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Press Release

Banc of California Reports Fourth Quarter 2017 Earnings

Company Release - 1/25/2018 6:00 AM ET

SANTA ANA, Calif., Jan. 25, 2018 /PRNewswire/ -- Banc of California, Inc. (NYSE: BANC) today reported net income available to common stockholders of $6.2 million, for the fourth quarter of 2017, resulting in diluted earnings per common share of $0.12 for the quarter.  Net income available to common stockholders for the full year was $37.3 million, resulting in diluted earnings per common share of $0.71 for the full year.  Diluted earnings per common share from continuing operations were $0.11 for the fourth quarter, and $0.63 for the full year.  

Highlights for the fourth quarter included:

  • Strong Organic Loan Growth:  Held for investment loans increased by $433 million, or 7%, during the quarter to $6.7 billion. 
    • Commercial loan balances increased by $308 million, or 7%, from the prior quarter, and by $680 million, or 18%, from a year ago.
  • Continuation of Balance Sheet Re-Mix:  Reduced securities by $180 million, or 7%, driven by decline of collateralized loan obligation ("CLO") balances of $117 million, and the sales of $24 million of master limited partnership debt securities ("MLPs") and $23 million of bank debt.   
  • Disciplined Expense Management:  Achieved targeted quarterly, recurring, run-rate expenses of $59.1 million for the quarter, excluding expense related to loss on investments in alternative energy partnerships and non-recurring expenses. 
  • Maintained Strong Credit:  Asset quality remained strong with non-performing assets to total assets of 0.21% at quarter end.  The ALLL / total loan ratio was 0.74% at quarter end, up from 0.72% at prior quarter end and up from 0.67% a year ago.
  • Strong Capital Ratios:  Common equity tier 1 capital ratio of 9.9%, the highest level in over three years.

The Company's fourth quarter reported financial results included $3.3 million of non-recurring expenses, $4.4 million of negative valuation adjustments to the mortgage servicing rights ("MSRs"), and $2.1 million of a net tax benefit as a result of re-measurement of the Company's deferred tax assets and liabilities due to the recently enacted tax reform legislation.

"During the fourth quarter, we continued to make substantial progress on our strategy to re-mix the balance sheet, reducing securities by $180 million, and increasing loan balances by $433 million, as our banking teams delivered a strong finish to cap off 2017," said Doug Bowers, President and Chief Executive Officer of Banc of California.  "These results reflect the focused effort centered on growing our core, commercial banking businesses.  We continue to work hard on improving the funding profile of the institution, and although we saw a modest decline in overall deposit balances as we reduced select high-rate and high volatility deposits this quarter, we did see increased deposit balances collectively in commercial, private and retail banking, which increased by $290 million.  Improving our funding base continues to be our number one goal and priority.  In wrapping up 2017, I want to say thank you to all my colleagues for their hard work and dedication over the course of the year.  As I look into the new year, we have a tremendous opportunity in front of us, and while there is certainly much work that lies ahead, I believe we have a strong foundation in place, with a great brand and talented people across the company, which position us well to achieve our goals for California's Bank in 2018."

The Company will host a conference call to discuss its fourth quarter and full year 2017 financial results at 7:00 a.m. Pacific Time (PT) on Thursday, January 25, 2018.  Interested parties are welcome to attend the conference call by dialing 888-317-6003, and referencing event code 8198599.  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.

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)









December 31,

September 30,

June 30,

March 31,

December 31,


2017

2017

2017

2017

2016

ASSETS






Cash and cash equivalents

$       387,699

$       611,826

$       511,190

$       409,281

$       439,510

Time deposits in financial institutions

-

1,000

1,000

1,000

1,000

Securities available-for-sale

2,575,469

2,755,664

2,915,103

2,434,541

2,381,488

Securities held-to-maturity

-

-

-

863,269

884,234

Loans held-for-sale

67,069

50,130

278,824

228,196

298,018

Loans and leases receivable

6,659,407

6,226,897

5,956,337

6,105,321

6,034,752

Allowance for loan and lease losses

(49,333)

(45,072)

(42,385)

(42,736)

(40,444)

Federal Home Loan Bank and other bank stock

75,654

67,063

63,438

63,238

67,842

Servicing rights, net

33,708

40,448

43,834

44,451

39,936

Other real estate owned, net

1,796

3,682

3,267

3,345

2,502

Premises and equipment, net

135,699

139,326

143,398

146,631

140,917

Investments in alternative energy partnerships, net

48,826

43,817

37,605

47,633

25,639

Goodwill

37,144

37,144

37,144

37,144

37,144

Other intangible assets, net

9,353

10,219

11,135

12,191

13,617

Deferred income tax, net

31,074

23,333

9,499

18,673

9,989

Income tax receivable

8,739

7,699

14,984

15,973

16,009

Bank owned life insurance investment

104,851

104,292

103,709

103,093

102,512

Other assets

161,797

142,985

113,534

128,036

92,694

Assets of discontinued operations

38,900

59,575

164,152

432,805

482,494

Total assets 

$  10,327,852

$  10,280,028

$  10,365,768

$  11,052,085

$  11,029,853







LIABILITIES AND STOCKHOLDERS' EQUITY






Noninterest-bearing deposits

$    1,071,608

$    1,075,782

$    1,138,095

$    1,273,649

$    1,282,629

Interest-bearing deposits

6,221,295

6,327,811

6,906,816

7,324,044

7,859,521

Total deposits

7,292,903

7,403,593

8,044,911

8,597,693

9,142,150

Advances from Federal Home Loan Bank

1,695,000

1,470,000

870,000

1,080,000

490,000

Securities sold under repurchase agreements

-

36,520

53,242

26,320

-

Other borrowings

-

-

-

67,981

67,922

Notes payable, net

172,941

172,865

172,790

174,090

175,378

Reserve for loss on repurchased loans

6,306

6,173

8,028

8,118

7,974

Income taxes payable

-

-

-

618

92

Accrued expenses and other liabilities

140,575

164,469

193,276

81,208

131,618

Liabilities of discontinued operations

7,819

12,500

17,229

30,309

34,480

Total liabilities

9,315,544

9,266,120

9,359,476

10,066,337

10,049,614

Commitments and contingent liabilities






Preferred stock

269,071

269,071

269,071

269,071

269,071

Common stock

517

542

540

537

537

Common stock, class B non-voting non-convertible

5

4

4

3

2

Additional paid-in capital

621,435

619,849

616,251

614,983

614,226

Retained earnings

144,839

145,420

140,331

139,926

134,515

Treasury stock

(28,786)

(28,786)

(28,786)

(29,070)

(29,070)

Accumulated other comprehensive income/(loss), net

5,227

7,808

8,881

(9,702)

(9,042)

Total stockholders' equity

1,012,308

1,013,908

1,006,292

985,748

980,239

Total liabilities and stockholders' equity 

$  10,327,852

$  10,280,028

$  10,365,768

$  11,052,085

$  11,029,853







Banc of California, Inc.

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

(Unaudited)











Three Months Ended

Year Ended


December 31,

September 30,

June 30,

March 31,

December 31,

December 31,

December 31,


2017

2017

2017

2017

2016

2017

2016

Interest and dividend income








Loans, including fees

$         71,695

$         70,208

$         69,661

$         69,507

$         71,613

$       281,071

$       281,868

Securities

23,170

24,337

24,996

27,239

24,153

99,742

79,527

Other interest-earning assets

2,292

2,206

1,783

2,096

3,965

8,377

8,449

Total interest and dividend income

97,157

96,751

96,440

98,842

99,731

389,190

369,844

Interest expense








Deposits

16,044

15,468

14,942

13,960

12,504

60,414

40,220

Federal Home Loan Bank advances

5,402

3,352

2,774

1,423

1,076

12,951

5,717

Securities sold under repurchase agreements

194

500

180

6

221

880

818

Notes payable and other interest-bearing liabilities

2,344

2,395

3,044

2,972

2,998

10,755

12,744

Total interest expense

23,984

21,715

20,940

18,361

16,799

85,000

59,499

Net interest income

73,173

75,036

75,500

80,481

82,932

304,190

310,345

Provision for loan and lease losses

5,052

3,561

2,503

2,583

589

13,699

5,271

Net interest income after provision for loan and lease losses

68,121

71,475

72,997

77,898

82,343

290,491

305,074

Noninterest income








Customer service fees

1,624

1,576

1,669

1,623

1,560

6,492

5,147

Loan servicing income (loss) 

(2,416)

553

132

2,756

4,699

1,025

633

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

2,688

7,625

1,099

3,356

(695)

14,768

29,405

Net gain on sale of loans

1,205

5,735

983

4,019

20,490

11,942

35,895

Loan brokerage income

-

-

34

1,027

1,331

1,061

4,251

Gain on sale of subsidiary and business unit

-

-

-

-

2,629

-

6,323

All other income

2,594

2,876

1,790

2,122

2,490

9,382

16,976

Total noninterest income

5,695

18,365

5,707

14,903

32,504

44,670

98,630

Noninterest expense








Salaries and employee benefits

33,146

30,216

33,348

32,443

42,800

129,153

146,147

Occupancy and equipment

9,565

10,085

9,776

10,668

10,012

40,094

38,046

Professional fees

7,853

7,697

11,794

15,073

11,562

42,417

30,373

Data processing

1,562

1,901

2,246

2,179

2,357

7,888

8,311

Amortization of intangible assets

866

916

1,056

1,090

1,028

3,928

4,851

Restructuring expense

(43)

-

82

5,287

-

5,326

-

All other expenses

9,438

16,508

8,256

14,474

11,286

48,676

43,977

Total noninterest expense excluding loss on investments in alternative energy partnerships

62,387

67,323

66,558

81,214

79,045

277,482

271,705

Loss on investments in alternative energy partnerships

3,995

8,348

9,761

8,682

13,850

30,786

31,510

Total noninterest expense

66,382

75,671

76,319

89,896

92,895

308,268

303,215

Income from continuing operations before income taxes

7,434

14,169

2,385

2,905

21,952

26,893

100,489

Income tax (benefit) expense

(3,418)

(3,939)

(12,753)

(6,471)

(2,543)

(26,581)

13,749

Income from continuing operations

10,852

18,108

15,138

9,376

24,495

53,474

86,740

Income (loss) from discontinued operations before income taxes

765

(1,958)

(4,991)

13,348

14,965

7,164

48,917

Income tax expense (benefit)

315

(799)

(2,110)

5,523

6,196

2,929

20,241

Income (loss) from discontinued operations

450

(1,159)

(2,881)

7,825

8,769

4,235

28,676

Net income

11,302

16,949

12,257

17,201

33,264

57,709

115,416

Preferred stock dividends

5,113

5,112

5,113

5,113

5,113

20,451

19,914

Net income available to common stockholders

$           6,189

$         11,837

$           7,144

$         12,088

$         28,151

$         37,258

$         95,502

Basic earnings per total common share








Income from continuing operations

$             0.11

$             0.25

$             0.20

$             0.08

$             0.37

$             0.64

$             1.36

Income (loss) from discontinued operations

0.01

(0.02)

(0.06)

0.15

0.18

0.08

0.61

Net income

$             0.12

$             0.23

$             0.14

$             0.23

$             0.55

$             0.72

$             1.97

Diluted earnings per total common share








Income from continuing operations

$             0.11

$             0.25

$             0.20

$             0.08

$             0.36

$             0.63

$             1.34

Income (loss) from discontinued operations

0.01

(0.02)

(0.06)

0.15

0.18

0.08

0.60

Net income

$             0.12

$             0.23

$             0.14

$             0.23

$             0.54

$             0.71

$             1.94

Weighted average number of shares outstanding








Basic

50,532,544

50,362,314

50,289,590

49,991,186

50,008,234

50,254,595

46,828,463

Diluted

50,943,165

50,933,358

50,942,324

50,754,145

50,702,110

50,819,790

47,638,105

Dividends declared per common share

$             0.13

$             0.13

$             0.13

$             0.13

$             0.13

$             0.52

$             0.49









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 December 31, 2017

Year Ended December 31, 2017


Continuing

Discontinued

Consolidated

Continuing

Discontinued

Consolidated


Operations

Operations

Operations

Operations

Operations

Operations

Interest and dividend income

$         97,157

$                73

$         97,230

$       389,190

$           7,052

$       396,242

Interest expense

23,984

-

23,984

85,000

-

85,000

Net interest income

73,173

73

73,246

304,190

7,052

311,242

Provision for loan and lease losses

5,052

-

5,052

13,699

-

13,699

Net interest income after provision for loan and lease losses

68,121

73

68,194

290,491

7,052

297,543

Noninterest income







Customer service fees

1,624

-

1,624

6,492

-

6,492

Loan servicing income (loss) 

(2,416)

-

(2,416)

1,025

1,551

2,576

Net gain on sale of securities available for sale

2,688

-

2,688

14,768

-

14,768

Net gain on sale of loans

1,205

-

1,205

11,942

-

11,942

Mortgage banking income (loss)

-

(194)

(194)

-

42,889

42,889

Loan brokerage income

-

-

-

1,061

164

1,225

Gain on disposal of discontinued operations

-

47

47

-

13,796

13,796

All other income

2,594

881

3,475

9,382

1,707

11,089

Total noninterest income

5,695

734

6,429

44,670

60,107

104,777

Noninterest expense







Salaries and employee benefits

33,146

(10)

33,136

129,153

38,374

167,527

Occupancy and equipment

9,565

210

9,775

40,094

3,964

44,058

Professional fees

7,853

84

7,937

42,417

2,546

44,963

Data processing

1,562

19

1,581

7,888

687

8,575

Loss on investments in alternative energy partnerships

3,995

-

3,995

30,786

-

30,786

Amortization of intangible assets

866

-

866

3,928

-

3,928

Restructuring expense

(43)

-

(43)

5,326

3,794

9,120

All other expenses

9,438

(261)

9,177

48,676

10,630

59,306

Total noninterest expense

66,382

42

66,424

308,268

59,995

368,263

Income before income taxes

7,434

765

8,199

26,893

7,164

34,057

Income tax (benefit) expense

(3,418)

315

(3,103)

(26,581)

2,929

(23,652)

Net income

$         10,852

$              450

$         11,302

$         53,474

$           4,235

$         57,709








Banc of California, Inc.

Selected Financial Data

(Dollars in thousands)

(Unaudited)











Three Months Ended

Year Ended


December 31,

September 30,

June 30,

March 31,

December 31,

December 31,

December 31,


2017

2017

2017

2017

2016

2017

2016

Profitability and other ratios of consolidated operations








Return on average assets(1)

0.44%

0.67%

0.46%

0.62%

1.14%

0.55%

1.12%

Return on average equity (1)

4.42%

6.69%

4.85%

6.96%

13.29%

5.72%

12.73%

Return on average tangible common equity(2)

3.84%

7.16%

4.51%

7.76%

17.30%

5.79%

16.97%

Dividend payout ratio (3)

108.33%

56.52%

92.86%

56.52%

23.64%

72.22%

24.87%

Net interest spread

2.79%

2.92%

2.90%

3.03%

2.99%

2.92%

3.15%

Net interest margin(1)

3.01%

3.15%

3.09%

3.19%

3.13%

3.11%

3.30%

Noninterest income to total revenue (4)

8.07%

19.86%

20.20%

41.62%

47.79%

25.19%

45.51%

Noninterest income to average total assets(1)

0.25%

0.74%

0.74%

2.16%

2.74%

0.99%

2.63%

Noninterest expense to average total assets(1)

2.59%

3.10%

3.68%

4.52%

4.44%

3.50%

4.28%

Efficiency ratio(5)

83.37%

83.36%

100.10%

86.87%

77.51%

88.52%

74.11%

Adjusted efficiency ratio including the pre-tax effect of

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

75.46%

72.49%

80.51%

78.76%

66.87%

77.18%

67.13%

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

86.09%

77.33%

73.54%

68.33%

69.11%

75.92%

76.26%

Average investment securities to average total assets

26.10%

27.64%

28.09%

30.18%

27.97%

28.04%

26.23%

Average stockholders' equity to average total assets

9.98%

9.95%

9.48%

8.95%

8.61%

9.58%

8.77%

Allowance for loan and lease losses (ALLL)








Balance at beginning of period

$         45,072

$         42,385

$         42,736

$         40,444

$         40,233

$         40,444

$         35,533

Loans and leases charged off

(1,367)

(959)

(2,898)

(357)

(1,351)

(5,581)

(2,618)

Recoveries

576

85

44

66

973

771

2,258

Provision for loan and lease losses

5,052

3,561

2,503

2,583

589

13,699

5,271

Balance at end of period

$         49,333

$         45,072

$         42,385

$         42,736

$         40,444

$         49,333

$         40,444

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

held-for-investment

0.05%

0.06%

0.19%

0.02%

0.02%

0.11%

0.01%

Reserve for loss on repurchased loans








Balance at beginning of period

$           6,173

$           8,028

$           8,118

$           7,974

$         11,369

7,974

$           9,700

Provision for loan repurchases

(326)

(651)

270

517

(1,881)

(190)

590

Utilization of reserve for loan repurchases

(301)

(1,204)

(360)

(373)

(1,514)

(2,238)

(2,316)

Other adjustments

760

-

-

-

-

760

-

Balance at end of period

$           6,306

$           6,173

$           8,028

$           8,118

$           7,974

$           6,306

$           7,974










(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)









December 31,

September 30,

June 30,

March 31,

December 31,


2017

2017

2017

2017

2016

Asset quality information and ratios






Delinquent loans and leases held-for-investment






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

$         32,087

$         20,286

$         23,305

$         22,596

$         30,140

90+ days delinquent, excluding PCI loans

9,542

11,150

6,508

9,802

14,218

Total delinquent loans, excluding PCI loans

41,629

31,436

29,813

32,398

44,358

PCI loans, 30 to 89 days delinquent

-

-

343

16,410

15,078

PCI loans, 90+ days delinquent

-

-

807

4,943

2,577

Total delinquent PCI loans

-

-

1,150

21,353

17,655

Total delinquent loans

$         41,629

$         31,436

$         30,963

$         53,751

$         62,013

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

0.63%

0.50%

0.50%

0.54%

0.75%

Total delinquent loans and leases to total loans and leases

0.63%

0.50%

0.52%

0.88%

1.03%

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






Non-performing loans and leases, excluding PCI loans

$         19,382

$         12,275

$           9,064

$         16,222

$         14,942

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

-

-

-

-

-

Other real estate owned

1,796

3,682

3,267

3,345

2,502

Non-performing assets

$         21,178

$         15,957

$         12,331

$         19,567

$         17,444

ALLL to non-performing loans and leases

254.53%

367.19%

467.62%

263.44%

270.67%

Non-performing loans and leases to total loans and leases

0.29%

0.20%

0.15%

0.27%

0.25%

Non-performing assets to total assets

0.21%

0.16%

0.12%

0.18%

0.16%

Troubled debt restructurings (TDRs)






Performing TDRs

$           5,646

$           5,668

$           4,579

$           4,309

$           4,827

Non-performing TDRs

2,675

-

1,125

1,144

-

Total TDRs

$           8,321

$           5,668

$           5,704

$           5,453

$           4,827

Loans and leases and ALLL by loan origination type






Loan and lease breakdown by origination type






Originated loans and leases

$    5,988,101

$    5,488,018

$    5,159,823

$    5,109,175

$    4,943,549

Acquired loans not impaired at acquisition

671,306

738,879

792,213

834,983

927,422

Seasoned SFR mortgage loan pools - non-impaired

-

-

-

21,464

21,955

Acquired with deteriorated credit quality

-

-

4,301

139,699

141,826

Total loans and leases

$    6,659,407

$    6,226,897

$    5,956,337

$    6,105,321

$    6,034,752

ALLL breakdown by origination type






Originated loans and leases

$         48,110

$         43,723

$         41,090

$         41,221

$         38,531

Acquired loans not impaired at acquisition

1,223

1,349

1,271

1,234

1,703

Seasoned SFR mortgage loan pools - non-impaired

-

-

-

120

106

Acquired with deteriorated credit quality

-

-

24

161

104

Total ALLL

$         49,333

$         45,072

$         42,385

$         42,736

$         40,444

Discount on Purchased/Acquired Loans






Acquired loans not impaired at acquisition

$         14,943

$         15,983

$         15,446

$         16,275

$         17,820

Seasoned SFR mortgage loan pools - non-impaired

-

-

-

1,219

1,280

Acquired with deteriorated credit quality

-

-

1,754

21,538

22,454

Total Discount

$         14,943

$         15,983

$         17,200

$         39,032

$         41,554

Percentage of ALLL to:






Originated loans and leases:

0.80%

0.80%

0.80%

0.81%

0.78%

Originated loans and leases and acquired loans not impaired at acquisition:

0.74%

0.72%

0.71%

0.71%

0.69%

Total loans and leases

0.74%

0.72%

0.71%

0.70%

0.67%







Banc of California, Inc.

Selected Financial Data, Continued

(Dollars in thousands)

(Unaudited)









December 31,

September 30,

June 30,

March 31,

December 31,


2017

2017

2017

2017

2016

Composition of held-for-investment loans and leases






Commercial real estate

$       717,415

$       713,120

$       716,771

$       750,592

$       729,959

Multifamily

1,816,141

1,617,890

1,545,888

1,449,715

1,365,262

Construction

182,960

176,397

156,246

142,164

125,100

Commercial and industrial

1,701,951

1,602,805

1,560,916

1,585,656

1,522,960

SBA

78,699

78,604

77,254

76,040

73,840

Lease financing

13

91

173

285

379

Total commercial loans

4,497,179

4,188,907

4,057,248

4,004,452

3,817,500

Single family residential mortgage

2,055,649

1,920,310

1,778,536

1,975,055

2,106,630

Other consumer

106,579

117,680

120,553

125,814

110,622

Total consumer loans

2,162,228

2,037,990

1,899,089

2,100,869

2,217,252

Total gross loans and leases

$    6,659,407

$    6,226,897

$    5,956,337

$    6,105,321

$    6,034,752

Composition percentage of held-for-investment loans and leases






Commercial real estate

10.8%

11.5%

12.0%

12.3%

12.1%

Multifamily

27.3%

26.0%

26.0%

23.7%

22.6%

Construction

2.7%

2.8%

2.6%

2.3%

2.1%

Commercial and industrial

25.5%

25.7%

26.2%

26.1%

25.2%

SBA

1.2%

1.3%

1.3%

1.2%

1.2%

Lease financing

0.0%

0.0%

0.0%

0.0%

0.1%

Total commercial loans

67.5%

67.3%

68.1%

65.6%

63.3%

Single family residential mortgage

30.9%

30.8%

29.9%

32.3%

34.9%

Other consumer

1.6%

1.9%

2.0%

2.1%

1.8%

Total consumer loans

32.5%

32.7%

31.9%

34.4%

36.7%

Total gross loans and leases

100.0%

100.0%

100.0%

100.0%

100.0%

Composition of deposits






Noninterest-bearing checking

$    1,071,608

$    1,075,782

$    1,138,095

$    1,273,649

$    1,282,629

Interest-bearing checking

2,089,016

2,011,943

2,058,130

1,998,778

2,048,839

Money market

1,146,859

1,728,937

2,265,380

2,610,376

2,731,314

Savings

1,059,628

945,699

985,001

1,008,218

1,118,175

Certificates of deposit

1,925,792

1,641,232

1,598,305

1,706,672

1,961,193

Total deposits

$    7,292,903

$    7,403,593

$    8,044,911

$    8,597,693

$    9,142,150

Composition percentage of deposits






Noninterest-bearing checking

14.7%

14.5%

14.1%

14.8%

14.0%

Interest-bearing checking

28.7%

27.2%

25.6%

23.2%

22.4%

Money market

15.7%

23.3%

28.2%

30.4%

29.9%

Savings

14.5%

12.8%

12.2%

11.7%

12.2%

Certificates of deposit

26.4%

22.2%

19.9%

19.9%

21.5%

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


December 31, 2017

September 30, 2017

June 30, 2017


Average


Yield 

Average


Yield 

Average


Yield 


Balance

Interest

/ Cost

Balance

Interest

/ Cost

Balance

Interest

/ Cost

Interest earning assets










Loans held-for-sale (1)

$       127,139

$         363

1.13%

$       246,675

$      2,319

3.73%

$       575,669

$      4,876

3.40%

SFR mortgage

1,957,754

19,487

3.95%

1,775,443

17,435

3.90%

1,832,524

18,006

3.94%

Seasoned SFR mortgage loan pools

-

-

-

84,128

1,208

5.70%

151,759

2,121

5.61%

Commercial real estate, multifamily, and construction

2,613,940

28,856

4.38%

2,494,284

27,980

4.45%

2,394,487

25,821

4.33%

Commercial and industrial, SBA, and lease financing

1,630,886

21,829

5.31%

1,553,816

20,820

5.32%

1,565,583

20,233

5.18%

Other consumer

107,664

1,233

4.54%

114,569

1,363

4.72%

119,644

1,400

4.69%

Gross loans and leases

6,437,383

71,768

4.42%

6,268,915

71,125

4.50%

6,639,666

72,457

4.38%

Securities

2,653,838

23,170

3.46%

2,791,585

24,337

3.46%

3,004,551

24,996

3.34%

Other interest-earning assets

548,171

2,292

1.66%

519,593

2,206

1.68%

517,349

1,783

1.38%

Total interest-earning assets

9,639,392

97,230

4.00%

9,580,093

97,668

4.04%

10,161,566

99,236

3.92%

Allowance for loan and lease losses

(45,681)



(42,696)



(42,896)



BOLI and non-interest earning assets

572,692



563,784



578,333



Total assets

$  10,166,403



$  10,101,181



$  10,697,003













Interest-bearing liabilities










Savings

$    1,019,659

2,947

1.15%

$       968,158

2,263

0.93%

$    1,002,797

2,262

0.90%

Interest-bearing checking

2,082,677

4,267

0.81%

2,037,729

3,871

0.75%

2,013,751

3,609

0.72%

Money market

1,294,537

3,262

1.00%

1,935,262

5,095

1.04%

2,359,173

5,482

0.93%

Certificates of deposit

1,822,010

5,568

1.21%

1,560,078

4,239

1.08%

1,606,270

3,589

0.90%

Total interest-bearing deposits

6,218,883

16,044

1.02%

6,501,227

15,468

0.94%

6,981,991

14,942

0.86%

FHLB advances

1,448,326

5,402

1.48%

962,391

3,352

1.38%

990,780

2,774

1.12%

Securities sold under repurchase agreements

33,513

194

2.30%

88,810

500

2.23%

34,298

180

2.11%

Long-term debt and other interest-bearing liabilities

174,066

2,344

5.34%

173,772

2,395

5.47%

240,201

3,044

5.08%

Total interest-bearing liabilities

7,874,788

23,984

1.21%

7,726,200

21,715

1.12%

8,247,270

20,940

1.02%

Noninterest-bearing deposits

1,110,815



1,178,062



1,261,338



Non-interest-bearing liabilities

166,432



191,457



174,128



Total liabilities

9,152,035



9,095,719



9,682,736



Total stockholders' equity

1,014,368



1,005,462



1,014,267



Total liabilities and stockholders' equity

$  10,166,403



$  10,101,181



$  10,697,003













Net interest income/spread


$    73,246

2.79%


$    75,953

2.92%


$    78,296

2.90%











Net interest margin



3.01%



3.15%



3.09%











Ratio of interest-earning assets to interest-bearing liabilities

122.41%



123.99%



123.21%













Total deposits

$    7,329,698

$    16,044

0.87%

$    7,679,289

$    15,468

0.80%

$    8,243,329

$    14,942

0.73%

Total funding (2)

$    8,985,603

$    23,984

1.06%

$    8,904,262

$    21,715

0.97%

$    9,508,608

$    20,940

0.88%












(1)

Includes loans held-for-sale of discontinued operations

(2)

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)










Three Months Ended


March 31, 2017

December 31, 2016


Average


Yield 

Average


Yield 


Balance

Interest

/ Cost

Balance

Interest

/ Cost

Interest earning assets







Loans held-for-sale (1)

$       699,671

$      6,111

3.54%

$       912,468

$      7,817

3.41%

SFR mortgage

1,963,861

19,105

3.95%

1,843,381

17,760

3.83%

Seasoned SFR mortgage loan pools

154,736

2,145

5.62%

570,006

6,281

4.38%

Commercial real estate, multifamily, and construction

2,336,323

25,851

4.49%

2,146,067

23,405

4.34%

Commercial and industrial, SBA, and lease financing

1,508,756

18,293

4.92%

1,628,177

19,228

4.70%

Other consumer

121,666

1,268

4.23%

109,142

1,248

4.55%

Gross loans and leases

6,785,013

72,773

4.35%

7,209,241

75,739

4.18%

Securities

3,376,698

27,239

3.27%

3,236,253

24,153

2.97%

Other interest-earning assets

500,123

2,096

1.70%

629,873

3,965

2.50%

Total interest-earning assets

10,661,834

102,108

3.88%

11,075,367

103,857

3.73%

Allowance for loan and lease losses

(41,285)



(39,163)



BOLI and non-interest earning assets

568,257



532,645



Total assets

$  11,188,806



$  11,568,849










Interest-bearing liabilities







Savings

$    1,042,031

2,292

0.89%

$       941,404

1,917

0.81%

Interest-bearing checking

2,008,828

3,414

0.69%

2,081,105

3,371

0.64%

Money market

2,735,810

4,691

0.70%

2,830,271

3,909

0.55%

Certificates of deposit

1,937,392

3,563

0.75%

1,972,256

3,307

0.67%

Total interest-bearing deposits

7,724,061

13,960

0.73%

7,825,036

12,504

0.64%

FHLB advances

812,444

1,423

0.71%

892,120

1,076

0.48%

Securities sold under repurchase agreements

2,123

6

1.15%

59,761

221

1.47%

Long-term debt and other interest-bearing liabilities

244,040

2,972

4.94%

238,179

2,998

5.01%

Total interest-bearing liabilities

8,782,668

18,361

0.85%

9,015,096

16,799

0.74%

Noninterest-bearing deposits

1,181,279



1,286,642



Non-interest-bearing liabilities

223,075



271,203



Total liabilities

10,187,022



10,572,941



Total stockholders' equity

1,001,784



995,908



Total liabilities and stockholders' equity

$  11,188,806



$  11,568,849










Net interest income/spread


$    83,747

3.03%


$    87,058

2.99%








Net interest margin



3.19%



3.13%








Ratio of interest-earning assets to interest-bearing liabilities

121.40%



122.85%










Total deposits

$    8,905,340

$    13,960

0.64%

$    9,111,678

$    12,504

0.55%

Total funding (2)

$    9,963,947

$    18,361

0.75%

$  10,301,738

$    16,799

0.65%









(1)

Includes loans held-for-sale of discontinued operations

(2)

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)










Year Ended


December 31, 2017

December 31, 2016


Average


Yield 

Average


Yield 


Balance

Interest

/ Cost

Balance

Interest

/ Cost

Interest earning assets







Loans held-for-sale (1)

$       410,266

$    13,669

3.33%

$       881,875

$    31,493

3.57%

SFR mortgage

1,882,086

74,033

3.93%

1,606,153

60,746

3.78%

Seasoned SFR mortgage loan pools

97,195

5,474

5.63%

807,522

43,318

5.36%

Commercial real estate, multifamily, and construction

2,460,614

108,508

4.41%

1,962,719

87,367

4.45%

Commercial and industrial, SBA, and lease financing

1,565,065

81,175

5.19%

1,414,653

69,268

4.90%

Other consumer

115,843

5,264

4.54%

107,904

4,804

4.45%

Gross loans and leases

6,531,069

288,123

4.41%

6,780,826

296,996

4.38%

Securities

2,954,235

99,742

3.38%

2,711,112

79,527

2.93%

Other interest-earning assets

516,832

8,377

1.62%

380,832

8,449

2.22%

Total interest-earning assets

10,002,136

396,242

3.96%

9,872,770

384,972

3.90%

Allowance for loan and lease losses

(43,150)



(37,664)



BOLI and non-interest earning assets

575,363



500,599



Total assets

$  10,534,349



$  10,335,705










Interest-bearing liabilities







Savings

$    1,007,990

9,764

0.97%

$       882,774

6,795

0.77%

Interest-bearing checking

2,035,954

15,161

0.74%

2,066,623

13,723

0.66%

Money market

2,076,847

18,530

0.89%

2,094,839

10,776

0.51%

Certificates of deposit

1,730,652

16,959

0.98%

1,465,679

8,926

0.61%

Total interest-bearing deposits

6,851,443

60,414

0.88%

6,509,915

40,220

0.62%

FHLB advances

1,054,978

12,951

1.23%

1,153,208

5,717

0.50%

Securities sold under repurchase agreements

39,907

880

2.21%

92,937

818

0.88%

Long-term debt and other interest-bearing liabilities

207,734

10,755

5.18%

218,737

12,744

5.83%

Total interest-bearing liabilities

8,154,062

85,000

1.04%

7,974,797

59,499

0.75%

Noninterest-bearing deposits

1,182,667



1,225,656



Non-interest-bearing liabilities

188,625



228,421



Total liabilities

9,525,354



9,428,874



Total stockholders' equity

1,008,995



906,831



Total liabilities and stockholders' equity

$  10,534,349



$  10,335,705










Net interest income/spread


$  311,242

2.92%


$  325,473

3.15%








Net interest margin



3.11%



3.30%








Ratio of interest-earning assets to interest-bearing liabilities

122.66%



123.80%










Total deposits

$    8,034,110

$    60,414

0.75%

$    7,735,571

$    40,220

0.52%

Total funding (2)

$    9,336,729

$    85,000

0.91%

$    9,200,453

$    59,499

0.65%









(1)

Includes loans held-for-sale of discontinued operations

(2)

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)









December 31,

September 30,

June 30,

March 31,

December 31,


2017

2017

2017

2017

2016

Capital Ratios






Banc of California, Inc.






Total risk-based capital ratio

14.56%

14.48%

14.39%

13.72%

13.70%

Tier 1 risk-based capital ratio

13.79%

13.77%

13.72%

13.08%

13.22%

Common equity tier 1 capital ratio

9.92%

9.91%

9.83%

9.37%

9.44%

Tier 1 leverage ratio

9.39%

9.55%

8.93%

8.51%

8.17%

Banc of California, NA






Total risk-based capital ratio

16.56%

16.39%

16.13%

15.11%

14.73%

Tier 1 risk-based capital ratio

15.78%

15.68%

15.45%

14.48%

14.12%

Common equity tier 1 capital ratio

15.78%

15.68%

15.45%

14.48%

14.12%

Tier 1 leverage ratio

10.67%

10.88%

10.05%

9.43%

8.71%







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.

 








December 31,

September 30,

June 30,

March 31,

December 31,


2017

2017

2017

2017

2016

Tangible common equity to tangible assets ratio






Total assets

$  10,327,852

$  10,280,028

$  10,365,768

$  11,052,085

$  11,029,853

Less goodwill

(37,144)

(37,144)

(37,144)

(37,144)

(39,244)

Less other intangible assets

(9,353)

(10,219)

(11,135)

(12,191)

(13,617)

Tangible assets

$  10,281,355

$  10,232,665

$  10,317,489

$  11,002,750

$  10,976,992







Total stockholders' equity

$    1,012,308

$    1,013,908

$    1,006,292

$       985,748

$       980,239

Less goodwill

(37,144)

(37,144)

(37,144)

(37,144)

(39,244)

Less other intangible assets

(9,353)

(10,219)

(11,135)

(12,191)

(13,617)

Tangible equity

965,811

966,545

958,013

936,413

927,378

Less preferred stock

(269,071)

(269,071)

(269,071)

(269,071)

(269,071)

Tangible common equity

$       696,740

$       697,474

$       688,942

$       667,342

$       658,307







Total stockholders' equity to total assets

9.80%

9.86%

9.71%

8.92%

8.89%

Tangible equity to tangible assets

9.39%

9.45%

9.29%

8.51%

8.45%

Tangible common equity to tangible assets

6.78%

6.82%

6.68%

6.07%

6.00%







Common stock outstanding

50,083,345

50,096,056

49,991,395

49,601,363

49,695,299

Class B non-voting non-convertible common stock outstanding

508,107

430,694

355,173

277,797

201,922

Total common stock outstanding

50,591,452

50,526,750

50,346,568

49,879,160

49,897,221

Minimum number of shares issuable under purchase contracts (1)

-

-

-

166,265

188,742

Total common stock outstanding and shares issuable under purchase contracts

50,591,452

50,526,750

50,346,568

50,045,425

50,085,963







(1) Purchase contracts relating to the tangible equity units








Tangible common equity per common stock

$           13.77

$           13.80

$           13.68

$           13.38

$           13.19

Book value per common stock

$           14.69

$           14.74

$           14.64

$           14.37

$           14.25







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

$           13.77

$           13.80

$           13.68

$           13.33

$           13.14

Book value per common stock and shares issuable under purchase contracts

$           14.69

$           14.74

$           14.64

$           14.32

$           14.20







Banc of California, Inc.

Consolidated Operations

Non-GAAP Measures, Continued

(Dollars in thousands, except per share data)

(Unaudited)











Three Months Ended

Year Ended


December 31,

September 30,

June 30,

March 31,

December 31,

December 31,

December 31,


2017

2017

2017

2017

2016

2017

2016

Return on tangible common equity








Average total stockholders' equity

$    1,014,368

$    1,005,462

$    1,014,267

$    1,001,784

$       995,908

$    1,008,995

$       906,831

Less average preferred stock

(269,071)

(269,071)

(269,071)

(269,071)

(269,071)

(269,071)

(267,054)

Less average goodwill

(37,144)

(37,144)

(37,144)

(39,221)

(39,244)

(37,656)

(39,244)

Less average other intangible assets

(9,788)

(10,760)

(11,808)

(13,190)

(14,704)

(11,375)

(16,654)

Average tangible common equity

$       698,365

$       688,487

$       696,244

$       680,302

$       672,889

$       690,893

$       583,879









Net income

$         11,302

$         16,949

$         12,257

$         17,201

$         33,264

$         57,709

$       115,416

Less preferred stock dividends

(5,113)

(5,112)

(5,113)

(5,113)

(5,113)

(20,451)

(19,914)

Add amortization of intangible assets

866

916

1,056

1,090

1,028

3,928

4,851

Add impairment on intangible assets

-

-

-

336

690

336

690

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

(303)

(321)

(370)

(499)

(601)

(1,492)

(1,939)

Net income available to common stockholders

$           6,752

$         12,432

$           7,830

$         13,015

$         29,268

$         40,030

$         99,104









Return on average equity

4.42%

6.69%

4.85%

6.96%

13.29%

5.72%

12.73%

Return on average tangible common equity

3.84%

7.16%

4.51%

7.76%

17.30%

5.79%

16.97%









(1) Utilized a 35% effective tax rate














Three Months Ended

Year Ended


December 31,

September 30,

June 30,

March 31,

December 31,

December 31,

December 31,


2017

2017

2017

2017

2016

2017

2016

Adjusted efficiency ratio including the pre-tax effect of

investments in alternative energy partnerships








Noninterest expense

$         66,424

$         79,008

$         98,216

$       124,615

$       129,239

$       368,263

$       442,676

Loss on investments in alternative energy partnerships

(3,995)

(8,348)

(9,761)

(8,682)

(13,850)

(30,786)

(31,510)

Adjusted noninterest expense

$         62,429

$         70,660

$         88,455

$       115,933

$       115,389

$       337,477

$       411,166









Net interest income

$         73,246

$         75,953

$         78,296

$         83,747

$         87,058

$       311,242

$       325,473

Noninterest income

6,429

18,827

19,817

59,704

79,687

104,777

271,880

Total revenue

79,675

94,780

98,113

143,451

166,745

416,019

597,353

Tax credit from investments in alternative energy partnerships

4,908

8,777

15,681

8,829

14,048

38,196

33,405

Deferred tax expense on investments in alternative energy partnerships

(859)

(1,536)

(2,744)

(1,545)

(2,459)

(6,684)

(5,846)

Tax effect on tax credit and deferred tax expense

3,004

3,804

8,584

5,140

8,078

20,531

19,080

Loss on investments in alternative energy partnerships, net

(3,995)

(8,348)

(9,761)

(8,682)

(13,850)

(30,786)

(31,510)

Total pre-tax adjustments for investments in alternative energy

partnerships

3,058

2,697

11,760

3,742

5,817

21,257

15,129

Adjusted total revenue

$         82,733

$         97,477

$       109,873

$       147,193

$       172,562

$       437,276

$       612,482









Efficiency ratio

83.37%

83.36%

100.10%

86.87%

77.51%

88.52%

74.11%

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

75.46%

72.49%

80.51%

78.76%

66.87%

77.18%

67.13%









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

42.59%

34.44%

39.89%

41.37%

41.10%

39.45%

40.91%









 

Cision View original content:http://www.prnewswire.com/news-releases/banc-of-california-reports-fourth-quarter-2017-earnings-300588035.html

SOURCE Banc of California, Inc.