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Press Release

Banc of California Reports Second Quarter 2017 Earnings

Company Release - 7/26/2017 6:00 AM ET

SANTA ANA, Calif., July 26, 2017 /PRNewswire/ -- Banc of California, Inc. (NYSE: BANC) today reported net income of $12.3 million, and net income available to common stockholders of $7.1 million, for the second quarter of 2017, resulting in diluted earnings per common share of $0.14 for the quarter.  Net income from continuing operations for the quarter was $15.1 million, resulting in diluted earnings per common share from continuing operations of $0.20.

Highlights for the second quarter included:

  • Significantly re-positioned and de-risked the balance sheet during the quarter, through the reduction of brokered deposits by $576 million, the reclassification of all HTM securities to AFS, and the sales of securities including $294 million of longer duration agency MBS, $120 million of private label non-agency MBS, and $17 million of corporate bank debt.
  • Signed an agreement to sell the remaining seasoned SFR mortgage loan pools which is expected to close in the third quarter, and thus moved those loan balances, totaling $146 million, to held for sale during the second quarter.
  • Increased commercial loan balances by $53 million, or 1%, from the prior quarter, and by $497 million, or 14%, from a year ago. Commercial loans now represent 68% of total loans held for investment, up from 57% a year ago.
  • Held for investment loan balances decreased by $149 million, or 2%, during the quarter to $6.0 billion. The Company sold $156 million of loans from held for investment during the quarter and moved $146 million of seasoned SFR mortgage loans to held for sale, as noted above. Excluding these sales and transfers, held for investment loan balances increased by $153 million, or 3%, from the prior quarter.
  • Completed numerous expense initiatives during the second quarter which reduced quarterly, recurring, run-rate expenses to less than $60 million for the quarter, excluding the expense related to loss on investments in alternative energy partnerships.
  • Asset quality remained strong as nonperforming assets to total assets declined to just 0.12%.
  • Common equity tier 1 capital ratio improved from the prior quarter to 9.8%.

The Company's consolidated assets totaled $10.4 billion at June 30, 2017, down 6% compared to the prior quarter and up 2% compared to the prior year.

"During the second quarter, we completed numerous actions designed to re-position and de-risk the balance sheet and to continue orienting the Company toward an increased focus on core, commercial banking activities," said Doug Bowers, President and Chief Executive Officer of Banc of California.  "These actions included both the select sales of securities and the reclassification of all held-to-maturity securities to available for sale.  In addition, we reduced brokered deposits, and continued to focus on lowering the overall expense base and improving efficiencies across the organization.  The second quarter did include non-recurring expense items related to severance, legal and professional fees, and termination costs associated with certain facilities and the company car program.  All the while, a strong credit culture continues to endure, and coupled with improved governance both remain core parts of the foundation of Banc of California.  We are in the early days of the transformation of what Banc of California aims to become, and there is certainly more work to do.  I have been very pleased with the quality of our people across the Company.  I believe we have a substantial opportunity in front of us to serve our clients well across our markets and to deliver value for our shareholders.  What attracted me initially to Banc of California holds truer than ever as our brand, our markets, and our size, coupled with our strong credit culture provides us with every opportunity to build a thriving commercial bank."

The Company will host a conference call to discuss its second quarter financial results at 7:00 a.m. Pacific Time (PT) on Wednesday, July 26, 2017. Interested parties are welcome to attend the conference call by dialing 888-317-6003, and referencing event code 3749697. A live audio webcast will also be available and the webcast link will be posted on the Company's Investor Relations website at www.bancofcal.com/investor. The slide presentation for the call will also be available on the Company's Investor Relations website prior to the call.

About Banc of California, Inc.

Banc of California, Inc. (NYSE: BANC) provides comprehensive banking services to California's diverse businesses, entrepreneurs and communities. Banc of California operates 34 offices in California. The Company was recently recognized by Forbes for the second straight year as one of the 100 Best Banks in America for 2017.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the "Safe-Harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are necessarily subject to risk and uncertainty and actual results could differ materially from those anticipated due to various factors, including those set forth from time to time in the documents filed or furnished by Banc of California, Inc. with the Securities and Exchange Commission. You should not place undue reliance on forward-looking statements and Banc of California, Inc. undertakes no obligation to update any such statements to reflect circumstances or events that occur after the date on which the forward-looking statement is made.

INVESTOR RELATIONS INQUIRIES:

MEDIA INQUIRIES:

Banc of California, Inc.

Abernathy MacGregor

Timothy Sedabres, (855) 361-2262

Ian Campbell / Joe Hixson / Kristin Cole, (213) 630-6550


idc@abmac.com / jrh@abmac.com / kec@abmac.com

 

Banc of California, Inc.

Consolidated Statements of Financial Condition

(Dollars in thousands)

(Unaudited)








June 30,

March 31, 

December 31,

September 30,

June 30,


2017

2017

2016

2016

2016

ASSETS






Cash and cash equivalents

$      511,190

$       409,281

$      439,510

$        372,603

$       271,732

Time deposits in financial institutions

1,000

1,000

1,000

1,500

1,500

Securities available-for-sale

2,915,103

2,434,541

2,381,488

1,941,588

1,302,785

Securities held-to-maturity

-

863,269

884,234

962,315

962,282

Loans held-for-sale

278,824

228,196

298,018

358,892

476,928

Loans and leases receivable

5,956,337

6,105,321

6,034,752

6,568,791

6,236,115

Allowance for loan and lease losses

(42,385)

(42,736)

(40,444)

(40,233)

(37,483)

Federal Home Loan Bank and other bank stock

63,438

63,238

67,842

69,190

81,115

Servicing rights, net

43,834

44,451

39,936

33,064

29,291

Other real estate owned, net

3,267

3,345

2,502

275

429

Premises and equipment, net

143,398

146,631

140,917

131,481

117,017

Investments in alternative energy partnerships, net

37,605

47,633

25,639

23,912

-

Goodwill

37,144

37,144

37,144

37,144

37,144

Other intangible assets, net

11,135

12,191

13,617

15,335

16,514

Deferred income tax, net

9,499

18,673

9,989

408

7,270

Income tax receivable

14,984

15,973

16,009

12,487

5,904

Bank owned life insurance investment

103,709

103,093

102,512

101,909

101,314

Other assets

113,534

128,036

92,694

79,386

75,115

Assets of discontinued operations

164,152

432,805

482,494

546,357

472,690

Total assets 

$ 10,365,768

$  11,052,085

$ 11,029,853

$   11,216,404

$  10,157,662







LIABILITIES AND STOCKHOLDERS' EQUITY






Deposits






Noninterest-bearing deposits

$   1,138,095

$    1,273,649

$   1,282,629

$     1,267,363

$    1,093,686

Interest-bearing deposits

6,906,816

7,324,044

7,859,521

7,810,956

6,835,270

Total deposits

8,044,911

8,597,693

9,142,150

9,078,319

7,928,956

Advances from Federal Home Loan Bank

870,000

1,080,000

490,000

770,000

930,000

Securities sold under repurchase agreements

53,242

26,320

-

-

-

Other borrowings

-

67,981

67,922

49,903

-

Notes payable, net

172,790

174,090

175,378

176,579

177,743

Reserve for loss on repurchased loans

8,028

8,118

7,974

11,369

10,438

Income taxes payable

-

618

92

908

-

Accrued expenses and other liabilities

193,276

81,208

131,618

132,089

146,537

Liabilities of discontinued operations

17,229

30,309

34,480

25,813

24,104

Total liabilities

9,359,476

10,066,337

10,049,614

10,244,980

9,217,778

Commitments and contingent liabilities






Preferred stock

269,071

269,071

269,071

269,071

269,071

Common stock

540

537

537

536

510

Common stock, class B non-voting non-convertible

4

3

2

2

2

Additional paid-in capital

616,251

614,983

614,226

611,069

608,303

Retained earnings

140,331

139,926

134,515

112,751

88,385

Treasury stock

(28,786)

(29,070)

(29,070)

(29,070)

(29,070)

Accumulated other comprehensive income/(loss), net

8,881

(9,702)

(9,042)

7,065

2,683

Total stockholders' equity

1,006,292

985,748

980,239

971,424

939,884

Total liabilities and stockholders' equity 

$ 10,365,768

$  11,052,085

$ 11,029,853

$   11,216,404

$  10,157,662

 

Banc of California, Inc.

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

(Unaudited)


Three Months Ended

Six Months Ended


June 30,

March 31,

December 31,

September 30,

June 30,

June 30,

June 30,


2017

2017

2016

2016

2016

2017

2016

Interest and dividend income








Loans, including fees

$        69,661

$         69,507

$        71,613

$          76,257

$         70,032

$       139,168

$       133,998

Securities

24,996

27,239

24,153

19,934

19,393

52,235

35,440

Other interest-earning assets

1,783

2,096

3,965

1,931

1,504

3,879

2,553

Total interest and dividend income

96,440

98,842

99,731

98,122

90,929

195,282

171,991

Interest expense








Deposits

14,942

13,960

12,504

11,224

8,385

28,902

16,492

Federal Home Loan Bank advances

2,774

1,423

1,076

1,413

1,966

4,197

3,228

Securities sold under repurchase agreements

180

6

221

48

389

186

549

Notes payable and other interest-bearing liabilities

3,044

2,972

2,998

2,589

2,863

6,016

7,157

Total interest expense

20,940

18,361

16,799

15,274

13,603

39,301

27,426

Net interest income

75,500

80,481

82,932

82,848

77,326

155,981

144,565

Provision for loan and lease losses

2,503

2,583

589

2,592

1,769

5,086

2,090

Net interest income after provision for loan and lease losses

72,997

77,898

82,343

80,256

75,557

150,895

142,475

Noninterest income








Customer service fees

1,669

1,623

1,560

1,566

1,173

3,292

2,021

Loan servicing (loss) income

132

2,756

4,699

74

(1,935)

2,888

(4,140)

Net gain (loss) on sale of securities available for sale

1,099

3,356

(695)

487

12,824

4,455

29,613

Net gain on sale of loans

983

4,019

20,490

11,063

2,147

5,002

4,342

Loan brokerage income

34

1,027

1,331

1,298

721

1,061

1,622

Gain on sale of subsidiary and business unit

-

-

2,629

-

3,694

-

3,694

All other income

1,790

2,122

2,490

7,542

4,279

3,912

6,944

Total noninterest income

5,707

14,903

32,504

22,030

22,903

20,610

44,096

Noninterest expense








Salaries and employee benefits

33,348

32,443

42,800

37,133

32,745

65,791

66,214

Occupancy and equipment

9,776

10,668

10,012

10,036

9,057

20,444

17,998

Professional fees

11,794

15,073

11,562

6,482

6,426

26,867

12,329

Data processing

2,246

2,179

2,357

2,112

2,156

4,425

3,842

Loss on investments in alternative energy partnerships

9,761

8,682

13,850

17,660

-

18,443

-

Amortization of intangible assets

1,056

1,090

1,028

1,179

1,322

2,146

2,644

Restructuring expense

82

5,287

-

-

-

5,369

-

All other expenses

8,256

14,474

11,286

11,521

13,347

22,730

21,170

Total noninterest expense

76,319

89,896

92,895

86,123

65,053

166,215

124,197

Income from continuing operations before income taxes

2,385

2,905

21,952

16,163

33,407

5,290

62,374

Income tax (benefit) expense

(12,753)

(6,471)

(2,543)

(9,016)

13,647

(19,224)

25,308

Income from continuing operations

15,138

9,376

24,495

25,179

19,760

24,514

37,066

Income (loss) from discontinued operations before income taxes

(4,991)

13,348

14,965

18,574

11,390

8,357

15,378

Income tax (benefit) expense

(2,110)

5,523

6,196

7,816

4,622

3,413

6,229

Income (loss) from discontinued operations

(2,881)

7,825

8,769

10,758

6,768

4,944

9,149

Net income

12,257

17,201

33,264

35,937

26,528

29,458

46,215

Preferred stock dividends

5,113

5,113

5,113

5,112

5,114

10,226

9,689

Net income available to common stockholders

$          7,144

$         12,088

$        28,151

$          30,825

$         21,414

$         19,232

$         36,526

Basic earnings per total common share








Income from continuing operations

$            0.20

$             0.08

$            0.37

$              0.38

$             0.30

$             0.27

$             0.60

Income (loss) from discontinued operations

(0.06)

0.15

0.18

0.22

0.14

0.10

0.21

Net income

$            0.14

$             0.23

$            0.55

$              0.60

$             0.44

$             0.37

$             0.81

Diluted earnings per total common share








Income from continuing operations

$            0.20

$             0.08

$            0.36

$              0.38

$             0.29

$             0.27

$             0.59

Income (loss) from discontinued operations

(0.06)

0.15

0.18

0.21

0.14

0.10

0.20

Net income

$            0.14

$             0.23

$            0.54

$              0.59

$             0.43

$             0.37

$             0.79

Weighted average number of shares outstanding








Basic

50,289,590

49,991,186

50,008,234

49,907,840

47,426,841

50,058,540

43,694,683

Diluted

50,942,324

50,754,145

50,702,110

50,996,469

48,554,434

50,736,098

44,614,049

Dividends declared per common share

$            0.13

$             0.13

$            0.13

$              0.12

$             0.12

$             0.26

$             0.24

 

Banc of California, Inc.

Reconciliation of Consolidated Statements of Operations between Continuing and Discontinued Operations

(Dollars in thousands, except per share data)

(Unaudited)


Three Months Ended June 30, 2017

Six Months Ended June 30, 2017


Continuing

Discontinued

Consolidated

Continuing

Discontinued

Consolidated


Operations

Operations

Operations

Operations

Operations

Operations

Interest and dividend income

$        96,440

$           2,796

$        99,236

$        195,282

$           6,062

$       201,344

Interest expense

20,940

-

20,940

39,301

-

39,301

Net interest income

75,500

2,796

78,296

155,981

6,062

162,043

Provision for loan and lease losses

2,503

-

2,503

5,086

-

5,086

Net interest income after provision for loan and lease losses

72,997

2,796

75,793

150,895

6,062

156,957

Noninterest income







Customer service fees

1,669

-

1,669

3,292

-

3,292

Loan servicing (loss) income

132

-

132

2,888

1,551

4,439

Net gain (loss) on sale of securities available for sale

1,099

-

1,099

4,455

-

4,455

Net gain on sale of loans

983

-

983

5,002

-

5,002

Mortgage banking income

-

13,636

13,636

-

43,070

43,070

Loan brokerage income

34

68

102

1,061

158

1,219

Gain on disposal of discontinued operations

-

236

236

-

13,538

13,538

All other income

1,790

170

1,960

3,912

594

4,506

Total noninterest income

5,707

14,110

19,817

20,610

58,911

79,521

Noninterest expense







Salaries and employee benefits

33,348

13,593

46,941

65,791

37,968

103,759

Occupancy and equipment

9,776

1,038

10,814

20,444

3,395

23,839

Professional fees

11,794

2,090

13,884

26,867

2,192

29,059

Data processing

2,246

63

2,309

4,425

527

4,952

Loss on investments in alternative energy partnerships

9,761

-

9,761

18,443

-

18,443

Amortization of intangible assets

1,056

-

1,056

2,146

-

2,146

Restructuring expense

82

297

379

5,369

3,515

8,884

All other expenses

8,256

4,816

13,072

22,730

9,019

31,749

Total noninterest expense

76,319

21,897

98,216

166,215

56,616

222,831

Income (loss) before income taxes

2,385

(4,991)

(2,606)

5,290

8,357

13,647

Income tax (benefit) expense

(12,753)

(2,110)

(14,863)

(19,224)

3,413

(15,811)

Net income

$        15,138

$         (2,881)

$        12,257

$          24,514

$           4,944

$         29,458

 

Banc of California, Inc.

Selected Financial Data

(Dollars in thousands)

(Unaudited)


Three Months Ended

Six Months Ended


June 30,

March 31,

December 31,

September 30,

June 30,

June 30,

June 30,


2017

2017

2016

2016

2016

2017

2016

Average balances of consolidated operations








Total assets

$ 10,697,003

$  11,188,806

$ 11,568,849

$   10,860,257

$  10,061,237

$  10,941,546

$    9,447,206

Total gross loans and leases

6,639,666

6,785,013

7,209,241

7,245,472

6,663,340

6,711,938

6,329,388

Investment Securities

3,004,551

3,376,698

3,236,253

2,776,304

2,696,524

3,189,596

2,412,703

Total interest earning assets

10,161,566

10,661,834

11,075,367

10,432,247

9,619,937

10,410,318

8,982,052

Total interest-bearing deposits

6,981,991

7,724,061

7,825,036

7,164,061

5,696,893

7,350,976

5,514,463

Total borrowings

1,265,279

1,058,607

1,190,060

1,297,382

2,067,234

1,162,515

1,688,472

Total interest bearing liabilities

8,247,270

8,782,668

9,015,096

8,461,443

7,764,127

8,513,491

7,202,935

Total stockholders' equity

1,014,267

1,001,784

995,908

968,684

898,164

1,008,060

830,544

Profitability and other ratios of consolidated operations








Return on average assets(1)

0.46%

0.62%

1.14%

1.32%

1.06%

0.54%

0.98%

Return on average equity (1)

4.85%

6.96%

13.29%

14.76%

11.88%

5.89%

11.19%

Return on average tangible common equity(2)

4.51%

7.76%

17.30%

19.51%

15.65%

6.11%

15.13%

Dividend payout ratio (3)

92.86%

56.52%

23.64%

20.00%

27.27%

70.27%

29.63%

Net interest spread

2.90%

3.03%

2.99%

3.18%

3.26%

2.97%

3.23%

Net interest margin(1)

3.09%

3.19%

3.13%

3.32%

3.39%

3.14%

3.39%

Noninterest income to total revenue (4)

20.20%

41.62%

47.79%

46.18%

44.74%

32.92%

43.70%

Noninterest income to average total assets(1)

0.74%

2.16%

2.74%

2.73%

2.62%

1.47%

2.50%

Noninterest expense to average total assets(1)

3.68%

4.52%

4.44%

4.55%

4.00%

4.11%

4.03%

Efficiency ratio(5)

100.10%

86.87%

77.51%

76.90%

68.24%

92.25%

70.32%

Adjusted efficiency ratio for including the pre-tax effect of investments in alternative energy partnerships (2) , (5)

80.51%

78.76%

66.87%

62.38%

68.24%

79.51%

70.32%

Average held for investment loans and leases to average deposits

73.54%

68.33%

69.11%

75.92%

82.88%

70.85%

81.36%

Average investment securities to average total assets

28.09%

30.18%

27.97%

25.56%

26.80%

29.15%

25.54%

Average stockholders' equity to average total assets

9.48%

8.95%

8.61%

8.92%

8.93%

9.21%

8.79%


(1) Ratios are presented on an annualized basis.

(2) The ratios are determined by methods other than in accordance with U.S. generally accepted accounting principles (GAAP). 

      See Non-GAAP measures section for reconciliation of the calculation.

(3) The ratio is calculated by dividing dividends declared per common share by basic earnings per share

(4) Total revenue is equal to the sum of net interest income before provision for loan and lease losses and noninterest income.

(5) The ratios are calculated by dividing noninterest expense by the sum of net interest income before provision for loan and lease losses and noninterest income.

 

Banc of California, Inc.

Selected Financial Data, Continued

(Dollars in thousands)

(Unaudited)


Three Months Ended

Six Months Ended


June 30,

March 31,

December 31,

September 30,

June 30,

June 30,

June 30,


2017

2017

2016

2016

2016

2017

2016

Allowance for loan and lease losses (ALLL)








Balance at beginning of period

$        42,736

$         40,444

$        40,233

$          37,483

$         35,845

$         40,444

$         35,533

Loans and leases charged off

(2,898)

(357)

(1,351)

(393)

(772)

(3,255)

(874)

Recoveries

44

66

973

551

641

110

734

Provision for loan and lease losses

2,503

2,583

589

2,592

1,769

5,086

2,090

Balance at end of period

$        42,385

$         42,736

$        40,444

$          40,233

$         37,483

$         42,385

$         37,483

Annualized net loan charge-offs to average total loans and leases held-for-investment

0.19%

0.02%

0.02%

-0.01%

0.01%

0.10%

0.01%

Reserve for loss on repurchased loans








Balance at beginning of period

$          8,118

$           7,974

$        11,369

$          10,438

$           9,781

7,974

$           9,700

Provision for loan repurchases

270

517

(1,881)

1,241

851

787

1,230

Utilization of reserve for loan repurchases

(360)

(373)

(1,514)

(310)

(194)

(733)

(492)

Balance at end of period

$          8,028

$           8,118

$          7,974

$          11,369

$         10,438

$           8,028

$         10,438










June 30,

March 31,

December 31,

September 30,

June 30,




2017

2017

2016

2016

2016



Asset quality information and ratios








Delinquent loans and leases held-for-investment








30 to 89 days delinquent, excluding purchased credit impaired (PCI) loans

$        23,305

$         22,596

$        30,140

$          39,054

$         50,494



90+ days delinquent, excluding PCI loans

6,508

9,802

14,218

22,827

28,675



Total delinquent loans, excluding PCI loans

29,813

32,398

44,358

61,881

79,169



PCI loans, 30 to 89 days delinquent

343

16,410

15,078

39,113

48,255



PCI loans, 90+ days delinquent

807

4,943

2,577

6,145

8,952



Total delinquent PCI loans

1,150

21,353

17,655

45,258

57,207



Total delinquent loans

$        30,963

$         53,751

$        62,013

$        107,139

$       136,376



Total delinquent non-PCI loans to total non-PCI loans

0.50%

0.54%

0.75%

1.04%

1.44%



Total delinquent loans and leases to total loans and leases

0.52%

0.88%

1.03%

1.63%

2.19%



Non-performing assets, excluding loans held-for-sale








Non-performing loans and leases, excluding PCI loans

$          9,064

$         16,222

$        14,942

$          35,223

$         45,012



90+ days delinquent and still accruing loans and leases, excluding PCI loans  

-

-

-

-

-



Other real estate owned

3,267

3,345

2,502

275

429



Non-performing assets

$        12,331

$         19,567

$        17,444

$          35,498

$         45,441



ALLL to non-performing loans and leases

467.62%

263.44%

270.67%

114.22%

83.27%



Non-performing loans and leases to total loans and leases

0.15%

0.27%

0.25%

0.54%

0.72%



Non-performing assets to total assets

0.12%

0.18%

0.16%

0.32%

0.45%



Troubled debt restructurings (TDRs)








Performing TDRs

$          4,579

$           4,309

$          4,827

$          11,160

$         14,450



Non-performing TDRs

1,125

1,144

-

520

2,864



Total TDRs

$          5,704

$           5,453

$          4,827

$          11,680

$         17,314



 

Banc of California, Inc.

Selected Financial Data, Continued

(Dollars in thousands)

(Unaudited)








June 30,

March 31,

December 31,

September 30,

June 30,


2017

2017

2016

2016

2016

Loan and lease breakdown by ALLL evaluation type






Originated loans and leases






Individually evaluated for impairment

$        10,844

$         12,518

$        10,168

$          22,306

$         25,661

Collectively evaluated for impairment

5,148,979

5,096,657

4,933,381

4,789,155

4,254,975

Acquired loans not impaired at acquisition






Individually evaluated for impairment

-

-

2,429

3,397

3,470

Collectively evaluated for impairment

792,213

834,983

924,993

958,135

1,022,696

Seasoned SFR mortgage loan pools - non-impaired






Individually evaluated for impairment

-

877

755

6,581

9,717

Collectively evaluated for impairment

-

20,587

21,200

146,850

168,352

Acquired with deteriorated credit quality

4,301

139,699

141,826

642,367

751,244

Total loans

$   5,956,337

$    6,105,321

$   6,034,752

$     6,568,791

$    6,236,115

ALLL breakdown






Originated loans and leases






Individually evaluated for impairment

$             424

$              130

$             137

$               137

$              215

Collectively evaluated for impairment

40,666

41,091

38,394

37,858

34,575

Acquired loans not impaired at acquisition






Individually evaluated for impairment

-

-

-

-

-

Collectively evaluated for impairment

1,271

1,234

1,703

1,606

1,458

Seasoned SFR mortgage loan pools - non-impaired






Individually evaluated for impairment

-

120

106

528

1,131

Collectively evaluated for impairment

-

-

-

-

-

Acquired with deteriorated credit quality

24

161

104

104

104

Total ALLL

$        42,385

$         42,736

$        40,444

$          40,233

$         37,483

Discount on Purchased/Acquired Loans






Acquired loans not impaired at acquisition

$        15,446

$         16,275

$        17,820

$          18,400

$         20,136

Seasoned SFR mortgage loan pools - non-impaired

-

1,219

1,280

9,789

11,304

Acquired with deteriorated credit quality

1,754

21,538

22,454

57,780

76,505

Total Discount

$        17,200

$         39,032

$        41,554

$          85,969

$       107,945

Ratios






To originated loans and leases:






Individually evaluated for impairment

3.91%

1.04%

1.35%

0.61%

0.84%

Collectively evaluated for impairment

0.79%

0.81%

0.78%

0.79%

0.81%

Total ALLL

0.80%

0.81%

0.78%

0.79%

0.81%

To originated loans and leases and acquired loans not impaired at acquisition:






Individually evaluated for impairment

3.91%

1.04%

1.09%

0.53%

0.74%

Collectively evaluated for impairment

0.71%

0.71%

0.68%

0.69%

0.68%

Total ALLL

0.71%

0.71%

0.69%

0.69%

0.68%

To total loans and leases:






Individually evaluated for impairment

3.91%

1.87%

1.82%

2.06%

3.46%

Collectively evaluated for impairment

0.71%

0.71%

0.68%

0.67%

0.66%

Total ALLL

0.71%

0.70%

0.67%

0.61%

0.60%

 

Banc of California, Inc.

Selected Financial Data, Continued

(Dollars in thousands)

(Unaudited)








June 30,

March 31,

December 31,

September 30,

June 30,


2017

2017

2016

2016

2016

Composition of held for investment loans and leases






Commercial real estate

$      716,771

$       750,592

$      729,959

$        721,838

$       725,107

Multi-family

1,545,888

1,449,715

1,365,262

1,199,207

1,147,597

Construction

156,246

142,164

125,100

99,086

86,852

Commercial and industrial

1,560,916

1,585,656

1,522,960

1,531,041

1,306,866

SBA

77,254

76,040

73,840

67,737

65,477

Lease financing

173

285

379

234,540

228,663

Total commercial loans

4,057,248

4,004,452

3,817,500

3,853,449

3,560,562

Single family residential mortgage

1,778,536

1,975,055

2,106,630

2,601,375

2,555,344

Other consumer

120,553

125,814

110,622

113,967

120,209

Total consumer loans

1,899,089

2,100,869

2,217,252

2,715,342

2,675,553

Total gross loans and leases

$   5,956,337

$    6,105,321

$   6,034,752

$     6,568,791

$    6,236,115

Composition percentage of held for investment loans and leases






Commercial real estate

12.0%

12.3%

12.1%

11.0%

11.6%

Multi-family

26.0%

23.7%

22.6%

18.3%

18.4%

Construction

2.6%

2.3%

2.1%

1.5%

1.4%

Commercial and industrial

26.2%

26.1%

25.2%

23.3%

21.0%

SBA

1.3%

1.2%

1.2%

1.0%

1.0%

Lease financing

0.0%

0.0%

0.1%

3.6%

3.7%

Total commercial loans

68.1%

65.6%

63.3%

58.7%

57.1%

Single family residential mortgage

29.9%

32.3%

34.9%

39.6%

41.0%

Other consumer

2.0%

2.1%

1.8%

1.7%

1.9%

Total consumer loans

31.9%

34.4%

36.7%

41.3%

42.9%

Total gross loans and leases

100.0%

100.0%

100.0%

100.0%

100.0%

Composition of deposits






Noninterest-bearing checking

$   1,138,095

$    1,273,649

$   1,282,629

$     1,267,363

$    1,093,686

Interest-bearing checking

2,058,130

1,998,778

2,048,839

2,369,332

2,053,656

Money market

2,265,380

2,610,376

2,731,314

2,900,248

2,343,561

Savings

985,001

1,008,218

1,118,175

880,712

909,242

Certificates of deposit

1,598,305

1,706,672

1,961,193

1,660,664

1,528,811

Total deposits

$   8,044,911

$    8,597,693

$   9,142,150

$     9,078,319

$    7,928,956

Composition percentage of deposits






Noninterest-bearing checking

14.1%

14.8%

14.0%

14.0%

13.8%

Interest-bearing checking

25.6%

23.2%

22.4%

26.1%

25.9%

Money market

28.2%

30.4%

29.9%

31.9%

29.5%

Savings

12.2%

11.7%

12.2%

9.7%

11.5%

Certificates of deposit

19.9%

19.9%

21.5%

18.3%

19.3%

Total deposits

100.0%

100.0%

100.0%

100.0%

100.0%

 

Banc of California, Inc.

Average Balance, Average Yield Earned, and Average Cost Paid 

(Dollars in thousands)

(Unaudited)












Three Months Ended


June 30, 2017

March 31, 2017

December 31, 2016


Average


Yield 

Average


Yield 

Average


Yield 


Balance

Interest

/ Cost

Balance

Interest

/ Cost

Balance

Interest

/ Cost

Interest earning assets










Loans held-for-sale of discontinued operations

$      361,784

$     2,796

3.10%

$      388,194

$     3,266

3.41%

$      519,495

$   4,126

3.16%

Other loans held-for-sale and SFR mortgage

2,046,409

20,086

3.94%

2,275,338

21,950

3.91%

2,236,354

21,451

3.82%

Seasoned SFR mortgage loan pools

151,759

2,121

5.61%

154,736

2,145

5.62%

570,006

6,281

4.38%

Commercial real estate, multi-family, and construction

2,394,487

25,821

4.33%

2,336,323

25,851

4.49%

2,146,067

23,405

4.34%

Commercial and industrial, SBA, and lease financing

1,565,583

20,233

5.18%

1,508,756

18,293

4.92%

1,628,177

19,228

4.70%

Other consumer

119,644

1,400

4.69%

121,666

1,268

4.23%

109,142

1,248

4.55%

Gross loans and leases

6,639,666

72,457

4.38%

6,785,013

72,773

4.35%

7,209,241

75,739

4.18%

Securities

3,004,551

24,996

3.34%

3,376,698

27,239

3.27%

3,236,253

24,153

2.97%

Other interest-earning assets

517,349

1,783

1.38%

500,123

2,096

1.70%

629,873

3,965

2.50%

Total interest-earning assets

10,161,566

99,236

3.92%

10,661,834

102,108

3.88%

11,075,367

103,857

3.73%

Allowance for loan and lease losses

(42,896)



(41,285)



(39,163)



BOLI and non-interest earning assets

578,333



568,257



532,645



Total assets

$ 10,697,003



$ 11,188,806



$ 11,568,849













Interest-bearing liabilities










Savings

$   1,002,797

$     2,262

0.90%

$   1,042,031

$     2,292

0.89%

$      941,404

$   1,917

0.81%

Interest-bearing checking

2,013,751

3,609

0.72%

2,008,828

3,414

0.69%

2,081,105

3,371

0.64%

Money market

2,359,173

5,482

0.93%

2,735,810

4,691

0.70%

2,830,271

3,909

0.55%

Certificates of deposit

1,606,270

3,589

0.90%

1,937,392

3,563

0.75%

1,972,256

3,307

0.67%

Total interest-bearing deposits

6,981,991

14,942

0.86%

7,724,061

13,960

0.73%

7,825,036

12,504

0.64%

FHLB advances

990,780

2,774

1.12%

812,444

1,423

0.71%

892,120

1,076

0.48%

Securities sold under repurchase agreements

34,298

180

2.11%

2,123

6

1.15%

59,761

221

1.47%

Long-term debt and other interest-bearing liabilities

240,201

3,044

5.08%

244,040

2,972

4.94%

238,179

2,998

5.01%

Total interest-bearing liabilities

8,247,270

20,940

1.02%

8,782,668

18,361

0.85%

9,015,096

16,799

0.74%

Noninterest-bearing deposits

1,261,338



1,181,279



1,286,642



Non-interest-bearing liabilities

174,128



223,075



271,203



Total liabilities

9,682,736



10,187,022



10,572,941



Total stockholders' equity

1,014,267



1,001,784



995,908



Total liabilities and stockholders' equity

$ 10,697,003



$ 11,188,806



$ 11,568,849













Net interest income/spread


$   78,296

2.90%


$   83,747

3.03%


$ 87,058

2.99%











Net interest margin



3.09%



3.19%



3.13%











Ratio of interest-earning assets to interest-bearing liabilities

123.21%



121.40%



122.85%













Total deposits

$   8,243,329

$   14,942

0.73%

$   8,905,340

$   13,960

0.64%

$   9,111,678

$ 12,504

0.55%

Total funding (1)

$   9,508,608

$   20,940

0.88%

$   9,963,947

$   18,361

0.75%

$ 10,301,738

$ 16,799

0.65%


(1) Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.

 

Banc of California, Inc.

Average Balance, Average Yield Earned, and Average Cost Paid, Continued

(Dollars in thousands)

(Unaudited)









Three Months Ended


September 30, 2016

June 30, 2016


Average


Yield 

Average


Yield 


Balance

Interest

/ Cost

Balance

Interest

/ Cost

Interest earning assets







Loans held-for-sale of discontinued operations

$      479,133

$     4,113

3.42%

$      402,784

$     3,711

3.71%

Other loans held-for-sale and SFR mortgage

2,139,746

20,252

3.77%

2,025,384

18,777

3.73%

Seasoned SFR mortgage loan pools

907,387

11,924

5.23%

878,068

12,404

5.68%

Commercial real estate, multi-family, and construction

2,033,718

23,097

4.52%

1,907,649

21,049

4.44%

Commercial and industrial, SBA, and lease financing

1,576,379

19,734

4.98%

1,343,961

16,642

4.98%

Other consumer

109,109

1,250

4.56%

105,494

1,160

4.42%

Gross loans and leases

7,245,472

80,370

4.41%

6,663,340

73,743

4.45%

Securities

2,776,304

19,934

2.86%

2,696,524

19,393

2.89%

Other interest-earning assets

410,471

1,931

1.87%

260,073

1,504

2.33%

Total interest-earning assets

10,432,247

102,235

3.90%

9,619,937

94,640

3.96%

Allowance for loan and lease losses

(38,258)



(37,637)



BOLI and non-interest earning assets

466,268



478,937



Total assets

$ 10,860,257



$ 10,061,237










Interest-bearing liabilities







Savings

$      887,973

$     1,704

0.76%

$      866,051

$     1,603

0.74%

Interest-bearing checking

2,300,128

3,972

0.69%

1,981,702

3,135

0.64%

Money market

2,427,356

3,226

0.53%

1,672,662

1,962

0.47%

Certificates of deposit

1,548,604

2,322

0.60%

1,176,478

1,685

0.58%

Total interest-bearing deposits

7,164,061

11,224

0.62%

5,696,893

8,385

0.59%

FHLB advances

1,104,663

1,413

0.51%

1,663,791

1,966

0.48%

Securities sold under repurchase agreements

12,539

48

1.52%

210,299

389

0.74%

Long-term debt and other interest-bearing liabilities

180,180

2,589

5.72%

193,144

2,863

5.96%

Total interest-bearing liabilities

8,461,443

15,274

0.72%

7,764,127

13,603

0.70%

Noninterest-bearing deposits

1,178,849



1,205,987



Non-interest-bearing liabilities

251,281



192,959



Total liabilities

9,891,573



9,163,073



Total stockholders' equity

968,684



898,164



Total liabilities and stockholders' equity

$ 10,860,257



$ 10,061,237










Net interest income/spread


$   86,961

3.18%


$   81,037

3.26%








Net interest margin



3.32%



3.39%








Ratio of interest-earning assets to interest-bearing liabilities

123.29%



123.90%










Total deposits

$   8,342,910

$   11,224

0.54%

$   6,902,880

$     8,385

0.49%

Total funding (1)

$   9,640,292

$   15,274

0.63%

$   8,970,114

$   13,603

0.61%


(1) Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.

 

Banc of California, Inc.

Average Balance, Average Yield Earned, and Average Cost Paid, Continued

(Dollars in thousands)

(Unaudited)









Six Months Ended


June 30, 2017

June 30, 2016


Average


Yield 

Average


Yield 


Balance

Interest

/ Cost

Balance

Interest

/ Cost

Interest earning assets







Loans held-for-sale of discontinued operations

$      374,916

$     6,062

3.26%

$      402,784

$     6,889

3.44%

Other loans held-for-sale and SFR mortgage

2,160,241

42,038

3.92%

1,883,718

35,407

3.78%

Seasoned SFR mortgage loan pools

153,240

4,266

5.61%

877,105

25,114

5.76%

Commercial real estate, multi-family, and construction

2,365,566

51,670

4.40%

1,834,147

40,865

4.48%

Commercial and industrial, SBA, and lease financing

1,537,326

38,527

5.05%

1,224,966

30,307

4.98%

Other consumer

120,649

2,667

4.46%

106,668

2,305

4.35%

Gross loans and leases

6,711,938

145,230

4.36%

6,329,388

140,887

4.48%

Securities

3,189,596

52,235

3.30%

2,412,703

35,440

2.95%

Other interest-earning assets

508,784

3,879

1.54%

239,961

2,553

2.14%

Total interest-earning assets

10,410,318

201,344

3.90%

8,982,052

178,880

4.00%

Allowance for loan and lease losses

(42,095)



(36,606)



BOLI and non-interest earning assets

573,323



501,760



Total assets

$ 10,941,546



$   9,447,206










Interest-bearing liabilities







Savings

$   1,022,305

$     4,555

0.90%

$      850,508

$     3,175

0.75%

Interest-bearing checking

2,011,303

7,023

0.70%

1,941,268

6,378

0.66%

Money market

2,546,452

10,173

0.81%

1,554,997

3,641

0.47%

Certificates of deposit

1,770,916

7,151

0.81%

1,167,690

3,298

0.57%

Total interest-bearing deposits

7,350,976

28,902

0.79%

5,514,463

16,492

0.60%

FHLB advances

902,105

4,197

0.94%

1,309,725

3,228

0.50%

Securities sold under repurchase agreements

18,300

186

2.05%

150,347

549

0.73%

Long-term debt and other interest-bearing liabilities

242,110

6,016

5.01%

228,400

7,157

6.30%

Total interest-bearing liabilities

8,513,491

39,301

0.93%

7,202,935

27,426

0.77%

Noninterest-bearing deposits

1,221,530



1,218,489



Non-interest-bearing liabilities

198,465



195,238



Total liabilities

9,933,486



8,616,662



Total stockholders' equity

1,008,060



830,544



Total liabilities and stockholders' equity

$ 10,941,546



$   9,447,206










Net interest income/spread


$ 162,043

2.97%


$ 151,454

3.23%








Net interest margin



3.14%



3.39%








Ratio of interest-earning assets to interest-bearing liabilities

122.28%



124.70%










Total deposits

$   8,572,506

$   28,902

0.68%

$   6,732,952

$   16,492

0.49%

Total funding (1)

$   9,735,021

$   39,301

0.81%

$   8,421,424

$   27,426

0.65%


(1) Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.

 

Banc of California, Inc.

Capital Ratios

(Unaudited)








June 30,

March 31,

December 31,

September 30,

June 30,


2017

2017

2016

2016

2016

Capital Ratios






Banc of California, Inc.






Total risk-based capital ratio

14.39%

13.72%

13.70%

12.79%

13.45%

Tier 1 risk-based capital ratio

13.72%

13.08%

13.22%

12.54%

13.14%

Common equity tier 1 capital ratio

9.83%

9.37%

9.44%

8.85%

9.16%

Tier 1 leverage ratio

8.93%

8.51%

8.17%

8.47%

8.87%

Banc of California, NA






Total risk-based capital ratio

16.13%

15.11%

14.73%

14.38%

14.96%

Tier 1 risk-based capital ratio

15.45%

14.48%

14.12%

13.83%

14.38%

Common equity tier 1 capital ratio

15.45%

14.48%

14.12%

13.83%

14.38%

Tier 1 leverage ratio

10.05%

9.43%

8.71%

9.31%

9.70%

 

Banc of California, Inc.

Consolidated Operations

Non-GAAP Measures 

(Dollars in thousands, except per share data)

(Unaudited)







Non-GAAP performance measure:

Tangible equity to tangible assets, tangible common equity to tangible assets ratios, return on average tangible common equity, and adjusted efficiency ratio are supplemental financial information determined by methods other than in accordance with U.S. generally accepted accounting principles (GAAP). These non-GAAP measures are used by management in the analysis of the Company's capital strength and performance of businesses. Banking and financial institution regulators also exclude goodwill and other intangible assets from total stockholders' equity when assessing the capital adequacy of a financial institution. Management believes the presentation of these financial measures excluding the impact of these items provides useful supplemental information that is essential to a proper understanding of the capital and financial strength of the Company. This disclosure should not be viewed as a substitution for results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.







The following tables reconcile this non-GAAP performance measures to the GAAP performance measures for the periods indicated:








June 30,

March 31,

December 31,

September 30,

June 30,


2017

2017

2016

2016

2016

Tangible common equity to tangible assets ratio






Total assets

$ 10,365,768

$ 11,052,085

$ 11,029,853

$  11,216,404

$  10,157,662

Less goodwill

(37,144)

(37,144)

(39,244)

(39,244)

(39,244)

Less other intangible assets

(11,135)

(12,191)

(13,617)

(15,335)

(16,514)

Tangible assets

$ 10,317,489

$ 11,002,750

$ 10,976,992

$  11,161,825

$  10,101,904







Total stockholders' equity

$   1,006,292

$      985,748

$      980,239

$       971,424

$       939,884

Less goodwill

(37,144)

(37,144)

(39,244)

(39,244)

(39,244)

Less other intangible assets

(11,135)

(12,191)

(13,617)

(15,335)

(16,514)

Tangible equity

958,013

936,413

927,378

916,845

884,126

Less preferred stock

(269,071)

(269,071)

(269,071)

(269,071)

(269,071)

Tangible common equity

$      688,942

$      667,342

$      658,307

$       647,774

$       615,055







Total stockholders' equity to total assets

9.71%

8.92%

8.89%

8.66%

9.25%

Tangible equity to tangible assets

9.29%

8.51%

8.45%

8.21%

8.75%

Tangible common equity to tangible assets

6.68%

6.07%

6.00%

5.80%

6.09%







Common stock outstanding

49,991,395

49,601,363

49,695,299

49,531,321

49,478,348

Class B non-voting non-convertible common stock outstanding

355,173

277,797

201,922

201,922

161,841

Total common stock outstanding

50,346,568

49,879,160

49,897,221

49,733,243

49,640,189

Minimum number of shares issuable under purchase contracts (1)

-

166,265

188,742

188,742

218,928

Total common stock outstanding and shares issuable under purchase contracts

50,346,568

50,045,425

50,085,963

49,921,985

49,859,117







(1) Purchase contracts relating to the tangible equity units












Tangible common equity per common stock

$          13.68

$          13.38

$          13.19

$           13.02

$           12.39

Book value per common stock

$          14.64

$          14.37

$          14.25

$           14.12

$           13.51







Tangible common equity per common stock and shares issuable under purchase contracts

$          13.68

$          13.33

$          13.14

$           12.98

$           12.34

Book value per common stock and shares issuable under purchase contracts

$          14.64

$          14.32

$          14.20

$           14.07

$           13.45

 

Banc of California, Inc.

Consolidated Operations

Non-GAAP Measures, Continued

(Dollars in thousands, except per share data)

(Unaudited)


Three Months Ended

Six Months Ended


June 30,

March 31,

December 31,

September 30,

June 30,

June 30,

June 30,


2017

2017

2016

2016

2016

2017

2016

Return on tangible common equity








Average total stockholders' equity

$   1,014,267

$   1,001,784

$      995,908

$       968,684

$       898,164

$    1,008,060

$       830,544

Less average preferred stock

(269,071)

(269,071)

(269,071)

(269,071)

(269,073)

(269,071)

(265,016)

Less average goodwill

(37,144)

(39,221)

(39,244)

(39,244)

(39,244)

(38,177)

(39,244)

Less average other intangible assets

(11,808)

(13,190)

(14,704)

(16,039)

(17,299)

(12,495)

(17,950)

Average tangible common equity

$      696,244

$      680,302

$      672,889

$       644,330

$       572,548

$       688,317

$       508,334









Net income

$        12,257

$        17,201

$        33,264

$         35,937

$         26,528

$         29,458

$         46,215

Less preferred stock dividends

(5,113)

(5,113)

(5,113)

(5,112)

(5,114)

(10,226)

(9,689)

Add amortization of intangible assets

1,056

1,090

1,028

1,179

1,322

2,146

2,644

Add impairment on intangible assets

-

336

690

-

-

336

-

Less tax effect on amortization and impairment of intangible assets (1)

(370)

(499)

(601)

(413)

(463)

(869)

(925)

Net income available to common stockholders

$          7,830

$        13,015

$        29,268

$         31,591

$         22,273

$         20,845

$         38,245









Return on average equity

4.85%

6.96%

13.29%

14.76%

11.88%

5.89%

11.19%

Return on average tangible common equity

4.51%

7.76%

17.30%

19.51%

15.65%

6.11%

15.13%









(1) Utilized a 35% effective tax rate

















Three Months Ended

Six Months Ended


June 30,

March 31,

December 31,

September 30,

June 30,

June 30,

June 30,


2017

2017

2016

2016

2016

2017

2016

Adjusted efficiency ratio for including the pre-tax effect of investments in alternative energy partnerships








Noninterest expense

$        98,216

$      124,615

$      129,239

$       124,262

$       100,075

$       222,831

$       189,175

Loss on investments in alternative energy partnerships

(9,761)

(8,682)

(13,850)

(17,660)

-

(18,443)

-

Adjusted noninterest expense

$        88,455

$      115,933

$      115,389

$       106,602

$       100,075

$       204,388

$       189,175









Net interest income

$        78,296

$        83,747

$        87,058

$         86,961

$         81,037

$       162,043

$       151,454

Noninterest income

19,817

59,704

79,687

74,630

65,604

79,521

117,563

Total revenue

98,113

143,451

166,745

161,591

146,641

241,564

269,017

Tax credit from investments in alternative energy partnerships

15,681

8,829

14,048

19,357

-

24,510

-

Deferred tax expense on investments in alternative energy partnerships

(2,744)

(1,545)

(2,459)

(3,387)

-

(4,289)

-

Tax effect on tax credit and deferred tax expense

8,584

5,140

8,078

11,002

-

13,724

-

Loss on investments in alternative energy partnerships, net

(9,761)

(8,682)

(13,850)

(17,660)

-

(18,443)

-

Total pre-tax adjustments for investments in alternative energy partnerships

11,760

3,742

5,817

9,312

-

15,502

-

Adjusted total revenue

$      109,873

$      147,193

$      172,562

$       170,903

$       146,641

$       257,066

$       269,017









Efficiency ratio

100.10%

86.87%

77.51%

76.90%

68.24%

92.25%

70.32%

Adjusted efficiency ratio for including the pre-tax effect of investments in alternative energy partnerships

80.51%

78.76%

66.87%

62.38%

68.24%

79.51%

70.32%









Effective tax rate utilized for calculating tax effect on tax credit and deferred tax expense

39.89%

41.37%

41.10%

40.79%

-

40.43%

-

 

View original content:http://www.prnewswire.com/news-releases/banc-of-california-reports-second-quarter-2017-earnings-300494231.html

SOURCE Banc of California, Inc.