Banc of California Reports 2013 Third Quarter Financial Results

IRVINE, Calif.--()--Banc of California, Inc. (NASDAQ:BANC) (the “Company”), the holding company for Banc of California, National Association (the “Bank”), today announced financial results for the three and nine months ended September 30, 2013. For the quarter, the Company reported net loss attributable to common shareholders of $9.5 million, or $0.53 per diluted common share. This compares with net income available to common shareholders of $4.4 million, or $0.36 per diluted common share, for the second quarter ended June 30, 2013, and net income available to common shareholders of $9.2 million, or $0.79 per diluted common share, for the third quarter ended September 30, 2012.

For the nine months ended September 30, 2013 the Company reported a net loss attributable to common shareholders of $4.5 million, or $0.32 per diluted common share, for the first nine months of 2013. This compares with net income available to common shareholders of $8.1 million, or $0.70 per diluted common share, for the first nine months of 2012.

The Company’s consolidated assets totaled $3.72 billion at September 30, 2013, an increase of $1.18 billion compared with $2.54 billion at June 30, 2013, and an increase of $2.05 billion compared with $1.67 billion at September 30, 2012. Loans and leases of $2.58 billion at September 30, 2013 increased $.98 billion compared with $1.60 billion at June 30, 2013, and increased $1.37 billion compared with $1.20 billion at September 30, 2012. The increases in total assets and loans and leases receivable were primarily a result of organic loan growth, loans acquired in the acquisitions of The Private Bank of California, Beach Business Bank and Gateway Bancorp, purchases of seasoned SFR residential mortgage loans, and growth in deposits to support the previously announced deposit branch sale which closed October 4, 2013. Total deposits of $3.26 billion at September 30, 2013 represented an increase of $1.15 billion compared with $2.11 billion at June 30, 2013 and an increase of $1.93 billion compared with $1.33 billion at September 30, 2012.

Steven Sugarman, Chief Executive Officer of the Company, stated: “I am inspired by the commitment, dedication, and expertise of our team. Since the beginning of the third quarter, we have completed the acquisitions of The Private Bank of California, The Palisades Group and CS Financial; consolidated our banking subsidiaries under a single national bank charter; and converted to a new core operating system. The Banc of California now exceeds $3.5 billion in assets and boasts a single, consolidated full service banking platform able to meet the needs of California’s small businesses, entrepreneurs and homeowners.”

The Company and the Bank also announced today the appointment of Mr. Sugarman as President of the Company and President and Chief Executive Officer of the Bank. Mr. Sugarman will continue to serve as Chief Executive Officer and a director of the Company and Chairman of the Bank. Mr. Sugarman’s appointments occurred concurrently with the resignation of Robert Franko as President of the Company and President and Chief Executive Officer and a director of the Bank.

The Company plans to discuss its third quarter earnings, among other items, on November 8, 2013, at 8:00 a.m. Pacific Time. All interested parties are welcome to attend the conference call at 888-339-2688, event code 53722535.

About Banc of California, Inc.

Since 1941, Banc of California, Inc. (NASDAQ:BANC) through its banking subsidiary Banc of California, National Association, has provided banking services and home loans to businesses and families in California and the West. Today, Banc of California, Inc. has over $3.5 billion in consolidated assets and more than 60 banking locations.

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.

Financial Highlights

     

For the three months ended

     

For the nine months ended

September 30,       June 30,       September 30, September 30,       September 30,
2013 2013 2012 2013 2012
($ in thousands, except per share data)
 
Net income (loss) $ (8,534 ) $ 4,363 $ 9,543 $ (3,242 ) $ 9,181
Net income (loss) available to common stockholders $ (9,480 ) $ 4,363 $ 9,215 $ (4,476 ) $ 8,139
Diluted earnings (loss) per share $ (0.53 ) $ 0.36 $ 0.79 $ (0.32 ) $ 0.70
Return on average assets -0.98 % 0.76 % 2.50 % -0.17 % 1.00 %
Return on average equity -10.05 % 8.58 % 19.78 % -1.77 % 6.54 %
Net Interest Margin 3.25 % 3.93 % 3.97 % 3.56 % 3.66 %
Non-interest income $ 18,226 $ 26,072 $ 19,512 $ 62,226 $ 20,654
Non-interest expense $ 52,304 $ 39,594 $ 24,456 $ 121,456 $ 42,617
Provision for Loan Loss $ 2,109 $ 1,918 $ 1,031 $ 6,195 $ 2,001
Net Charge-offs $ (42 ) $ 954 $ 100 $ 1,513 $ 2,402
Net loans receivable $ 2,577,058 $ 1,597,367 $ 1,202,995
Deposits $ 3,259,374 $ 2,109,831 $ 1,328,221
Non-accrual loans $ 15,408 $ 9,164 $ 16,181
Allowance for loan and lease losses to originated loans 1.39 % 1.49 % 1.44 %

ALLL and discount to originated and non-credit impaired purchased loans, excluding purchased loan pools(1)

1.56 % 1.59 % 1.41 %
 
(1) The ratios were calculated by dividing a sum of ALLL and discounts by outstanding loan balance of originated and non-credit impaired purchased loans, excluding purchased loan pools and credit impaired purchased and acquired loans
 
 
                         

Banc of California, Inc.

Consolidated Statements of Financial Condition

(Dollars in thousands, except per share data)

(Unaudited)

 
September 30, June 30, September 30,
2013 2013 2012
ASSETS
Cash and due from banks $ 7,951 $ 8,153 $ 8,867
Interest-bearing deposits   408,059     454,182     113,193  
Total cash and cash equivalents 416,010 462,335 122,060
Time deposits in financial institutions 2,938 2,589 5,621
Securities available for sale 167,998 106,751 122,271
Federal Home Loan Bank and Other Bank stock, at cost 14,789 10,838 8,842

Loans and leases receivable, net of allowance of $19,130, $16,979 and $12,379 at September 30, 2013, June 30, 2013 and September 30, 2012, respectively

2,577,058 1,597,367 1,202,995
Loans held for sale 367,111 257,949 110,291
Servicing rights, net 7,603 5,040 2,170
Accrued interest receivable 10,425 7,887 5,312
Other real estate owned (OREO), net 1,383 1,537 8,704
Premises and equipment, net 61,443 15,533 15,492
Premises and equipment held-for-sale 3,080 3,139 -
Bank owned life insurance investment 18,834 18,792 18,649
Deferred income tax 5,515 7,199 7,441
Goodwill 22,086 7,048 7,039
Affordable housing fund investment 5,787 2,874 6,332
Income tax receivable 4,077 738 6,050
Other intangible assets, net 13,191 4,740 5,841
Other assets   19,045     22,758     14,622  
Total assets $ 3,718,373   $ 2,535,114   $ 1,669,732  
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Noninterest-bearing deposits $ 418,759 $ 132,855 $ 88,616
Interest-bearing deposits 2,377,847 1,519,948 1,239,605
Deposits held for sale   462,768     457,028     -  
Total deposits 3,259,374 2,109,831 1,328,221
Advances from Federal Home Loan Bank 25,000 45,000 86,000
Notes payable, net 82,224 82,127 34,018
Reserve for loss reimbursements on sold loans 4,282 3,974 2,665
Accrued expenses and other liabilities   44,913     25,697     27,089  
Total liabilities 3,415,793 2,266,629 1,477,993
Commitments and contingent liabilities
 
SHAREHOLDERS’ EQUITY
Preferred stock, $0.01 par value share, 50,000,000 shares authorized:
Series A, non-cumulative perpetual preferred stock, $1,000 per share liquidation preference, 32,000 authorized, 32,000 shares issued and outstanding at September 30, 2013, June 30, 2013 and September 30, 2012 31,934 31,934 31,925
Series B, non-cumulative perpetual preferred stock, $1,000 per share liquidation preference, 10,000 shares authorized, 10,000 shares issued and outstanding at September 30, 2013; 0 shares issued and outstanding at June 30, 2013 and 0 shares issued and outstanding at September 30, 2012 10,000 - -

Series C, 8.00% non-cumulative perpetual preferred stock, $1,000 per share liquidation preference, 40,250 shares authorized, 40,250 shares issued and outstanding at September 30, 2013; 35,000 shares issued and outstanding at June 30, 2013 and 0 shares issued and outstanding at September 30, 2012

37,943

33,734

-

Common stock, $.01 par value per share, 196,863,844 shares authorized; 18,693,092 shares issued and 17,439,562 shares outstanding at September 30, 2013; 16,134,900 shares issued and 14,976,979 shares outstanding at June 30, 2013; 11,900,952 shares issued and 10,683,327 shares outstanding at September 30, 2012

188 162 119

Class B non-voting non-convertible Common stock, $.01 par value per share, 3,136,156 shares authorized; 579,490 shares issued and outstanding at September 30, 2013; 574,258 shares issued and outstanding at June 30, 2013; 1,090,061 shares issued and outstanding at September 30, 2012

5 5 11
Additional paid-in capital 230,804 197,272 153,467
Retained earnings 17,027 28,678 31,477
Treasury stock, at cost (1,253,530 shares at September 30, 2013; 1,157,921 shares at June 30, 2013; 1,217,625 shares at September 30, 2012) (25,455 ) (24,088 ) (25,638 )
Accumulated other comprehensive income/(loss), net   134     788     378  
Total shareholders’ equity   302,580     268,485     191,739  
Total liabilities and shareholders’ equity $ 3,718,373   $ 2,535,114   $ 1,669,732  
 
 
           

Banc of California, Inc.

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

(Unaudited)

 
Three months ended Nine months ended
September 30,       June 30,       September 30, September 30,      

September 30,

2013 2013 2012 2013 2012
Interest and dividend income
Loans, including fees $ 32,061 $ 26,153 $ 15,928 $ 76,751 $ 35,060
Securities 1,292 369 708 2,159 2,139
Dividends and other interest-earning assets   493     219   86     845     226  
Total interest and dividend income 33,846 26,741 16,722 79,755 37,425
 
Interest expense
Deposits 5,084 3,303 1,578 10,386 4,285
Federal Home Loan Bank advances 56 58 74 177 266
Capital leases 27 20 2 59 4
Notes payable   1,736     1,735   660     5,206     1,155  
Total interest expense   6,903     5,116   2,314     15,828     5,710  
 
Net interest income 26,943 21,625 14,408 63,927 31,715
Provision for loan and lease losses   2,109     1,918   1,031     6,195     2,001  
Net interest income after provision for loan and lease losses 24,834 19,707 13,377 57,732 29,714
Noninterest income
Customer service fees 621 509 543 1,676 1,282
Mortgage banking income 16,231 20,261 5,546 52,862 5,546
Other   1,374     5,302   13,423     7,688     13,826  
Total noninterest income 18,226 26,072 19,512 62,226 20,654
Noninterest expense
Salaries and employee benefits 30,179 25,311 13,613 74,570 23,657
Occupancy and equipment 5,247 3,630 2,473 12,070 4,793
All other operating expenses   16,878     10,653   8,370     34,816     14,167  
Total noninterest expense   52,304     39,594   24,456     121,456     42,617  
Income (loss) before income taxes (9,244 ) 6,185 8,433 (1,498 ) 7,751
Income tax (benefit) expense   (710 )   1,822   (1,110 )   1,744     (1,430 )
Net income (loss) (8,534 ) 4,363 9,543 (3,242 ) 9,181
Preferred stock dividends and discount accretion   946     -   328     1,234     1,042  
Net income (loss) available to common shareholders $ (9,480 ) $ 4,363 $ 9,215   $ (4,476 ) $ 8,139  
Basic earnings (loss) per common share $ (0.53 ) $ 0.36 $ 0.79   $ (0.32 ) $ 0.70  
Diluted earnings (loss) per common share $ (0.53 ) $ 0.36 $ 0.79   $ (0.32 ) $ 0.70  
 
 
                 

Banc of California, Inc.

Selected Financial Data

(Dollars in thousands)

 

As of or for the

three months ended

As of or for the

nine months ended

September 30,       June 30, September 30, September 30,       September 30,
2013 2013 2012 2013 2012
Quarterly average balance:
Total assets $ 3,439,433 $ 2,301,382

$

1,520,310

$

2,509,750

$ 1,227,060
Total gross loans and leases 2,530,856 1,844,555 1,197,737 1,934,555 954,167
Securities available for sale 221,245 102,880 123,022 147,459 111,495
Total interest earning assets 3,286,840 2,205,484 1,444,985 2,397,486 1,158,604
Total deposits 2,948,644 1,938,164 1,207,801 2,103,721 962,015
Total borrowings 124,419 129,589 99,257 131,513 65,534
Total shareholders’ equity 336,963 203,873 191,958 244,778 187,431
Interest bearing liabilities 2,659,186 1,909,023 1,096,561 1,995,855 912,796
 
Profitability and other ratios:

Return on avg. assets(1)

-0.98 % 0.76 % 2.50 % -0.17 % 1.00 %

Return on avg. equity(1)

-10.05 % 8.58 % 19.78 % -1.77 % 6.54 %

Net interest margin(1)

3.25 % 3.93 % 3.97 % 3.56 % 3.66 %

Noninterest income to total revenue(2)

40.35 % 54.66 % 57.52 % 49.33 % 39.44 %

Noninterest income to avg. assets(1)

2.10 % 4.54 % 5.11 % 3.31 % 2.25 %

Noninterest exp. to avg. assets(1)

6.03 % 6.90 % 6.40 % 6.47 % 4.64 %

Efficiency ratio(3)

115.80 % 83.01 % 72.10 % 96.28 % 81.38 %
Avg. loans to average deposits 85.83 % 95.17 % 99.17 % 91.96 % 99.18 %
Average securities available for sale to average total assets 6.43 % 4.47 % 8.09 % 5.88 % 9.09 %
Average interest-earning assets to average interest-bearing liabilities 123.60 % 115.53 % 131.77 % 120.12 % 126.93 %
Average stockholders’ equity to average total assets 9.80 % 8.86 % 12.63 % 9.75 % 15.27 %
 
Asset quality information and ratios:
Nonaccrual Loans, excluding PCI loans $ 15,408 $ 9,164

$

16,181

90+ delinquent loans, excluding PCI loans 14,100 10,741 1,479
Other real estate owned (OREO), net 1,383 1,537 8,704
Net loan charge-offs (42 ) 954 100

$

1,513

$ 2,402
 

Allowance for loan and lease losses:

Originated loans $ 17,416 $ 16,199

$

11,663

Non-credit impaired loans acquired through business acquisitions 1,402 468 716
Non-credit impaired purchased loan pools - - -
Credit impaired acquired and purchased loan pools   312     312     -  
Total allowance for loan and lease losses $ 19,130   $ 16,979  

$

12,379

 
 

Discount

Non-credit impaired loans acquired through business acquisitions $ 9,003 $ 3,395 $3,257
Non-credit impaired purchased loan pools 38,002 16,237 -
Credit impaired acquired and purchased loan pools   110,081     74,460     54,458  
Total discount $ 157,086   $ 94,092  

$

57,715

 
 

Loans:

Originated loans $ 1,252,673 $ 1,086,271

$

810,010

Non-credit impaired loans acquired through business acquisitions 525,797 177,165 300,836
Non-credit impaired purchased loan pools 468,590 212,952 -
Credit impaired acquired and purchased loan pools   349,128     137,958     104,528  
Total loans $ 2,596,188   $ 1,614,346  

$

1,215,374

 
 
ALLL to originated loans 1.39 % 1.49 % 1.44 %

ALLL and discount to originated and non-credit impaired purchased loans, excluding purchased loan pools(4)

1.56 % 1.59 % 1.41 %
 
(1) Ratios are presented on an annualized basis
(2) Total revenue is equal to the sum of net interest income before provision and noninterest income
(3) Efficiency ratios are calculated by dividing noninterest expense by the sum of net interest income before provision for loan losses and noninterest income

(4) The ratios were calculated by dividing a sum of ALLL and discounts by outstanding loan balance of originated and non-credit impaired acquired loans, excluding purchased loan pools and credit impaired purchased and acquired loans

 

   
 
                         

Banc of California, Inc.

Selected Quarterly Financial Data

(Dollars in thousands, except per share data)

 
September 30, June 30, September 30,
2013 2013 2012
Capital Ratios
Banc of California, Inc.
Total risk-based capital ratio: 12.64 % 19.34 % 11.47 %
Tier 1 risk-based capital ratio: 11.58 % 18.08 % 14.36 %
Tier 1 leverage ratio: 7.82 % 11.16 % 15.61 %
PacTrust Bank
Total risk-based capital ratio: 15.39 % 19.78 % 17.41 %
Tier 1 risk-based capital ratio: 14.14 % 18.52 % 16.15 %
Tier 1 leverage ratio: 8.11 % 10.03 % 11.22 %
The Private Bank of California
Total risk-based capital ratio: 11.55 % 16.79 % 14.36 %
Tier 1 risk-based capital ratio: 11.06 % 15.88 % 14.15 %
Tier 1 leverage ratio: 8.34 % 11.94 % 10.76 %
 
Tangible common equity to tangible assets ratio is supplemental financial information determined by a method other than in accordance with U.S. generally accepted accounting principles ("GAAP"). This non-GAAP measure is used by management in the analysis of Banc of California, Inc.’s. capital strength. Tangible equity is calculated by subtracting goodwill and other intangible assets from total stockholders' equity. Banking and financial institution regulators also exclude goodwill and other intangible assets from total stockholders' equity when assessing the capital adequacy of a financial institution. Management believes the presentation of this financial measure excluding the impact of these items provides useful supplemental information that is essential to a proper understanding of the capital strength of Banc of California, Inc. This disclosure should not be viewed as a substitution 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 table reconciles this non-GAAP performance measure to the GAAP performance measure for the periods indicated:
 
September 30, June 30, September 30,
2013 2013 2012
Non-GAAP performance measure
Tangible common equity to tangible assets ratio
Total assets $ 3,718,373 $ 2,535,114 $ 1,669,732
Less goodwill (22,086 ) (7,048 ) (7,039 )
Less other intangible assets   (13,191 )   (4,740 )   (5,841 )
Tangible assets $ 3,683,096   $ 2,523,326   $ 1,656,852  
 
Total stockholders' equity $ 302,580 $ 268,485 $ 191,739
Less preferred stock (79,877 ) (65,668 ) (31,925 )
Less goodwill (22,086 ) (7,048 ) (7,039 )
Less other intangible assets   (13,191 )   (4,740 )   (5,841 )
Tangible stockholders' equity $ 187,426   $ 191,029   $ 146,934  
 
Total stockholders' equity to total assets 8.14 % 10.59 % 11.48 %
Tangible stockholders' equity to tangible assets 5.09 % 7.57 % 8.87 %
 
Common stock outstanding 17,439,562 14,976,979 10,683,327
Class B non-voting non-convertible common stock outstanding   579,490     574,258     1,090,061  
Total common stock outstanding   18,019,052     15,551,237     11,773,388  
 
Tangible common equity per common stock $ 10.40 $ 12.28 $ 12.48

Contacts

Investor Relations Inquiries:
Banc of California, Inc.
Richard Herrin, 855-361-2262
or
Media Inquiries:
Vectis Strategies
David Herbst, 213-973-4113 x101

Contacts

Investor Relations Inquiries:
Banc of California, Inc.
Richard Herrin, 855-361-2262
or
Media Inquiries:
Vectis Strategies
David Herbst, 213-973-4113 x101