Banc of California Reports Third Quarter 2020 Financial Results

SANTA ANA, Calif.--()--Banc of California, Inc. (NYSE: BANC) today reported net income available to common stockholders for the third quarter of 2020 of $12.1 million, or diluted earnings per common share of $0.24.

Highlights for the third quarter included:

  • Noninterest-bearing deposit balances increased $59.2 million during the quarter and represented 24% of total deposits at September 30, 2020, up from 19% a year earlier
  • Total checking balances increased $257.7 million during the quarter and represented 58% of total deposits at September 30, 2020, up from 45% a year earlier
  • Net interest margin remained stable at 3.09%
  • Average cost of total deposits declined 20 basis points from the prior quarter to 0.51%, with period-end cost of deposits at 0.39%
  • Total deferrals/forbearances declined to $282.5 million at September 30, 2020 from $604.2 million
  • Allowance for credit losses remained strong at 1.66% of total loans
  • Common Equity Tier 1 capital at 11.64%

Jared Wolff, President & CEO of Banc of California, commented, “Our third quarter results reflect the growing earnings momentum that we have been building following nearly 18 months of restructuring our operations. Our strong execution on the strategies we have identified to enhance the value of our franchise continued to result in positive trends on many fronts including a further reduction in our cost of deposits, a stable net interest margin, and improved operating efficiencies. These efforts translated into a significant improvement in earnings and pre-tax pre-provision income."

“Our business development efforts continue to gain traction despite the impact of the COVID-19 pandemic. We are consistently adding new commercial banking relationships, which resulted in our fifth consecutive quarter of demand deposit account growth and further improvement in our mix of deposits. The commercial banking team we have built is also effectively bringing in new, high quality commercial loans to offset the planned run-off of our single-family residential portfolio. As a result, we saw an increase in total loan balances in the third quarter, while our mix of loans continued to shift more towards relationship-based business loans.”

“We believe that we continue to have many levers to pull that will further improve our financial performance. While the ongoing pandemic creates a level of near-term uncertainty, we believe that over the longer-term, we are very well positioned to generate earning asset growth, expand our net interest margin, realize additional operating leverage, and deliver a higher level of earnings and returns for our shareholders as the economy strengthens,” said Mr. Wolff.

Lynn Hopkins, Chief Financial Officer of Banc of California, said, “We are very pleased with our third quarter performance and results which are a reflection of executing on our strategic vision. Our net interest margin remained unchanged at 3.09% as we successfully lowered our average cost of funds 21 basis points which helped absorb the decrease in our average earning assets yield. Our period end total deposits costs also fell 20 basis points to 39 basis points. Our loan portfolio remains well-positioned as it is heavily weighted towards real estate loans with low loan-to-values and we saw lower levels of loans on deferment and forbearance. Our allowance for credit losses to total loans was 1.66% and is a reflection of the considerable uncertainty of the timing and magnitude of the impact of the pandemic. Nonetheless, we are confident in our ability to continue to execute on our initiatives and optimize our capital in ways that will be accretive to earnings and create further value for our shareholders.”

Income Statement Highlights

 

Three Months Ended

 

Nine Months Ended

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

 

September 30,
2019

 

September 30,
2020

 

September 30,
2019

 

($ in thousands)

Total interest and dividend income

$

69,666

$

72,697

 

$

74,714

 

$

83,702

 

$

92,657

 

$

217,077

 

$

307,409

 

Total interest expense

13,811

17,382

 

22,853

 

27,042

 

33,742

 

54,046

 

115,906

 

Net interest income

55,855

55,315

 

51,861

 

56,660

 

58,915

 

163,031

 

191,503

 

Total noninterest income

3,954

5,528

 

2,061

 

4,930

 

3,181

 

11,543

 

7,186

 

Total revenue

59,809

60,843

 

53,922

 

61,590

 

62,096

 

174,574

 

198,689

 

Total noninterest expense

40,394

72,770

 

46,919

 

47,483

 

43,240

 

160,083

 

148,989

 

Pre-tax / pre-provision income (loss)

19,415

(11,927

)

7,003

 

14,107

 

18,856

 

14,491

 

49,700

 

Provision for (reversal of) credit losses

1,141

11,826

 

15,761

 

(2,976

)

38,607

 

28,728

 

38,805

 

Income tax expense (benefit)

2,361

(5,304

)

(2,165

)

2,811

 

(5,619

)

(5,108

)

1,408

 

Net income (loss)

$

15,913

$

(18,449

)

$

(6,593

)

$

14,272

 

$

(14,132

)

$

(9,129

)

$

9,487

 

 

 

 

 

 

 

 

 

Net income (loss) available to common stockholders(1)

$

12,084

$

(21,936

)

$

(9,694

)

$

10,415

 

$

(22,722

)

$

(19,265

)

$

(8,015

)

(1)

Balance represents the net income (loss) available to common stockholders after subtracting preferred stock dividends, income allocated to participating securities, participating securities dividends and impact of preferred stock redemption from net income (loss). Refer to the Statement of Operations for additional detail on these amounts.

 

Net interest income

Q3-2020 vs Q2-2020

Net interest income increased $0.5 million to $55.9 million for the third quarter due mostly to lower funding costs, offset by lower yields on interest-earning assets. Compared to the prior quarter, average interest-earning assets declined by $14.4 million to $7.18 billion, due to lower average loans of $174.0 million, offset by higher average securities of $126.8 million and other interest-earning assets of $32.8 million. During the third quarter, average deposits increased $164.3 million, consisting of higher average interest-bearing deposits of $156.6 million and higher average noninterest-bearing deposits of $7.7 million. Average FHLB advances decreased $211.0 million due to current quarter deposit growth and the impact of the early payoff of $100.0 million in FHLB advances at the end of the second quarter.

The net interest margin remained unchanged compared to the prior quarter at 3.09% for the third quarter as the average cost of funds decreased 21 basis points, offset by a 20 basis point decrease in the average earning-assets yield. The yield on average interest-earning assets decreased to 3.86% for the third quarter from 4.06% for the second quarter due to lower yields on most interest-earning asset classes and the change in the mix of interest-earning assets. The average yield on loans declined only 2 basis points to 4.46% during the third quarter as higher prepayment penalty fees and PPP fee income helped to offset the decreases in loan yields due to the mix of loans and lower interest rate environment. The third quarter includes $2.1 million of PPP fee income, which increased the net interest margin by 11 basis points, compared to $1.7 million in the second quarter which increased the net interest margin by 10 basis points. The average yield on securities decreased 69 basis points to 2.26% due mostly to a 106 basis point decrease in the collateralized loan obligations (CLOs) yield to 2.16% for the third quarter from 3.22% for the second quarter as these securities reprice quarterly.

The average cost of funds decreased 21 basis points to 0.82% for the third quarter from 1.03% for the second quarter. This decrease was driven by the lower average cost of interest-bearing liabilities and improved funding mix, including higher average noninterest-bearing deposits during the third quarter. We continue to reduce our reliance on high cost transaction accounts, non-brokered certificates of deposits, and wholesale funds as we continue to execute on our relationship-focused business banking strategy. The average cost of interest-bearing liabilities decreased 27 basis points to 1.02% for the third quarter from 1.29% for the second quarter due to actively managing down the cost of interest-bearing deposits into the current rate environment. The average cost of interest-bearing deposits declined 27 basis points to 0.66% for the third quarter from 0.93% for the prior quarter. Additionally, average noninterest-bearing deposits increased by $7.7 million and represented 22.9% of total average deposits in the third quarter compared to 23.4% of total average deposits for the second quarter. Our total cost of average deposits decreased 20 basis points to 0.51% for the third quarter. The spot rate of total deposits at the end of the third quarter of 2020 was 0.39%.

YTD 2020 vs YTD 2019

Net interest income for the nine months ended September 30, 2020 decreased $28.5 million to $163.0 million from $191.5 million for the same 2019 period. Net interest income was impacted by the overall decrease in market interest rates between periods and lower average interest-earning assets, as a result of targeted sales of securities and loans during 2019, in line with our strategy of remixing the loan portfolio towards relationship-based lending, offset by a higher net interest margin. For the nine months ended September 30, 2020, average interest-earning assets declined $1.87 billion to $7.14 billion, and the net interest margin increased 21 basis points to 3.05% for the nine months ended September 30, 2020 compared to 2.84% for the same 2019 period.

Our average yield on interest-earning assets decreased 50 basis points to 4.06% for the nine months ended September 30, 2020 as compared to 4.56% during the same 2019 period. The decrease in yield was primarily attributable to lower average yields on the loan and securities portfolios. Our average yield on loans was 4.50% for the nine months ended September 30, 2020, compared to 4.77% for the same 2019 period, primarily due to lower market interest rates and a lower percentage of higher-yielding commercial and industrial balances in the portfolio. Our average yield on securities decreased 109 basis points due mostly to CLOs repricing into the lower rate environment and a decrease in average CLO balances.

The average cost of funds decreased to 1.08% for the nine months ended September 30, 2020 from 1.83% for the same 2019 period. This decrease was driven by the lower average cost of interest-bearing liabilities and the improved funding mix, including higher average noninterest-bearing deposits. The 74 basis point decline in the average cost of interest-bearing liabilities to 1.34% for the nine months ended September 30, 2020 from 2.08% for the same 2019 period was driven by the lower average cost of interest-bearing deposits as they reprice into the lower interest rate environment and the lower average cost of FHLB term advances resulting from maturities and early repayments during the year and as a result of the refinancing of advances during the second quarter of 2020. The average cost of interest-bearing deposits declined 89 basis points to 0.98% from the prior period due to actively managing down deposit rates in response to the interest rate cuts by the Federal Reserve in March of 2020 and a lower reliance on brokered deposits. Additionally, average noninterest-bearing deposits increased by $245.8 million when compared to the same 2019 period. Our cost of average total deposits decreased 83 basis points to 0.76% for the nine months ended September 30, 2020 when compared to the same 2019 period.

Provision for credit losses

Q3-2020 vs Q2-2020

The provision for credit losses totaled $1.1 million for the third quarter, compared to $11.8 million for the second quarter. The third quarter provision for credit losses is comprised of $0.9 million in general reserves and $1.2 million related to specific reserves, offset by provision release of $1.0 million related to unfunded commitments. The general provision is due to changes in key macro-economic forecast variables, such as unemployment and gross domestic product, improved credit quality metrics, and higher period end loan balances of $50.3 million.

YTD 2020 vs YTD 2019

During the nine months ended September 30, 2020, the provision for credit losses totaled $28.7 million under the CECL model, compared to $38.8 million under the incurred loss model during 2019. The lower provision for credit losses was primarily the result of lower net charge-offs and lower period end loan balances of $705.3 million, offset by increases from using the new CECL model, the estimated future impact of the health crisis on our loans, and higher specific reserves.

Noninterest income

Q3-2020 vs Q2-2020

Noninterest income decreased $1.6 million, or 28%, to $4.0 million for the third quarter due mostly to lower gains on sale of securities. The second quarter of 2020 included a $2.0 million gain on the sale of $20.7 million in securities; there were no sales of securities in the third quarter. The third quarter included a $0.3 million gain on sale of $17.8 million in single-family residential mortgage loans held for sale; there were no sales of loans during second quarter of 2020.

YTD 2020 vs YTD 2019

Noninterest income for the nine months ended September 30, 2020 increased $4.4 million, or 60.6%, to $11.5 million compared to the prior year. The increase was primarily attributable to (i) higher net gain on sale of investment securities of $6.9 million, and (ii) higher other income of $7.4 million as the third quarter of 2019 included a previously reported $9.6 million realized loss from interest rate swap agreements entered into in order to offset variability in the fair value of the Freddie Mac securitization completed during the third quarter of 2019. These increases were partially offset by (i) lower net gain on sale of loans of $8.4 million as the third quarter of 2019 included a $9.0 million realized gain from the aforementioned securitization, (ii) a $1.6 million loss due to decreases in the fair value of loans held for sale, and (iii) lower customer fees of $0.7 million.

Noninterest expense

Q3-2020 vs Q2-2020

Noninterest expense decreased $32.4 million to $40.4 million for the third quarter compared to the prior quarter. The decrease was primarily due to the second quarter of 2020 including a $26.8 million charge related to the termination of the LAFC naming rights agreements and a $2.5 million debt extinguishment fee, included in all other expenses, associated with the early repayment of certain FHLB term advances. There were no similar expenses during the third quarter. In addition, noninterest expense decreased during the quarter due to (i) lower salaries and benefits expense of $1.0 million due mostly to lower incentive accruals, (ii) a larger gain on investments in alternative energy partnerships of $1.3 million, and (iii) lower advertising costs of $0.9 million due to the termination of the LAFC naming rights agreements. These decreases were partially offset by higher professional fees of $0.6 million. Total operating costs, defined as noninterest expense adjusted for certain non-core items (refer to section Non-GAAP Measures), decreased $2.1 million to $40.7 million for the third quarter compared to $42.8 million for the prior quarter.

YTD 2020 vs YTD 2019

Noninterest expense for the nine months ended September 30, 2020 increased $11.1 million, or 7.4%, to $160.1 million compared to the prior year. The increase was primarily due to: (i) the aforementioned $26.8 million one-time charge related to the termination of our LAFC naming rights agreements, (ii) a $2.5 million debt extinguishment fee, included in all other expenses, associated with the early repayment of certain FHLB term advances, and (iii) higher professional fees of $6.1 million, due to overall reductions in recoveries of $18.4 million related to indemnified legal fees for resolved legal proceedings and various other litigations. These increases were offset by: (i) $4.0 million in lower consulting fees for bank projects and initiatives, (ii) lower salaries and benefits expense of $10.9 million resulting from lower headcount, (iii) lower advertising costs of $3.1 million due to the termination of our LAFC naming rights agreements and reductions in overall events and media spending, and (iv) lower regulatory assessments of $3.9 million due to changes in our asset size and an FDIC assessment credit.

Income taxes

Q3-2020 vs Q2-2020

Income tax expense totaled $2.4 million for the third quarter resulting in an effective tax rate of 12.9% compared to a $5.3 million benefit for the second quarter resulting in an effective tax rate of 22.3%. Based on our actual and projected level of earnings and permanent tax differences for 2020, our estimated effective tax rate for the full year was refined this quarter to a negative tax rate ranging from approximately 10% to 15%. As a result of the change, we expect our fourth quarter effective tax rate to be approximately 25%.

YTD 2020 vs YTD 2019

Income tax benefit totaled $5.1 million for the nine months ended September 30, 2020, representing an effective tax rate of 35.9%, compared to a $1.4 million expense and an effective tax rate of 12.9% for nine months ended September 30, 2019.

Balance Sheet

At September 30, 2020, total assets were $7.74 billion, which represented a linked-quarter decrease of $32.0 million. The following table shows selected balance sheet line items as of the dates indicated.

 

As of and for the Three Months Ended

 

Amount Change

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

 

September 30,
2019

 

Q3-20 vs. Q2-20

 

Q3-20 vs. Q3-19

 

 

 

 

 

 

 

 

 

($ in thousands)

Total assets

$

7,738,106

 

$

7,770,138

 

$

7,662,607

 

$

7,828,410

 

$

8,625,337

 

$

(32,032

)

$

(887,231

)

Securities available-for-sale

$

1,245,867

 

$

1,176,029

 

$

969,427

 

$

912,580

 

$

775,662

 

$

69,838

 

$

470,205

 

Loans held-for-investment

$

5,678,002

 

$

5,627,696

 

$

5,667,464

 

$

5,951,885

 

$

6,383,259

 

$

50,306

 

$

(705,257

)

Loans held-for-sale

$

1,849

 

$

19,768

 

$

20,234

 

$

22,642

 

$

23,936

 

$

(17,919

)

$

(22,087

)

 

 

 

 

 

 

 

 

Demand deposits

$

3,495,859

 

$

3,238,202

 

$

2,828,470

 

$

2,622,398

 

$

2,602,011

 

$

257,657

 

$

893,848

 

Other core deposits

2,446,593

 

2,619,502

 

2,515,703

 

2,794,769

 

3,074,936

 

(172,909

)

(628,343

)

Brokered deposits

89,814

 

179,761

 

218,665

 

10,000

 

93,111

 

(89,947

)

(3,297

)

Total Deposits

$

6,032,266

 

$

6,037,465

 

$

5,562,838

 

$

5,427,167

 

$

5,770,058

 

$

(5,199

)

$

262,208

 

As percentage of total deposits

 

 

 

 

 

 

 

Demand deposits

57.95

%

53.64

%

50.85

%

48.32

%

45.10

%

4.31

%

12.85

%

Other core deposits

40.56

%

43.39

%

45.22

%

51.50

%

53.29

%

(2.83

)%

(12.73

)%

Brokered deposits

1.49

%

2.98

%

3.93

%

0.18

%

1.61

%

(1.49

)%

(0.12

)%

 

 

 

 

 

 

 

 

Average loan yield

4.46

%

4.48

%

4.56

%

4.71

%

4.75

%

(0.02

)%

(0.29

)%

Average cost of interest-bearing deposits

0.66

%

0.93

%

1.41

%

1.57

%

1.78

%

(0.27

)%

(1.12

)%

Average cost of total deposits

0.51

%

0.71

%

1.11

%

1.27

%

1.48

%

(0.20

)%

(0.97

)%

 

Investments

Securities available-for-sale increased $69.8 million to $1.25 billion at September 30, 2020 due to purchases of $48.5 million and lower unrealized net losses of $23.9 million. The decrease in the unrealized net losses was due mostly to credit spreads tightening during the quarter for a positive change on the pricing of the CLOs and corporate debt securities. Securities purchased included municipal bonds, government agency securities and floating rate SBA pool securities. There were no sales of securities during the third quarter. As of September 30, 2020, our securities portfolio included $685.9 million of CLOs, $325.8 million of agency securities, $69.2 million of municipal securities, $146.9 million of corporate debt securities, and $17.8 million of SBA pool securities. The CLO portfolio, which is comprised only of AA and AAA rated securities, represented 55.1% of the total securities portfolio and the carrying value included an unrealized net loss of $17.7 million at September 30, 2020 compared to an unrealized net loss of $35.3 million at June 30, 2020.

Loans

The following table sets forth the composition, by loan category, of our loan portfolio as of the dates indicated:

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

 

September 30,
2019

 

($ in thousands)

Composition of held-for-investment loans

 

 

 

 

 

 

 

 

 

Commercial real estate

$

826,683

 

 

$

822,694

 

 

$

810,024

 

 

$

818,817

 

 

$

891,029

 

Multifamily

1,476,803

 

 

1,434,071

 

 

1,466,083

 

 

1,494,528

 

 

1,563,757

 

Construction

197,629

 

 

212,979

 

 

227,947

 

 

231,350

 

 

228,561

 

Commercial and industrial

1,586,824

 

 

1,436,990

 

 

1,578,223

 

 

1,691,270

 

 

1,789,478

 

SBA

320,573

 

 

310,784

 

 

70,583

 

 

70,981

 

 

75,359

 

Total commercial loans

4,408,512

 

 

4,217,518

 

 

4,152,860

 

 

4,306,946

 

 

4,548,184

 

Single-family residential mortgage

1,234,479

 

 

1,370,785

 

 

1,467,375

 

 

1,590,774

 

 

1,775,953

 

Other consumer

35,011

 

 

39,393

 

 

47,229

 

 

54,165

 

 

59,122

 

Total consumer loans

1,269,490

 

 

1,410,178

 

 

1,514,604

 

 

1,644,939

 

 

1,835,075

 

Total gross loans

$

5,678,002

 

 

$

5,627,696

 

 

$

5,667,464

 

 

$

5,951,885

 

 

$

6,383,259

 

Composition percentage of held-for-investment loans

 

 

 

 

 

 

 

 

 

Commercial real estate

14.6

%

 

14.6

%

 

14.3

%

 

13.8

%

 

14.0

%

Multifamily

26.0

%

 

25.5

%

 

25.9

%

 

25.1

%

 

24.5

%

Construction

3.5

%

 

3.8

%

 

4.0

%

 

3.9

%

 

3.6

%

Commercial and industrial

28.0

%

 

25.5

%

 

27.9

%

 

28.4

%

 

28.0

%

SBA

5.6

%

 

5.5

%

 

1.2

%

 

1.2

%

 

1.2

%

Total commercial loans

77.7

%

 

74.9

%

 

73.3

%

 

72.4

%

 

71.3

%

Single-family residential mortgage

21.7

%

 

24.4

%

 

25.9

%

 

26.7

%

 

27.8

%

Other consumer

0.6

%

 

0.7

%

 

0.8

%

 

0.9

%

 

0.9

%

Total consumer loans

22.3

%

 

25.1

%

 

26.7

%

 

27.6

%

 

28.7

%

Total gross loans

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

 

Held-for-investment loans increased $50.3 million to $5.68 billion from the prior quarter, resulting from higher commercial and industrial (C&I) loans of $149.8 million due, in part, to increased utilization of credit facilities, and higher multifamily loans of $42.7 million. These increases were offset partially by lower single-family residential mortgage loans of $136.3 million and construction loans of $15.4 million. The decline in single-family residential is attributed to payoffs as the loans refinance away in the lower rate environment. The decline in construction loans is attributed to general fluctuations in volume and certain payoffs. At September 30, 2020, SBA loans included $255.8 million of PPP loans, net of fees.

We continue to focus the real estate loan portfolio toward relationship-based multifamily, bridge, light infill construction, and commercial real estate loans. Currently, loans secured by residential real estate (single-family, multifamily, single-family construction, and warehouse credit facilities) represent approximately 67% of our total loans outstanding.

The C&I portfolio has limited exposure to certain business sectors undergoing severe stress. The C&I industry concentrations in dollars and as a percentage of total outstanding C&I loan balances are summarized below:

 

September 30, 2020

 

Amount

 

% of Portfolio

 

($ in thousands)

C&I Portfolio by Industry

 

 

 

Finance and insurance (includes Warehouse lending)

$

932,887

 

 

59

%

Real estate and rental leasing

204,182

 

 

13

%

Gas stations

70,630

 

 

4

%

Manufacturing

50,747

 

 

3

%

Healthcare

67,789

 

 

4

%

Wholesale trade

40,232

 

 

3

%

Other retail trade

37,157

 

 

2

%

Television/motion pictures

31,310

 

 

2

%

Food services

29,835

 

 

2

%

Professional services

13,878

 

 

1

%

Transportation

5,480

 

 

%

Accommodations

1,473

 

 

%

All other

101,224

 

 

6

%

Total

$

1,586,824

 

 

100

%

 

Deposits

The following table sets forth the composition of our deposits at the dates indicated.

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

 

September 30,
2019

 

($ in thousands)

Composition of deposits

 

 

 

 

 

 

 

 

 

Noninterest-bearing checking

$

1,450,744

 

 

$

1,391,504

 

 

$

1,256,081

 

 

$

1,088,516

 

 

$

1,107,442

 

Interest-bearing checking

2,045,115

 

 

1,846,698

 

 

1,572,389

 

 

1,533,882

 

 

1,503,208

 

Money market

689,769

 

 

765,854

 

 

575,820

 

 

715,479

 

 

695,530

 

Savings

946,293

 

 

939,018

 

 

877,947

 

 

885,246

 

 

1,042,162

 

Non-brokered certificates of deposit

820,531

 

 

924,630

 

 

1,071,936

 

 

1,204,044

 

 

1,367,284

 

Brokered certificates of deposit

79,814

 

 

169,761

 

 

208,665

 

 

 

 

54,432

 

Total deposits

$

6,032,266

 

 

$

6,037,465

 

 

$

5,562,838

 

 

$

5,427,167

 

 

$

5,770,058

 

Composition percentage of deposits

 

 

 

 

 

 

 

 

 

Noninterest-bearing checking

24.1

%

 

23.0

%

 

22.6

%

 

20.1

%

 

19.2

%

Interest-bearing checking

33.9

%

 

30.6

%

 

28.3

%

 

28.2

%

 

26.1

%

Money market

11.4

%

 

12.7

%

 

10.3

%

 

13.2

%

 

12.0

%

Savings

15.7

%

 

15.6

%

 

15.8

%

 

16.3

%

 

18.1

%

Non-brokered certificates of deposit

13.6

%

 

15.3

%

 

19.3

%

 

22.2

%

 

23.7

%

Brokered certificates of deposit

1.3

%

 

2.8

%

 

3.7

%

 

%

 

0.9

%

Total deposits

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

 

Total deposits decreased $5.2 million during the third quarter of 2020 to $6.03 billion due to lower brokered certificates of deposit of $89.9 million, non-brokered certificates of deposit of $104.1 million, and money market balances of $76.1 million, offset by higher noninterest-bearing checking balances of $59.2 million, interest-bearing checking of $198.4 million, and savings balances of $7.3 million. We continue to focus on growing relationship-based deposits, strategically augmented by wholesale funding, as we proactively reduce our deposit costs in response to the interest rate cuts by the Federal Reserve in March of 2020. Noninterest-bearing deposits totaled $1.45 billion and represented 24.1% of total deposits at September 30, 2020 compared to $1.39 billion, or 23.0% of total deposits, at June 30, 2020 and $1.11 billion, or 19.2% of total deposits, one year ago.

Debt

Advances from the FHLB decreased $57.7 million, or 9%, to $559.5 million, as of September 30, 2020, due to maturities of $58.0 million. At the end of the third quarter, FHLB advances included no overnight borrowings, $105.0 million maturing within three months, and $461.0 million maturing beyond three months with a weighted average life of 4.7 years and weighted average interest rate of 2.51%.

Equity

At September 30, 2020, total stockholders’ equity increased by $27.3 million to $874.3 million and tangible common equity increased by $27.8 million to $649.3 million on a linked-quarter basis. The increase in total stockholders’ equity for the three months ended September 30, 2020, was a result of net income of $15.9 million and lower net accumulated other comprehensive loss of $16.8 million, offset by dividends to common and preferred stockholders of $6.6 million, and redemption of preferred stock of $0.2 million. Tangible book value per share increased to $12.92 as of September 30, 2020 from $12.37 at June 30, 2020.

Capital ratios remain strong with total risk-based capital at 16.24% and a tier 1 leverage ratio of 10.83%. The following table sets forth our regulatory capital ratios at September 30, 2020 and the previous four quarters. The interim capital relief related to the adoption of CECL increased the Bank's leverage ratio approximately 12 basis points at September 30, 2020.

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

 

September 30,
2019

Capital Ratios(1)

 

 

 

 

 

 

 

 

 

Banc of California, Inc.

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

16.24

%

 

16.35

%

 

16.16

%

 

15.90

%

 

14.37

%

Tier 1 risk-based capital ratio

14.98

%

 

15.10

%

 

14.91

%

 

14.83

%

 

13.32

%

Common equity tier 1 capital ratio

11.64

%

 

11.68

%

 

11.58

%

 

11.56

%

 

10.34

%

Tier 1 leverage ratio

10.83

%

 

10.56

%

 

11.20

%

 

10.89

%

 

9.84

%

Banc of California, NA

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

18.20

%

 

18.17

%

 

18.21

%

 

17.46

%

 

15.65

%

Tier 1 risk-based capital ratio

16.94

%

 

16.92

%

 

16.96

%

 

16.39

%

 

14.60

%

Common equity tier 1 capital ratio

16.94

%

 

16.92

%

 

16.96

%

 

16.39

%

 

14.60

%

Tier 1 leverage ratio

12.24

%

 

11.84

%

 

12.67

%

 

12.02

%

 

10.75

%

(1)

September 30, 2020 capital ratios are preliminary.

 

Credit Quality

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

 

September 30,
2019

Asset quality information and ratios

($ in thousands)

Delinquent loans held-for-investment

 

 

 

 

 

 

 

 

 

30 to 89 days delinquent

$

51,229

 

 

$

49,810

 

 

$

56,338

 

 

$

32,873

 

 

$

39,122

 

90+ days delinquent

31,809

 

 

45,384

 

 

28,632

 

 

24,734

 

 

17,220

 

Total delinquent loans

$

83,038

 

 

$

95,194

 

 

$

84,970

 

 

$

57,607

 

 

$

56,342

 

Total delinquent loans to total loans

1.46

%

 

1.69

%

 

1.50

%

 

0.97

%

 

0.88

%

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

 

 

 

 

 

 

 

 

 

Non-performing loans

$

66,337

 

 

$

72,703

 

 

$

56,471

 

 

$

43,354

 

 

$

45,169

 

90+ days delinquent and still accruing loans

547

 

 

 

 

 

 

 

 

 

Other real estate owned

 

 

 

 

 

 

 

 

 

Non-performing assets

$

66,884

 

 

$

72,703

 

 

$

56,471

 

 

$

43,354

 

 

$

45,169

 

ALL to non-performing loans

135.95

%

 

124.30

%

 

138.55

%

 

132.97

%

 

139.31

%

Non-performing loans to total loans held-for-investment

1.18

%

 

1.29

%

 

1.00

%

 

0.73

%

 

0.71

%

Non-performing assets to total assets

0.86

%

 

0.94

%

 

0.74

%

 

0.55

%

 

0.52

%

Troubled debt restructurings (TDRs)

 

 

 

 

 

 

 

 

 

Performing TDRs

$

5,408

 

 

$

5,597

 

 

$

6,100

 

 

$

6,620

 

 

$

6,800

 

Non-performing TDRs

20,002

 

 

20,275

 

 

20,852

 

 

21,837

 

 

14,605

 

Total TDRs

$

25,410

 

 

$

25,872

 

 

$

26,952

 

 

$

28,457

 

 

$

21,405

 

 

Total delinquent loans decreased $12.2 million in the third quarter to $83.0 million at September 30, 2020, due to $30.0 million returning to current status and $0.2 million of principal payments or payoffs, offset by $18.0 million of additions. Delinquent loans included primarily legacy single-family residential loans, which accounted for 86% of the balance at quarter end and represented an increase of $0.8 million quarter over quarter. Excluding delinquent single-family residential loans, delinquent loans totaled $12.0 million, or 0.27% of total loans at September 30, 2020.

Non-performing loans decreased $5.8 million to $66.9 million as of September 30, 2020, of which $31.5 million, or 47% relates to loans in a current payment status. The third quarter decrease was due primarily to $10.2 million in cured loans and payoffs, offset by $4.4 million of loans placed on nonaccrual status. The quarter-end balance includes three large loan relationships totaling $34.9 million, or 52% of total nonperforming loans, which consist of one $16.1 million legacy shared national credit, a $9.1 million single-family mortgage residential loan with a loan-to-value ratio of 58%, and a $9.6 million legacy relationship well-secured by commercial real estate and single-family residential properties with an average loan-to-value ratio of 51%. Aside from those three loan relationships, non-performing single-family residential loans totaled $17.7 million and the remaining non-performing loans totaled $14.3 million.

In light of the pandemic, during the second and third quarters we provided support to clients by granting loan deferments or forbearances. As of September 30, 2020 loans on deferment or forbearance status totaled $282.5 million as shown below:

 

September 30, 2020

 

June 30, 2020

 

Count

 

Amount(1)

 

% of Loans
in Category

 

Count

 

Amount

 

% of Loans
in Category

 

($ in thousands)

Single-family residential mortgage

123

 

 

$

137,510

 

 

11

%

 

142

 

 

$

163,815

 

 

12

%

All other loans

35

 

 

145,036

 

 

3

%

 

156

 

 

440,420

 

 

10

%

Total

158

 

 

$

282,546

 

 

5

%

 

298

 

 

$

604,235

 

 

11

%

(1)

Loans in the process of deferment or forbearance are not reported as delinquent.

 

Of the balances as of September 30, 2020, $98.1 million of all other loans are in their second deferment. Further, as of September 30, 2020, 18 commercial loans totaling $45.3 million were under review and pending approval for a second deferral. We continue to actively monitor and manage all lending relationships in a manner that supports our clients and protects the Bank.

Allowance for Credit Losses

 

Three Months Ended

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

 

September 30,
2019

 

($ in thousands)

Allowance for loan losses (ALL)

 

 

 

 

 

Balance at beginning of period

$

90,370

 

$

78,243

 

$

57,649

 

$

62,927

 

$

59,523

 

Adoption of ASU 2016-13 (1)

 

 

7,609

 

 

 

Loans charged off

(1,821

)

 

(2,076

)

(2,706

)

(35,546

)

Recoveries

248

 

608

 

350

 

106

 

410

 

Net (charge-offs) recoveries

(1,573

)

608

 

(1,726

)

(2,600

)

(35,136

)

Provision for (reversal of) loan losses

2,130

 

11,519

 

14,711

 

(2,678

)

38,540

 

Balance at end of period

$

90,927

 

$

90,370

 

$

78,243

 

$

57,649

 

$

62,927

 

Reserve for unfunded loan commitments

 

 

 

 

 

Balance at beginning of period

$

4,195

 

$

3,888

 

$

4,064

 

$

4,362

 

$

4,295

 

Adoption of ASU 2016-13 (1)

 

 

(1,226

)

 

 

(Reversal of) provision for credit losses

(989

)

307

 

1,050

 

(298

)

67

 

Balance at end of period

3,206

 

4,195

 

3,888

 

4,064

 

4,362

 

Allowance for credit losses (ACL)

$

94,133

 

$

94,565

 

$

82,131

 

$

61,713

 

$

67,289

 

 

 

 

 

 

 

ALL to total loans

1.60

%

1.61

%

1.38

%

0.97

%

0.99

%

ACL to total loans

1.66

%

1.68

%

1.45

%

1.04

%

1.05

%

ACL to total loans, excluding PPP loans

1.74

%

1.76

%

1.45

%

1.04

%

1.05

%

Annualized net loan charge-offs (recoveries) to average total loans held-for-investment

0.12

%

(0.04

)%

0.12

%

0.17

%

2.19

%

 

 

 

 

 

 

Reserve for loss on repurchased loans

 

 

 

 

 

Balance at beginning of period

$

5,567

 

$

5,601

 

$

6,201

 

$

6,561

 

$

2,478

 

Initial provision for loan repurchases

11

 

 

 

 

4,415

 

Reversal of provision for loan repurchases

(91

)

(34

)

(600

)

(360

)

(123

)

Utilization of reserve for loan repurchases

 

 

 

 

(209

)

Balance at end of period

$

5,487

 

$

5,567

 

$

5,601

 

$

6,201

 

$

6,561

 

(1)

Represents the impact of adopting ASU 2016-13, Financial Instruments - Credit Losses on January 1, 2020. As a result of adopting ASU 2016-13, our methodology to compute our allowance for credit losses is based on a current expected credit loss methodology, rather than the previously applied incurred loss methodology.

 

The allowance for expected credit losses ("ACL"), which includes the reserve for unfunded loan commitments, totaled $94.1 million, or 1.66% of total loans, at September 30, 2020 compared to $94.6 million or 1.68% of total loans, at June 30, 2020. The $0.4 million decrease in the ACL was due to: (i) net charge-offs of $1.6 million and (ii) a negative provision for unfunded loan commitments of $1.0 million, offset by (iii) specific reserves of $1.2 million, and (iv) general reserves of $0.9 million due to the impact of higher loan balances, updated forecasts, and improved credit quality metrics. The ACL coverage of nonperforming loans was 141% at September 30, 2020 compared to 130% at June 30, 2020 and 142% at December 31, 2019.

Our ACL methodology and resulting provision continues to be impacted by the current economic uncertainty and volatility caused by the COVID-19 pandemic. The ACL methodology uses a nationally recognized, third-party model that includes many assumptions based on historical and peer loss data, current loan portfolio risk profile including risk ratings, and economic forecasts including macroeconomic variables ("MEVs") released by our model provider during September 2020. In contrast to the June 2020 forecasts, these September forecasts reflect a more favorable view of the economy (i.e. higher GDP growth rates and lower unemployment rates). Despite this, the Company-specific economic view recognizes that the foreseeable future is uncertain with respect to the search for a vaccine and effective treatments for COVID-19; the lack of clarity regarding the timing and amount of a potential government stimulus; the unknown impact of the COVID-19 pandemic on the economy and certain industry segments; and the unknown benefit from Federal Reserve and other government actions. Accordingly, the ACL level and resulting provision reflect these uncertainties. The ACL also incorporated qualitative factors to account for certain loan portfolio characteristics that are not taken into consideration by the third-party model including underlying strengths and weaknesses in the loan portfolio. As is the case with all estimates, the ACL is expected to be impacted in future periods by economic volatility, changing economic forecasts, underlying model assumptions, and asset quality metrics, all of which may be better than or worse than current estimates.

The Company will host a conference call to discuss its third quarter 2020 financial results at 10:00 a.m. Pacific Time (PT) on Thursday, October 22, 2020. Interested parties are welcome to attend the conference call by dialing (888) 317-6003, and referencing event code 8723927. 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. A replay of the call will be made available approximately one hour after the call has ended on the Company’s Investor Relations website at www.bancofcal.com/investor or by dialing (877) 344-7529 and referencing event code 10145608.

About Banc of California, Inc.

Banc of California, Inc. (NYSE: BANC) is a bank holding company with approximately $7.7 billion in assets and one wholly-owned banking subsidiary, Banc of California, N.A. (the “Bank”). The Bank has 39 offices including 31 full-service branches located throughout Southern California. Through our dedicated professionals, we provide customized and innovative banking and lending solutions to businesses, entrepreneurs and individuals throughout California. We 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. In addition to those, statements about the potential effects of the COVID-19 pandemic on the business, financial results and condition of Banc of California, Inc. and its subsidiaries may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond the control of Banc of California, Inc., including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on Banc of California Inc. and its subsidiaries, their customers and third parties. 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 (Unaudited)

(Dollars in thousands)

 

September 30,
2020

June 30,
2020

March 31,
2020

December 31,
2019

September 30,
2019

ASSETS

 

 

 

 

 

Cash and cash equivalents

$

292,490

 

$

420,640

 

$

435,992

 

$

373,472

 

$

526,874

 

Securities available-for-sale

1,245,867

 

1,176,029

 

969,427

 

912,580

 

775,662

 

Loans held-for-sale

1,849

 

19,768

 

20,234

 

22,642

 

23,936

 

Loans held-for-investment

5,678,002

 

5,627,696

 

5,667,464

 

5,951,885

 

6,383,259

 

Allowance for loan losses

(90,927

)

(90,370

)

(78,243

)

(57,649

)

(62,927

)

Federal Home Loan Bank and other bank stock

44,809

 

46,585

 

57,237

 

59,420

 

71,679

 

Servicing rights, net

1,621

 

1,753

 

2,009

 

2,299

 

2,407

 

Premises and equipment, net

123,812

 

125,247

 

127,379

 

128,021

 

128,979

 

Investments in alternative energy partnerships, net

27,786

 

26,967

 

27,347

 

29,300

 

27,039

 

Goodwill

37,144

 

37,144

 

37,144

 

37,144

 

37,144

 

Other intangible assets, net

2,939

 

3,292

 

3,722

 

4,151

 

4,605

 

Deferred income tax, net

43,744

 

48,288

 

63,849

 

44,906

 

45,950

 

Income tax receivable

10,701

 

13,094

 

7,198

 

4,233

 

4,459

 

Bank owned life insurance investment

111,115

 

110,487

 

110,397

 

109,819

 

108,720

 

Right of use assets

18,909

 

19,408

 

20,882

 

22,540

 

23,907

 

Due from unsettled securities sales

 

 

 

 

334,769

 

Other assets

188,245

 

184,110

 

190,569

 

183,647

 

188,875

 

Total assets

$

7,738,106

 

$

7,770,138

 

$

7,662,607

 

$

7,828,410

 

$

8,625,337

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Noninterest-bearing deposits

$

1,450,744

 

$

1,391,504

 

$

1,256,081

 

$

1,088,516

 

$

1,107,442

 

Interest-bearing deposits

4,581,522

 

4,645,961

 

4,306,757

 

4,338,651

 

4,662,616

 

Total deposits

6,032,266

 

6,037,465

 

5,562,838

 

5,427,167

 

5,770,058

 

Advances from Federal Home Loan Bank

559,482

 

617,170

 

978,000

 

1,195,000

 

1,650,000

 

Notes payable, net

173,623

 

173,537

 

173,479

 

173,421

 

173,339

 

Reserve for loss on repurchased loans

5,487

 

5,567

 

5,601

 

6,201

 

6,561

 

Lease liabilities

19,938

 

20,531

 

22,075

 

23,692

 

25,210

 

Accrued expenses and other liabilities

73,056

 

68,909

 

85,612

 

95,684

 

99,181

 

Total liabilities

6,863,852

 

6,923,179

 

6,827,605

 

6,921,165

 

7,724,349

 

Commitments and contingent liabilities

 

 

 

 

 

Preferred stock

184,878

 

185,037

 

187,687

 

189,825

 

189,825

 

Common stock

522

 

522

 

520

 

520

 

520

 

Common stock, class B non-voting non-convertible

5

 

5

 

5

 

5

 

5

 

Additional paid-in capital

633,409

 

632,117

 

631,125

 

629,848

 

628,774

 

Retained earnings

95,001

 

85,670

 

110,640

 

127,733

 

120,221

 

Treasury stock

(40,827

)

(40,827

)

(40,827

)

(28,786

)

(28,786

)

Accumulated other comprehensive income (loss), net

1,266

 

(15,565

)

(54,148

)

(11,900

)

(9,571

)

Total stockholders’ equity

874,254

 

846,959

 

835,002

 

907,245

 

900,988

 

Total liabilities and stockholders’ equity

$

7,738,106

 

$

7,770,138

 

$

7,662,607

 

$

7,828,410

 

$

8,625,337

 

 

Banc of California, Inc.

Consolidated Statements of Operations (Unaudited)

(Dollars in thousands, except per share data)

 

Three Months Ended

 

Nine Months Ended

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

 

September 30,
2019

 

September 30,
2020

 

September 30,
2019

Interest and dividend income

 

 

 

 

 

 

 

Loans, including fees

$

62,019

 

$

63,642

 

$

65,534

 

$

73,930

 

$

80,287

 

$

191,195

 

$

260,004

 

Securities

6,766

 

7,816

 

7,820

 

7,812

 

10,024

 

22,402

 

40,322

 

Other interest-earning assets

881

 

1,239

 

1,360

 

1,960

 

2,346

 

3,480

 

7,083

 

Total interest and dividend income

69,666

 

72,697

 

74,714

 

83,702

 

92,657

 

217,077

 

307,409

 

Interest expense

 

 

 

 

 

 

 

Deposits

7,564

 

10,205

 

14,611

 

18,247

 

22,811

 

32,380

 

82,852

 

Federal Home Loan Bank advances

3,860

 

4,818

 

5,883

 

6,396

 

8,519

 

14,561

 

25,889

 

Notes payable and other interest-bearing liabilities

2,387

 

2,359

 

2,359

 

2,399

 

2,412

 

7,105

 

7,165

 

Total interest expense

13,811

 

17,382

 

22,853

 

27,042

 

33,742

 

54,046

 

115,906

 

Net interest income

55,855

 

55,315

 

51,861

 

56,660

 

58,915

 

163,031

 

191,503

 

Provision for (reversal of) credit losses

1,141

 

11,826

 

15,761

 

(2,976

)

38,607

 

28,728

 

38,805

 

Net interest income after provision for (reversal of) credit losses

54,714

 

43,489

 

36,100

 

59,636

 

20,308

 

134,303

 

152,698

 

Noninterest income

 

 

 

 

 

 

 

Customer service fees

1,498

 

1,224

 

1,096

 

1,451

 

1,582

 

3,818

 

4,531

 

Loan servicing income

186

 

95

 

75

 

312

 

128

 

356

 

367

 

Income from bank owned life insurance

629

 

591

 

578

 

599

 

588

 

1,798

 

1,693

 

Impairment loss on investment securities

 

 

 

 

(731

)

 

(731

)

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

 

2,011

 

 

3

 

(5,063

)

2,011

 

(4,855

)

Fair value adjustment on loans held for sale

24

 

25

 

(1,586

)

30

 

16

 

(1,537

)

76

 

Net gain (loss) on sale of loans

272

 

 

(27

)

(863

)

4,310

 

245

 

8,629

 

All other income (loss)

1,345

 

1,582

 

1,925

 

3,398

 

2,351

 

4,852

 

(2,524

)

Total noninterest income

3,954

 

5,528

 

2,061

 

4,930

 

3,181

 

11,543

 

7,186

 

Noninterest expense

 

 

 

 

 

 

 

Salaries and employee benefits

23,277

 

24,260

 

23,436

 

24,036

 

25,934

 

70,973

 

81,879

 

Naming rights termination

 

26,769

 

 

 

 

26,769

 

 

Occupancy and equipment

7,457

 

7,090

 

7,243

 

7,900

 

7,767

 

21,790

 

23,408

 

Professional fees

5,147

 

4,596

 

5,964

 

2,611

 

1,463

 

15,707

 

9,601

 

Data processing

1,657

 

1,536

 

1,773

 

1,684

 

1,568

 

4,966

 

4,736

 

Advertising

219

 

1,157

 

1,756

 

2,227

 

2,090

 

3,132

 

6,195

 

Regulatory assessments

784

 

725

 

484

 

1,854

 

1,239

 

1,993

 

5,857

 

Reversal of loan repurchase reserves

(91

)

(34

)

(600

)

(360

)

(123

)

(725

)

(300

)

Amortization of intangible assets

353

 

430

 

429

 

454

 

500

 

1,212

 

1,741

 

Restructuring expense

 

 

 

1,626

 

 

 

2,637

 

All other expenses

3,021

 

6,408

 

4,529

 

4,412

 

3,742

 

13,958

 

12,580

 

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

41,824

 

72,937

 

45,014

 

46,444

 

44,180

 

159,775

 

148,334

 

(Gain) loss on investments in alternative energy partnerships

(1,430

)

(167

)

1,905

 

1,039

 

(940

)

308

 

655

 

Total noninterest expense

40,394

 

72,770

 

46,919

 

47,483

 

43,240

 

160,083

 

148,989

 

Income (loss) from operations before income taxes

18,274

 

(23,753

)

(8,758

)

17,083

 

(19,751

)

(14,237

)

10,895

 

Income tax expense (benefit)

2,361

 

(5,304

)

(2,165

)

2,811

 

(5,619

)

(5,108

)

1,408

 

Net income (loss)

15,913

 

(18,449

)

(6,593

)

14,272

 

(14,132

)

(9,129

)

9,487

 

Preferred stock dividends

3,447

 

3,442

 

3,533

 

3,540

 

3,403

 

10,422

 

12,019

 

Income allocated to participating securities

281

 

 

 

224

 

 

 

 

Participating securities dividends

94

 

94

 

94

 

93

 

94

 

282

 

390

 

Impact of preferred stock redemption

7

 

(49

)

(526

)

 

5,093

 

(568

)

5,093

 

Net income (loss) available to common stockholders

$

12,084

 

$

(21,936

)

$

(9,694

)

$

10,415

 

$

(22,722

)

$

(19,265

)

$

(8,015

)

 

 

 

 

 

 

 

 

Earnings (loss) per common share:

 

 

 

 

 

 

 

Basic

$

0.24

 

$

(0.44

)

$

(0.19

)

$

0.21

 

$

(0.45

)

$

(0.38

)

$

(0.16

)

Diluted

$

0.24

 

$

(0.44

)

$

(0.19

)

$

0.20

 

$

(0.45

)

$

(0.38

)

$

(0.16

)

Weighted average number of common shares outstanding

 

 

 

 

 

 

 

Basic

50,108,655

 

50,030,919

 

50,464,777

 

50,699,915

 

50,882,227

 

50,201,112

 

50,804,429

 

Diluted

50,190,933

 

50,030,919

 

50,464,777

 

50,927,978

 

50,882,227

 

50,201,112

 

50,804,429

 

Dividends declared per common share

$

0.06

 

$

0.06

 

$

0.06

 

$

0.06

 

$

0.06

 

$

0.18

 

$

0.25

 

 

Banc of California, Inc.

Selected Financial Data

(Unaudited)

 

Three Months Ended

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

 

September 30,
2019

Profitability and other ratios of consolidated operations

 

 

 

 

 

Return on average assets(1)

0.82

%

(0.96

)%

(0.35

)%

0.71

%

(0.64

)%

Return on average equity(1)

7.32

%

(8.69

)%

(2.89

)%

6.20

%

(5.83

)%

Return on average tangible common equity(2)

7.92

%

(13.77

)%

(5.44

)%

6.46

%

(12.49

)%

Dividend payout ratio(3)

25.00

%

(13.64

)%

(31.58

)%

28.57

%

(13.33

)%

Net interest spread

2.84

%

2.77

%

2.56

%

2.65

%

2.47

%

Net interest margin(1)

3.09

%

3.09

%

2.97

%

3.04

%

2.86

%

Noninterest income to total revenue(4)

6.61

%

9.09

%

3.82

%

8.00

%

5.12

%

Noninterest income to average total assets(1)

0.20

%

0.29

%

0.11

%

0.25

%

0.15

%

Noninterest expense to average total assets(1)

2.09

%

3.78

%

2.50

%

2.37

%

1.97

%

Adjusted noninterest expense to average total assets(1)

2.10

%

2.22

%

2.30

%

2.41

%

2.13

%

Efficiency ratio(2)(5)

67.54

%

119.60

%

87.01

%

77.10

%

69.63

%

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

68.30

%

119.55

%

86.54

%

74.51

%

70.00

%

Average loans held-for-investment to average deposits

92.86

%

98.51

%

108.54

%

108.50

%

105.92

%

Average securities available-for-sale to average total assets

15.49

%

13.75

%

12.60

%

10.48

%

12.71

%

Average stockholders’ equity to average total assets

11.26

%

11.04

%

12.11

%

11.47

%

11.06

%

(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 (loss) per common share.

(4)

Total revenue is equal to the sum of net interest income before provision for (reversal of) credit losses and noninterest income.

(5)

The ratios are calculated by dividing noninterest expense by the sum of net interest income before provision for credit losses and noninterest income.

 

Banc of California, Inc.

Average Balance, Average Yield Earned, and Average Cost Paid

(Dollars in thousands)

(Unaudited)

 

Three Months Ended

 

September 30, 2020

 

June 30, 2020

 

March 31, 2020

 

Average

 

 

 

Yield

 

Average

 

 

 

Yield

 

Average

 

 

 

Yield

 

Balance

 

Interest

 

/ Cost

 

Balance

 

Interest

 

/ Cost

 

Balance

 

Interest

 

/ Cost

Interest-earning assets

 

 

 

 

 

 

 

 

 

Loans held-for-sale

$

19,544

 

 

$

139

2.83

%

$

19,967

 

 

$

155

3.12

%

$

22,273

 

 

$

220

3.97

%

SFR mortgage

1,311,513

 

 

13,178

4.00

%

1,416,358

 

 

14,187

4.03

%

1,532,967

 

 

15,295

4.01

%

Commercial real estate, multifamily, and construction

2,493,408

 

 

29,666

4.73

%

2,524,477

 

 

29,459

4.69

%

2,564,485

 

 

30,223

4.74

%

Commercial and industrial, SBA, and lease financing

1,673,548

 

 

18,585

4.42

%

1,706,120

 

 

19,392

4.57

%

1,613,324

 

 

19,157

4.78

%

Other consumer

35,563

 

 

451

5.05

%

40,697

 

 

449

4.44

%

47,761

 

 

639

5.38

%

Gross loans and leases

5,533,576

 

 

62,019

4.46

%

5,707,619

 

 

63,642

4.48

%

5,780,810

 

 

65,534

4.56

%

Securities

1,190,765

 

 

6,766

2.26

%

1,063,941

 

 

7,816

2.95

%

952,966

 

 

7,820

3.30

%

Other interest-earning assets

457,558

 

 

881

0.77

%

424,776

 

 

1,239

1.17

%

297,444

 

 

1,360

1.84

%

Total interest-earning assets

7,181,899

 

 

69,666

3.86

%

7,196,336

 

 

72,697

4.06

%

7,031,220

 

 

74,714

4.27

%

Allowance for loan losses

(89,679

)

 

 

 

(78,528

)

 

 

 

(60,470

)

 

 

 

BOLI and noninterest-earning assets

594,885

 

 

 

 

622,398

 

 

 

 

592,192

 

 

 

 

Total assets

$

7,687,105

 

 

 

 

$

7,740,206

 

 

 

 

$

7,562,942

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

Savings

$

948,898

 

 

$

2,353

0.99

%

$

905,997

 

 

$

2,718

1.21

%

$

890,830

 

 

$

3,296

1.49

%

Interest-bearing checking

1,919,327

 

 

1,660

0.34

%

1,710,038

 

 

2,186

0.51

%

1,520,922

 

 

3,728

0.99

%

Money market

681,421

 

 

645

0.38

%

592,872

 

 

850

0.58

%

608,926

 

 

1,760

1.16

%

Certificates of deposit

1,030,829

 

 

2,906

1.12

%

1,214,939

 

 

4,451

1.47

%

1,151,518

 

 

5,827

2.04

%

Total interest-bearing deposits

4,580,475

 

 

7,564

0.66

%

4,423,846

 

 

10,205

0.93

%

4,172,196

 

 

14,611

1.41

%

FHLB advances

608,169

 

 

3,860

2.52

%

819,166

 

 

4,818

2.37

%

1,039,055

 

 

5,883

2.28

%

Securities sold under repurchase agreements

1,309

 

 

2

0.61

%

1,024

 

 

2

0.79

%

 

 

%

Long-term debt and other interest-bearing liabilities

173,911

 

 

2,385

5.46

%

173,977

 

 

2,357

5.45

%

174,056

 

 

2,359

5.45

%

Total interest-bearing liabilities

5,363,864

 

 

13,811

1.02

%

5,418,013

 

 

17,382

1.29

%

5,385,307

 

 

22,853

1.71

%

Noninterest-bearing deposits

1,357,411

 

 

 

 

1,349,735

 

 

 

 

1,133,306

 

 

 

 

Noninterest-bearing liabilities

100,424

 

 

 

 

118,208

 

 

 

 

128,282

 

 

 

 

Total liabilities

6,821,699

 

 

 

 

6,885,956

 

 

 

 

6,646,895

 

 

 

 

Total stockholders’ equity

865,406

 

 

 

 

854,250

 

 

 

 

916,047

 

 

 

 

Total liabilities and stockholders’ equity

$

7,687,105

 

 

 

 

$

7,740,206

 

 

 

 

$

7,562,942

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income/spread

 

$

55,855

2.84

%

 

$

55,315

2.77

%

 

$

51,861

2.56

%

Net interest margin

 

 

3.09

%

 

 

3.09

%

 

 

2.97

%

 

 

 

 

 

 

 

 

 

 

Ratio of interest-earning assets to interest-bearing liabilities

133.89

 

%

 

 

132.82

 

%

 

 

130.56

 

%

 

 

Total deposits

$

5,937,886

 

 

$

7,564

0.51

%

$

5,773,581

 

 

$

10,205

0.71

%

$

5,305,502

 

 

$

14,611

1.11

%

Total funding (1)

$

6,721,275

 

 

$

13,811

0.82

%

$

6,767,748

 

 

$

17,382

1.03

%

$

6,518,613

 

 

$

22,853

1.41

%

(1)

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.

 

 

Three Months Ended

 

December 31, 2019

 

September 30, 2019

 

Average

 

 

 

Yield

 

Average

 

 

 

Yield

 

Balance

 

Interest

 

/ Cost

 

Balance

 

Interest

 

/ Cost

Interest-earning assets

 

 

 

 

 

 

Loans held-for-sale

$

23,527

 

 

$

221

3.73

%

$

216,746

 

 

$

1,894

3.47

%

SFR mortgage

1,689,228

 

 

16,788

3.94

%

1,866,103

 

 

19,179

4.08

%

Commercial real estate, multifamily, and construction

2,633,342

 

 

32,763

4.94

%

2,717,609

 

 

33,343

4.87

%

Commercial and industrial, SBA, and lease financing

1,821,064

 

 

23,381

5.09

%

1,840,202

 

 

24,970

5.38

%

Other consumer

54,088

 

 

777

5.70

%

58,652

 

 

901

6.09

%

Gross loans and leases

6,221,249

 

 

73,930

4.71

%

6,699,312

 

 

80,287

4.75

%

Securities

833,726

 

 

7,812

3.72

%

1,105,499

 

 

10,024

3.60

%

Other interest-earning assets

330,950

 

 

1,960

2.35

%

362,613

 

 

2,346

2.57

%

Total interest-earning assets

7,385,925

 

 

83,702

4.50

%

8,167,424

 

 

92,657

4.50

%

Allowance for loan losses

(61,642

)

 

 

 

(55,976

)

 

 

 

BOLI and noninterest-earning assets

630,308

 

 

 

 

584,190

 

 

 

 

Total assets

$

7,954,591

 

 

 

 

$

8,695,638

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

Savings

981,346

 

 

3,889

1.57

%

1,055,086

 

 

4,722

1.78

%

Interest-bearing checking

1,546,322

 

 

4,234

1.09

%

1,511,432

 

 

4,483

1.18

%

Money market

743,695

 

 

2,593

1.38

%

755,114

 

 

3,093

1.63

%

Certificates of deposit

1,332,911

 

 

7,531

2.24

%

1,750,970

 

 

10,513

2.38

%

Total interest-bearing deposits

4,604,274

 

 

18,247

1.57

%

5,072,602

 

 

22,811

1.78

%

FHLB advances

1,020,478

 

 

6,396

2.49

%

1,333,739

 

 

8,519

2.53

%

Securities sold under repurchase agreements

2,223

 

 

15

2.68

%

1,922

 

 

13

2.68

%

Long-term debt and other interest-bearing liabilities

174,092

 

 

2,384

5.43

%

174,111

 

 

2,399

5.47

%

Total interest-bearing liabilities

5,801,067

 

 

27,042

1.85

%

6,582,374

 

 

33,742

2.03

%

Noninterest-bearing deposits

1,108,077

 

 

 

 

1,047,858

 

 

 

 

Noninterest-bearing liabilities

132,698

 

 

 

 

103,667

 

 

 

 

Total liabilities

7,041,842

 

 

 

 

7,733,899

 

 

 

 

Total stockholders’ equity

912,749

 

 

 

 

961,739

 

 

 

 

Total liabilities and stockholders’ equity

$

7,954,591

 

 

 

 

$

8,695,638

 

 

 

 

 

 

 

 

 

 

 

Net interest income/spread

 

$

56,660

2.65

%

 

$

58,915

2.47

%

Net interest margin

 

 

3.04

%

 

 

2.86

%

 

 

 

 

 

 

 

Ratio of interest-earning assets to interest-bearing liabilities

127.32

 

%

 

 

124.08

 

%

 

 

Total deposits

$

5,712,351

 

 

$

18,247

1.27

%

$

6,120,460

 

 

$

22,811

1.48

%

Total funding (1)

$

6,909,144

 

 

$

27,042

1.55

%

$

7,630,232

 

 

$

33,742

1.75

%

(1)

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.

 

 

Nine Months Ended

 

September 30, 2020

 

September 30, 2019

 

Average

 

 

 

Yield

 

Average

 

 

 

Yield

 

Balance

 

Interest

 

/ Cost

 

Balance

 

Interest

 

/ Cost

Interest-earning assets

 

 

 

 

 

 

Loans held-for-sale

$

20,591

 

 

$

515

3.34

%

$

99,130

 

 

$

2,388

3.22

%

SFR mortgage

1,419,882

 

 

42,660

4.01

%

2,077,932

 

 

64,631

4.16

%

Commercial real estate, multifamily, and construction

2,527,331

 

 

89,348

4.72

%

3,168,206

 

 

111,119

4.69

%

Commercial and industrial, SBA, and lease financing

1,664,365

 

 

57,134

4.59

%

1,877,277

 

 

79,145

5.64

%

Other consumer

41,319

 

 

1,538

4.97

%

60,324

 

 

2,721

6.03

%

Gross loans and leases

5,673,488

 

 

191,195

4.50

%

7,282,869

 

 

260,004

4.77

%

Securities

1,069,668

 

 

22,402

2.80

%

1,384,928

 

 

40,322

3.89

%

Other interest-earning assets

393,495

 

 

3,480

1.18

%

342,597

 

 

7,083

2.76

%

Total interest-earning assets

7,136,651

 

 

217,077

4.06

%

9,010,394

 

 

307,409

4.56

%

Allowance for credit losses

(76,275

)

 

 

 

(60,294

)

 

 

 

BOLI and noninterest-earning assets

603,128

 

 

 

 

579,992

 

 

 

 

Total assets

$

7,663,504

 

 

 

 

$

9,530,092

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

Savings

915,364

 

 

8,366

1.22

%

1,112,949

 

 

15,152

1.82

%

Interest-bearing checking

1,717,483

 

 

7,575

0.59

%

1,548,655

 

 

13,562

1.17

%

Money market

627,927

 

 

3,255

0.69

%

831,401

 

 

11,124

1.79

%

Certificates of deposit

1,132,058

 

 

13,184

1.56

%

2,419,158

 

 

43,014

2.38

%

Total interest-bearing deposits

4,392,832

 

 

32,380

0.98

%

5,912,163

 

 

82,852

1.87

%

FHLB advances

821,349

 

 

14,561

2.37

%

1,347,330

 

 

25,889

2.57

%

Securities sold under repurchase agreements

779

 

 

4

0.69

%

2,146

 

 

47

2.93

%

Long-term debt and other interest-bearing liabilities

173,981

 

 

7,101

5.45

%

174,167

 

 

7,118

5.46

%

Total interest-bearing liabilities

5,388,941

 

 

54,046

1.34

%

7,435,806

 

 

115,906

2.08

%

Noninterest-bearing deposits

1,280,461

 

 

 

 

1,034,697

 

 

 

 

Noninterest-bearing liabilities

115,582

 

 

 

 

99,113

 

 

 

 

Total liabilities

6,784,984

 

 

 

 

8,569,616

 

 

 

 

Total stockholders’ equity

878,520

 

 

 

 

960,476

 

 

 

 

Total liabilities and stockholders’ equity

$

7,663,504

 

 

 

 

$

9,530,092

 

 

 

 

 

 

 

 

 

 

 

Net interest income/spread

 

$

163,031

2.72

%

 

$

191,503

2.48

%

Net interest margin

 

 

3.05

%

 

 

2.84

%

 

 

 

 

 

 

 

Ratio of interest-earning assets to interest-bearing liabilities

132.43

 

%

 

 

121.18

 

%

 

 

Total deposits

$

5,673,293

 

 

$

32,380

0.76

%

$

6,946,860

 

 

$

82,852

1.59

%

Total funding (1)

$

6,669,402

 

 

$

54,046

1.08

%

$

8,470,503

 

 

$

115,906

1.83

%

(1)

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, tangible common equity to tangible assets, tangible common equity per common share, and pre-tax pre-provision income and return on average assets ("ROAA") 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 excluding (gain) loss on investments in alternative energy partnerships from noninterest expense and adding total pre-tax return, which includes the (gain) loss on investments in alternative energy partnerships, to the sum of net interest income and noninterest income (total revenue). Pre-tax pre-provision income is calculated by adding total revenue and subtracting noninterest expense. 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.

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

 

September 30,
2019

Tangible common equity, and tangible common equity to tangible assets ratio

 

 

 

 

 

Total assets

$

7,738,106

 

 

$

7,770,138

 

 

$

7,662,607

 

 

$

7,828,410

 

 

$

8,625,337

 

 

Less goodwill

(37,144

)

 

(37,144

)

 

(37,144

)

 

(37,144

)

 

(37,144

)

 

Less other intangible assets

(2,939

)

 

(3,292

)

 

(3,722

)

 

(4,151

)

 

(4,605

)

 

Tangible assets(1)

$

7,698,023

 

 

$

7,729,702

 

 

$

7,621,741

 

 

$

7,787,115

 

 

$

8,583,588

 

 

 

 

 

 

 

 

Total stockholders' equity

$

874,254

 

 

$

846,959

 

 

$

835,002

 

 

$

907,245

 

 

$

900,988

 

 

Less goodwill

(37,144

)

 

(37,144

)

 

(37,144

)

 

(37,144

)

 

(37,144

)

 

Less other intangible assets

(2,939

)

 

(3,292

)

 

(3,722

)

 

(4,151

)

 

(4,605

)

 

Tangible equity(1)

834,171

 

 

806,523

 

 

794,136

 

 

865,950

 

 

859,239

 

 

Less preferred stock

(184,878

)

 

(185,037

)

 

(187,687

)

 

(189,825

)

 

(189,825

)

 

Tangible common equity(1)

$

649,293

 

 

$

621,486

 

 

$

606,449

 

 

$

676,125

 

 

$

669,414

 

 

 

 

 

 

 

 

Total stockholders' equity to total assets

11.30

 

%

10.90

 

%

10.90

 

%

11.59

 

%

10.45

 

%

Tangible equity to tangible assets(1)

10.84

 

%

10.43

 

%

10.42

 

%

11.12

 

%

10.01

 

%

Tangible common equity to tangible assets(1)

8.43

 

%

8.04

 

%

7.96

 

%

8.68

 

%

7.80

 

%

 

 

 

 

 

 

Common shares outstanding

49,760,543

 

 

49,750,958

 

 

49,593,077

 

 

50,413,681

 

 

50,406,763

 

 

Class B non-voting non-convertible common shares outstanding

477,321

 

 

477,321

 

 

477,321

 

 

477,321

 

 

477,321

 

 

Total common shares outstanding

50,237,864

 

 

50,228,279

 

 

50,070,398

 

 

50,891,002

 

 

50,884,084

 

 

 

 

 

 

 

 

Tangible common equity per common share(1)

$

12.92

 

 

$

12.37

 

 

$

12.11

 

 

$

13.29

 

 

$

13.16

 

 

Book value per common share

$

13.72

 

 

$

13.18

 

 

$

12.93

 

 

$

14.10

 

 

$

13.98

 

 

(1)

Non-GAAP measure.

 

Banc of California, Inc.

Consolidated Operations

Non-GAAP Measures, Continued

(Dollars in thousands, except per share data)

(Unaudited)

 

Three Months Ended

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

 

September 30,
2019

Return on tangible common equity

 

 

 

 

 

Average total stockholders' equity

$

865,406

 

 

$

854,250

 

 

$

916,047

 

 

$

912,749

 

 

$

961,739

 

 

Less average preferred stock

(184,910

)

 

(185,471

)

 

(189,607

)

 

(189,824

)

 

(213,619

)

 

Less average goodwill

(37,144

)

 

(37,144

)

 

(37,144

)

 

(37,144

)

 

(37,144

)

 

Less average other intangible assets

(3,172

)

 

(3,574

)

 

(4,003

)

 

(4,441

)

 

(4,935

)

 

Average tangible common equity(1)

$

640,180

 

 

$

628,061

 

 

$

685,293

 

 

$

681,340

 

 

$

706,041

 

 

 

 

 

 

 

 

Net income (loss)

$

15,913

 

 

$

(18,449

)

 

$

(6,593

)

 

$

14,272

 

 

$

(14,132

)

 

Less preferred stock dividends and impact of preferred stock redemption

(3,454

)

 

(3,393

)

 

(3,007

)

 

(3,540

)

 

(8,496

)

 

Add amortization of intangible assets

353

 

 

430

 

 

429

 

 

454

 

 

500

 

 

Less tax effect on amortization and impairment of intangible assets

(74

)

 

(90

)

 

(90

)

 

(95

)

 

(105

)

 

Net income (loss) available to common stockholders(1)

$

12,738

 

 

$

(21,502

)

 

$

(9,261

)

 

$

11,091

 

 

$

(22,233

)

 

 

 

 

 

 

 

Return on average equity

7.32

 

%

(8.69

)

%

(2.89

)

%

6.20

 

%

(5.83

)

%

Return on average tangible common equity(1)

7.92

 

%

(13.77

)

%

(5.44

)

%

6.46

 

%

(12.49

)

%

 

 

 

 

 

 

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

21.00

 

%

21.00

 

%

21.00

 

%

21.00

 

%

21.00

 

%

 

Three Months Ended

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

 

September 30,
2019

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

 

 

 

 

 

Noninterest expense

$

40,394

 

$

72,770

 

$

46,919

 

 

$

47,483

 

 

$

43,240

 

 

Gain (loss) on investments in alternative energy partnerships

1,430

 

167

 

(1,905

)

 

(1,039

)

 

940

 

 

Total noninterest expense excluding (gain) loss on investments in alternative energy partnerships(1)

$

41,824

 

$

72,937

 

$

45,014

 

 

$

46,444

 

 

$

44,180

 

 

 

 

 

 

 

 

Net interest income

$

55,855

 

$

55,315

 

$

51,861

 

 

$

56,660

 

 

$

58,915

 

 

Noninterest income

3,954

 

5,528

 

2,061

 

 

4,930

 

 

3,181

 

 

Total revenue

59,809

 

60,843

 

53,922

 

 

61,590

 

 

62,096

 

 

Tax credit from investments in alternative energy partnerships

 

 

 

 

1,689

 

 

77

 

 

Deferred tax expense on investments in alternative energy partnerships

 

 

 

 

(177

)

 

(8

)

 

Tax effect on tax credit and deferred tax expense

 

 

 

 

267

 

 

7

 

 

(Loss) gain on investments in alternative energy partnerships

1,430

 

167

 

(1,905

)

 

(1,039

)

 

940

 

 

Total pre-tax adjustments for investments in alternative energy partnerships

1,430

 

167

 

(1,905

)

 

740

 

 

1,016

 

 

Adjusted total revenue(1)

$

61,239

 

$

61,010

 

$

52,017

 

 

$

62,330

 

 

$

63,112

 

 

Efficiency ratio(1)

67.54

%

119.60

%

87.01

 

%

77.10

 

%

69.63

 

%

Adjusted efficiency ratio including the pre-tax effect of investments in alternative energy partnerships(1)

68.30

%

119.55

%

86.54

 

%

74.51

 

%

70.00

 

%

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

N/A

N/A

N/A

 

15.00

 

%

9.36

 

%

(1)

Non-GAAP measure.

 

Banc of California, Inc.

Consolidated Operations

Non-GAAP Measures, Continued

(Dollars in thousands, except per share data)

(Unaudited)

 

Three Months Ended

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

 

September 30,
2019

Adjusted noninterest income and expense

 

 

 

 

 

Total noninterest income

$

3,954

 

$

5,528

 

$

2,061

 

$

4,930

 

$

3,181

 

Adjustments for non-core items:

 

 

 

 

 

Net (gain) loss on securities available for sale

 

(2,011

)

 

(3

)

5,794

 

Net (gain) loss on sale of legacy SFR loans held for sale

(272

)

 

 

 

 

Fair value adjustment on legacy SFR loans held for sale

(24

)

(25

)

1,586

 

(30

)

(16

)

Total non-core adjustments - noninterest income

(296

)

(2,036

)

1,586

 

(33

)

5,778

 

Adjusted noninterest income(1)

$

3,658

 

$

3,492

 

$

3,647

 

$

4,897

 

$

8,959

 

 

 

 

 

 

 

Total noninterest expense

$

40,394

 

$

72,770

 

$

46,919

 

$

47,483

 

$

43,240

 

Adjustments for non-core items:

 

 

 

 

 

Naming rights termination

 

(26,769

)

 

 

 

Extinguishment of debt

 

(2,515

)

 

 

 

Professional (fees) recoveries

(1,172

)

(875

)

(1,678

)

3,557

 

2,615

 

Restructuring expense

 

 

 

(1,626

)

 

Other expenses

 

 

 

 

(131

)

Total non-core adjustments - noninterest expense

(1,172

)

(30,159

)

(1,678

)

1,931

 

2,484

 

Gain (loss) on investments in alternative energy partnerships

1,430

 

167

 

(1,905

)

(1,039

)

940

 

Total adjustments - noninterest expense

258

 

(29,992

)

(3,583

)

892

 

3,424

 

Adjusted noninterest expense(1)

$

40,652

 

$

42,778

 

$

43,336

 

$

48,375

 

$

46,664

 

 

Three Months Ended

 

September 30,
2020

June 30,
2020

March 31,
2020

December 31,
2019

September 30,
2019

Adjusted pre-tax pre-provision income

 

 

 

 

 

Net interest income

$

55,855

 

 

$

55,315

 

 

$

51,861

 

 

$

56,660

 

 

$

58,915

 

Noninterest income

3,954

 

 

5,528

 

 

2,061

 

 

4,930

 

 

3,181

 

Total revenue

59,809

 

 

60,843

 

 

53,922

 

 

61,590

 

 

62,096

 

Noninterest expense

40,394

 

 

72,770

 

 

46,919

 

 

47,483

 

 

43,240

 

Pre-tax pre-provision income (loss)(1)

$

19,415

 

 

$

(11,927

)

 

$

7,003

 

 

$

14,107

 

 

$

18,856

 

 

 

 

 

 

 

Net interest income

$

55,855

 

 

$

55,315

 

 

$

51,861

 

 

$

56,660

 

 

$

58,915

 

Noninterest income

3,954

 

 

5,528

 

 

2,061

 

 

4,930

 

 

3,181

 

Total non-core adjustments - noninterest income

(296

)

 

(2,036

)

 

1,586

 

 

(33

)

 

5,778

 

Adjusted noninterest income(1)

3,658

 

 

3,492

 

 

3,647

 

 

4,897

 

 

8,959

 

Total revenue

59,513

 

 

58,807

 

 

55,508

 

 

61,557

 

 

67,874

 

Noninterest expense

40,394

 

 

72,770

 

 

46,919

 

 

47,483

 

 

43,240

 

Total adjustments - noninterest expense

258

 

 

(29,992

)

 

(3,583

)

 

892

 

 

3,424

 

Adjusted noninterest expense(1)

40,652

 

 

42,778

 

 

43,336

 

 

48,375

 

 

46,664

 

Adjusted pre-tax pre-provision income(1)

$

18,861

 

 

$

16,029

 

 

$

12,172

 

 

$

13,182

 

 

$

21,210

 

 

 

 

 

 

 

Average assets

$

7,687,105

 

 

$

7,740,206

 

 

$

7,562,942

 

 

$

7,954,591

 

 

$

8,695,638

 

Pre-tax pre-provision income (loss) ROAA

1.00

 

%

(0.62

)

%

0.37

 

%

0.70

 

%

0.86

%

Adjusted pre-tax pre-provision income ROAA(1)

0.98

 

%

0.83

 

%

0.65

 

%

0.66

 

%

0.97

%

(1)

Non-GAAP measure.

 

 

Contacts

Investor Relations Inquiries:
Banc of California, Inc.
(855) 361-2262
Jared Wolff, (949) 385-8700
Lynn Hopkins, (949) 265-6599

Contacts

Investor Relations Inquiries:
Banc of California, Inc.
(855) 361-2262
Jared Wolff, (949) 385-8700
Lynn Hopkins, (949) 265-6599