NCAL BANCORP

2014 ANNUAL REPORT

To Our Shareholders, Clients and Friends,

NCAL Bancorp (the “Company”) and its subsidiary, National Bank of California, ended 2014 on a high note, as we completed the successful recapitalization of the Company. Concurrently, as previously announced, Mr. Alex Meruelo and the current directors and officers of NCAL Bancorp purchased and retired all outstanding shares of the Company’s fixed-rate cumulative perpetual preferred stock from the U.S. Department of the Treasury. Also in December, Alex Meruelo, Luis Armona, Xavier Gutierrez, and Ash Patel joined the Company’s board, with Mr. Patel elected Board Chairman.

We are pleased to have the financial and leadership support of Mr. Meruelo and his team. This im-portant achievement provides a solid capital base for new growth while helping us meet our regulato-ry commitments. This would not have happened without the tireless efforts of our founding Board of Directors and the management team. Since 1982, our dedicated directors have diligently served to set policy and provide direction, while maintaining active roles in the communities we serve. We wish to acknowledge and give special thanks to Daniel Dworsky, Jerald Friedman, Mark Lainer, and Stanley Treitel for their commitment and service over the years. While we will miss these dedicated individu-als and their contributions, a legacy of our founding remains on the Board, as Joe Kornwasser, Alfred Landolph, and Henry Homsher will continue their stewardship to revitalize and enrich the organiza-tion’s future success.

Thus begins a new chapter in the life of a great bank. While there is still much work ahead of us, some of the most capable people in banking are serving on the NCAL team. In 2014, net loans rose 3.5%, an increase of over $8 million from the $231,623,200 posted in 2013. Similarly, our core non-interest bearing deposits grew over $4.2 million this past year, and represent a healthy 61.2% of total depos-its. While we have not yet achieved the level of performance we seek, we are gaining momentum and improving results. As we move forward, we will continue to build on this solid foundation by increasing our portfolio of business and professional clients. We believe our experience and expertise in both traditional and electronic banking can be expanded upon to generate new sources of income for the bank and new benefits for our customers.

Looking ahead, we plan to give National Bank of California a new, fresh look including a new logo design, updated marketing materials, and a totally redesigned website. We want our clients and pro-spective clients to enjoy easy access to the information they need. There is much to do, but one primary objective will remain unchanged: our reputation for service excellence. You will continue to receive first-rate, personalized service from our friendly and experienced staff.

To our shareholders, our loyal customers, our dedicated board of directors, and our hardworking staff we sincerely say ----Thank you!

Ash Patel Henry P. HomsherChairman of the Board President/CEO

NCAL BANCORP AND SUBSIDIARY 

Consolidated Statements of Financial Condition December 31, 2014 and 2013     

The accompanying notes are an integral part of these consolidated financial statements.  2 

2014  2013 ASSETS Cash and cash equivalents   Cash and due from banks  $  75,823,600  $  72,750,200   Federal funds sold    3,790,000    9,035,000 

    Total cash and cash equivalents    79,613,600    81,785,200  Interest‐bearing deposits in other financial institutions    5,480,000    4,828,000 Securities available for sale    8,543,600    9,155,800 Stock investments, restricted    2,695,800    2,814,100 Loans, net    239,677,300    231,623,200 Premises and equipment, net    838,600    1,164,200 Foreclosed assets    ‐‐    627,800 Bank‐owned life insurance    6,730,600    6,562,300 Other assets    4,223,200    4,381,200 

    Total assets  $  347,802,700  $  342,941,800  LIABILITIES   Deposits:     Noninterest‐bearing demand  $  193,130,400  $  188,876,400     Interest‐bearing demand    30,420,000    19,462,600     Money market and savings    82,668,300    99,105,500     Time    8,976,500    10,541,400 

    Total deposits    315,195,200    317,985,900  Subordinated debt    10,310,000    10,310,000 Other liabilities    3,391,000    5,461,400 

    Total Liabilities    328,896,200    333,757,300  Commitments and contingencies (Notes 14 and 21)  STOCKHOLDERS’ EQUITY   Fixed rate cumulative preferred stock (authorized 10,500 shares),    Series A, $1,000 liquidation preference, issued and outstanding       zero shares at December 31, 2014 and 10,000 shares at       December 31, 2013, 9% dividend after December 18, 2013       (5% dividend prior to December 18, 2013)     ‐‐    10,000,000     Series B, $1,000 liquidation preference, issued and outstanding       zero shares at December 31, 2014 and        500 shares at December 31, 2013, 9% dividend    ‐‐    500,000   Common stock, no par value; authorized 200,000,000 shares;     Issued and outstanding 29,424,714 and 2,405,245 shares at      December 31, 2014 and 2013, respectively    28,527,000    7,132,400   Accumulated deficit    (9,643,500)    (8,392,700)   Accumulated other comprehensive income (loss)    23,000    (55,200) 

      Total stockholders’ equity    18,906,500    9,184,500 

      Total liabilities and stockholders’ equity  $  347,802,700  $  342,941,800 

 

NCAL BANCORP AND SUBSIDIARY 

Consolidated Statements of Operations Years Ended December 31, 2014 and 2013     

The accompanying notes are an integral part of these consolidated financial statements.  3 

2014  2013 INTEREST INCOME   Interest and fees on loans  $  11,204,300  $  12,716,000   Interest on certificate of deposit    33,700    27,100   Interest on due from banks    255,700    225,500   Dividends on stock investments    187,200    148,200   Interest on securities available for sale    104,300    70,700   Earnings on cash surrender value of bank‐owned life insurance    168,300    175,900   Interest on federal funds sold    9,100    30,500 

  Total interest income    11,962,600    13,393,900 

INTEREST EXPENSE   Interest on deposits and other borrowings    825,000    758,800 

  Total interest expense    825,000    758,800 

  Net interest income    11,137,600    12,635,100 

Provision for loan losses     ‐‐    183,000 

  Net interest income after provision for loan losses    11,137,600    12,452,100 

NONINTEREST INCOME   Loan administration fees    219,700    124,600   Other service charges and fees    1,089,500    1,205,800   Gain on sale of guaranteed portion of loans    322,900    487,900   Gain (loss) on sale of securities available for sale, net    ‐‐    8,800   Gain on sale of foreclosed assets    163,900    93,700   Gain on sale of branch facilities    ‐‐    179,500  Other    695,700    921,200 

  Total noninterest income    2,491,700    3,021,500 

NONINTEREST EXPENSES   Salaries and employee benefits    7,506,700    7,664,900   Occupancy    2,008,800    2,002,000   Depreciation and amortization expense    457,400    523,600   Professional service expense    3,329,700    3,513,600   Data processing    701,500    657,200   Business promotion and advertising    213,700    182,700   Auto and transportation    99,100    106,000   Foreclosed assets, net    (26,100)    20,400   Other operating expenses    2,131,200    2,786,700 

  Total noninterest expenses    16,422,000    17,457,100 

  Loss before income tax expense    (2,792,700)    (1,983,500) 

Income tax expense    1,600    1,600 

  Net loss     (2,794,300)    (1,985,100)   Preferred stock dividends    (1,024,800)    (729,100)   Cancelation of accrued preferred stock dividends    2,568,300    ‐‐ 

  Net loss attributable to common stockholders  $  (1,250,800)  $  (2,714,200) 

Net loss per share ‐ basic  $  (0.69)  $  (0.83) Net loss per share ‐ diluted  $  (0.69)  $  (0.83)  

NCAL BANCORP AND SUBSIDIARY 

Consolidated Statements of Comprehensive Loss Years Ended December 31, 2014 and 2013     

The accompanying notes are an integral part of these consolidated financial statements.  4 

2014  2013  Net loss  $  (2,794,300)  $  (1,985,100)  Other comprehensive income (loss)  Reclassification adjustment for loss (gains) realized in income:   Gain on sale of securities available for sale, net    ‐‐    (8,800) Unrealized holding gains (loss) on securities    78,200    (93,800) Tax effects    ‐‐    ‐‐            78,200    (102,600)        Total comprehensive loss  $  (2,716,100)  $  (2,087,700)   

NCAL BANCORP AND SUBSIDIARY 

Consolidated Statements of Stockholders’ Equity Years Ended December 31, 2014 and 2013     

The accompanying notes are an integral part of these consolidated financial statements.  5 

  Accumulated   Other   Comprehensive     Preferred Stock      Common Stock    Accumulated  Income   Shares  Amount  Shares  Amount  Deficit  (Loss)  Total  Balance, December 31, 2012    10,500  $  10,395,200    2,405,245  $  7,118,800  $  (5,678,600)  $  47,400  $  11,882,800 

Dividends on preferred stock, Series A and B  ‐‐    ‐‐  ‐‐  ‐‐  (624,200)  ‐‐  (624,200) 

Accretion of discount on preferred stock,  Series A and B  ‐‐    104,800  ‐‐  ‐‐  (104,800)  ‐‐  ‐‐ 

Comprehensive loss: Change in unrealized gain on securities available for sale, net of tax effect  ‐‐    ‐‐  ‐‐  ‐‐  ‐‐  (102,600)  (102,600) 

Net loss  ‐‐    ‐‐  ‐‐  ‐‐  (1,985,100)  ‐‐  (1,985,100) 

Stock‐based compensation    ‐‐    ‐‐    ‐‐    13,600    ‐‐    ‐‐    13,600 

Balance, December 31, 2013  10,500    10,500,000  2,405,245  7,132,400  (8,392,700)  (55,200)  9,184,500 

Dividends on preferred stock, Series A and B  ‐‐    ‐‐  ‐‐  ‐‐  (1,024,800)  ‐‐  (1,024,800) 

Issuance of common stock (Note 19)  ‐‐    ‐‐  19,890,322  10,881,000  ‐‐  ‐‐  10,881,000 

Exchange of preferred stock for  common stock (Note 19)  (10,500)    (10,500,000)  7,129,147  10,500,000  ‐‐  ‐‐  ‐‐ 

Cancelation of accrued dividends (Note 19)  ‐‐    ‐‐  ‐‐  ‐‐  2,568,300  ‐‐  2,568,300 

Comprehensive loss: Change in unrealized gain on securities available for sale, net of tax effect  ‐‐    ‐‐  ‐‐  ‐‐  ‐‐  78,200  78,200 

Net loss  ‐‐    ‐‐  ‐‐  ‐‐  (2,794,300)  ‐‐  (2,794,300) 

Stock‐based compensation    ‐‐    ‐‐    ‐‐    13,600    ‐‐    ‐‐    13,600 

Balance, December 31, 2014    ‐‐  $  ‐‐  29,424,714  $  28,527,000  $  (9,643,500)  $  23,000  $  18,906,500  

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Real Estate Loan Department

William F. Bowman Senior Vice President

Cathy Caruso Assistant Vice President

Angelina ShekAssistant Vice President,Senior Commercial Loan Underwriter

Small Business Administration Loan Department

Lou MalesciSenior Vice President, SBA Manager

Yolanda Del AguilaVice President

Market Makers

Burford Capital(800) 765-5558

Raymond James Financial(800) 248-8863

Wedbush Morgan Securities(800) 421-0251

Western Financial (619) 544-0260

Stock Registrar and Transfer Agent

Computershare(201) 680-2504

www.nbcal.com

Bank Administration

Lynn Jarmon Senior Vice President,Director of Operations

Mary Grace KaronisVice President,BSA/Compliance Officer

Randa D. Saleh Vice President, Controller

Catherine V. TominagaAssistant Vice President

Business Development

Richard E. Lawrence Executive Vice President

Kathy L. IrbyVice President

Credit Card Settlement

Vince K. LombardoVice President

Lerna CanikAssistant Vice President

Electronic Payment Department

Houri WartanianSenior Vice President, Cash Management

Nathan AstleAssistant Vice President

Information Technology

David Ward IT Systems Administrator

Note Department

Darr Russell-Smith Assistant Vice President

Donna L. Smith Assistant Vice President

Los Angeles Regional Office

145 S. Fairfax AvenueSuite 101Los Angeles, CA 90036 (323) 655-6001

David Weiss Regional Vice PresidentBayani L. ManansalaVice President

Becky CaceresVice President, Branch Administration

Nichole MontesAssistant Vice President

Kay SuzukiAssistant Vice President

Orange County Regional Office

575 Anton Blvd.Suite 140Costa Mesa, CA 92626(714) 437-7500

Patricia A. McAdamsRegional Vice President

Sherry D. GreerVice President

Cheryl A. VargasVice President, Operations Officer

San Fernando Valley Regional Office

14724 Ventura Blvd.Suite 100 Sherman Oaks, CA 91403(818) 386-9234

Randle T. SpearsSenior Vice President

Gabriela OrozcoVice President, Operations Officer

Directors

Ash PatelChairman of the Board

Henry P. HomsherPresident & Chief Executive Officer

Luis Armona

Xavier Gutierrez

Joseph K. Kornwasser

Alfred E. Landolph

Alex Meruelo

Executive OfficersAdministration

12121 Wilshire Blvd. 14th floorLos Angeles, CA 90025(310) 882-4800

Henry P. HomsherPresident & Chief Executive Officer

Peter Koos Executive Vice President & Chief Operation Officer

Jonathan E. Matalon Executive Vice President &Chief Financial Officer

Headquarters Office Brentwood

12121 Wilshire Blvd. Suite 101Los Angeles, CA 90025(310) 882-4800

Ricardo M. MateusRegional Vice President

Jennifer L. IrizarryVice President

Chanthan PomAssistant Vice President

National Bank of California

Board Members and Senior Management

National Bank of California Annual Report 2014