BayCom Completes Bond-Book Repositioning After a Loss

The Tip Desk · October 22, 2026 · 3 min read

Net interest margin reached 4.11% as the bank booked a $6.8 million loss on $106.8 million of securities sold.

BayCom Corp (BCML), the holding company for United Business Bank, sold $106.8 million of available-for-sale securities in the third quarter of 2026, taking a $6.8 million pre-tax loss, and reinvested $109.3 million at a weighted average yield of 5.01%, a 122 basis point lift on the redeployed balances.

The move was the quarter’s defining event. Noninterest income swung to a $5.8 million loss from $1.5 million of income in the second quarter, when the securities sale and a $589,000 loss on preferred-equity sales more than offset a $9.5 million drop in noninterest expense. Net income was $1.1 million, or $0.10 a share, versus a $7.0 million loss, or $(0.64) a share, in the second quarter.

Executive Vice Chairman William Black said the company also began restructuring its bank-owned life insurance portfolio and sold $7.8 million of preferred equity securities to cut earnings volatility. He said the securities and BOLI actions together are expected to recoup their costs within about three years, and that the package of actions reduced current-quarter earnings by about $0.50 a share.

The core franchise still expanded. Annualized net interest margin was 4.11%, up 16 basis points from 3.95% in the second quarter. Net interest income rose $1.8 million to $25.6 million. The average yield on interest-earning assets was 5.54%. The average rate paid on interest-bearing liabilities was 2.15%.

Average loans were $2.10 billion, up 3.7% from $2.02 billion a quarter earlier. Period-end loans were $2.15 billion. Interest income on loans, including fees, was $30.3 million. The company said the increase reflected a $77.2 million rise in the average loan balance and a 12 basis point lift in the average loan yield from new originations at higher rates. Premium amortization on acquired loans fell to $67,000 from $380,000, an eight-basis-point drag in the second quarter. President and Chief Executive Officer Christopher Baron said loan growth was led by residential, multifamily and commercial and industrial lending.

Total deposits increased $122.3 million, or 5.6%, to $2.3 billion. The average cost of deposits rose one basis point to 1.57%. Average interest-bearing deposit cost held at 2.12%. Average noninterest-bearing deposits were $577.7 million. Baron said the deposit franchise remained a strength despite competitive pressure and the Federal Reserve’s September rate increase.

The provision for credit losses was $843,000, down from $5.2 million in the second quarter, when the company cited loan growth, higher reserves on certain individually evaluated loans and $2.8 million of net charge-offs. Net charge-offs in the third quarter were $13,000, or 0.01% of average loans. Nonaccrual loans were $10.5 million, including a $3.3 million commercial real estate loan. Classified assets declined $3.9 million, or 11.1%, to $31.7 million. The allowance for credit losses on loans was 1.10% of loans.

Noninterest expense fell $9.5 million, or 35.0%, to $17.7 million from $27.2 million, as the second quarter had included $10.5 million of severance, accelerated equity-award vesting and employee-benefit costs tied to the departures of three senior executives. Third-quarter salaries included $192,000 of severance for staffing realignment.

Capital ratios remained above well-capitalized thresholds: Total Capital 14.52%, Common Equity Tier 1 13.39% and Tangible Common Equity 11.17% at September 30, 2026. After-tax unrealized losses on AFS securities in AOCI were $6.3 million. Black said the company is now focused on growing core customer relationships while looking at opportunities to improve legacy cost structures.