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Press Release

Banc of California Reports Third Quarter 2017 Earnings

Company Release - 10/26/2017 6:00 AM ET

SANTA ANA, Calif., Oct. 26, 2017 /PRNewswire/ -- Banc of California, Inc. (NYSE: BANC) today reported net income of $16.9 million, and net income available to common stockholders of $11.8 million, for the third quarter of 2017, resulting in diluted earnings per common share of $0.23 for the quarter.  Net income from continuing operations for the quarter was $18.1 million, resulting in diluted earnings per common share from continuing operations of $0.25.

Highlights for the third quarter included:

  • Balance Sheet Re-Mix:  Reduced securities by $159 million, driven by sales of $87 million of master limited partnerships ("MLPs") and $32 million of bank debt.  Reduced held for sale loans by $229 million, driven primarily by jumbo portfolio mortgage loan sales and the completed sale of all remaining seasoned SFR mortgage loan pools. 
  • Loan Growth:  Held for investment loans increased by $271 million, or 5%, during the quarter to $6.2 billion.  The Company sold $46 million of loans from held for investment and transferred $88 million of jumbo residential mortgage loans from held for sale to held for investment during the quarter.  Excluding these sales and transfers, held for investment loans increased by $229 million, or 4%, from the prior quarter.
    • Commercial loan balances increased by $132 million, or 3%, from the prior quarter, and by $335 million, or 9%, from a year ago.
  • Expense Management:  Achieved targeted quarterly, recurring, run-rate expenses of less than $60 million for the quarter, excluding expense related to loss on investments in alternative energy partnerships and non-recurring expenses. 
  • Strong Credit:  Asset quality remained strong with non-performing assets to total assets of 0.16% at quarter end.
  • Strengthened Capital:  Common equity tier 1 capital ratio improved from the prior quarter to 9.91%, the highest level in the past 12 quarters.
  • Bolstered Talent:  Key executive hires including John Bogler as Chief Financial Officer, Jason Pendergist as Head of Real Estate Banking, and Rita Dailey as EVP, Head of Deposits & Treasury Management Services.

"Our third quarter results included numerous strategic actions centered on re-mixing the balance sheet and positioning the company with an ever increasing emphasis on building a diversified and strong California commercial banking franchise," said Doug Bowers, President and Chief Executive Officer of Banc of California.  "During the quarter, we continued to de-risk the securities portfolio through selective sales, re-mixed the loan book increasingly toward core lending activities, and saw moderate growth in the held for investment loan portfolio.  On the liability side, our focus is on core funding activities as we reduced brokered and other high-rate and high-volatility deposits.  Looking forward, we are laser-focused on building and expanding our core deposit capabilities across the organization as core, low cost deposit generation remains our number one priority. Gaining control of our expense base, and reducing costs related to legal and professional fees, settlement, and termination costs is also a high priority.  The addition of key senior leaders such as John Bogler, Jason Pendergist, and Rita Dailey are a centerpiece of the plan to help guide Banc of California through this transformation, and we welcome their addition to our team.  While we remain in the early innings of this transformation, I continue to see substantial opportunity in front of us, with the size and product set to compete, coupled with a deep and talented employee base, and operating in one of the most attractive markets in the U.S."

The Company will host a conference call to discuss its third quarter financial results at 7:00 a.m. Pacific Time (PT) on Thursday, October 26, 2017. Interested parties are welcome to attend the conference call by dialing 888-317-6003, and referencing event code 8972485. 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 has been 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, (213) 630-6550


idc@abmac.com / jrh@abmac.com

 

Banc of California, Inc.



Consolidated Statements of Financial Condition



(Dollars in thousands)



(Unaudited)










September 30,

June 30,

March 31,

December 31,

September 30,


2017

2017

2017

2016

2016

ASSETS






Cash and cash equivalents

$       611,826

$       511,190

$       409,281

$       439,510

$       372,603

Time deposits in financial institutions

1,000

1,000

1,000

1,000

1,500

Securities available-for-sale

2,755,664

2,915,103

2,434,541

2,381,488

1,941,588

Securities held-to-maturity

-

-

863,269

884,234

962,315

Loans held-for-sale

50,130

278,824

228,196

298,018

358,892

Loans and leases receivable

6,226,897

5,956,337

6,105,321

6,034,752

6,568,791

Allowance for loan and lease losses

(45,072)

(42,385)

(42,736)

(40,444)

(40,233)

Federal Home Loan Bank and other bank stock

67,063

63,438

63,238

67,842

69,190

Servicing rights, net

40,448

43,834

44,451

39,936

33,064

Other real estate owned, net

3,682

3,267

3,345

2,502

275

Premises and equipment, net

139,326

143,398

146,631

140,917

131,481

Investments in alternative energy partnerships, net

43,817

37,605

47,633

25,639

23,912

Goodwill

37,144

37,144

37,144

37,144

37,144

Other intangible assets, net

10,219

11,135

12,191

13,617

15,335

Deferred income tax, net

23,333

9,499

18,673

9,989

408

Income tax receivable

7,699

14,984

15,973

16,009

12,487

Bank owned life insurance investment

104,292

103,709

103,093

102,512

101,909

Other assets

142,985

113,534

128,036

92,694

79,386

Assets of discontinued operations

59,575

164,152

432,805

482,494

546,357

Total assets 

$  10,280,028

$  10,365,768

$  11,052,085

$  11,029,853

$  11,216,404







LIABILITIES AND STOCKHOLDERS' EQUITY






Noninterest-bearing deposits

$    1,075,782

$    1,138,095

$    1,273,649

$    1,282,629

$    1,267,363

Interest-bearing deposits

6,327,811

6,906,816

7,324,044

7,859,521

7,810,956

Total deposits

7,403,593

8,044,911

8,597,693

9,142,150

9,078,319

Advances from Federal Home Loan Bank

1,470,000

870,000

1,080,000

490,000

770,000

Securities sold under repurchase agreements

36,520

53,242

26,320

-

-

Other borrowings

-

-

67,981

67,922

49,903

Notes payable, net

172,865

172,790

174,090

175,378

176,579

Reserve for loss on repurchased loans

6,173

8,028

8,118

7,974

11,369

Income taxes payable

-

-

618

92

908

Accrued expenses and other liabilities

164,469

193,276

81,208

131,618

132,089

Liabilities of discontinued operations

12,500

17,229

30,309

34,480

25,813

Total liabilities

9,266,120

9,359,476

10,066,337

10,049,614

10,244,980

Commitments and contingent liabilities






Preferred stock

269,071

269,071

269,071

269,071

269,071

Common stock

542

540

537

537

536

Common stock, class B non-voting non-convertible

4

4

3

2

2

Additional paid-in capital

619,849

616,251

614,983

614,226

611,069

Retained earnings

145,420

140,331

139,926

134,515

112,751

Treasury stock

(28,786)

(28,786)

(29,070)

(29,070)

(29,070)

Accumulated other comprehensive income/(loss), net

7,808

8,881

(9,702)

(9,042)

7,065

Total stockholders' equity

1,013,908

1,006,292

985,748

980,239

971,424

Total liabilities and stockholders' equity 

$  10,280,028

$  10,365,768

$  11,052,085

$  11,029,853

$  11,216,404







 

Banc of California, Inc.





Consolidated Statements of Operations





(Dollars in thousands, except per share data)





(Unaudited)






Three Months Ended

Nine Months Ended


September 30,

June 30,

March 31,

December 31,

September 30,

September 30,

September 30,


2017

2017

2017

2016

2016

2017

2016

Interest and dividend income








Loans, including fees

$         70,208

$         69,661

$         69,507

$         71,613

$         76,257

$       209,376

$       210,255

Securities

24,337

24,996

27,239

24,153

19,934

76,572

55,374

Other interest-earning assets

2,206

1,783

2,096

3,965

1,931

6,085

4,484

Total interest and dividend income

96,751

96,440

98,842

99,731

98,122

292,033

270,113

Interest expense








Deposits

15,468

14,942

13,960

12,504

11,224

44,370

27,716

Federal Home Loan Bank advances

3,352

2,774

1,423

1,076

1,413

7,549

4,641

Securities sold under repurchase agreements

500

180

6

221

48

686

597

Notes payable and other interest-bearing liabilities

2,395

3,044

2,972

2,998

2,589

8,411

9,746

Total interest expense

21,715

20,940

18,361

16,799

15,274

61,016

42,700

Net interest income

75,036

75,500

80,481

82,932

82,848

231,017

227,413

Provision for loan and lease losses

3,561

2,503

2,583

589

2,592

8,647

4,682

Net interest income after provision for loan and lease losses

71,475

72,997

77,898

82,343

80,256

222,370

222,731

Noninterest income








Customer service fees

1,576

1,669

1,623

1,560

1,566

4,868

3,587

Loan servicing income (loss) 

553

132

2,756

4,699

74

3,441

(4,066)

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

7,625

1,099

3,356

(695)

487

12,080

30,100

Net gain on sale of loans

5,735

983

4,019

20,490

11,063

10,737

15,405

Loan brokerage income

-

34

1,027

1,331

1,298

1,061

2,920

Gain on sale of subsidiary and business unit

-

-

-

2,629

-

-

3,694

All other income

2,876

1,790

2,122

2,490

7,542

6,788

14,486

Total noninterest income

18,365

5,707

14,903

32,504

22,030

38,975

66,126

Noninterest expense








Salaries and employee benefits

30,216

33,348

32,443

42,800

37,133

96,007

103,347

Occupancy and equipment

10,085

9,776

10,668

10,012

10,036

30,529

28,034

Professional fees

7,697

11,794

15,073

11,562

6,482

34,564

18,811

Data processing

1,901

2,246

2,179

2,357

2,112

6,326

5,954

Loss on investments in alternative energy partnerships

8,348

9,761

8,682

13,850

17,660

26,791

17,660

Amortization of intangible assets

916

1,056

1,090

1,028

1,179

3,062

3,823

Restructuring expense

-

82

5,287

-

-

5,369

-

All other expenses

16,508

8,256

14,474

11,286

11,521

39,238

32,691

Total noninterest expense

75,671

76,319

89,896

92,895

86,123

241,886

210,320

Income from continuing operations before income taxes

14,169

2,385

2,905

21,952

16,163

19,459

78,537

Income tax (benefit) expense

(3,939)

(12,753)

(6,471)

(2,543)

(9,016)

(23,163)

16,292

Income from continuing operations

18,108

15,138

9,376

24,495

25,179

42,622

62,245

Income (loss) from discontinued operations before income taxes

(1,958)

(4,991)

13,348

14,965

18,574

6,399

33,952

Income tax (benefit) expense

(799)

(2,110)

5,523

6,196

7,816

2,614

14,045

Income (loss) from discontinued operations

(1,159)

(2,881)

7,825

8,769

10,758

3,785

19,907

Net income

16,949

12,257

17,201

33,264

35,937

46,407

82,152

Preferred stock dividends

5,112

5,113

5,113

5,113

5,112

15,338

14,801

Net income available to common stockholders

$         11,837

$           7,144

$         12,088

$         28,151

$         30,825

$         31,069

$         67,351

Basic earnings per total common share








Income from continuing operations

$             0.25

$             0.20

$             0.08

$             0.37

$             0.38

$             0.52

$             0.99

Income (loss) from discontinued operations

(0.02)

(0.06)

0.15

0.18

0.22

0.08

0.43

Net income

$             0.23

$             0.14

$             0.23

$             0.55

$             0.60

$             0.60

$             1.42

Diluted earnings per total common share








Income from continuing operations

$             0.25

$             0.20

$             0.08

$             0.36

$             0.38

$             0.52

$             0.97

Income (loss) from discontinued operations

(0.02)

(0.06)

0.15

0.18

0.21

0.07

0.43

Net income

$             0.23

$             0.14

$             0.23

$             0.54

$             0.59

$             0.59

$             1.40

Weighted average number of shares outstanding








Basic

50,362,314

50,289,590

49,991,186

50,008,234

49,907,840

50,160,928

45,760,802

Diluted

50,933,358

50,942,324

50,754,145

50,702,110

50,996,469

50,810,407

46,681,317

Dividends declared per common share

$             0.13

$             0.13

$             0.13

$             0.13

$             0.12

$             0.39

$             0.36









 

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 September 30, 2017

Nine Months Ended September 30, 2017


Continuing

Discontinued

Consolidated

Continuing

Discontinued

Consolidated


Operations

Operations

Operations

Operations

Operations

Operations

Interest and dividend income

$         96,751

$              917

$         97,668

$       292,033

$           6,979

$       299,012

Interest expense

21,715

-

21,715

61,016

-

61,016

Net interest income

75,036

917

75,953

231,017

6,979

237,996

Provision for loan and lease losses

3,561

-

3,561

8,647

-

8,647

Net interest income after provision for loan and lease losses

71,475

917

72,392

222,370

6,979

229,349

Noninterest income







Customer service fees

1,576

-

1,576

4,868

-

4,868

Loan servicing income

553

-

553

3,441

1,551

4,992

Net gain on sale of securities available for sale

7,625

-

7,625

12,080

-

12,080

Net gain on sale of loans

5,735

-

5,735

10,737

-

10,737

Mortgage banking income

-

13

13

-

43,083

43,083

Loan brokerage income

-

6

6

1,061

164

1,225

Gain on disposal of discontinued operations

-

211

211

-

13,749

13,749

All other income

2,876

232

3,108

6,788

826

7,614

Total noninterest income

18,365

462

18,827

38,975

59,373

98,348

Noninterest expense







Salaries and employee benefits

30,216

416

30,632

96,007

38,384

134,391

Occupancy and equipment

10,085

359

10,444

30,529

3,754

34,283

Professional fees

7,697

270

7,967

34,564

2,462

37,026

Data processing

1,901

141

2,042

6,326

668

6,994

Loss on investments in alternative energy partnerships

8,348

-

8,348

26,791

-

26,791

Amortization of intangible assets

916

-

916

3,062

-

3,062

Restructuring expense

-

279

279

5,369

3,794

9,163

All other expenses

16,508

1,872

18,380

39,238

10,891

50,129

Total noninterest expense

75,671

3,337

79,008

241,886

59,953

301,839

Income (loss) before income taxes

14,169

(1,958)

12,211

19,459

6,399

25,858

Income tax (benefit) expense

(3,939)

(799)

(4,738)

(23,163)

2,614

(20,549)

Net income

$         18,108

$         (1,159)

$         16,949

$         42,622

$           3,785

$         46,407








 

Banc of California, Inc.





Selected Financial Data





(Dollars in thousands)





(Unaudited)






Three Months Ended

Nine Months Ended


September 30,

June 30,

March 31,

December 31,

September 30,

September 30,

September 30,


2017

2017

2017

2016

2016

2017

2016

Average balances of consolidated operations








Total assets

$  10,101,181

$  10,697,003

$  11,188,806

$  11,568,849

$  10,860,257

$  10,658,346

$    9,921,657

Total gross loans and leases

6,268,915

6,639,666

6,785,013

7,209,241

7,245,472

6,562,641

6,636,978

Investment securities

2,791,585

3,004,551

3,376,698

3,236,253

2,776,304

3,055,468

2,534,788

Total interest earning assets

9,580,093

10,161,566

10,661,834

11,075,367

10,432,247

10,130,535

9,468,979

Total interest-bearing deposits

6,501,227

6,981,991

7,724,061

7,825,036

7,164,061

7,064,615

6,068,343

Total borrowings

1,224,973

1,265,279

1,058,607

1,190,060

1,297,382

1,183,562

1,557,157

Total interest bearing liabilities

7,726,200

8,247,270

8,782,668

9,015,096

8,461,443

8,248,176

7,625,500

Total stockholders' equity

1,005,462

1,014,267

1,001,784

995,908

968,684

1,007,185

876,922

Profitability and other ratios of consolidated operations








Return on average assets(1)

0.67%

0.46%

0.62%

1.14%

1.32%

0.58%

1.11%

Return on average equity (1)

6.69%

4.85%

6.96%

13.29%

14.76%

6.16%

12.51%

Return on average tangible common equity(2)

7.16%

4.51%

7.76%

17.30%

19.51%

6.46%

16.84%

Dividend payout ratio (3)

56.52%

92.86%

56.52%

23.64%

20.00%

65.00%

25.35%

Net interest spread

2.92%

2.90%

3.03%

2.99%

3.18%

2.96%

3.22%

Net interest margin(1)

3.15%

3.09%

3.19%

3.13%

3.32%

3.14%

3.36%

Noninterest income to total revenue (4)

19.86%

20.20%

41.62%

47.79%

46.18%

29.24%

44.63%

Noninterest income to average total assets(1)

0.74%

0.74%

2.16%

2.74%

2.73%

1.23%

2.59%

Noninterest expense to average total assets(1)

3.10%

3.68%

4.52%

4.44%

4.55%

3.79%

4.22%

Efficiency ratio(5)

83.36%

100.10%

86.87%

77.51%

76.90%

89.74%

72.79%

Adjusted efficiency ratio for including the pre-tax effect of

investments in alternative energy partnerships (2) , (5)

72.49%

80.51%

78.76%

66.87%

62.38%

77.58%

67.23%

Average held-for-investment loans and leases to average deposits

77.33%

73.54%

68.33%

69.11%

75.92%

72.88%

79.27%

Average investment securities to average total assets

27.64%

28.09%

30.18%

27.97%

25.56%

28.67%

25.55%

Average stockholders' equity to average total assets

9.95%

9.48%

8.95%

8.61%

8.92%

9.45%

8.84%




(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

Nine Months Ended


September 30,

June 30,

March 31,

December 31,

September 30,

September 30,

September 30,


2017

2017

2017

2016

2016

2017

2016

Allowance for loan and lease losses (ALLL)








Balance at beginning of period

$         42,385

$         42,736

$         40,444

$         40,233

$         37,483

$         40,444

$         35,533

Loans and leases charged off

(959)

(2,898)

(357)

(1,351)

(393)

(4,214)

(1,267)

Recoveries

85

44

66

973

551

195

1,285

Provision for loan and lease losses

3,561

2,503

2,583

589

2,592

8,647

4,682

Balance at end of period

$         45,072

$         42,385

$         42,736

$         40,444

$         40,233

$         45,072

$         40,233

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

0.06%

0.19%

0.02%

0.02%

-0.01%

0.09%

-0.01%

Reserve for loss on repurchased loans








Balance at beginning of period

$           8,028

$           8,118

$           7,974

$         11,369

$         10,438

$           7,974

$           9,700

Provision for loan repurchases

(651)

270

517

(1,881)

1,241

136

2,471

Utilization of reserve for loan repurchases

(1,204)

(360)

(373)

(1,514)

(310)

(1,937)

(802)

Balance at end of period

$           6,173

$           8,028

$           8,118

$           7,974

$         11,369

$           6,173

$         11,369










September 30,

June 30,

March 31,

December 31,

September 30,




2017

2017

2017

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

$         20,286

$         23,305

$         22,596

$         30,140

$         39,054



90+ days delinquent, excluding PCI loans

11,150

6,508

9,802

14,218

22,827



Total delinquent loans, excluding PCI loans

31,436

29,813

32,398

44,358

61,881



PCI loans, 30 to 89 days delinquent

-

343

16,410

15,078

39,113



PCI loans, 90+ days delinquent

-

807

4,943

2,577

6,145



Total delinquent PCI loans

-

1,150

21,353

17,655

45,258



Total delinquent loans

$         31,436

$         30,963

$         53,751

$         62,013

$       107,139



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

0.50%

0.50%

0.54%

0.75%

1.04%



Total delinquent loans and leases to total loans and leases

0.50%

0.52%

0.88%

1.03%

1.63%



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








Non-performing loans and leases, excluding PCI loans

$         12,275

$           9,064

$         16,222

$         14,942

$         35,223



90+ days delinquent and still accruing loans and leases,

excluding PCI loans  

-

-

-

-

-



Other real estate owned

3,682

3,267

3,345

2,502

275



Non-performing assets

$         15,957

$         12,331

$         19,567

$         17,444

$         35,498



ALLL to non-performing loans and leases

367.19%

467.62%

263.44%

270.67%

114.22%



Non-performing loans and leases to total loans and leases

0.20%

0.15%

0.27%

0.25%

0.54%



Non-performing assets to total assets

0.16%

0.12%

0.18%

0.16%

0.32%



Troubled debt restructurings (TDRs)








Performing TDRs

$           5,668

$           4,579

$           4,309

$           4,827

$         11,160



Non-performing TDRs

-

1,125

1,144

-

520



Total TDRs

$           5,668

$           5,704

$           5,453

$           4,827

$         11,680











 

Banc of California, Inc.



Selected Financial Data, Continued



(Dollars in thousands)



(Unaudited)










September 30,

June 30,

March 31,

December 31,

September 30,


2017

2017

2017

2016

2016

Loan and lease breakdown by ALLL evaluation type






Originated loans and leases






Individually evaluated for impairment

$         15,485

$         10,844

$         12,518

$         10,168

$         22,306

Collectively evaluated for impairment

5,472,533

5,148,979

5,096,657

4,933,381

4,789,155

Acquired loans not impaired at acquisition






Individually evaluated for impairment

430

-

-

2,429

3,397

Collectively evaluated for impairment

738,449

792,213

834,983

924,993

958,135

Seasoned SFR mortgage loan pools - non-impaired






Individually evaluated for impairment

-

-

877

755

6,581

Collectively evaluated for impairment

-

-

20,587

21,200

146,850

Acquired with deteriorated credit quality

-

4,301

139,699

141,826

642,367

Total loans

$    6,226,897

$    5,956,337

$    6,105,321

$    6,034,752

$    6,568,791

ALLL breakdown






Originated loans and leases






Individually evaluated for impairment

$              407

$              424

$              130

$              137

$              137

Collectively evaluated for impairment

43,316

40,666

41,091

38,394

37,858

Acquired loans not impaired at acquisition






Individually evaluated for impairment

8

-

-

-

-

Collectively evaluated for impairment

1,341

1,271

1,234

1,703

1,606

Seasoned SFR mortgage loan pools - non-impaired






Individually evaluated for impairment

-

-

120

106

528

Collectively evaluated for impairment

-

-

-

-

-

Acquired with deteriorated credit quality

-

24

161

104

104

Total ALLL

$         45,072

$         42,385

$         42,736

$         40,444

$         40,233

Discount on Purchased/Acquired Loans






Acquired loans not impaired at acquisition

$         15,983

$         15,446

$         16,275

$         17,820

$         18,400

Seasoned SFR mortgage loan pools - non-impaired

-

-

1,219

1,280

9,789

Acquired with deteriorated credit quality

-

1,754

21,538

22,454

57,780

Total Discount

$         15,983

$         17,200

$         39,032

$         41,554

$         85,969

Ratios






To originated loans and leases:






Individually evaluated for impairment

2.63%

3.91%

1.04%

1.35%

0.61%

Collectively evaluated for impairment

0.79%

0.79%

0.81%

0.78%

0.79%

Total ALLL

0.80%

0.80%

0.81%

0.78%

0.79%

To originated loans and leases and acquired loans not impaired

at acquisition:






Individually evaluated for impairment

2.61%

3.91%

1.04%

1.09%

0.53%

Collectively evaluated for impairment

0.72%

0.71%

0.71%

0.68%

0.69%

Total ALLL

0.72%

0.71%

0.71%

0.69%

0.69%

To total loans and leases:






Individually evaluated for impairment

2.61%

3.91%

1.87%

1.82%

2.06%

Collectively evaluated for impairment

0.72%

0.71%

0.71%

0.68%

0.67%

Total ALLL

0.72%

0.71%

0.70%

0.67%

0.61%







 

Banc of California, Inc.



Selected Financial Data, Continued



(Dollars in thousands)



(Unaudited)










September 30,

June 30,

March 31,

December 31,

September 30,


2017

2017

2017

2016

2016

Composition of held-for-investment loans and leases






Commercial real estate

$       713,120

$       716,771

$       750,592

$       729,959

$       721,838

Multifamily

1,617,890

1,545,888

1,449,715

1,365,262

1,199,207

Construction

176,397

156,246

142,164

125,100

99,086

Commercial and industrial

1,602,805

1,560,916

1,585,656

1,522,960

1,531,041

SBA

78,604

77,254

76,040

73,840

67,737

Lease financing

91

173

285

379

234,540

Total commercial loans

4,188,907

4,057,248

4,004,452

3,817,500

3,853,449

Single family residential mortgage

1,920,310

1,778,536

1,975,055

2,106,630

2,601,375

Other consumer

117,680

120,553

125,814

110,622

113,967

Total consumer loans

2,037,990

1,899,089

2,100,869

2,217,252

2,715,342

Total gross loans and leases

$    6,226,897

$    5,956,337

$    6,105,321

$    6,034,752

$    6,568,791

Composition percentage of held-for-investment loans and leases






Commercial real estate

11.5%

12.0%

12.3%

12.1%

11.0%

Multifamily

26.0%

26.0%

23.7%

22.6%

18.3%

Construction

2.8%

2.6%

2.3%

2.1%

1.5%

Commercial and industrial

25.7%

26.2%

26.1%

25.2%

23.3%

SBA

1.3%

1.3%

1.2%

1.2%

1.0%

Lease financing

0.0%

0.0%

0.0%

0.1%

3.6%

Total commercial loans

67.3%

68.1%

65.6%

63.3%

58.7%

Single family residential mortgage

30.8%

29.9%

32.3%

34.9%

39.6%

Other consumer

1.9%

2.0%

2.1%

1.8%

1.7%

Total consumer loans

32.7%

31.9%

34.4%

36.7%

41.3%

Total gross loans and leases

100.0%

100.0%

100.0%

100.0%

100.0%

Composition of deposits






Noninterest-bearing checking

$    1,075,782

$    1,138,095

$    1,273,649

$    1,282,629

$    1,267,363

Interest-bearing checking

2,011,943

2,058,130

1,998,778

2,048,839

2,369,332

Money market

1,728,937

2,265,380

2,610,376

2,731,314

2,900,248

Savings

945,699

985,001

1,008,218

1,118,175

880,712

Certificates of deposit

1,641,232

1,598,305

1,706,672

1,961,193

1,660,664

Total deposits

$    7,403,593

$    8,044,911

$    8,597,693

$    9,142,150

$    9,078,319

Composition percentage of deposits






Noninterest-bearing checking

14.5%

14.1%

14.8%

14.0%

14.0%

Interest-bearing checking

27.2%

25.6%

23.2%

22.4%

26.1%

Money market

23.3%

28.2%

30.4%

29.9%

31.9%

Savings

12.8%

12.2%

11.7%

12.2%

9.7%

Certificates of deposit

22.2%

19.9%

19.9%

21.5%

18.3%

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


September 30, 2017

June 30, 2017

March 31, 2017


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

$         98,904

$         917

3.68%

$       361,784

$      2,796

3.10%

$       388,194

$      3,266

3.41%

Loans held-for-sale and SFR mortgage

1,923,214

18,837

3.89%

2,046,409

20,086

3.94%

2,275,338

21,950

3.91%

Seasoned SFR mortgage loan pools

84,128

1,208

5.70%

151,759

2,121

5.61%

154,736

2,145

5.62%

Commercial real estate, multifamily, and construction

2,494,284

27,980

4.45%

2,394,487

25,821

4.33%

2,336,323

25,851

4.49%

Commercial and industrial, SBA, and lease financing

1,553,816

20,820

5.32%

1,565,583

20,233

5.18%

1,508,756

18,293

4.92%

Other consumer

114,569

1,363

4.72%

119,644

1,400

4.69%

121,666

1,268

4.23%

Gross loans and leases

6,268,915

71,125

4.50%

6,639,666

72,457

4.38%

6,785,013

72,773

4.35%

Securities

2,791,585

24,337

3.46%

3,004,551

24,996

3.34%

3,376,698

27,239

3.27%

Other interest-earning assets

519,593

2,206

1.68%

517,349

1,783

1.38%

500,123

2,096

1.70%

Total interest-earning assets

9,580,093

97,668

4.04%

10,161,566

99,236

3.92%

10,661,834

102,108

3.88%

Allowance for loan and lease losses

(42,696)



(42,896)



(41,285)



BOLI and non-interest earning assets

563,784



578,333



568,257



Total assets

$  10,101,181



$  10,697,003



$  11,188,806













Interest-bearing liabilities










Savings

$       968,158

$      2,263

0.93%

$    1,002,797

$      2,262

0.90%

$    1,042,031

$      2,292

0.89%

Interest-bearing checking

2,037,729

3,871

0.75%

2,013,751

3,609

0.72%

2,008,828

3,414

0.69%

Money market

1,935,262

5,095

1.04%

2,359,173

5,482

0.93%

2,735,810

4,691

0.70%

Certificates of deposit

1,560,078

4,239

1.08%

1,606,270

3,589

0.90%

1,937,392

3,563

0.75%

Total interest-bearing deposits

6,501,227

15,468

0.94%

6,981,991

14,942

0.86%

7,724,061

13,960

0.73%

FHLB advances

962,391

3,352

1.38%

990,780

2,774

1.12%

812,444

1,423

0.71%

Securities sold under repurchase agreements

88,810

500

2.23%

34,298

180

2.11%

2,123

6

1.15%

Long-term debt and other interest-bearing liabilities

173,772

2,395

5.47%

240,201

3,044

5.08%

244,040

2,972

4.94%

Total interest-bearing liabilities

7,726,200

21,715

1.12%

8,247,270

20,940

1.02%

8,782,668

18,361

0.85%

Noninterest-bearing deposits

1,178,062



1,261,338



1,181,279



Non-interest-bearing liabilities

191,457



174,128



223,075



Total liabilities

9,095,719



9,682,736



10,187,022



Total stockholders' equity

1,005,462



1,014,267



1,001,784



Total liabilities and stockholders' equity

$  10,101,181



$  10,697,003



$  11,188,806













Net interest income/spread


$    75,953

2.92%


$    78,296

2.90%


$    83,747

3.03%











Net interest margin



3.15%



3.09%



3.19%











Ratio of interest-earning assets to interest-bearing liabilities

123.99%



123.21%



121.40%













Total deposits

$    7,679,289

$    15,468

0.80%

$    8,243,329

$    14,942

0.73%

$    8,905,340

$    13,960

0.64%

Total funding (1)

$    8,904,262

$    21,715

0.97%

$    9,508,608

$    20,940

0.88%

$    9,963,947

$    18,361

0.75%












(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



December 31, 2016

September 30, 2016



Average


Yield 

Average


Yield 



Balance

Interest

/ Cost

Balance

Interest

/ Cost


Interest earning assets








Loans held-for-sale of discontinued operations

$       519,495

$      4,126

3.16%

$       479,133

$      4,113

3.42%


Loans held-for-sale and SFR mortgage

2,236,354

21,451

3.82%

2,139,746

20,252

3.77%


Seasoned SFR mortgage loan pools

570,006

6,281

4.38%

907,387

11,924

5.23%


Commercial real estate, multifamily, and construction

2,146,067

23,405

4.34%

2,033,718

23,097

4.52%


Commercial and industrial, SBA, and lease financing

1,628,177

19,228

4.70%

1,576,379

19,734

4.98%


Other consumer

109,142

1,248

4.55%

109,109

1,250

4.56%


Gross loans and leases

7,209,241

75,739

4.18%

7,245,472

80,370

4.41%


Securities

3,236,253

24,153

2.97%

2,776,304

19,934

2.86%


Other interest-earning assets

629,873

3,965

2.50%

410,471

1,931

1.87%


Total interest-earning assets

11,075,367

103,857

3.73%

10,432,247

102,235

3.90%


Allowance for loan and lease losses

(39,163)



(38,258)




BOLI and non-interest earning assets

532,645



466,268




Total assets

$  11,568,849



$  10,860,257












Interest-bearing liabilities








Savings

$       941,404

$      1,917

0.81%

$       887,973

$      1,704

0.76%


Interest-bearing checking

2,081,105

3,371

0.64%

2,300,128

3,972

0.69%


Money market

2,830,271

3,909

0.55%

2,427,356

3,226

0.53%


Certificates of deposit

1,972,256

3,307

0.67%

1,548,604

2,322

0.60%


Total interest-bearing deposits

7,825,036

12,504

0.64%

7,164,061

11,224

0.62%


FHLB advances

892,120

1,076

0.48%

1,104,663

1,413

0.51%


Securities sold under repurchase agreements

59,761

221

1.47%

12,539

48

1.52%


Long-term debt and other interest-bearing liabilities

238,179

2,998

5.01%

180,180

2,589

5.72%


Total interest-bearing liabilities

9,015,096

16,799

0.74%

8,461,443

15,274

0.72%


Noninterest-bearing deposits

1,286,642



1,178,849




Non-interest-bearing liabilities

271,203



251,281




Total liabilities

10,572,941



9,891,573




Total stockholders' equity

995,908



968,684




Total liabilities and stockholders' equity

$  11,568,849



$  10,860,257












Net interest income/spread


$    87,058

2.99%


$    86,961

3.18%










Net interest margin



3.13%



3.32%










Ratio of interest-earning assets to interest-bearing liabilities

122.85%



123.29%












Total deposits

$    9,111,678

$    12,504

0.55%

$    8,342,910

$    11,224

0.54%


Total funding (1)

$  10,301,738

$    16,799

0.65%

$    9,640,292

$    15,274

0.63%











(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 expensedivided by average total funding.










 

Banc of California, Inc.



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



(Dollars in thousands)



(Unaudited)











Nine Months Ended


September 30, 2017

September 30, 2016


Average


Yield 

Average


Yield 


Balance

Interest

/ Cost

Balance

Interest

/ Cost

Interest earning assets







Loans held-for-sale of discontinued operations

$       281,177

$      6,979

3.32%

$       428,419

$    11,002

3.43%

Loans held-for-sale and SFR mortgage

2,081,088

60,873

3.91%

1,969,682

55,659

3.77%

Seasoned SFR mortgage loan pools

129,949

5,474

5.63%

887,273

37,037

5.58%

Commercial real estate, multifamily, and construction

2,408,943

79,651

4.42%

1,901,157

63,962

4.49%

Commercial and industrial, SBA, and lease financing

1,542,884

59,347

5.14%

1,342,959

50,041

4.98%

Other consumer

118,600

4,031

4.54%

107,488

3,556

4.42%

Gross loans and leases

6,562,641

216,355

4.41%

6,636,978

221,257

4.45%

Securities

3,055,468

76,572

3.35%

2,534,788

55,374

2.92%

Other interest-earning assets

512,426

6,085

1.59%

297,213

4,484

2.02%

Total interest-earning assets

10,130,535

299,012

3.95%

9,468,979

281,115

3.97%

Allowance for loan and lease losses

(42,297)



(37,161)



BOLI and non-interest earning assets

570,108



489,839



Total assets

$  10,658,346



$    9,921,657










Interest-bearing liabilities







Savings

$    1,004,058

$      6,817

0.91%

$       863,088

$      4,878

0.75%

Interest-bearing checking

2,020,208

10,894

0.72%

2,061,761

10,352

0.67%

Money market

2,340,484

15,268

0.87%

1,847,906

6,867

0.50%

Certificates of deposit

1,699,865

11,391

0.90%

1,295,588

5,619

0.58%

Total interest-bearing deposits

7,064,615

44,370

0.84%

6,068,343

27,716

0.61%

FHLB advances

922,421

7,549

1.09%

1,240,872

4,641

0.50%

Securities sold under repurchase agreements

42,061

686

2.18%

104,076

597

0.77%

Long-term debt and other interest-bearing liabilities

219,080

8,411

5.13%

212,209

9,746

6.13%

Total interest-bearing liabilities

8,248,176

61,016

0.99%

7,625,500

42,700

0.75%

Noninterest-bearing deposits

1,206,881



1,205,179



Non-interest-bearing liabilities

196,104



214,056



Total liabilities

9,651,161



9,044,735



Total stockholders' equity

1,007,185



876,922



Total liabilities and stockholders' equity

$  10,658,346



$    9,921,657










Net interest income/spread


$  237,996

2.96%


$  238,415

3.22%








Net interest margin



3.14%



3.36%








Ratio of interest-earning assets to interest-bearing liabilities

122.82%



124.18%










Total deposits

$    8,271,496

$    44,370

0.72%

$    7,273,522

$    27,716

0.51%

Total funding (1)

$    9,455,057

$    61,016

0.86%

$    8,830,679

$    42,700

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)










September 30,

June 30,

March 31,

December 31,

September 30,


2017

2017

2017

2016

2016

Capital Ratios






Banc of California, Inc.






Total risk-based capital ratio

14.48%

14.39%

13.72%

13.70%

12.79%

Tier 1 risk-based capital ratio

13.77%

13.72%

13.08%

13.22%

12.54%

Common equity tier 1 capital ratio

9.91%

9.83%

9.37%

9.44%

8.85%

Tier 1 leverage ratio

9.55%

8.93%

8.51%

8.17%

8.47%

Banc of California, NA






Total risk-based capital ratio

16.39%

16.13%

15.11%

14.73%

14.38%

Tier 1 risk-based capital ratio

15.68%

15.45%

14.48%

14.12%

13.83%

Common equity tier 1 capital ratio

15.68%

15.45%

14.48%

14.12%

13.83%

Tier 1 leverage ratio

10.88%

10.05%

9.43%

8.71%

9.31%







 

Banc of California, Inc.

Consolidated Operations

Non-GAAP Measures 

(Dollars in thousands, except per share data)

(Unaudited)

Under Item 10(e) of SEC Regulation S-K, public companies disclosing financial measures in filings with the SEC that are not calculated in accordance with GAAP must also disclose, along with each non-GAAP financial measure, certain additional information, including a presentation of the most directly comparable GAAP financial measure, a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure, as well as a statement of the reasons why the company's management believes that presentation of the non-GAAP financial measure provides useful information to investors regarding the company's financial condition and results of operations and, to the extent material, a statement of the additional purposes, if any, for which the company's management uses the non-GAAP financial measure.


Return on average tangible common equity and efficiency ratio, as adjusted, tangible common equity to tangible assets, and tangible common equity per common share and tangible common equity per common share and per common share issuable under purchase contracts constitute supplemental financial information determined by methods other than in accordance with GAAP. These non-GAAP measures are used by management in its analysis of the Company's performance.


Tangible common equity is calculated by subtracting preferred stock, goodwill, and other intangible assets from stockholders' equity. Tangible assets is calculated by subtracting goodwill and other intangible assets from total assets. Banking regulators also exclude goodwill and other intangible assets from stockholders' equity when assessing the capital adequacy of a financial institution.


Adjusted efficiency ratio is calculated by subtracting loss on investments in alternative energy partnerships from noninterest expense and adding total pre-tax return, which includes the loss on investments in alternative energy partnerships, to the sum of net interest income and noninterest income (total revenue). Management believes the presentation of these financial measures adjusting the impact of these items provides useful supplemental information that is essential to a proper understanding of the financial results and operating performance of the Company.


This disclosure should not be viewed as a substitute 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 provide reconciliations of the non-GAAP measures with financial measures defined by GAAP.

 


September 30,

June 30,

March 31,

December 31,

September 30,


2017

2017

2017

2016

2016

Tangible common equity to tangible assets ratio






Total assets

$  10,280,028

$  10,365,768

$  11,052,085

$  11,029,853

$  11,216,404

Less goodwill

(37,144)

(37,144)

(37,144)

(39,244)

(39,244)

Less other intangible assets

(10,219)

(11,135)

(12,191)

(13,617)

(15,335)

Tangible assets

$  10,232,665

$  10,317,489

$  11,002,750

$  10,976,992

$  11,161,825







Total stockholders' equity

$    1,013,908

$    1,006,292

$       985,748

$       980,239

$       971,424

Less goodwill

(37,144)

(37,144)

(37,144)

(39,244)

(39,244)

Less other intangible assets

(10,219)

(11,135)

(12,191)

(13,617)

(15,335)

Tangible equity

966,545

958,013

936,413

927,378

916,845

Less preferred stock

(269,071)

(269,071)

(269,071)

(269,071)

(269,071)

Tangible common equity

$       697,474

$       688,942

$       667,342

$       658,307

$       647,774







Total stockholders' equity to total assets

9.86%

9.71%

8.92%

8.89%

8.66%

Tangible equity to tangible assets

9.45%

9.29%

8.51%

8.45%

8.21%

Tangible common equity to tangible assets

6.82%

6.68%

6.07%

6.00%

5.80%







Common stock outstanding

50,096,056

49,991,395

49,601,363

49,695,299

49,531,321

Class B non-voting non-convertible common stock outstanding

430,694

355,173

277,797

201,922

201,922

Total common stock outstanding

50,526,750

50,346,568

49,879,160

49,897,221

49,733,243

Minimum number of shares issuable under purchase contracts (1)

-

-

166,265

188,742

188,742

Total common stock outstanding and shares issuable under

purchase contracts

50,526,750

50,346,568

50,045,425

50,085,963

49,921,985







(1) Purchase contracts relating to the tangible equity units












Tangible common equity per common stock

$           13.80

$           13.68

$           13.38

$           13.19

$           13.02

Book value per common stock

$           14.74

$           14.64

$           14.37

$           14.25

$           14.12







Tangible common equity per common stock and shares issuable under

purchase contracts

$           13.80

$           13.68

$           13.33

$           13.14

$           12.98

Book value per common stock and shares issuable under

purchase contracts

$           14.74

$           14.64

$           14.32

$           14.20

$           14.07







 

Banc of California, Inc.





Consolidated Operations





Non-GAAP Measures, Continued





(Dollars in thousands, except per share data)





(Unaudited)






Three Months Ended

Nine Months Ended


September 30,

June 30,

March 31,

December 31,

September 30,

September 30,

September 30,


2017

2017

2017

2016

2016

2017

2016

Return on tangible common equity








Average total stockholders' equity

$    1,005,462

$    1,014,267

$    1,001,784

$       995,908

$       968,684

$    1,007,185

$       876,922

Less average preferred stock

(269,071)

(269,071)

(269,071)

(269,071)

(269,071)

(269,071)

(266,377)

Less average goodwill

(37,144)

(37,144)

(39,221)

(39,244)

(39,244)

(37,829)

(39,244)

Less average other intangible assets

(10,760)

(11,808)

(13,190)

(14,704)

(16,039)

(11,910)

(17,308)

Average tangible common equity

$       688,487

$       696,244

$       680,302

$       672,889

$       644,330

$       688,375

$       553,993









Net income

$         16,949

$         12,257

$         17,201

$         33,264

$         35,937

$         46,407

$         82,152

Less preferred stock dividends

(5,112)

(5,113)

(5,113)

(5,113)

(5,112)

(15,338)

(14,801)

Add amortization of intangible assets

916

1,056

1,090

1,028

1,179

3,062

3,823

Add impairment on intangible assets

-

-

336

690

-

336

-

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

(321)

(370)

(499)

(601)

(413)

(1,189)

(1,338)

Net income available to common stockholders

$         12,432

$           7,830

$         13,015

$         29,268

$         31,591

$         33,278

$         69,836









Return on average equity

6.69%

4.85%

6.96%

13.29%

14.76%

6.16%

12.51%

Return on average tangible common equity

7.16%

4.51%

7.76%

17.30%

19.51%

6.46%

16.84%









(1) Utilized a 35% effective tax rate

















Three Months Ended

Nine Months Ended


September 30,

June 30,

March 31,

December 31,

September 30,

September 30,

September 30,


2017

2017

2017

2016

2016

2017

2016

Adjusted efficiency ratio for including the pre-tax effect of

investments in alternative energy partnerships








Noninterest expense

$         79,008

$         98,216

$       124,615

$       129,239

$       124,262

$       301,839

$       313,437

Loss on investments in alternative energy partnerships

(8,348)

(9,761)

(8,682)

(13,850)

(17,660)

(26,791)

(17,660)

Adjusted noninterest expense

$         70,660

$         88,455

$       115,933

$       115,389

$       106,602

$       275,048

$       295,777









Net interest income

$         75,953

$         78,296

$         83,747

$         87,058

$         86,961

$       237,996

$       238,415

Noninterest income

18,827

19,817

59,704

79,687

74,630

98,348

192,193

Total revenue

94,780

98,113

143,451

166,745

161,591

336,344

430,608

Tax credit from investments in alternative energy partnerships

8,777

15,681

8,829

14,048

19,357

33,287

19,357

Deferred tax expense on investments in alternative energy

partnerships

(1,536)

(2,744)

(1,545)

(2,459)

(3,387)

(5,825)

(3,387)

Tax effect on tax credit and deferred tax expense

3,804

8,584

5,140

8,078

11,002

17,528

11,002

Loss on investments in alternative energy partnerships, net

(8,348)

(9,761)

(8,682)

(13,850)

(17,660)

(26,791)

(17,660)

Total pre-tax adjustments for investments in alternative energy

partnerships

2,697

11,760

3,742

5,817

9,312

18,199

9,312

Adjusted total revenue

$         97,477

$       109,873

$       147,193

$       172,562

$       170,903

$       354,543

$       439,920









Efficiency ratio

83.36%

100.10%

86.87%

77.51%

76.90%

89.74%

72.79%

Adjusted efficiency ratio for including the pre-tax effect of

investments in alternative energy partnerships

72.49%

80.51%

78.76%

66.87%

62.38%

77.58%

67.23%









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

34.44%

39.89%

41.37%

41.10%

40.79%

38.96%

40.79%









 

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SOURCE Banc of California, Inc.