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Banc of California Reports Fourth Quarter 2018 Earnings

SANTA ANA, Calif., Jan. 24, 2019 /PRNewswire/ -- Banc of California, Inc. (BANC) today reported net income available to common stockholders of $6.7 million, for the fourth quarter of 2018, resulting in diluted earnings per common share of $0.13 for the quarter. 

Highlights for the fourth quarter included:

  • Core Deposits: Core deposit balances were flat for the quarter. Full year core deposit balances grew 10% to $6.2 billion.
  • Organic Loan Growth: Held for investment loans increased by $448 million during the quarter to $7.7 billion. Loan portfolio growth for the full year was 16%.
  • Asset Re-Mix: Investment securities balance declined by $67 million during the quarter and represented 19% of total assets at quarter end, down from 20% at the end of the prior quarter and 25% from a year ago.
  • Disciplined Expense Management: Fourth quarter noninterest expense totaled $49.6 million, down from $60.9 million for the third quarter. Fourth quarter noninterest expense to average total assets ratio of 1.92%, down from 2.38% for the third quarter.
  • Strong Credit Performance: Non-performing assets to total assets at quarter end of 0.21% and total delinquent loans to total loans at quarter end of 0.53%, compared to 0.25% and 0.49%, respectively, at the prior quarter end and 0.21% and 0.63%, respectively, a year ago. Net charge-offs during the quarter totaled $2.2 million, compared with $306 thousand during the prior quarter and $791 thousand during the same quarter a year ago. The ALLL / total loan ratio was 0.81% at quarter end, up from 0.80% at the prior quarter end and 0.74% a year ago.
  • Strong Capital Ratios: Common equity tier 1 capital ratio at quarter end of 9.53%, compared to 9.80% at the prior quarter end and 9.92% a year ago.

The Company's fourth quarter results included $7.1 million of legal and professional fees and $1.1 million in project related expenses, offset by a $9.8 million insurance recovery related to ongoing indemnification expense and a gain from the sale of an owned branch office of $1.8 million. The aggregate impact of these items resulted in a net benefit of $3.4 million from non-recurring items for the quarter. 

"We continue to lay the foundation to support the development of our core commercial banking platform," said Doug Bowers, President and Chief Executive Officer of Banc of California. "We saw strong organic loan growth with balances increasing $448 million for the quarter or 25% annualized.  Core deposit growth came in below expectations for the quarter, but was up 10% for the full year.  Efforts to de-risk the balance sheet, build front line business units and simplify the operating platform further reflect our efforts to build California's bank.  Credit quality remained strong with non-performing assets to total assets at 0.21% at quarter end."   

The Company will host a conference call to discuss its fourth quarter 2018 financial results at 7:00 a.m. Pacific Time (PT) on Thursday, January 24, 2019.  Interested parties are welcome to attend the conference call by dialing 888-317-6003, and referencing event code 1216098.  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. (BANC) provides comprehensive banking services to California's diverse businesses, entrepreneurs and communities. Banc of California operates 32 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

John A. Bogler, (949) 236-5400


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)








December 31,

September 30,

June 30,

March 31,

December 31,


2018

2018

2018

2018

2017

ASSETS






Cash and cash equivalents

$       391,592

$        372,221

$      385,691

$      346,704

$       387,699

Securities available-for-sale

1,992,500

2,059,832

2,297,124

2,424,593

2,575,469

Loans held-for-sale

8,116

9,382

13,753

20,180

67,069

Loans and leases receivable

7,700,873

7,253,293

7,036,004

6,930,507

6,659,407

Allowance for loan and lease losses

(62,192)

(57,782)

(56,678)

(54,763)

(49,333)

Federal Home Loan Bank and other bank stock

68,094

71,308

75,737

82,715

75,654

Servicing rights, net

3,428

3,770

3,869

6,739

33,708

Other real estate owned, net

672

434

710

1,024

1,796

Premises and equipment, net

129,394

133,129

135,478

135,198

135,699

Investments in alternative energy partnerships, net

28,988

41,781

44,806

48,344

48,826

Goodwill

37,144

37,144

37,144

37,144

37,144

Other intangible assets, net

6,346

6,990

7,683

8,510

9,353

Deferred income tax, net

49,404

47,865

42,334

43,192

31,074

Income tax receivable

2,695

1,764

7,995

10,126

8,739

Bank owned life insurance investment

107,027

106,468

105,917

105,384

104,851

Other assets

146,496

152,933

155,298

153,834

161,797

Assets of discontinued operations

19,490

20,290

26,415

29,888

38,900

Total assets 

$  10,630,067

$   10,260,822

$ 10,319,280

$ 10,329,319

$  10,327,852







LIABILITIES AND STOCKHOLDERS' EQUITY






Noninterest-bearing deposits

$    1,023,360

$     1,061,557

$   1,005,032

$   1,039,116

$    1,071,608

Interest-bearing deposits

6,893,284

6,340,185

6,130,762

6,071,049

6,221,295

Total deposits

7,916,644

7,401,742

7,135,794

7,110,165

7,292,903

Advances from Federal Home Loan Bank

1,520,000

1,640,000

1,805,000

1,905,000

1,695,000

Notes payable, net

173,174

173,096

173,017

172,966

172,941

Reserve for loss on repurchased loans

2,506

2,575

3,149

3,426

6,306

Due on unsettled securities purchases

-

17,500

132,546

59,000

-

Accrued expenses and other liabilities

72,209

79,231

81,086

84,997

140,575

Liabilities of discontinued operations

-

-

-

9

7,819

Total liabilities

9,684,533

9,314,144

9,330,592

9,335,563

9,315,544

Commitments and contingent liabilities






Preferred stock

231,128

231,128

269,071

269,071

269,071

Common stock

518

518

517

517

517

Common stock, class B non-voting non-convertible

5

5

4

5

5

Additional paid-in capital

625,834

624,789

623,372

623,483

621,435

Retained earnings

140,952

140,971

143,880

141,008

144,839

Treasury stock

(28,786)

(28,786)

(28,786)

(28,786)

(28,786)

Accumulated other comprehensive (loss) income, net

(24,117)

(21,947)

(19,370)

(11,542)

5,227

Total stockholders' equity

945,534

946,678

988,688

993,756

1,012,308

Total liabilities and stockholders' equity 

$  10,630,067

$   10,260,822

$ 10,319,280

$ 10,329,319

$  10,327,852

 

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,


2018

2018

2018

2018

2017

2018

2017

Interest and dividend income








Loans, including fees

$         88,258

$          84,795

$        81,307

$        74,912

$         71,695

$       329,272

$       281,071

Securities

19,882

20,599

21,455

21,631

23,170

83,567

99,742

Other interest-earning assets

2,990

2,380

2,423

2,164

2,292

9,957

8,377

Total interest and dividend income

111,130

107,774

105,185

98,707

97,157

422,796

389,190

Interest expense








Deposits

28,972

25,154

20,315

16,795

16,044

91,236

60,414

Federal Home Loan Bank advances

9,068

8,996

9,539

7,392

5,402

34,995

12,951

Securities sold under repurchase agreements

25

47

211

750

194

1,033

880

Notes payable and other interest-bearing liabilities

2,383

2,385

2,356

2,332

2,344

9,456

10,755

Total interest expense

40,448

36,582

32,421

27,269

23,984

136,720

85,000

Net interest income

70,682

71,192

72,764

71,438

73,173

286,076

304,190

Provision for loan and lease losses

6,653

1,410

2,653

19,499

5,052

30,215

13,699

Net interest income after provision for loan and lease losses

64,029

69,782

70,111

51,939

68,121

255,861

290,491

Noninterest income








Customer service fees

1,786

1,446

1,491

1,592

1,624

6,315

6,492

Loan servicing income (loss) 

22

439

948

2,311

(2,416)

3,720

1,025

Impairment loss on investment securities

(3,252)

-

-

-

-

(3,252)

-

Net gain on sale of securities available for sale

-

13

278

5,241

2,688

5,532

14,768

Net gain (loss) on sale of loans

873

279

821

(41)

1,205

1,932

11,942

All other income (loss)

3,019

2,647

4,523

(521)

2,594

9,668

10,443

Total noninterest income

2,448

4,824

8,061

8,582

5,695

23,915

44,670

Noninterest expense








Salaries and employee benefits

24,587

24,832

29,440

31,115

33,146

109,974

129,153

Occupancy and equipment

8,064

8,213

7,883

7,687

9,565

31,847

38,391

Professional fees

6,206

11,966

6,303

9,177

7,853

33,652

42,417

Data processing

1,733

1,884

1,678

1,656

1,562

6,951

7,888

Advertising

3,371

3,152

2,864

3,277

1,420

12,664

5,313

Regulatory assessments

1,252

2,138

2,196

2,092

2,174

7,678

8,105

Reversal of provision for loan repurchases

(122)

(360)

(218)

(1,788)

(335)

(2,488)

(1,812)

Amortization of intangible assets

644

693

827

843

866

3,007

3,928

Restructuring expense

(105)

553

3,983

-

(43)

4,431

5,326

All other expenses

3,153

5,322

5,775

5,775

6,179

20,025

38,773

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

48,783

58,393

60,731

59,834

62,387

227,741

277,482

Loss (gain) on investments in alternative energy partnerships

786

2,484

1,808

(34)

3,995

5,044

30,786

Total noninterest expense

49,569

60,877

62,539

59,800

66,382

232,785

308,268

Income from continuing operations before income taxes

16,908

13,729

15,633

721

7,434

46,991

26,893

Income tax expense (benefit)

6,117

3,301

1,779

(6,353)

(3,418)

4,844

(26,581)

Income from continuing operations

10,791

10,428

13,854

7,074

10,852

42,147

53,474

Income from discontinued operations before income taxes

347

924

1,281

2,044

765

4,596

7,164

Income tax expense

100

256

355

560

315

1,271

2,929

Income from discontinued operations

247

668

926

1,484

450

3,325

4,235

Net income

11,038

11,096

14,780

8,558

11,302

45,472

57,709

Preferred stock dividends

4,308

4,970

5,113

5,113

5,113

19,504

20,451

Impact of preferred stock redemption

-

2,307

-

-

-

2,307

-

Net income available to common stockholders

$           6,730

$            3,819

$          9,667

$          3,445

$           6,189

$         23,661

$         37,258

Basic earnings per common share








Income from continuing operations

$             0.12

$              0.06

$            0.17

$            0.03

$             0.11

$             0.38

$             0.64

Income from discontinued operations

0.01

0.01

0.02

0.03

0.01

0.07

0.08

Net income

$             0.13

$              0.07

$            0.19

$            0.06

$             0.12

$             0.45

$             0.72

Diluted earnings per common share








Income from continuing operations

$             0.12

$              0.06

$            0.16

$            0.03

$             0.11

$             0.38

$             0.63

Income from discontinued operations

0.01

0.01

0.02

0.03

0.01

0.07

0.08

Net income

$             0.13

$              0.07

$            0.18

$            0.06

$             0.12

$             0.45

$             0.71

Weighted average number of common shares outstanding








Basic

50,651,805

50,656,076

50,593,429

50,590,545

50,532,544

50,623,222

50,254,595

Diluted

50,812,874

50,899,464

50,919,091

50,925,530

50,943,165

50,851,594

50,819,790

Dividends declared per common share

$             0.13

$              0.13

$            0.13

$            0.13

$             0.13

$             0.52

$             0.52

 

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, 2018

Year Ended December 31, 2018


Continuing

Discontinued

Consolidated

Continuing

Discontinued

Consolidated


Operations

Operations

Operations

Operations

Operations

Operations

Interest and dividend income

$       111,130

$               160

$      111,290

$      422,796

$              665

$       423,461

Interest expense

40,448

-

40,448

136,720

-

136,720

Net interest income

70,682

160

70,842

286,076

665

286,741

Provision for loan and lease losses

6,653

-

6,653

30,215

-

30,215

Net interest income after provision for loan and lease losses

64,029

160

64,189

255,861

665

256,526

Noninterest income







Customer service fees

1,786

-

1,786

6,315

-

6,315

Loan servicing income

22

-

22

3,720

-

3,720

Impairment loss on investment securities

(3,252)

-

(3,252)

(3,252)

-

(3,252)

Net gain on sale of securities available for sale

-

-

-

5,532

-

5,532

Net gain on sale of loans

873

-

873

1,932

-

1,932

Mortgage banking income

-

32

32

-

428

428

Gain on disposal of discontinued operations

-

164

164

-

1,439

1,439

All other income

3,019

-

3,019

9,668

2,200

11,868

Total noninterest income

2,448

196

2,644

23,915

4,067

27,982

Noninterest expense







Salaries and employee benefits

24,587

-

24,587

109,974

20

109,994

Occupancy and equipment

8,064

-

8,064

31,847

-

31,847

Professional fees

6,206

-

6,206

33,652

-

33,652

Data processing

1,733

8

1,741

6,951

8

6,959

Advertising

3,371

-

3,371

12,664

-

12,664

Regulatory assessments

1,252

-

1,252

7,678

-

7,678

Reversal of provision for loan repurchases

(122)

-

(122)

(2,488)

-

(2,488)

Loss on investments in alternative energy partnerships

786

-

786

5,044

-

5,044

Amortization of intangible assets

644

-

644

3,007

-

3,007

Restructuring expense

(105)

-

(105)

4,431

-

4,431

All other expenses

3,153

1

3,154

20,025

108

20,133

Total noninterest expense

49,569

9

49,578

232,785

136

232,921

Income before income taxes

16,908

347

17,255

46,991

4,596

51,587

Income tax expense

6,117

100

6,217

4,844

1,271

6,115

Net income

$         10,791

$               247

$        11,038

$        42,147

$           3,325

$         45,472

 

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,


2018

2018

2018

2018

2017

2018

2017

Profitability and other ratios of consolidated operations








Return on average assets(1)

0.43%

0.43%

0.58%

0.34%

0.44%

0.44%

0.55%

Return on average equity (1)

4.56%

4.40%

5.92%

3.40%

4.42%

4.57%

5.72%

Return on average tangible common equity(2)

4.19%

2.49%

6.03%

2.37%

3.84%

3.76%

5.79%

Dividend payout ratio (3)

100.00%

185.71%

68.42%

216.67%

108.33%

115.56%

72.22%

Net interest spread

2.56%

2.62%

2.75%

2.74%

2.79%

2.67%

2.92%

Net interest margin(1)

2.88%

2.93%

3.01%

2.98%

3.01%

2.95%

3.11%

Noninterest income to total revenue (4)

3.60%

7.42%

11.16%

12.73%

8.07%

8.89%

25.19%

Noninterest income to average total assets(1)

0.10%

0.22%

0.36%

0.41%

0.25%

0.27%

0.99%

Noninterest expense to average total assets(1)

1.92%

2.38%

2.45%

2.36%

2.59%

2.28%

3.50%

Efficiency ratio(5)

67.47%

79.15%

76.17%

72.87%

83.37%

74.01%

88.52%

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

67.09%

77.88%

73.50%

65.70%

75.46%

70.87%

77.18%

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

97.40%

97.00%

98.63%

94.87%

86.09%

96.99%

75.92%

Average investment securities to average total assets

19.85%

21.28%

22.27%

24.60%

26.10%

21.99%

28.04%

Average stockholders' equity to average total assets

9.38%

9.85%

9.78%

9.94%

9.98%

9.73%

9.58%

Allowance for loan and lease losses (ALLL)








Balance at beginning of period

$         57,782

$          56,678

$        54,763

$        49,333

$         45,072

$         49,333

$         40,444

Loans and leases charged off

(2,522)

(388)

(950)

(14,639)

(1,367)

(18,499)

(5,581)

Recoveries

279

82

212

570

576

1,143

771

Provision for loan and lease losses

6,653

1,410

2,653

19,499

5,052

30,215

13,699

Balance at end of period

$         62,192

$          57,782

$        56,678

$        54,763

$         49,333

$         62,192

$         49,333

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

0.12%

0.02%

0.04%

0.84%

0.05%

0.25%

0.11%

Reserve for loss on repurchased loans








Balance at beginning of period

$           2,575

$            3,149

$          3,426

$          6,306

$           6,173

6,306

$           7,974

Reversal of provision for loan repurchases

(69)

(342)

(165)

(1,786)

(326)

(2,362)

(190)

Utilization of reserve for loan repurchases

-

(232)

(112)

(1,094)

(301)

(1,438)

(2,238)

Other adjustments

-

-

-

-

760

-

760

Balance at end of period

$           2,506

$            2,575

$          3,149

$          3,426

$           6,306

$           2,506

$           6,306



(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)








December 31,

September 30,

June 30,

March 31,

December 31,


2018

2018

2018

2018

2017

Asset quality information and ratios






Delinquent loans and leases held-for-investment






30 to 89 days delinquent

$         26,684

$          20,265

$        15,097

$        31,936

$         32,087

90+ days delinquent

13,846

15,269

11,453

11,526

9,542

Total delinquent loans

$         40,530

$          35,534

$        26,550

$        43,462

$         41,629

Total delinquent loans and leases to total loans and leases

0.53%

0.49%

0.38%

0.63%

0.63%

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






Non-performing loans and leases

$         21,585

$          25,523

$        22,290

$        21,220

$         19,382

90+ days delinquent and still accruing loans and leases

470

-

-

-

-

Other real estate owned

672

434

710

1,024

1,796

Non-performing assets

$         22,727

$          25,957

$        23,000

$        22,244

$         21,178

ALLL to non-performing loans and leases

281.99%

226.39%

254.28%

258.07%

254.53%

Non-performing loans and leases to total loans and leases

0.29%

0.35%

0.32%

0.31%

0.29%

Non-performing assets to total assets

0.21%

0.25%

0.22%

0.22%

0.21%

Troubled debt restructurings (TDRs)






Performing TDRs

$           5,745

$            5,580

$          5,648

$          5,787

$           5,646

Non-performing TDRs

2,276

2,684

2,701

2,632

2,675

Total TDRs

$           8,021

$            8,264

$          8,349

$          8,419

$           8,321

Loans and leases and ALLL by loan origination type






Loan and lease breakdown by origination type






Originated loans and leases

$    7,105,171

$     6,683,683

$   6,446,127

$   6,295,843

$    5,988,101

Acquired loans not impaired at acquisition

595,702

569,610

589,877

634,664

671,306

Total loans and leases

$    7,700,873

$     7,253,293

$   7,036,004

$   6,930,507

$    6,659,407

ALLL breakdown by origination type






Originated loans and leases

$         61,256

$          56,672

$        55,534

$        53,605

$         48,110

Acquired loans not impaired at acquisition

937

1,110

1,144

1,158

1,223

Total ALLL

$         62,193

$          57,782

$        56,678

$        54,763

$         49,333

Discount on Purchased/Acquired Loans






Acquired loans not impaired at acquisition

$         11,645

$          12,311

$        12,932

$        14,255

$         14,943

Total Discount

$         11,645

$          12,311

$        12,932

$        14,255

$         14,943

Percentage of ALLL to:






Originated loans and leases

0.86%

0.85%

0.86%

0.85%

0.80%

Originated loans and leases and acquired loans not impaired at acquisition

0.81%

0.80%

0.81%

0.79%

0.74%

Total loans and leases

0.81%

0.80%

0.81%

0.79%

0.74%

 

Banc of California, Inc.

Selected Financial Data, Continued

(Dollars in thousands)

(Unaudited)








December 31,

September 30,

June 30,

March 31,

December 31,


2018

2018

2018

2018

2017

Composition of held-for-investment loans and leases






Commercial real estate

$       867,013

$        823,193

$      793,855

$      773,193

$       717,415

Multifamily

2,241,246

2,112,190

1,959,965

1,944,082

1,816,141

Construction

203,976

200,294

211,110

200,766

182,960

Commercial and industrial

1,944,142

1,673,055

1,742,559

1,638,559

1,701,951

SBA

68,741

71,494

78,092

79,022

78,699

Lease financing

-

-

-

3

13

Total commercial loans

5,325,118

4,880,226

4,785,581

4,635,625

4,497,179

Single family residential mortgage

2,305,490

2,300,069

2,174,183

2,201,358

2,055,649

Other consumer

70,265

72,998

76,240

93,524

106,579

Total consumer loans

2,375,755

2,373,067

2,250,423

2,294,882

2,162,228

Total gross loans and leases

$    7,700,873

$     7,253,293

$   7,036,004

$   6,930,507

$    6,659,407

Composition percentage of held-for-investment loans and leases






Commercial real estate

11.3%

11.3%

11.3%

11.2%

10.8%

Multifamily

29.2%

29.1%

27.9%

28.1%

27.3%

Construction

2.6%

2.8%

3.0%

2.9%

2.7%

Commercial and industrial

25.2%

23.1%

24.8%

23.6%

25.5%

SBA

0.9%

1.0%

1.1%

1.1%

1.2%

Lease financing

0.0%

0.0%

0.0%

0.0%

0.0%

Total commercial loans

69.2%

67.3%

68.1%

66.9%

67.5%

Single family residential mortgage

29.9%

31.7%

30.9%

31.8%

30.9%

Other consumer

0.9%

1.0%

1.0%

1.3%

1.6%

Total consumer loans

30.8%

32.7%

31.9%

33.1%

32.5%

Total gross loans and leases

100.0%

100.0%

100.0%

100.0%

100.0%

Composition of deposits






Noninterest-bearing checking

$    1,023,360

$     1,061,557

$   1,005,032

$   1,039,116

$    1,071,608

Interest-bearing checking

1,556,410

1,713,790

1,778,400

1,864,629

2,089,016

Money market

873,153

856,886

1,136,335

1,091,735

1,146,859

Savings

1,265,847

1,269,489

1,175,275

1,051,267

1,059,628

Brokered certificates of deposit

1,543,269

987,771

686,203

974,706

915,623

Non-brokered certificates of deposit

1,654,605

1,512,249

1,354,549

1,088,712

1,010,169

Total deposits

$    7,916,644

$     7,401,742

$   7,135,794

$   7,110,165

$    7,292,903

Composition percentage of deposits






Noninterest-bearing checking

12.9%

14.3%

14.1%

14.6%

14.7%

Interest-bearing checking

19.7%

23.2%

24.9%

26.2%

28.7%

Money market

11.0%

11.6%

15.9%

15.4%

15.7%

Savings

16.0%

17.2%

16.5%

14.8%

14.5%

Brokered certificates of deposit

19.5%

13.3%

9.6%

13.7%

12.5%

Non-brokered certificates of deposit

20.9%

20.4%

19.0%

15.3%

13.9%

Total deposits

100.0%

100.0%

100.0%

100.0%

100.0%

Capital Ratios






Banc of California, Inc.






Total risk-based capital ratio

13.71%

14.05%

14.71%

14.60%

14.56%

Tier 1 risk-based capital ratio

12.77%

13.15%

13.83%

13.74%

13.79%

Common equity tier 1 capital ratio

9.53%

9.80%

9.90%

9.80%

9.92%

Tier 1 leverage ratio

8.95%

8.99%

9.30%

9.21%

9.39%

Banc of California, NA






Total risk-based capital ratio

15.71%

15.94%

16.63%

16.53%

16.56%

Tier 1 risk-based capital ratio

14.77%

15.04%

15.74%

15.67%

15.78%

Common equity tier 1 capital ratio

14.77%

15.04%

15.74%

15.67%

15.78%

Tier 1 leverage ratio

10.36%

10.29%

10.58%

10.50%

10.67%

 

Banc of California, Inc.

Average Balance, Average Yield Earned, and Average Cost Paid 

(Dollars in thousands)

(Unaudited)












Three Months Ended


December 31, 2018

September 30, 2018

June 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)

$        33,243

$        221

2.64%

$        42,754

$        263

2.44%

$        54,791

$      328

2.40%

SFR mortgage

2,260,205

23,585

4.14%

2,222,602

23,461

4.19%

2,223,608

22,790

4.11%

Seasoned SFR mortgage loan pools

-

-

-

-

-

-

-

-

-

Commercial real estate, multifamily, and construction

3,246,860

37,403

4.57%

3,091,706

35,838

4.60%

2,989,014

33,736

4.53%

Commercial and industrial, SBA, and lease financing

1,791,708

26,219

5.81%

1,739,711

24,382

5.56%

1,707,478

23,664

5.56%

Other consumer

68,479

990

5.74%

69,600

981

5.59%

80,188

978

4.89%

Gross loans and leases

7,400,495

88,418

4.74%

7,166,373

84,925

4.70%

7,055,079

81,496

4.63%

Securities

2,032,632

19,882

3.88%

2,163,037

20,599

3.78%

2,279,416

21,455

3.78%

Other interest-earning assets

318,419

2,990

3.73%

335,160

2,380

2.82%

392,342

2,423

2.48%

Total interest-earning assets

9,751,546

111,290

4.53%

9,664,570

107,904

4.43%

9,726,837

105,374

4.35%

Allowance for loan and lease losses

(58,099)



(56,730)



(54,903)



BOLI and non-interest earning assets

544,302



554,636



565,224



Total assets

$ 10,237,749



$ 10,162,476



$ 10,237,158













Interest-bearing liabilities










Savings

$   1,279,155

5,663

1.76%

$   1,231,696

5,122

1.65%

$   1,055,693

3,886

1.48%

Interest-bearing checking

1,666,884

4,916

1.17%

1,789,679

5,054

1.12%

1,822,856

4,182

0.92%

Money market

803,157

3,168

1.56%

966,165

3,455

1.42%

1,134,280

3,689

1.30%

Certificates of deposit

2,759,665

15,225

2.19%

2,332,181

11,523

1.96%

2,079,932

8,558

1.65%

Total interest-bearing deposits

6,508,861

28,972

1.77%

6,319,721

25,154

1.58%

6,092,761

20,315

1.34%

FHLB advances

1,447,348

9,068

2.49%

1,528,674

8,996

2.33%

1,827,307

9,539

2.09%

Securities sold under repurchase agreements

3,116

25

3.18%

6,418

47

2.91%

29,907

211

2.83%

Long-term debt and other interest-bearing liabilities

174,281

2,383

5.42%

174,361

2,385

5.43%

174,296

2,356

5.42%

Total interest-bearing liabilities

8,133,606

40,448

1.97%

8,029,174

36,582

1.81%

8,124,271

32,421

1.60%

Noninterest-bearing deposits

1,054,790



1,023,890



1,004,502



Non-interest-bearing liabilities

89,111



108,593



107,529



Total liabilities

9,277,507



9,161,657



9,236,302



Total stockholders' equity

960,242



1,000,819



1,000,856



Total liabilities and stockholders' equity

$ 10,237,749



$ 10,162,476



$ 10,237,158













Net interest income/spread


$   70,842

2.56%


$   71,322

2.62%


$ 72,953

2.75%











Net interest margin



2.88%



2.93%



3.01%











Ratio of interest-earning assets to interest-bearing liabilities

119.89%



120.37%



119.73%













Total deposits

$   7,563,651

$   28,972

1.52%

$   7,343,611

$   25,154

1.36%

$   7,097,263

$ 20,315

1.15%

Total funding (2)

$   9,188,396

$   40,448

1.75%

$   9,053,064

$   36,582

1.60%

$   9,128,773

$ 32,421

1.42%



(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


March 31, 2018

December 31, 2017


Average


Yield 

Average


Yield 


Balance

Interest

/ Cost

Balance

Interest

/ Cost

Interest earning assets







Loans held-for-sale (1)

$        97,095

$        297

1.24%

$      127,139

$        363

1.13%

SFR mortgage

2,122,666

21,352

4.08%

1,957,754

19,487

3.95%

Seasoned SFR mortgage loan pools

-

-

-

-

-

-

Commercial real estate, multifamily, and construction

2,856,290

31,439

4.46%

2,613,940

29,696

4.51%

Commercial and industrial, SBA, and lease financing

1,625,549

20,850

5.20%

1,630,886

20,989

5.11%

Other consumer

103,676

1,160

4.54%

107,664

1,233

4.54%

Gross loans and leases

6,805,276

75,098

4.48%

6,437,383

71,768

4.42%

Securities

2,525,220

21,631

3.47%

2,653,838

23,170

3.46%

Other interest-earning assets

407,064

2,164

2.16%

548,171

2,292

1.66%

Total interest-earning assets

9,737,560

98,893

4.12%

9,639,392

97,230

4.00%

Allowance for loan and lease losses

(49,257)



(45,681)



BOLI and non-interest earning assets

574,930



572,692



Total assets

$ 10,263,233



$ 10,166,403










Interest-bearing liabilities







Savings

$   1,055,338

3,300

1.27%

$   1,019,659

2,947

1.15%

Interest-bearing checking

1,976,160

4,108

0.84%

2,082,677

4,267

0.81%

Money market

1,076,117

2,834

1.07%

1,294,537

3,262

1.00%

Certificates of deposit

1,906,556

6,553

1.39%

1,822,010

5,568

1.21%

Total interest-bearing deposits

6,014,171

16,795

1.13%

6,218,883

16,044

1.02%

FHLB advances

1,711,089

7,392

1.75%

1,448,326

5,402

1.48%

Securities sold under repurchase agreements

119,543

750

2.54%

33,513

194

2.30%

Long-term debt and other interest-bearing liabilities

174,424

2,332

5.42%

174,066

2,344

5.34%

Total interest-bearing liabilities

8,019,227

27,269

1.38%

7,874,788

23,984

1.21%

Noninterest-bearing deposits

1,056,700



1,110,815



Non-interest-bearing liabilities

167,345



166,432



Total liabilities

9,243,272



9,152,035



Total stockholders' equity

1,019,961



1,014,368



Total liabilities and stockholders' equity

$ 10,263,233



$ 10,166,403










Net interest income/spread


$   71,624

2.74%


$   73,246

2.79%








Net interest margin



2.98%



3.01%








Ratio of interest-earning assets to interest-bearing liabilities

121.43%



122.41%










Total deposits

$   7,070,871

$   16,795

0.96%

$   7,329,698

$   16,044

0.87%

Total funding (2)

$   9,075,927

$   27,269

1.22%

$   8,985,603

$   23,984

1.06%



(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)









Year Ended


December 31, 2018

December 31, 2017


Average


Yield 

Average


Yield 


Balance

Interest

/ Cost

Balance

Interest

/ Cost

Interest earning assets







Loans held-for-sale (1)

$        56,757

$     1,109

1.95%

$      410,266

$   13,669

3.33%

SFR mortgage

2,207,689

91,188

4.13%

1,882,086

74,033

3.93%

Seasoned SFR mortgage loan pools

-

-

-

97,195

5,474

5.63%

Commercial real estate, multifamily, and construction

3,047,164

138,416

4.54%

2,460,614

108,508

4.41%

Commercial and industrial, SBA, and lease financing

1,716,631

95,115

5.54%

1,565,065

81,175

5.19%

Other consumer

80,359

4,109

5.11%

115,843

5,264

4.54%

Gross loans and leases

7,108,600

329,937

4.64%

6,531,069

288,123

4.41%

Securities

2,248,488

83,567

3.72%

2,954,235

99,742

3.38%

Other interest-earning assets

362,927

9,957

2.74%

516,832

8,377

1.62%

Total interest-earning assets

9,720,015

423,461

4.36%

10,002,136

396,242

3.96%

Allowance for loan and lease losses

(54,777)



(43,150)



BOLI and non-interest earning assets

559,675



575,363



Total assets

$ 10,224,913



$ 10,534,349










Interest-bearing liabilities







Savings

$   1,156,292

17,971

1.55%

$   1,007,990

9,764

0.97%

Interest-bearing checking

1,812,980

18,261

1.01%

2,035,954

15,161

0.74%

Money market

994,103

13,146

1.32%

2,076,847

18,530

0.89%

Certificates of deposit

2,272,093

41,858

1.84%

1,730,652

16,959

0.98%

Total interest-bearing deposits

6,235,468

91,236

1.46%

6,851,443

60,414

0.88%

FHLB advances

1,627,608

34,995

2.15%

1,054,978

12,951

1.23%

Securities sold under repurchase agreements

39,336

1,033

2.63%

39,907

880

2.21%

Long-term debt and other interest-bearing liabilities

174,340

9,456

5.42%

207,734

10,755

5.18%

Total interest-bearing liabilities

8,076,752

136,720

1.69%

8,154,062

85,000

1.04%

Noninterest-bearing deposits

1,034,937



1,182,667



Non-interest-bearing liabilities

117,904



188,625



Total liabilities

9,229,593



9,525,354



Total stockholders' equity

995,320



1,008,995



Total liabilities and stockholders' equity

$ 10,224,913



$ 10,534,349










Net interest income/spread


$ 286,741

2.67%


$ 311,242

2.92%








Net interest margin



2.95%



3.11%








Ratio of interest-earning assets to interest-bearing liabilities

120.35%



122.66%










Total deposits

$   7,270,405

$   91,236

1.25%

$   8,034,110

$   60,414

0.75%

Total funding (2)

$   9,111,689

$ 136,720

1.50%

$   9,336,729

$   85,000

0.91%



(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.








December 31,

September 30,

June 30,

March 31,

December 31,


2018

2018

2018

2018

2017

Tangible common equity to tangible assets ratio






Total assets

$ 10,630,067

$   10,260,822

$ 10,319,280

$ 10,329,319

$ 10,327,852

Less goodwill

(37,144)

(37,144)

(37,144)

(37,144)

(37,144)

Less other intangible assets

(6,346)

(6,990)

(7,683)

(8,510)

(9,353)

Tangible assets

$ 10,586,577

$   10,216,688

$ 10,274,453

$ 10,283,665

$ 10,281,355







Total stockholders' equity

$      945,534

$        946,678

$      988,688

$      993,756

$   1,012,308

Less goodwill

(37,144)

(37,144)

(37,144)

(37,144)

(37,144)

Less other intangible assets

(6,346)

(6,990)

(7,683)

(8,510)

(9,353)

Tangible equity

902,044

902,544

943,861

948,102

965,811

Less preferred stock

(231,128)

(231,128)

(269,071)

(269,071)

(269,071)

Tangible common equity

$      670,916

$        671,416

$      674,790

$      679,031

$      696,740







Total stockholders' equity to total assets

8.89%

9.23%

9.58%

9.62%

9.80%

Tangible equity to tangible assets

8.52%

8.83%

9.19%

9.22%

9.39%

Tangible common equity to tangible assets

6.34%

6.57%

6.57%

6.60%

6.78%







Common stock outstanding

50,172,018

50,180,607

50,142,955

50,079,736

50,083,345

Class B non-voting non-convertible common stock outstanding

477,321

477,321

403,778

508,107

508,107

Total common stock outstanding

50,649,339

50,657,928

50,546,733

50,587,843

50,591,452







Tangible common equity per common stock

$          13.25

$            13.25

$          13.35

$          13.42

$          13.77

Book value per common stock

$          14.10

$            14.13

$          14.24

$          14.33

$          14.69

 

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,


2018

2018

2018

2018

2017

2018

2017

Return on tangible common equity








Average total stockholders' equity

$      960,242

$     1,000,819

$   1,000,856

$   1,019,961

$   1,014,368

$      995,320

$   1,008,995

Less average preferred stock

(231,128)

(260,822)

(269,071)

(269,071)

(269,071)

(257,428)

(269,071)

Less average goodwill

(37,144)

(37,144)

(37,144)

(37,144)

(37,144)

(37,144)

(37,656)

Less average other intangible assets

(6,731)

(7,412)

(8,110)

(8,972)

(9,788)

(7,799)

(11,375)

Average tangible common equity

$      685,239

$        695,441

$      686,531

$      704,774

$      698,365

$      692,949

$      690,893









Net income

$        11,038

$          11,096

$        14,780

$          8,558

$        11,302

$        45,472

$        57,709

Less preferred stock dividends and impact of preferred stock redemption

(4,308)

(7,277)

(5,113)

(5,113)

(5,113)

(21,811)

(20,451)

Add amortization of intangible assets

644

693

827

843

866

3,007

3,928

Add impairment on intangible assets

-

-

-

-

-

-

336

Less tax effect on amortization and impairment of intangible assets

(135)

(146)

(174)

(177)

(303)

(631)

(1,492)

Net income available to common stockholders

$          7,239

$            4,366

$        10,320

$          4,111

$          6,752

$        26,037

$        40,030









Return on average equity

4.56%

4.40%

5.92%

3.40%

4.42%

4.57%

5.72%

Return on average tangible common equity

4.19%

2.49%

6.03%

2.37%

3.84%

3.76%

5.79%









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

21.00%

21.00%

21.00%

21.00%

35.00%

21.00%

35.00%










Three Months Ended

Year Ended


December 31,

September 30,

June 30,

March 31,

December 31,

December 31,

December 31,


2018

2018

2018

2018

2017

2018

2017

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








Noninterest expense

$        49,578

$          60,977

$        62,554

$        59,812

$        66,424

$      232,921

$      368,263

(Loss) gain on investments in alternative energy partnerships

(786)

(2,484)

(1,808)

34

(3,995)

(5,044)

(30,786)

Adjusted noninterest expense

$        48,792

$          58,493

$        60,746

$        59,846

$        62,429

$      227,877

$      337,477









Net interest income

$        70,842

$          71,322

$        72,953

$        71,624

$        73,246

$      286,741

$      311,242

Noninterest income

2,644

5,718

9,168

10,452

6,429

27,982

104,777

Total revenue

73,486

77,040

82,121

82,076

79,675

314,723

416,019

Tax credit from investments in alternative energy partnerships

-

412

1,912

7,323

4,908

9,647

38,196

Deferred tax expense on investments in alternative energy partnerships

-

(43)

(211)

(769)

(859)

(1,023)

(6,684)

Tax effect on tax credit and deferred tax expense

26

180

631

2,422

3,004

3,259

20,531

(Loss) gain on investments in alternative energy partnerships

(786)

(2,484)

(1,808)

34

(3,995)

(5,044)

(30,786)

Total pre-tax adjustments for investments in alternative energy partnerships

(760)

(1,935)

524

9,010

3,058

6,839

21,257

Adjusted total revenue

$        72,726

$          75,105

$        82,645

$        91,086

$        82,733

$      321,562

$      437,276









Efficiency ratio

67.47%

79.15%

76.17%

72.87%

83.37%

74.01%

88.52%









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

67.09%

77.88%

73.50%

65.70%

75.46%

70.87%

77.18%









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

100.00%

32.81%

27.07%

26.98%

42.59%

27.42%

39.45%

 

Cision

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