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Press Release

Banc of California Reports First Quarter 2018 Earnings

Company Release - 4/27/2018 6:00 AM ET

SANTA ANA, Calif., April 27, 2018 /PRNewswire/ -- Banc of California, Inc. (NYSE: BANC) today reported net income available to common stockholders of $3.4 million, for the first quarter of 2018, resulting in diluted earnings per common share of $0.06 for the quarter. 

Highlights for the first quarter included:

  • Strong Organic Loan Growth: Held for investment loans increased by $271 million, or 4%, during the quarter to $6.9 billion, representing a 16% annualized growth rate.
    • Gross loan commitment originations totaled $867 million for the first quarter at an average production yield of 4.99%.
  • Stabilization of Core Deposit Balances: Stabilized the deposit base and completed the run-off of legacy high-rate, high-volatility deposit balances, which comprised $207 million of deposit outflows in the first quarter. Core deposit balances increased by $55 million and brokered deposit balances declined by $31 million, which coupled with the legacy run-off, drove total reported deposit balances down by $183 million during the first quarter.
  • Continuation of Balance Sheet Re-Mix: Reduced securities by $151 million, or 6%, driven by the sale of all remaining master limited partnership debt securities ("MLPs") totaling $77 million and the sale of $103 million of commercial mortgage-backed securities ("CMBS"). Additionally, the Company completed the sale of $26 million of mortgage servicing rights ("MSRs") during the first quarter, which resulted in $2.3 million of expenses which are reflected in all other income and a $1.8 million benefit from the release of the associated loan repurchase reserve.
  • Bolstered Talent: Added key leadership talent including Kris Gagnon as Chief Credit Officer and Leticia Aguilar as Head of Community Banking. Executing on hiring and talent plan to support deposit growth initiatives including commercial deposit and treasury management sales and product leadership, Commercial Banking Los Angeles Market Executive and team, and bolstered Commercial Banking and Private Banking teams in San Diego.
  • Disciplined Expense Management: First quarter noninterest expense totaled $59.8 million.
  • Credit and Charge-offs: Net charge-offs totaled $14.1 million for the first quarter, primarily driven by the previously announced $13.9 million fraudulent credit. Our review of the underwriting process for this loan continues but, based upon our review to date, we believe this loan involved an isolated event of external fraud. Provision for loan and lease losses was $19.5 million for the quarter, primarily driven by the single credit described above, and excluding this item, provision expense was $5.6 million. Non-performing assets to total assets were 0.22% at quarter end, compared to 0.21% at the prior quarter end, and compared to 0.18% a year ago. The ALLL / total loan ratio was 0.79% at quarter end, up from 0.74% at the prior quarter end and up from 0.70% a year ago.
  • Strong Capital Ratios: Common equity tier 1 capital ratio of 9.8%, compared to 9.4% a year ago.

The Company's first quarter reported financial results included non-recurring expense items, which included $4.4 million of legal and professional fees, a $0.7 million recovery of legal settlement expense reflected in all other expense, $0.9 million benefit to salaries from the reversal of a portion of the 2017 bonus accrual, and $1.8 million of release of the loan repurchase reserve as a result of the sale of MSRs in the quarter. The net impact of these items totaled $1.0 million of net, nonrecurring expenses for the quarter.

"The first quarter marked another important step in our transformation as we continued to re-mix the balance sheet by lowering securities balances and increasing core lending activities," said Doug Bowers, President and Chief Executive Officer of Banc of California.  "We have now completed the sale of all MLP debt securities, have started to work down our CMBS portfolio, and we completed the sale of the majority of our mortgage servicing rights.  All of these activities we believe lower our overall risk profile, reduce volatility on the balance sheet, and focus us ever more so on core commercial banking activities.  On the deposit front, core deposit balances increased modestly from year-end as we reduced our brokered deposit balances, and completed the reduction of legacy high-rate, high-volatility deposit balances we had discussed over the past few quarters.  We saw substantial hiring momentum in the first quarter to support our plan, namely around core deposit generation initiatives.  At the same time, we continued to be diligent around expense management as we invest in adding front-line bankers and teams." 

The Company will host a conference call to discuss its first quarter 2018 financial results at 7:00 a.m. Pacific Time (PT) on Friday, April 27, 2018.  Interested parties are welcome to attend the conference call by dialing 888-317-6003, and referencing event code 1373989.  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 / James Bourne / Sarah Dhanaphatana, (213) 630-6550

idc@abmac.com / jab@abmac.com / skd@abmac.com

 

Banc of California, Inc.

Consolidated Statements of Financial Condition

(Dollars in thousands)

(Unaudited)








March 31,

December 31,

September 30,

June 30,

March 31,


2018

2017

2017

2017

2017

ASSETS






Cash and cash equivalents

$      346,704

$      387,699

$        611,826

$        511,190

$      409,281

Time deposits in financial institutions

-

-

1,000

1,000

1,000

Securities available-for-sale

2,424,593

2,575,469

2,755,664

2,915,103

2,434,541

Securities held-to-maturity

-

-

-

-

863,269

Loans held-for-sale

20,180

67,069

50,130

278,824

228,196

Loans and leases receivable

6,930,507

6,659,407

6,226,897

5,956,337

6,105,321

Allowance for loan and lease losses

(54,763)

(49,333)

(45,072)

(42,385)

(42,736)

Federal Home Loan Bank and other bank stock

82,715

75,654

67,063

63,438

63,238

Servicing rights, net

6,739

33,708

40,448

43,834

44,451

Other real estate owned, net

1,024

1,796

3,682

3,267

3,345

Premises and equipment, net

135,198

135,699

139,326

143,398

146,631

Investments in alternative energy partnerships, net

48,344

48,826

43,817

37,605

47,633

Goodwill

37,144

37,144

37,144

37,144

37,144

Other intangible assets, net

8,510

9,353

10,219

11,135

12,191

Deferred income tax, net

43,192

31,074

23,333

9,499

18,673

Income tax receivable

10,126

8,739

7,699

14,984

15,973

Bank owned life insurance investment

105,384

104,851

104,292

103,709

103,093

Other assets

153,834

161,797

142,985

113,534

128,036

Assets of discontinued operations

29,888

38,900

59,575

164,152

432,805

Total assets 

$ 10,329,319

$ 10,327,852

$   10,280,028

$   10,365,768

$ 11,052,085







LIABILITIES AND STOCKHOLDERS' EQUITY






Noninterest-bearing deposits

$   1,039,116

$   1,071,608

$     1,075,782

$   1,138,095

$   1,273,649

Interest-bearing deposits

6,071,049

6,221,295

6,327,811

6,906,816

7,324,044

Total deposits

7,110,165

7,292,903

7,403,593

8,044,911

8,597,693

Advances from Federal Home Loan Bank

1,905,000

1,695,000

1,470,000

870,000

1,080,000

Securities sold under repurchase agreements

-

-

36,520

53,242

26,320

Other borrowings

-

-

-

-

67,981

Notes payable, net

172,966

172,941

172,865

172,790

174,090

Reserve for loss on repurchased loans

3,426

6,306

6,173

8,028

8,118

Income taxes payable

-

-

-

-

618

Due on unsettled securities purchases

59,000

-

54,500

116,090

-

Accrued expenses and other liabilities

84,997

140,575

109,969

77,186

81,208

Liabilities of discontinued operations

9

7,819

12,500

17,229

30,309

Total liabilities

9,335,563

9,315,544

9,266,120

9,359,476

10,066,337

Commitments and contingent liabilities






Preferred stock

269,071

269,071

269,071

269,071

269,071

Common stock

517

517

542

540

537

Common stock, class B non-voting non-convertible

5

5

4

4

3

Additional paid-in capital

623,483

621,435

619,849

616,251

614,983

Retained earnings

141,008

144,839

145,420

140,331

139,926

Treasury stock

(28,786)

(28,786)

(28,786)

(28,786)

(29,070)

Accumulated other comprehensive income/(loss), net

(11,542)

5,227

7,808

8,881

(9,702)

Total stockholders' equity

993,756

1,012,308

1,013,908

1,006,292

985,748

Total liabilities and stockholders' equity 

$ 10,329,319

$ 10,327,852

$   10,280,028

$   10,365,768

$ 11,052,085

 

Banc of California, Inc.

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

(Unaudited)


Three Months Ended


March 31,

December 31,

September 30,

June 30,

March 31,


2018

2017

2017

2017

2017

Interest and dividend income






Loans, including fees

$        74,912

$        71,695

$          70,208

$          69,661

$        69,507

Securities

21,631

23,170

24,337

24,996

27,239

Other interest-earning assets

2,164

2,292

2,206

1,783

2,096

Total interest and dividend income

98,707

97,157

96,751

96,440

98,842

Interest expense






Deposits

16,795

16,044

15,468

14,942

13,960

Federal Home Loan Bank advances

7,392

5,402

3,352

2,774

1,423

Securities sold under repurchase agreements

750

194

500

180

6

Notes payable and other interest-bearing liabilities

2,332

2,344

2,395

3,044

2,972

Total interest expense

27,269

23,984

21,715

20,940

18,361

Net interest income

71,438

73,173

75,036

75,500

80,481

Provision for loan and lease losses

19,499

5,052

3,561

2,503

2,583

Net interest income after provision for loan and lease losses

51,939

68,121

71,475

72,997

77,898

Noninterest income






Customer service fees

1,592

1,624

1,576

1,669

1,623

Loan servicing income (loss) 

2,311

(2,416)

553

132

2,756

Net gain on sale of securities available for sale

5,241

2,688

7,625

1,099

3,356

Net gain (loss) on sale of loans

(41)

1,205

5,735

983

4,019

All other income

(521)

2,594

2,876

1,824

3,149

Total noninterest income

8,582

5,695

18,365

5,707

14,903

Noninterest expense






Salaries and employee benefits

31,115

33,146

30,216

33,348

32,443

Occupancy and equipment

7,687

9,565

10,085

9,776

10,668

Professional fees

9,177

7,853

7,697

11,794

15,073

Data processing

1,656

1,562

1,901

2,246

2,179

Advertising

3,277

1,420

1,051

1,117

1,725

Regulatory assessments

2,092

2,174

2,350

1,140

2,441

Reversal of provision for loan repurchases

(1,788)

(335)

(749)

(403)

(325)

Amortization of intangible assets

843

866

916

1,056

1,090

Restructuring expense

-

(43)

-

82

5,287

All other expenses

5,775

6,179

13,856

6,402

10,633

Total noninterest expense excluding (gain) loss on investments in alternative energy partnerships

59,834

62,387

67,323

66,558

81,214

(Gain) loss on investments in alternative energy partnerships

(34)

3,995

8,348

9,761

8,682

Total noninterest expense

59,800

66,382

75,671

76,319

89,896

Income from continuing operations before income taxes

721

7,434

14,169

2,385

2,905

Income tax benefit

(6,353)

(3,418)

(3,939)

(12,753)

(6,471)

Income from continuing operations

7,074

10,852

18,108

15,138

9,376

Income (loss) from discontinued operations before income taxes

2,044

765

(1,958)

(4,991)

13,348

Income tax expense (benefit)

560

315

(799)

(2,110)

5,523

Income (loss) from discontinued operations

1,484

450

(1,159)

(2,881)

7,825

Net income

8,558

11,302

16,949

12,257

17,201

Preferred stock dividends

5,113

5,113

5,112

5,113

5,113

Net income available to common stockholders

$          3,445

$          6,189

$          11,837

$          7,144

$        12,088

Basic earnings per total common share






Income from continuing operations

$            0.03

$            0.11

$              0.25

$              0.20

$            0.08

Income (loss) from discontinued operations

0.03

0.01

(0.02)

(0.06)

0.15

Net income

$            0.06

$            0.12

$              0.23

$              0.14

$            0.23

Diluted earnings per total common share






Income from continuing operations

$            0.03

$            0.11

$              0.25

$              0.20

$            0.08

Income (loss) from discontinued operations

0.03

0.01

(0.02)

(0.06)

0.15

Net income

$            0.06

$            0.12

$              0.23

$              0.14

$            0.23

Weighted average number of shares outstanding






Basic

50,590,545

50,532,544

50,362,314

50,289,590

49,991,186

Diluted

50,925,530

50,943,165

50,933,358

50,942,324

50,754,145

Dividends declared per common share

$            0.13

$            0.13

$              0.13

$              0.13

$            0.13

 

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 March 31, 2018




Continuing

Discontinued

Consolidated




Operations

Operations

Operations

Interest and dividend income



$          98,707

$              186

$        98,893

Interest expense



27,269

-

27,269

Net interest income



71,438

186

71,624

Provision for loan and lease losses



19,499

-

19,499

Net interest income after provision for loan and lease losses



51,939

186

52,125

Noninterest income






Customer service fees



1,592

-

1,592

Loan servicing income 



2,311

-

2,311

Net gain on sale of securities available for sale



5,241

-

5,241

Net loss on sale of loans



(41)

-

(41)

Mortgage banking income



-

232

232

Gain on disposal of discontinued operations



-

1,003

1,003

All other income



(521)

635

114

Total noninterest income



8,582

1,870

10,452

Noninterest expense






Salaries and employee benefits



31,115

9

31,124

Occupancy and equipment



7,687

-

7,687

Professional fees



9,177

-

9,177

Data processing



1,656

-

1,656

Advertising



3,277

-

3,277

Regulatory assessments



2,092

-

2,092

Reversal of provision for loan repurchases



(1,788)

-

(1,788)

Gain on investments in alternative energy partnerships



(34)

-

(34)

Amortization of intangible assets



843

-

843

All other expenses



5,775

3

5,778

Total noninterest expense



59,800

12

59,812

Income before income taxes



721

2,044

2,765

Income tax (benefit) expense



(6,353)

560

(5,793)

Net income



$            7,074

$          1,484

$          8,558

 

Banc of California, Inc.

Selected Financial Data

(Dollars in thousands)

(Unaudited)


Three Months Ended


March 31,

December 31,

September 30,

June 30,

March 31,


2018

2017

2017

2017

2017

Profitability and other ratios of consolidated operations






Return on average assets(1)

0.34%

0.44%

0.67%

0.46%

0.62%

Return on average equity (1)

3.40%

4.42%

6.69%

4.85%

6.96%

Return on average tangible common equity(2)

2.37%

3.84%

7.16%

4.51%

7.76%

Dividend payout ratio (3)

216.67%

108.33%

56.52%

92.86%

56.52%

Net interest spread

2.74%

2.79%

2.92%

2.90%

3.03%

Net interest margin(1)

2.98%

3.01%

3.15%

3.09%

3.19%

Noninterest income to total revenue (4)

12.73%

8.07%

19.86%

20.20%

41.62%

Noninterest income to average total assets(1)

0.41%

0.25%

0.74%

0.74%

2.16%

Noninterest expense to average total assets(1)

2.36%

2.59%

3.10%

3.68%

4.52%

Efficiency ratio(5)

72.87%

83.37%

83.36%

100.10%

86.87%

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

65.70%

75.46%

72.49%

80.51%

78.76%

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

94.87%

86.09%

77.33%

73.54%

68.33%

Average investment securities to average total assets

24.60%

26.10%

27.64%

28.09%

30.18%

Average stockholders' equity to average total assets

9.94%

9.98%

9.95%

9.48%

8.95%

Allowance for loan and lease losses (ALLL)






Balance at beginning of period

$        49,333

$        45,072

$          42,385

$          42,736

$        40,444

Loans and leases charged off

(14,639)

(1,367)

(959)

(2,898)

(357)

Recoveries

570

576

85

44

66

Provision for loan and lease losses

19,499

5,052

3,561

2,503

2,583

Balance at end of period

$        54,763

$        49,333

$          45,072

$          42,385

$        42,736

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

0.84%

0.05%

0.06%

0.19%

0.02%

Reserve for loss on repurchased loans






Balance at beginning of period

$          6,306

$          6,173

$            8,028

$          8,118

$          7,974

Provision (reversal) for loan repurchases

(1,786)

(326)

(651)

270

517

Utilization of reserve for loan repurchases

(1,094)

(301)

(1,204)

(360)

(373)

Other adjustments

-

760

-

-

-

Balance at end of period

$          3,426

$          6,306

$            6,173

$          8,028

$          8,118



(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)








March 31,

December 31,

September 30,

June 30,

March 31,


2018

2017

2017

2017

2017

Asset quality information and ratios






Delinquent loans and leases held-for-investment






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

$        31,936

$        32,087

$          20,286

$          23,305

$        22,596

90+ days delinquent, excluding PCI loans

11,526

9,542

11,150

6,508

9,802

Total delinquent loans, excluding PCI loans

43,462

41,629

31,436

29,813

32,398

PCI loans, 30 to 89 days delinquent

-

-

-

343

16,410

PCI loans, 90+ days delinquent

-

-

-

807

4,943

Total delinquent PCI loans

-

-

-

1,150

21,353

Total delinquent loans

$        43,462

$        41,629

$          31,436

$          30,963

$        53,751

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

0.63%

0.63%

0.50%

0.50%

0.54%

Total delinquent loans and leases to total loans and leases

0.63%

0.63%

0.50%

0.52%

0.88%

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






Non-performing loans and leases, excluding PCI loans

$        21,220

$        19,382

$          12,275

$            9,064

$        16,222

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

-

-

-

-

-

Other real estate owned

1,024

1,796

3,682

3,267

3,345

Non-performing assets

$        22,244

$        21,178

$          15,957

$          12,331

$        19,567

ALLL to non-performing loans and leases

258.07%

254.53%

367.19%

467.62%

263.44%

Non-performing loans and leases to total loans and leases

0.31%

0.29%

0.20%

0.15%

0.27%

Non-performing assets to total assets

0.22%

0.21%

0.16%

0.12%

0.18%

Troubled debt restructurings (TDRs)






Performing TDRs

$          5,787

$          5,646

$            5,668

$            4,579

$          4,309

Non-performing TDRs

2,632

2,675

-

1,125

1,144

Total TDRs

$          8,419

$          8,321

$            5,668

$            5,704

$          5,453

Loans and leases and ALLL by loan origination type






Loan and lease breakdown by origination type






Originated loans and leases

$   6,295,843

$   5,988,101

$     5,488,018

$     5,159,823

$   5,109,175

Acquired loans not impaired at acquisition

634,664

671,306

738,879

792,213

834,983

Seasoned SFR mortgage loan pools - non-impaired

-

-

-

-

21,464

Acquired with deteriorated credit quality

-

-

-

4,301

139,699

Total loans and leases

$   6,930,507

$   6,659,407

$     6,226,897

$     5,956,337

$   6,105,321

ALLL breakdown by origination type






Originated loans and leases

$        53,605

$        48,110

$          43,723

$          41,090

$        41,221

Acquired loans not impaired at acquisition

1,158

1,223

1,349

1,271

1,234

Seasoned SFR mortgage loan pools - non-impaired

-

-

-

-

120

Acquired with deteriorated credit quality

-

-

-

24

161

Total ALLL

$        54,763

$        49,333

$          45,072

$          42,385

$        42,736

Discount on Purchased/Acquired Loans






Acquired loans not impaired at acquisition

$        14,255

$        14,943

$          15,983

$          15,446

$        16,275

Seasoned SFR mortgage loan pools - non-impaired

-

-

-

-

1,219

Acquired with deteriorated credit quality

-

-

-

1,754

21,538

Total Discount

$        14,255

$        14,943

$          15,983

$          17,200

$        39,032

Percentage of ALLL to:






Originated loans and leases:

0.85%

0.80%

0.80%

0.80%

0.81%

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

0.79%

0.74%

0.72%

0.71%

0.71%

Total loans and leases

0.79%

0.74%

0.72%

0.71%

0.70%

 

Banc of California, Inc.

Selected Financial Data, Continued

(Dollars in thousands)

(Unaudited)








March 31,

December 31,

September 30,

June 30,

March 31,


2018

2017

2017

2017

2017

Composition of held-for-investment loans and leases






Commercial real estate

$      773,193

$      717,415

$        713,120

$        716,771

$      750,592

Multifamily

1,944,082

1,816,141

1,617,890

1,545,888

1,449,715

Construction

200,766

182,960

176,397

156,246

142,164

Commercial and industrial

1,638,559

1,701,951

1,602,805

1,560,916

1,585,656

SBA

79,022

78,699

78,604

77,254

76,040

Lease financing

3

13

91

173

285

Total commercial loans

4,635,625

4,497,179

4,188,907

4,057,248

4,004,452

Single family residential mortgage

2,201,358

2,055,649

1,920,310

1,778,536

1,975,055

Other consumer

93,524

106,579

117,680

120,553

125,814

Total consumer loans

2,294,882

2,162,228

2,037,990

1,899,089

2,100,869

Total gross loans and leases

$   6,930,507

$   6,659,407

$     6,226,897

$     5,956,337

$   6,105,321

Composition percentage of held-for-investment loans and leases






Commercial real estate

11.2%

10.8%

11.5%

12.0%

12.3%

Multifamily

28.1%

27.3%

26.0%

26.0%

23.7%

Construction

2.9%

2.7%

2.8%

2.6%

2.3%

Commercial and industrial

23.6%

25.5%

25.7%

26.2%

26.1%

SBA

1.1%

1.2%

1.3%

1.3%

1.2%

Lease financing

0.0%

0.0%

0.0%

0.0%

0.0%

Total commercial loans

66.9%

67.5%

67.3%

68.1%

65.6%

Single family residential mortgage

31.8%

30.9%

30.8%

29.9%

32.3%

Other consumer

1.3%

1.6%

1.9%

2.0%

2.1%

Total consumer loans

33.1%

32.5%

32.7%

31.9%

34.4%

Total gross loans and leases

100.0%

100.0%

100.0%

100.0%

100.0%

Composition of deposits






Noninterest-bearing checking

$   1,039,116

$   1,071,608

$     1,075,782

$     1,138,095

$   1,273,649

Interest-bearing checking

1,864,629

2,089,016

2,011,943

2,058,130

1,998,778

Money market

1,091,735

1,146,859

1,728,937

2,265,380

2,610,376

Savings

1,051,267

1,059,628

945,699

985,001

1,008,218

Certificates of deposit

2,063,418

1,925,792

1,641,232

1,598,305

1,706,672

Total deposits

$   7,110,165

$   7,292,903

$     7,403,593

$     8,044,911

$   8,597,693

Composition percentage of deposits






Noninterest-bearing checking

14.6%

14.7%

14.5%

14.1%

14.8%

Interest-bearing checking

26.2%

28.7%

27.2%

25.6%

23.2%

Money market

15.4%

15.7%

23.3%

28.2%

30.4%

Savings

14.8%

14.5%

12.8%

12.2%

11.7%

Certificates of deposit

29.0%

26.4%

22.2%

19.9%

19.9%

Total deposits

100.0%

100.0%

100.0%

100.0%

100.0%

Capital Ratios






Banc of California, Inc.






Total risk-based capital ratio

14.60%

14.56%

14.48%

14.39%

13.72%

Tier 1 risk-based capital ratio

13.74%

13.79%

13.77%

13.72%

13.08%

Common equity tier 1 capital ratio

9.80%

9.92%

9.91%

9.83%

9.37%

Tier 1 leverage ratio

9.21%

9.39%

9.55%

8.93%

8.51%

Banc of California, NA






Total risk-based capital ratio

16.53%

16.56%

16.39%

16.13%

15.11%

Tier 1 risk-based capital ratio

15.67%

15.78%

15.68%

15.45%

14.48%

Common equity tier 1 capital ratio

15.67%

15.78%

15.68%

15.45%

14.48%

Tier 1 leverage ratio

10.50%

10.67%

10.88%

10.05%

9.43%

 

Banc of California, Inc.

Average Balance, Average Yield Earned, and Average Cost Paid 

(Dollars in thousands)

(Unaudited)












Three Months Ended


March 31, 2018

December 31, 2017

September 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)

$        97,095

$      297

1.24%

$      127,139

$      363

1.13%

$      246,675

$   2,319

3.73%

SFR mortgage

2,122,666

21,352

4.08%

1,957,754

19,487

3.95%

1,775,443

17,435

3.90%

Seasoned SFR mortgage loan pools

-

-

-

-

-

-

84,128

1,208

5.70%

Commercial real estate, multifamily, and construction

2,856,290

31,439

4.46%

2,613,940

29,696

4.51%

2,494,284

28,659

4.56%

Commercial and industrial, SBA, and lease financing

1,625,549

20,850

5.20%

1,630,886

20,989

5.11%

1,553,816

20,141

5.14%

Other consumer

103,676

1,160

4.54%

107,664

1,233

4.54%

114,569

1,363

4.72%

Gross loans and leases

6,805,276

75,098

4.48%

6,437,383

71,768

4.42%

6,268,915

71,125

4.50%

Securities

2,525,220

21,631

3.47%

2,653,838

23,170

3.46%

2,791,585

24,337

3.46%

Other interest-earning assets

407,064

2,164

2.16%

548,171

2,292

1.66%

519,593

2,206

1.68%

Total interest-earning assets

9,737,560

98,893

4.12%

9,639,392

97,230

4.00%

9,580,093

97,668

4.04%

Allowance for loan and lease losses

(49,257)



(45,681)



(42,696)



BOLI and non-interest earning assets

574,930



572,692



563,784



Total assets

$ 10,263,233



$ 10,166,403



$ 10,101,181













Interest-bearing liabilities










Savings

$   1,055,338

3,300

1.27%

$   1,019,659

2,947

1.15%

$      968,158

2,263

0.93%

Interest-bearing checking

1,976,160

4,108

0.84%

2,082,677

4,267

0.81%

2,037,729

3,871

0.75%

Money market

1,076,117

2,834

1.07%

1,294,537

3,262

1.00%

1,935,262

5,095

1.04%

Certificates of deposit

1,906,556

6,553

1.39%

1,822,010

5,568

1.21%

1,560,078

4,239

1.08%

Total interest-bearing deposits

6,014,171

16,795

1.13%

6,218,883

16,044

1.02%

6,501,227

15,468

0.94%

FHLB advances

1,711,089

7,392

1.75%

1,448,326

5,402

1.48%

962,391

3,352

1.38%

Securities sold under repurchase agreements

119,543

750

2.54%

33,513

194

2.30%

88,810

500

2.23%

Long-term debt and other interest-bearing liabilities

174,424

2,332

5.42%

174,066

2,344

5.34%

173,772

2,395

5.47%

Total interest-bearing liabilities

8,019,227

27,269

1.38%

7,874,788

23,984

1.21%

7,726,200

21,715

1.12%

Noninterest-bearing deposits

1,056,700



1,110,815



1,178,062



Non-interest-bearing liabilities

167,345



166,432



191,457



Total liabilities

9,243,272



9,152,035



9,095,719



Total stockholders' equity

1,019,961



1,014,368



1,005,462



Total liabilities and stockholders' equity

$ 10,263,233



$ 10,166,403



$ 10,101,181













Net interest income/spread


$ 71,624

2.74%


$ 73,246

2.79%


$ 75,953

2.92%











Net interest margin



2.98%



3.01%



3.15%











Ratio of interest-earning assets to interest-bearing liabilities

121.43%



122.41%



123.99%













Total deposits

$   7,070,871

$ 16,795

0.96%

$   7,329,698

$ 16,044

0.87%

$   7,679,289

$ 15,468

0.80%

Total funding (2)

$   9,075,927

$ 27,269

1.22%

$   8,985,603

$ 23,984

1.06%

$   8,904,262

$ 21,715

0.97%



(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.

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

(Dollars in thousands)

(Unaudited)









Three Months Ended


June 30, 2017

March 31, 2017


Average


Yield 

Average


Yield 


Balance

Interest

/ Cost

Balance

Interest

/ Cost

Interest earning assets







Loans held-for-sale (1)

$      575,669

$   4,876

3.40%

$      699,671

$   6,111

3.54%

SFR mortgage

1,832,524

18,006

3.94%

1,963,861

19,105

3.95%

Seasoned SFR mortgage loan pools

151,759

2,121

5.61%

154,736

2,145

5.62%

Commercial real estate, multifamily, and construction

2,394,487

27,038

4.53%

2,336,323

26,393

4.58%

Commercial and industrial, SBA, and lease financing

1,565,583

18,991

4.87%

1,508,756

17,751

4.77%

Other consumer

119,644

1,425

4.78%

121,666

1,268

4.23%

Gross loans and leases

6,639,666

72,457

4.38%

6,785,013

72,773

4.35%

Securities

3,004,551

24,996

3.34%

3,376,698

27,239

3.27%

Other interest-earning assets

517,349

1,783

1.38%

500,123

2,096

1.70%

Total interest-earning assets

10,161,566

99,236

3.92%

10,661,834

102,108

3.88%

Allowance for loan and lease losses

(42,896)



(41,285)



BOLI and non-interest earning assets

578,333



568,257



Total assets

$ 10,697,003



$ 11,188,806










Interest-bearing liabilities







Savings

$   1,002,797

2,262

0.90%

$   1,042,031

2,292

0.89%

Interest-bearing checking

2,013,751

3,609

0.72%

2,008,828

3,414

0.69%

Money market

2,359,173

5,482

0.93%

2,735,810

4,691

0.70%

Certificates of deposit

1,606,270

3,589

0.90%

1,937,392

3,563

0.75%

Total interest-bearing deposits

6,981,991

14,942

0.86%

7,724,061

13,960

0.73%

FHLB advances

990,780

2,774

1.12%

812,444

1,423

0.71%

Securities sold under repurchase agreements

34,298

180

2.11%

2,123

6

1.15%

Long-term debt and other interest-bearing liabilities

240,201

3,044

5.08%

244,040

2,972

4.94%

Total interest-bearing liabilities

8,247,270

20,940

1.02%

8,782,668

18,361

0.85%

Noninterest-bearing deposits

1,261,338



1,181,279



Non-interest-bearing liabilities

174,128



223,075



Total liabilities

9,682,736



10,187,022



Total stockholders' equity

1,014,267



1,001,784



Total liabilities and stockholders' equity

$ 10,697,003



$ 11,188,806










Net interest income/spread


$ 78,296

2.90%


$ 83,747

3.03%








Net interest margin



3.09%



3.19%








Ratio of interest-earning assets to interest-bearing liabilities

123.21%



121.40%










Total deposits

$   8,243,329

$ 14,942

0.73%

$   8,905,340

$ 13,960

0.64%

Total funding (2)

$   9,508,608

$ 20,940

0.88%

$   9,963,947

$ 18,361

0.75%



(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.

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.








March 31,

December 31,

September 30,

June 30,

March 31,


2018

2017

2017

2017

2017

Tangible common equity to tangible assets ratio






Total assets

$ 10,329,319

$ 10,327,852

$   10,280,028

$   10,365,768

$ 11,052,085

Less goodwill

(37,144)

(37,144)

(37,144)

(37,144)

(37,144)

Less other intangible assets

(8,510)

(9,353)

(10,219)

(11,135)

(12,191)

Tangible assets

$ 10,283,665

$ 10,281,355

$   10,232,665

$   10,317,489

$ 11,002,750







Total stockholders' equity

$      993,756

$   1,012,308

$     1,013,908

$   1,006,292

$      985,748

Less goodwill

(37,144)

(37,144)

(37,144)

(37,144)

(37,144)

Less other intangible assets

(8,510)

(9,353)

(10,219)

(11,135)

(12,191)

Tangible equity

948,102

965,811

966,545

958,013

936,413

Less preferred stock

(269,071)

(269,071)

(269,071)

(269,071)

(269,071)

Tangible common equity

$      679,031

$      696,740

$        697,474

$        688,942

$      667,342







Total stockholders' equity to total assets

9.62%

9.80%

9.86%

9.71%

8.92%

Tangible equity to tangible assets

9.22%

9.39%

9.45%

9.29%

8.51%

Tangible common equity to tangible assets

6.60%

6.78%

6.82%

6.68%

6.07%







Common stock outstanding

50,079,736

50,083,345

50,096,056

49,991,395

49,601,363

Class B non-voting non-convertible common stock outstanding

508,107

508,107

430,694

355,173

277,797

Total common stock outstanding

50,587,843

50,591,452

50,526,750

50,346,568

49,879,160

Minimum number of shares issuable under purchase contracts (1)

-

-

-

-

166,265

Total common stock outstanding and shares issuable under purchase contracts

50,587,843

50,591,452

50,526,750

50,346,568

50,045,425







(1) Purchase contracts relating to the tangible equity units












Tangible common equity per common stock

$          13.42

$          13.77

$            13.80

$            13.68

$          13.38

Book value per common stock

$          14.33

$          14.69

$            14.74

$            14.64

$          14.37







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

$          13.42

$          13.77

$            13.80

$            13.68

$          13.33

Book value per common stock and shares issuable under purchase contracts

$          14.33

$          14.69

$            14.74

$            14.64

$          14.32

 

Banc of California, Inc.

Consolidated Operations

Non-GAAP Measures, Continued

(Dollars in thousands, except per share data)

(Unaudited)


Three Months Ended


March 31,

December 31,

September 30,

June 30,

March 31,


2018

2017

2017

2017

2017

Return on tangible common equity






Average total stockholders' equity

$   1,019,961

$   1,014,368

$     1,005,462

$     1,014,267

$   1,001,784

Less average preferred stock

(269,071)

(269,071)

(269,071)

(269,071)

(269,071)

Less average goodwill

(37,144)

(37,144)

(37,144)

(37,144)

(39,221)

Less average other intangible assets

(8,972)

(9,788)

(10,760)

(11,808)

(13,190)

Average tangible common equity

$      704,774

$      698,365

$        688,487

$        696,244

$      680,302







Net income

$          8,558

$        11,302

$          16,949

$          12,257

$        17,201

Less preferred stock dividends

(5,113)

(5,113)

(5,112)

(5,113)

(5,113)

Add amortization of intangible assets

843

866

916

1,056

1,090

Add impairment on intangible assets

-

-

-

-

336

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

(177)

(303)

(321)

(370)

(499)

Net income available to common stockholders

$          4,111

$          6,752

$          12,432

$           7,830

$        13,015







Return on average equity

3.40%

4.42%

6.69%

4.85%

6.96%

Return on average tangible common equity

2.37%

3.84%

7.16%

4.51%

7.76%







Effective tax rate utilized for calculating tax effect on amortization and impairment of intangible assets

21.00%

35.00%

35.00%

35.00%

35.00%








Three Months Ended


March 31,

December 31,

September 30,

June 30,

March 31,


2018

2017

2017

2017

2017

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






Noninterest expense

$        59,812

$        66,424

$          79,008

$          98,216

$      124,615

Gain (loss) on investments in alternative energy partnerships

34

(3,995)

(8,348)

(9,761)

(8,682)

Adjusted noninterest expense

$        59,846

$        62,429

$          70,660

$          88,455

$      115,933







Net interest income

$        71,624

$        73,246

$          75,953

$          78,296

$        83,747

Noninterest income

10,452

6,429

18,827

19,817

59,704

Total revenue

82,076

79,675

94,780

98,113

143,451

Tax credit from investments in alternative energy partnerships

7,323

4,908

8,777

15,681

8,829

Deferred tax expense on investments in alternative energy partnerships

(769)

(859)

(1,536)

(2,744)

(1,545)

Tax effect on tax credit and deferred tax expense

2,422

3,004

3,804

8,584

5,140

Gain (loss) on investments in alternative energy partnerships

34

(3,995)

(8,348)

(9,761)

(8,682)

Total pre-tax adjustments for investments in alternative energy partnerships

9,010

3,058

2,697

11,760

3,742

Adjusted total revenue

$        91,086

$        82,733

$          97,477

$        109,873

$      147,193







Efficiency ratio

72.87%

83.37%

83.36%

100.10%

86.87%

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

65.70%

75.46%

72.49%

80.51%

78.76%







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

26.98%

42.59%

34.44%

39.89%

41.37%

 

Cision View original content:http://www.prnewswire.com/news-releases/banc-of-california-reports-first-quarter-2018-earnings-300637860.html

SOURCE Banc of California, Inc.