest expense or lead to deposit outflows, pressuring net interest margin.

Outlook

Management stated that the underlying business is strong, with healthy deposit and loan pipelines positioning the company for the quarters ahead. The company lowered its cost of deposits and continues to see loan growth opportunities, particularly at the end of Q2 2026. Capital ratios remain above regulatory thresholds for well-capitalized banks, including a Total Capital ratio of 14.87% and a Common Equity Tier 1 ratio of 13.76%. The company declared a cash dividend of $0.30 per share paid in July 2026.