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Press Release

Banc of California Reports First Quarter 2019 Earnings

Company Release - 4/23/2019 5:00 AM ET

SANTA ANA, Calif.--(BUSINESS WIRE)-- Banc of California, Inc. (NYSE: BANC) today reported net income available to common stockholders of $2.7 million, for the first quarter of 2019, resulting in diluted earnings per common share of $0.05 for the quarter.

Highlights for the first quarter included:

  • Core Deposits: Core deposit balances were up to $6.3 billion from $6.2 billion in the prior quarter and $5.7 billion a year ago.
    • Wholesale funding mix is 24% in the first quarter, down from 30% at the end of 2018.
    • Noninterest bearing deposits increased by $97 million.
  • HFI Loan Balances: Held for investment loans decreased by $144 million during the quarter to $7.6 billion.
    • Gross loan commitment originations totaled $521 million for the first quarter at an average production yield of 5.29%.
    • Sales of single family loans totaled $243 million.
  • Asset Re-Mix: Investment securities balance declined by $521 million during the quarter and represented 15% of total assets at quarter end, down from 19% at the end of the prior quarter and 23% from a year ago.
  • Noninterest Expenses: First quarter noninterest expenses totaled $61.8 million, up from $49.6 million for the fourth quarter, driven by a seasonal increase in salaries and benefits combined with increased professional fees and restructuring expenses.
  • Credit Performance: Non-performing assets to total assets at quarter end were 0.29% and total delinquent loans to total loans at quarter end were 0.79%, compared to 0.21% and 0.53%, respectively, at the prior quarter end. Net charge-offs during the quarter totaled $1.1 million, compared with $2.5 million during the prior quarter. The ALLL / total loan ratio was 0.85% at quarter end, up from 0.81% at the prior quarter end and 0.79% a year ago.
  • Strong Capital Ratios: Common equity tier 1 capital ratio at quarter end of 9.72%, compared to 9.53% at the prior quarter end and 9.80% a year ago.

Capital actions:

  • Dividend Reduction: The Company’s Board of Directors approved a plan to reduce the quarterly dividend from $0.13 to $0.06 per common share.

The Company’s first quarter results included $11.0 million of legal and professional fees and $2.8 million in restructuring expenses, offset by a $4.7 million insurance recovery related to ongoing indemnification expenses.

“The first quarter results, and particularly actions taken at the end of the quarter, reflect continued effort toward our strategic transformation,” said Jared Wolff, President and Chief Executive Officer of Banc of California. “We increased our core deposits during the quarter by $58 million and more importantly, increased our noninterest bearing deposits by $97 million. Additionally, we decreased our wholesale funding balance to 24% of total funding. Credit quality remained strong with non-performing assets to total assets at 0.29% at quarter end.”

Mr. Wolff continued, “This will be my first quarterly earnings call as the company’s President and CEO, and I am honored to be leading Banc of California at such an exciting time for the company. We have a great brand, very talented people at all levels and are located in one of the best banking markets in the country with the expertise, products and platform necessary to be one of the premier community banking franchises in California. I look forward to accelerating the company’s transformation and continuing to build long term value for our stockholders.”

The Company will host a conference call to discuss its first quarter 2019 financial results at 10:00 a.m. Pacific Time (PT) on Tuesday, April 23, 2019. Interested parties are welcome to attend the conference call by dialing 888-317-6003, and referencing event code 4703060. 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) is a bank holding company with approximately $10 billion in assets and one wholly-owned banking subsidiary, Banc of California, N.A. (the “Bank”). The Bank has 43 offices including 32 full-service branches located throughout Southern California. Through our 750+ dedicated professionals, we provide customized and innovative banking and lending solutions to businesses, entrepreneurs and individuals throughout California. We help our clients grow their businesses, purchase a home, create jobs, transform neighborhoods, enrich communities and empower their dreams. We also help to improve the communities where we live and work, by supporting organizations that provide financial literacy and job training, small business support and affordable housing. With a commitment to service and building enduring relationships, we provide a higher standard of banking. We look forward to helping you achieve your goals. For more information, please visit us at www.bancofcal.com.

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.

           
Banc of California, Inc.
Consolidated Statements of Financial Condition
(Dollars in thousands)
(Unaudited)
 
March 31, December 31, September 30, June 30, March 31,
  2019     2018     2018     2018     2018  
ASSETS
Cash and cash equivalents $ 304,705 $ 391,592 $ 372,221 $ 385,691 $ 346,704
Securities available-for-sale 1,471,303 1,992,500 2,059,832 2,297,124 2,424,593
Loans held-for-sale 25,191 8,116 9,382 13,753 20,180
Loans and leases receivable 7,557,200 7,700,873 7,253,293 7,036,004 6,930,507
Allowance for loan and lease losses (63,885 ) (62,192 ) (57,782 ) (56,678 ) (54,763 )
Federal Home Loan Bank and other bank stock 55,794 68,094 71,308 75,737 82,715
Servicing rights, net 3,053 3,428 3,770 3,869 6,739
Other real estate owned, net 316 672 434 710 1,024
Premises and equipment, net 130,417 129,394 133,129 135,478 135,198
Investments in alternative energy partnerships, net 26,578 28,988 41,781 44,806 48,344
Goodwill 37,144 37,144 37,144 37,144 37,144
Other intangible assets, net 5,726 6,346 6,990 7,683 8,510
Deferred income tax, net 45,111 49,404 47,865 42,334 43,192
Income tax receivable 4,787 2,695 1,764 7,995 10,126
Bank owned life insurance investment 107,552 107,027 106,468 105,917 105,384
Right of use assets 24,519 - - - -
Other assets 151,014 146,496 152,933 155,298 153,834
Assets of discontinued operations   -     19,490     20,290     26,415     29,888  
Total assets $ 9,886,525   $ 10,630,067   $ 10,260,822   $ 10,319,280   $ 10,329,319  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Noninterest-bearing deposits $ 1,120,700 $ 1,023,360 $ 1,061,557 $ 1,005,032 $ 1,039,116
Interest-bearing deposits   6,604,232     6,893,284     6,340,185     6,130,762     6,071,049  
Total deposits 7,724,932 7,916,644 7,401,742 7,135,794 7,110,165
Advances from Federal Home Loan Bank 935,000 1,520,000 1,640,000 1,805,000 1,905,000
Notes payable, net 173,203 173,174 173,096 173,017 172,966
Reserve for loss on repurchased loans 2,486 2,506 2,575 3,149 3,426
Lease liabilities 25,893 - - - -
Due on unsettled securities purchases - - 17,500 132,546 59,000
Accrued expenses and other liabilities 76,686 72,209 79,231 81,086 84,997
Liabilities of discontinued operations   -     -     -     -     9  
Total liabilities 8,938,200 9,684,533 9,314,144 9,330,592 9,335,563
Commitments and contingent liabilities
Preferred stock 231,128 231,128 231,128 269,071 269,071
Common stock 518 518 518 517 517
Common stock, class B non-voting non-convertible 5 5 5 4 5
Additional paid-in capital 626,608 625,834 624,789 623,372 623,483
Retained earnings 136,943 140,952 140,971 143,880 141,008
Treasury stock (28,786 ) (28,786 ) (28,786 ) (28,786 ) (28,786 )
Accumulated other comprehensive (loss) income, net   (18,091 )   (24,117 )   (21,947 )   (19,370 )   (11,542 )
Total stockholders’ equity   948,325     945,534     946,678     988,688     993,756  
Total liabilities and stockholders’ equity $ 9,886,525   $ 10,630,067   $ 10,260,822   $ 10,319,280   $ 10,329,319  
 
           
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,
  2019     2018     2018     2018     2018  
Interest and dividend income
Loans, including fees $ 90,558 $ 88,258 $ 84,795 $ 81,307 $ 74,912
Securities 17,841 19,882 20,599 21,455 21,631
Other interest-earning assets   2,313     2,990     2,380     2,423     2,164  
Total interest and dividend income 110,712 111,130 107,774 105,185 98,707
Interest expense
Deposits 31,443 28,972 25,154 20,315 16,795
Federal Home Loan Bank advances 9,081 9,068 8,996 9,539 7,392
Securities sold under repurchase agreements 18 25 47 211 750
Notes payable and other interest-bearing liabilities   2,362     2,383     2,385     2,356     2,332  
Total interest expense   42,904     40,448     36,582     32,421     27,269  
Net interest income 67,808 70,682 71,192 72,764 71,438
Provision for loan and lease losses   2,512     6,653     1,410     2,653     19,499  
Net interest income after provision for loan and lease losses 65,296 64,029 69,782 70,111 51,939
Noninterest income
Customer service fees 1,515 1,786 1,446 1,491 1,592
Loan servicing income (loss) 118 22 439 948 2,311
Impairment loss on investment securities - (3,252 ) - - -
Net gain on sale of securities available for sale 208 - 13 278 5,241
Net gain (loss) on sale of loans 1,553 873 279 821 (41 )
All other income (loss)   2,901     3,019     2,647     4,523     (521 )
Total noninterest income 6,295 2,448 4,824 8,061 8,582
Noninterest expense
Salaries and employee benefits 28,439 24,587 24,832 29,440 31,115
Occupancy and equipment 7,686 8,064 8,213 7,883 7,687
Professional fees 11,041 6,206 11,966 6,303 9,177
Data processing 1,496 1,733 1,884 1,678 1,656
Advertising 2,057 3,371 3,152 2,864 3,277
Regulatory assessments 2,482 1,252 2,138 2,196 2,092
Reversal of provision for loan repurchases (116 ) (122 ) (360 ) (218 ) (1,788 )
Amortization of intangible assets 620 644 693 827 843
Restructuring expense 2,795 (105 ) 553 3,983 -
All other expenses   3,385     3,153     5,322     5,775     5,775  

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

59,885 48,783 58,393 60,731 59,834
Loss (gain) on investments in alternative energy partnerships   1,950     786     2,484     1,808     (34 )
Total noninterest expense   61,835     49,569     60,877     62,539     59,800  
Income from continuing operations before income taxes 9,756 16,908 13,729 15,633 721
Income tax expense (benefit)   2,719     6,117     3,301     1,779     (6,353 )
Income from continuing operations   7,037     10,791     10,428     13,854     7,074  
Income from discontinued operations before income taxes - 347 924 1,281 2,044
Income tax expense   -     100     256     355     560  
Income from discontinued operations   -     247     668     926     1,484  
Net income 7,037 11,038 11,096 14,780 8,558
Preferred stock dividends 4,308 4,308 4,970 5,113 5,113
Impact of preferred stock redemption   -     -     2,307     -     -  
Net income available to common stockholders $ 2,729   $ 6,730   $ 3,819   $ 9,667   $ 3,445  
Basic earnings per common share
Income from continuing operations $ 0.05 $ 0.12 $ 0.06 $ 0.17 $ 0.03
Income from discontinued operations   -     0.01     0.01     0.02     0.03  
Net income $ 0.05   $ 0.13   $ 0.07   $ 0.19   $ 0.06  
Diluted earnings per common share
Income from continuing operations $ 0.05 $ 0.12 $ 0.06 $ 0.16 $ 0.03
Income from discontinued operations   -     0.01     0.01     0.02     0.03  
Net income $ 0.05   $ 0.13   $ 0.07   $ 0.18   $ 0.06  
Weighted average number of common shares outstanding
Basic 50,676,722 50,651,805 50,656,076 50,593,429 50,590,545
Diluted 50,846,722 50,812,874 50,899,464 50,919,091 50,925,530
Dividends declared per common share $ 0.13 $ 0.13 $ 0.13 $ 0.13 $ 0.13
 
           
Banc of California, Inc.
Selected Financial Data
(Dollars in thousands)
(Unaudited)
 
Three Months Ended
March 31, December 31, September 30, June 30, March 31,
  2019     2018     2018     2018     2018  
Profitability and other ratios of consolidated operations
Return on average assets (1) 0.28 % 0.43 % 0.43 % 0.58 % 0.34 %
Return on average equity (1) 2.98 % 4.56 % 4.40 % 5.92 % 3.40 %
Return on average tangible common equity (2) 1.91 % 4.19 % 2.49 % 6.03 % 2.37 %
Dividend payout ratio (3) 260.00 % 100.00 % 185.71 % 68.42 % 216.67 %
Net interest spread 2.47 % 2.56 % 2.62 % 2.75 % 2.74 %
Net interest margin (1) 2.81 % 2.88 % 2.93 % 3.01 % 2.98 %
Noninterest income to total revenue (4) 8.49 % 3.60 % 7.42 % 11.16 % 12.73 %
Noninterest income to average total assets (1) 0.25 % 0.10 % 0.22 % 0.36 % 0.41 %
Noninterest expense to average total assets (1) 2.43 % 1.92 % 2.38 % 2.45 % 2.36 %
Efficiency ratio (5) 83.44 % 67.47 % 79.15 % 76.17 % 72.87 %

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

83.00 % 67.09 % 77.88 % 73.50 % 65.70 %
Average held-for-investment loans and leases to average deposits 100.45 % 97.40 % 97.00 % 98.63 % 94.87 %
Average investment securities to average total assets 17.00 % 19.85 % 21.28 % 22.27 % 24.60 %
Average stockholders’ equity to average total assets 9.29 % 9.38 % 9.85 % 9.78 % 9.94 %
Allowance for loan and lease losses (ALLL)
Balance at beginning of period $ 62,192 $ 57,782 $ 56,678 $ 54,763 $ 49,333
Loans and leases charged off (1,063 ) (2,522 ) (388 ) (950 ) (14,639 )
Recoveries 244 279 82 212 570
Provision for loan and lease losses   2,512     6,653     1,410     2,653     19,499  
Balance at end of period $ 63,885   $ 62,192   $ 57,782   $ 56,678   $ 54,763  

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

0.04 % 0.12 % 0.02 % 0.04 % 0.84 %
Reserve for loss on repurchased loans
Balance at beginning of period $ 2,506 $ 2,575 $ 3,149 $ 3,426 $ 6,306
Reversal of provision for loan repurchases (20 ) (69 ) (342 ) (165 ) (1,786 )
Utilization of reserve for loan repurchases   -     -     (232 )   (112 )   (1,094 )
Balance at end of period $ 2,486   $ 2,506   $ 2,575   $ 3,149   $ 3,426  
 

(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 common 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,
  2019     2018     2018     2018     2018  
Asset quality information and ratios
Delinquent loans and leases held-for-investment
30 to 89 days delinquent $ 44,840 $ 26,684 $ 20,265 $ 15,097 $ 31,936
90+ days delinquent   14,623     13,846     15,269     11,453     11,526  
Total delinquent loans $ 59,463   $ 40,530   $ 35,534   $ 26,550   $ 43,462  
Total delinquent loans and leases to total loans and leases 0.79 % 0.53 % 0.49 % 0.38 % 0.63 %
Non-performing assets, excluding loans held-for-sale
Non-performing loans and leases $ 27,739 $ 21,585 $ 25,523 $ 22,290 $ 21,220
90+ days delinquent and still accruing loans and leases 731 470 - - -
Other real estate owned   316     672     434     710     1,024  
Non-performing assets $ 28,786   $ 22,727   $ 25,957   $ 23,000   $ 22,244  
ALLL to non-performing loans and leases 224.40 % 281.99 % 226.39 % 254.28 % 258.07 %
Non-performing loans and leases to total loans and leases 0.38 % 0.29 % 0.35 % 0.32 % 0.31 %
Non-performing assets to total assets 0.29 % 0.21 % 0.25 % 0.22 % 0.22 %
Troubled debt restructurings (TDRs)
Performing TDRs $ 5,574 $ 5,745 $ 5,580 $ 5,648 $ 5,787
Non-performing TDRs   1,943     2,276     2,684     2,701     2,632  
Total TDRs $ 7,517   $ 8,021   $ 8,264   $ 8,349   $ 8,419  
Loans and leases and ALLL by loan origination type
Loan and lease breakdown by origination type
Originated loans and leases $ 6,991,056 $ 7,105,171 $ 6,683,683 $ 6,446,127 $ 6,295,843
Acquired loans not impaired at acquisition   566,144     595,702     569,610     589,877     634,664  
Total loans and leases $ 7,557,200   $ 7,700,873   $ 7,253,293   $ 7,036,004   $ 6,930,507  
ALLL breakdown by origination type
Originated loans and leases $ 63,003 $ 61,256 $ 56,672 $ 55,534 $ 53,605
Acquired loans not impaired at acquisition   882     937     1,110     1,144     1,158  
Total ALLL $ 63,885   $ 62,193   $ 57,782   $ 56,678   $ 54,763  
Discount on Purchased/Acquired Loans
Acquired loans not impaired at acquisition $ 11,184   $ 11,645   $ 12,311   $ 12,932   $ 14,255  
Total Discount $ 11,184   $ 11,645   $ 12,311   $ 12,932   $ 14,255  
Percentage of ALLL to:
Originated loans and leases 0.90 % 0.86 % 0.85 % 0.86 % 0.85 %

Originated loans and leases and acquired loans not impaired at acquisition

0.85 % 0.81 % 0.80 % 0.81 % 0.79 %
Total loans and leases 0.85 % 0.81 % 0.80 % 0.81 % 0.79 %
 
           
Banc of California, Inc.
Selected Financial Data, Continued
(Dollars in thousands)
(Unaudited)
 
March 31, December 31, September 30, June 30, March 31,
  2019     2018     2018     2018     2018  
Composition of held-for-investment loans and leases
Commercial real estate $ 865,521 $ 867,013 $ 823,193 $ 793,855 $ 773,193
Multifamily 2,332,527 2,241,246 2,112,190 1,959,965 1,944,082
Construction 211,549 203,976 200,294 211,110 200,766
Commercial and industrial 1,907,102 1,944,142 1,673,055 1,742,559 1,638,559
SBA 74,998 68,741 71,494 78,092 79,022
Lease financing   -     -     -     -     3  
Total commercial loans   5,391,697     5,325,118     4,880,226     4,785,581     4,635,625  
Single family residential mortgage 2,102,694 2,305,490 2,300,069 2,174,183 2,201,358
Other consumer   62,809     70,265     72,998     76,240     93,524  
Total consumer loans   2,165,503     2,375,755     2,373,067     2,250,423     2,294,882  
Total gross loans and leases $ 7,557,200   $ 7,700,873   $ 7,253,293   $ 7,036,004   $ 6,930,507  
Composition percentage of held-for-investment loans and leases
Commercial real estate 11.5 % 11.3 % 11.3 % 11.3 % 11.2 %
Multifamily 30.9 % 29.2 % 29.1 % 27.9 % 28.1 %
Construction 2.8 % 2.6 % 2.8 % 3.0 % 2.9 %
Commercial and industrial 25.2 % 25.2 % 23.1 % 24.8 % 23.6 %
SBA 1.0 % 0.9 % 1.0 % 1.1 % 1.1 %
Lease financing   0.0 %   0.0 %   0.0 %   0.0 %   0.0 %
Total commercial loans   71.4 %   69.2 %   67.3 %   68.1 %   66.9 %
Single family residential mortgage 27.8 % 29.9 % 31.7 % 30.9 % 31.8 %
Other consumer   0.8 %   0.9 %   1.0 %   1.0 %   1.3 %
Total consumer loans   28.6 %   30.8 %   32.7 %   31.9 %   33.1 %
Total gross loans and leases   100.0 %   100.0 %   100.0 %   100.0 %   100.0 %
Composition of deposits
Noninterest-bearing checking $ 1,120,700 $ 1,023,360 $ 1,061,557 $ 1,005,032 $ 1,039,116
Interest-bearing checking 1,573,499 1,556,410 1,713,790 1,778,400 1,864,629
Money market 899,330 873,153 856,886 1,136,335 1,091,735
Savings 1,151,442 1,265,847 1,269,489 1,175,275 1,051,267
Brokered certificates of deposit 1,295,066 1,543,269 987,771 686,203 974,706
Non-brokered certificates of deposit   1,684,895     1,654,605     1,512,249     1,354,549     1,088,712  
Total deposits $ 7,724,932   $ 7,916,644   $ 7,401,742   $ 7,135,794   $ 7,110,165  
Composition percentage of deposits
Noninterest-bearing checking 14.5 % 12.9 % 14.3 % 14.1 % 14.6 %
Interest-bearing checking 20.4 % 19.7 % 23.2 % 24.9 % 26.2 %
Money market 11.6 % 11.0 % 11.6 % 15.9 % 15.4 %
Savings 14.9 % 16.0 % 17.2 % 16.5 % 14.8 %
Brokered certificates of deposit 16.8 % 19.5 % 13.3 % 9.6 % 13.7 %
Non-brokered certificates of deposit   21.8 %   20.9 %   20.4 %   19.0 %   15.3 %
Total deposits   100.0 %   100.0 %   100.0 %   100.0 %   100.0 %
Capital Ratios
Banc of California, Inc.
Total risk-based capital ratio 14.01 % 13.71 % 14.05 % 14.71 % 14.60 %
Tier 1 risk-based capital ratio 13.03 % 12.77 % 13.15 % 13.83 % 13.74 %
Common equity tier 1 capital ratio 9.72 % 9.53 % 9.80 % 9.90 % 9.80 %
Tier 1 leverage ratio 8.87 % 8.95 % 8.99 % 9.30 % 9.21 %
Banc of California, NA
Total risk-based capital ratio 15.79 % 15.71 % 15.94 % 16.63 % 16.53 %
Tier 1 risk-based capital ratio 14.81 % 14.77 % 15.04 % 15.74 % 15.67 %
Common equity tier 1 capital ratio 14.81 % 14.77 % 15.04 % 15.74 % 15.67 %
Tier 1 leverage ratio 10.07 % 10.36 % 10.29 % 10.58 % 10.50 %
 
                   
Banc of California, Inc.
Average Balance, Average Yield Earned, and Average Cost Paid
(Dollars in thousands)
(Unaudited)
 
Three Months Ended
March 31, 2019 December 31, 2018 September 30, 2018
Average Yield Average Yield Average Yield
Balance Interest / Cost Balance Interest / Cost Balance Interest / Cost
Interest earning assets
Loans held-for-sale (1) $ 31,374 $ 228 2.95 % $ 33,243 $ 221 2.64 % $ 42,754 $ 263 2.44 %
SFR mortgage 2,312,900 24,062 4.22 % 2,260,205 23,585 4.14 % 2,222,602 23,461 4.19 %
Commercial real estate, multifamily, and construction 3,387,698 38,117 4.56 % 3,246,860 37,403 4.57 % 3,091,706 35,838 4.60 %
Commercial and industrial, SBA, and lease financing 1,920,220 27,235 5.75 % 1,791,708 26,219 5.81 % 1,739,711 24,382 5.56 %
Other consumer   62,558     916 5.94 %   68,479     990 5.74 %   69,600     981 5.59 %
Gross loans and leases 7,714,750 90,558 4.76 % 7,400,495 88,418 4.74 % 7,166,373 84,925 4.70 %
Securities 1,751,509 17,841 4.13 % 2,032,632 19,882 3.88 % 2,163,037 20,599 3.78 %
Other interest-earning assets   321,823     2,313 2.91 %   318,419     2,990 3.73 %   335,160     2,380 2.82 %
Total interest-earning assets 9,788,082 110,712 4.59 % 9,751,546 111,290 4.53 % 9,664,570 107,904 4.43 %
Allowance for loan and lease losses (61,924 ) (58,099 ) (56,730 )
BOLI and non-interest earning assets   575,559     544,302     554,636  
Total assets $ 10,301,717   $ 10,237,749   $ 10,162,476  
 
Interest-bearing liabilities
Savings $ 1,201,802 5,480 1.85 % $ 1,279,155 5,663 1.76 % $ 1,231,696 5,122 1.65 %
Interest-bearing checking 1,554,846 4,525 1.18 % 1,666,884 4,916 1.17 % 1,789,679 5,054 1.12 %
Money market 887,538 4,128 1.89 % 803,157 3,168 1.56 % 966,165 3,455 1.42 %
Certificates of deposit   2,982,980     17,310 2.35 %   2,759,665     15,225 2.19 %   2,332,181     11,523 1.96 %
Total interest-bearing deposits 6,627,166 31,443 1.92 % 6,508,861 28,972 1.77 % 6,319,721 25,154 1.58 %
FHLB advances 1,422,100 9,081 2.59 % 1,447,348 9,068 2.49 % 1,528,674 8,996 2.33 %
Securities sold under repurchase agreements 2,350 18 3.11 % 3,116 25 3.18 % 6,418 47 2.91 %
Long-term debt and other interest-bearing liabilities   174,230     2,362 5.50 %   174,281     2,383 5.42 %   174,361     2,385 5.43 %
Total interest-bearing liabilities 8,225,846 42,904 2.12 % 8,133,606 40,448 1.97 % 8,029,174 36,582 1.81 %
Noninterest-bearing deposits 1,021,741 1,054,790 1,023,890
Non-interest-bearing liabilities   97,430     89,111     108,593  
Total liabilities 9,345,017 9,277,507 9,161,657
Total stockholders’ equity   956,700     960,242     1,000,819  
Total liabilities and stockholders’ equity $ 10,301,717   $ 10,237,749   $ 10,162,476  
 
Net interest income/spread $ 67,808 2.47 % $ 70,842 2.56 % $ 71,322 2.62 %
 
Net interest margin 2.81 % 2.88 % 2.93 %
 
Ratio of interest-earning assets to interest-bearing liabilities 118.99 % 119.89 % 120.37 %
 
Total deposits $ 7,648,907 $ 31,443 1.67 % $ 7,563,651 $ 28,972 1.52 % $ 7,343,611 $ 25,154 1.36 %
Total funding (2) $ 9,247,587 $ 42,904 1.88 % $ 9,188,396 $ 40,448 1.75 % $ 9,053,064 $ 36,582 1.60 %
 

(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, 2018 March 31, 2018
Average Yield Average Yield
Balance Interest / Cost Balance Interest / Cost
Interest earning assets
Loans held-for-sale (1) $ 54,791 $ 328 2.40 % $ 97,095 $ 297 1.24 %
SFR mortgage 2,223,608 22,790 4.11 % 2,122,666 21,352 4.08 %
Commercial real estate, multifamily, and construction 2,989,014 33,736 4.53 % 2,856,290 31,439 4.46 %
Commercial and industrial, SBA, and lease financing 1,707,478 23,664 5.56 % 1,625,549 20,850 5.20 %
Other consumer   80,188     978 4.89 %   103,676     1,160 4.54 %
Gross loans and leases 7,055,079 81,496 4.63 % 6,805,276 75,098 4.48 %
Securities 2,279,416 21,455 3.78 % 2,525,220 21,631 3.47 %
Other interest-earning assets   392,342     2,423 2.48 %   407,064     2,164 2.16 %
Total interest-earning assets 9,726,837 105,374 4.35 % 9,737,560 98,893 4.12 %
Allowance for loan and lease losses (54,903 ) (49,257 )
BOLI and non-interest earning assets   565,224     574,930  
Total assets $ 10,237,158   $ 10,263,233  
 
Interest-bearing liabilities
Savings $ 1,055,693 3,886 1.48 % $ 1,055,338 3,300 1.27 %
Interest-bearing checking 1,822,856 4,182 0.92 % 1,976,160 4,108 0.84 %
Money market 1,134,280 3,689 1.30 % 1,076,117 2,834 1.07 %
Certificates of deposit   2,079,932     8,558 1.65 %   1,906,556     6,553 1.39 %
Total interest-bearing deposits 6,092,761 20,315 1.34 % 6,014,171 16,795 1.13 %
FHLB advances 1,827,307 9,539 2.09 % 1,711,089 7,392 1.75 %
Securities sold under repurchase agreements 29,907 211 2.83 % 119,543 750 2.54 %
Long-term debt and other interest-bearing liabilities   174,296     2,356 5.42 %   174,424     2,332 5.42 %
Total interest-bearing liabilities 8,124,271 32,421 1.60 % 8,019,227 27,269 1.38 %
Noninterest-bearing deposits 1,004,502 1,056,700
Non-interest-bearing liabilities   107,529     167,345  
Total liabilities 9,236,302 9,243,272
Total stockholders’ equity   1,000,856     1,019,961  
Total liabilities and stockholders’ equity $ 10,237,158   $ 10,263,233  
 
Net interest income/spread $ 72,953 2.75 % $ 71,624 2.74 %
 
Net interest margin 3.01 % 2.98 %
 
Ratio of interest-earning assets to interest-bearing liabilities 119.73 % 121.43 %
 
Total deposits $ 7,097,263 $ 20,315 1.15 % $ 7,070,871 $ 16,795 0.96 %
Total funding (2) $ 9,128,773 $ 32,421 1.42 % $ 9,075,927 $ 27,269 1.22 %
 

(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 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,
  2019     2018     2018     2018     2018  
Tangible common equity to tangible assets ratio
Total assets $ 9,886,525 $ 10,630,067 $ 10,260,822 $ 10,319,280 $ 10,329,319
Less goodwill (37,144 ) (37,144 ) (37,144 ) (37,144 ) (37,144 )
Less other intangible assets   (5,726 )   (6,346 )   (6,990 )   (7,683 )   (8,510 )
Tangible assets $ 9,843,655   $ 10,586,577   $ 10,216,688   $ 10,274,453   $ 10,283,665  
 
Total stockholders' equity $ 948,325 $ 945,534 $ 946,678 $ 988,688 $ 993,756
Less goodwill (37,144 ) (37,144 ) (37,144 ) (37,144 ) (37,144 )
Less other intangible assets   (5,726 )   (6,346 )   (6,990 )   (7,683 )   (8,510 )
Tangible equity 905,455 902,044 902,544 943,861 948,102
Less preferred stock   (231,128 )   (231,128 )   (231,128 )   (269,071 )   (269,071 )
Tangible common equity $ 674,327   $ 670,916   $ 671,416   $ 674,790   $ 679,031  
 
Total stockholders' equity to total assets 9.59 % 8.89 % 9.23 % 9.58 % 9.62 %
Tangible equity to tangible assets 9.20 % 8.52 % 8.83 % 9.19 % 9.22 %
Tangible common equity to tangible assets 6.85 % 6.34 % 6.57 % 6.57 % 6.60 %
 
Common shares outstanding 50,315,490 50,172,018 50,180,607 50,142,955 50,079,736
Class B non-voting non-convertible common shares outstanding   477,321     477,321     477,321     403,778     508,107  
Total common shares outstanding   50,792,811     50,649,339     50,657,928     50,546,733     50,587,843  
 
Tangible common equity per common shares $ 13.28 $ 13.25 $ 13.25 $ 13.35 $ 13.42
Book value per common share $ 14.12 $ 14.10 $ 14.13 $ 14.24 $ 14.33
 
           
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,
  2019     2018     2018     2018     2018  
Return on tangible common equity
Average total stockholders' equity $ 956,700 $ 960,242 $ 1,000,819 $ 1,000,856 $ 1,019,961
Less average preferred stock (231,128 ) (231,128 ) (260,822 ) (269,071 ) (269,071 )
Less average goodwill (37,144 ) (37,144 ) (37,144 ) (37,144 ) (37,144 )
Less average other intangible assets   (6,128 )   (6,731 )   (7,412 )   (8,110 )   (8,972 )
Average tangible common equity $ 682,300   $ 685,239   $ 695,441   $ 686,531   $ 704,774  
 
Net income $ 7,037 $ 11,038 $ 11,096 $ 14,780 $ 8,558
Less preferred stock dividends and impact of preferred stock redemption (4,308 ) (4,308 ) (7,277 ) (5,113 ) (5,113 )
Add amortization of intangible assets 620 644 693 827 843
Add impairment on intangible assets - - - - -
Less tax effect on amortization and impairment of intangible assets   (130 )   (135 )   (146 )   (174 )   (177 )
Net income available to common stockholders $ 3,219   $ 7,239   $ 4,366   $ 10,320   $ 4,111  
 
Return on average equity 2.98 % 4.56 % 4.40 % 5.92 % 3.40 %
Return on average tangible common equity 1.91 % 4.19 % 2.49 % 6.03 % 2.37 %
 

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

21.00 % 21.00 % 21.00 % 21.00 % 21.00 %
 
Three Months Ended
March 31, December 31, September 30, June 30, March 31,
  2019     2018     2018     2018     2018  
Adjusted efficiency ratio including the pre-tax effect of

investments in alternative energy partnerships

Noninterest expense $ 61,835 $ 49,578 $ 60,977 $ 62,554 $ 59,812
(Loss) gain on investments in alternative energy partnerships   (1,950 )   (786 )   (2,484 )   (1,808 )   34  
Adjusted noninterest expense $ 59,885   $ 48,792   $ 58,493   $ 60,746   $ 59,846  
 
Net interest income $ 67,808 $ 70,842 $ 71,322 $ 72,953 $ 71,624
Noninterest income   6,295     2,644     5,718     9,168     10,452  
Total revenue 74,103 73,486 77,040 82,121 82,076
Tax credit from investments in alternative energy partnerships - - 412 1,912 7,323
Deferred tax expense on investments in alternative energy partnerships - - (43 ) (211 ) (769 )
Tax effect on tax credit and deferred tax expense - 26