UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 24, 2019
BANC OF CALIFORNIA, INC.
(Exact name of registrant as specified in its charter)
Maryland | 001-35522 | 04-3639825 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
3 MacArthur Place, Santa Ana, California | 92707 | |||
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code: (855) 361-2262
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 | Results of Operations and Financial Condition. |
On January 24, 2019, Banc of California, Inc. (the Company) issued a press release announcing 2018 fourth quarter financial results. The Company will host a conference call to discuss these results at 7:00 A.M. Pacific Time on Thursday, January 24, 2019. Interested parties may attend the conference call by dialing 888-317-6003, and referencing event code 1216098. A live audio webcast will be available through the webcast link to be posted on the Companys Investor Relations website at www.bancofcal.com/investor, in addition to the slide presentation for investor review prior to the call.
Copies of the press release and presentation materials are attached to this report as Exhibits 99.1 and 99.2 and are incorporated by reference herein.
Forward-Looking Statements
This Current Report on Form 8-K 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.
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
99.1 | Banc of California, Inc. Press Release dated January 24, 2019. | |
99.2 | Banc of California, Inc. Earnings Conference Call Presentation Materials dated January 24, 2019. |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
BANC OF CALIFORNIA, INC. | ||||||
January 24, 2019 | /s/ John A. Bogler | |||||
John A. Bogler | ||||||
Executive Vice President and Chief Financial Officer |
3
Exhibit 99.1
Banc of California Reports Fourth Quarter 2018 Earnings
SANTA ANA, Calif., (January 24, 2019) Banc of California, Inc. (NYSE: BANC) today reported net income available to common stockholders of $6.7 million, for the fourth quarter of 2018, resulting in diluted earnings per common share of $0.13 for the quarter.
Highlights for the fourth quarter included:
| Core Deposits: Core deposit balances were flat for the quarter. Full year core deposit balances grew 10% to $6.2 billion. |
| Organic Loan Growth: Held for investment loans increased by $448 million during the quarter to $7.7 billion. Loan portfolio growth for the full year was 16%. |
| Gross loan commitment originations totaled $1.0 billion for the fourth quarter at an average production yield of 5.26%. |
| Asset Re-Mix: Investment securities balance declined by $67 million during the quarter and represented 19% of total assets at quarter end, down from 20% at the end of the prior quarter and 25% from a year ago. |
| Disciplined Expense Management: Fourth quarter noninterest expense totaled $49.6 million, down from $60.9 million for the third quarter. Fourth quarter noninterest expense to average total assets ratio of 1.92%, down from 2.38% for the third quarter. |
| Strong Credit Performance: Non-performing assets to total assets at quarter end of 0.21% and total delinquent loans to total loans at quarter end of 0.53%, compared to 0.25% and 0.49%, respectively, at the prior quarter end and 0.21% and 0.63%, respectively, a year ago. Net charge-offs during the quarter totaled $2.2 million, compared with $306 thousand during the prior quarter and $791 thousand during the same quarter a year ago. The ALLL / total loan ratio was 0.81% at quarter end, up from 0.80% at the prior quarter end and 0.74% a year ago. |
| Strong Capital Ratios: Common equity tier 1 capital ratio at quarter end of 9.53%, compared to 9.80% at the prior quarter end and 9.92% a year ago. |
The Companys fourth quarter results included $7.1 million of legal and professional fees and $1.1 million in project related expenses, offset by a $9.8 million insurance recovery related to ongoing indemnification expense and a gain from the sale of an owned branch office of $1.8 million. The aggregate impact of these items resulted in a net benefit of $3.4 million from non-recurring items for the quarter.
We continue to lay the foundation to support the development of our core commercial banking platform, said Doug Bowers, President and Chief Executive Officer of Banc of California. We saw strong organic loan growth with balances increasing $448 million for the quarter or 25% annualized. Core deposit growth came in below expectations for the quarter, but was up 10% for the full year. Efforts to de-risk the balance sheet, build front line business units and simplify the operating platform further reflect our efforts to build Californias bank. Credit quality remained strong with non-performing assets to total assets at 0.21% at quarter end.
The Company will host a conference call to discuss its fourth quarter 2018 financial results at 7:00 a.m. Pacific Time (PT) on Thursday, January 24, 2019. Interested parties are welcome to attend the conference call by dialing 888-317-6003, and referencing event code 1216098. A live audio webcast will also be available and the webcast link will be posted on the Companys Investor Relations website at www.bancofcal.com/investor. The slide presentation for the call will also be available on the Companys Investor Relations website prior to the call.
About Banc of California, Inc.
Banc of California, Inc. (NYSE: BANC) provides comprehensive banking services to Californias diverse businesses, entrepreneurs and communities. Banc of California operates 32 offices in California.
3 MacArthur Place ● Santa Ana, CA 92707 ● (949) 236-5250 ● www.bancofcal.com
Forward-Looking Statements
This press release includes forward-looking statements within the meaning of the Safe-Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are necessarily subject to risk and uncertainty and actual results could differ materially from those anticipated due to various factors, including those set forth from time to time in the documents filed or furnished by Banc of California, Inc. with the Securities and Exchange Commission. You should not place undue reliance on forward-looking statements and Banc of California, Inc. undertakes no obligation to update any such statements to reflect circumstances or events that occur after the date on which the forward-looking statement is made.
Source: Banc of California, Inc.
INVESTOR RELATIONS INQUIRIES: | MEDIA INQUIRIES: | |||
Banc of California, Inc. | Abernathy MacGregor | |||
John A. Bogler, (949) 236-5400 | Ian Campbell / James Bourne / Sarah Dhanaphatana, (213) 630-6550 idc@abmac.com / jab@abmac.com / skd@abmac.com |
- 2 -
Banc of California, Inc.
Consolidated Statements of Financial Condition
(Dollars in thousands)
(Unaudited)
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
2018 | 2018 | 2018 | 2018 | 2017 | ||||||||||||||||
ASSETS |
||||||||||||||||||||
Cash and cash equivalents |
$ | 391,592 | $ | 372,221 | $ | 385,691 | $ | 346,704 | $ | 387,699 | ||||||||||
Securities available-for-sale |
1,992,500 | 2,059,832 | 2,297,124 | 2,424,593 | 2,575,469 | |||||||||||||||
Loans held-for-sale |
8,116 | 9,382 | 13,753 | 20,180 | 67,069 | |||||||||||||||
Loans and leases receivable |
7,700,873 | 7,253,293 | 7,036,004 | 6,930,507 | 6,659,407 | |||||||||||||||
Allowance for loan and lease losses |
(62,192 | ) | (57,782 | ) | (56,678 | ) | (54,763 | ) | (49,333 | ) | ||||||||||
Federal Home Loan Bank and other bank stock |
68,094 | 71,308 | 75,737 | 82,715 | 75,654 | |||||||||||||||
Servicing rights, net |
3,428 | 3,770 | 3,869 | 6,739 | 33,708 | |||||||||||||||
Other real estate owned, net |
672 | 434 | 710 | 1,024 | 1,796 | |||||||||||||||
Premises and equipment, net |
129,394 | 133,129 | 135,478 | 135,198 | 135,699 | |||||||||||||||
Investments in alternative energy partnerships, net |
28,988 | 41,781 | 44,806 | 48,344 | 48,826 | |||||||||||||||
Goodwill |
37,144 | 37,144 | 37,144 | 37,144 | 37,144 | |||||||||||||||
Other intangible assets, net |
6,346 | 6,990 | 7,683 | 8,510 | 9,353 | |||||||||||||||
Deferred income tax, net |
49,404 | 47,865 | 42,334 | 43,192 | 31,074 | |||||||||||||||
Income tax receivable |
2,695 | 1,764 | 7,995 | 10,126 | 8,739 | |||||||||||||||
Bank owned life insurance investment |
107,027 | 106,468 | 105,917 | 105,384 | 104,851 | |||||||||||||||
Other assets |
146,496 | 152,933 | 155,298 | 153,834 | 161,797 | |||||||||||||||
Assets of discontinued operations |
19,490 | 20,290 | 26,415 | 29,888 | 38,900 | |||||||||||||||
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Total assets |
$ | 10,630,067 | $ | 10,260,822 | $ | 10,319,280 | $ | 10,329,319 | $ | 10,327,852 | ||||||||||
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LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||||||||||||||
Noninterest-bearing deposits |
$ | 1,023,360 | $ | 1,061,557 | $ | 1,005,032 | $ | 1,039,116 | $ | 1,071,608 | ||||||||||
Interest-bearing deposits |
6,893,284 | 6,340,185 | 6,130,762 | 6,071,049 | 6,221,295 | |||||||||||||||
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Total deposits |
7,916,644 | 7,401,742 | 7,135,794 | 7,110,165 | 7,292,903 | |||||||||||||||
Advances from Federal Home Loan Bank |
1,520,000 | 1,640,000 | 1,805,000 | 1,905,000 | 1,695,000 | |||||||||||||||
Notes payable, net |
173,174 | 173,096 | 173,017 | 172,966 | 172,941 | |||||||||||||||
Reserve for loss on repurchased loans |
2,506 | 2,575 | 3,149 | 3,426 | 6,306 | |||||||||||||||
Due on unsettled securities purchases |
| 17,500 | 132,546 | 59,000 | | |||||||||||||||
Accrued expenses and other liabilities |
72,209 | 79,231 | 81,086 | 84,997 | 140,575 | |||||||||||||||
Liabilities of discontinued operations |
| | | 9 | 7,819 | |||||||||||||||
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Total liabilities |
9,684,533 | 9,314,144 | 9,330,592 | 9,335,563 | 9,315,544 | |||||||||||||||
Commitments and contingent liabilities |
||||||||||||||||||||
Preferred stock |
231,128 | 231,128 | 269,071 | 269,071 | 269,071 | |||||||||||||||
Common stock |
518 | 518 | 517 | 517 | 517 | |||||||||||||||
Common stock, class B non-voting non-convertible |
5 | 5 | 4 | 5 | 5 | |||||||||||||||
Additional paid-in capital |
625,834 | 624,789 | 623,372 | 623,483 | 621,435 | |||||||||||||||
Retained earnings |
140,952 | 140,971 | 143,880 | 141,008 | 144,839 | |||||||||||||||
Treasury stock |
(28,786 | ) | (28,786 | ) | (28,786 | ) | (28,786 | ) | (28,786 | ) | ||||||||||
Accumulated other comprehensive (loss) income, net |
(24,117 | ) | (21,947 | ) | (19,370 | ) | (11,542 | ) | 5,227 | |||||||||||
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Total stockholders equity |
945,534 | 946,678 | 988,688 | 993,756 | 1,012,308 | |||||||||||||||
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Total liabilities and stockholders equity |
$ | 10,630,067 | $ | 10,260,822 | $ | 10,319,280 | $ | 10,329,319 | $ | 10,327,852 | ||||||||||
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1
Banc of California, Inc.
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended | Year Ended | |||||||||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | ||||||||||||||||||||||
2018 | 2018 | 2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||
Interest and dividend income |
||||||||||||||||||||||||||||
Loans, including fees |
$ | 88,258 | $ | 84,795 | $ | 81,307 | $ | 74,912 | $ | 71,695 | $ | 329,272 | $ | 281,071 | ||||||||||||||
Securities |
19,882 | 20,599 | 21,455 | 21,631 | 23,170 | 83,567 | 99,742 | |||||||||||||||||||||
Other interest-earning assets |
2,990 | 2,380 | 2,423 | 2,164 | 2,292 | 9,957 | 8,377 | |||||||||||||||||||||
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Total interest and dividend income |
111,130 | 107,774 | 105,185 | 98,707 | 97,157 | 422,796 | 389,190 | |||||||||||||||||||||
Interest expense |
||||||||||||||||||||||||||||
Deposits |
28,972 | 25,154 | 20,315 | 16,795 | 16,044 | 91,236 | 60,414 | |||||||||||||||||||||
Federal Home Loan Bank advances |
9,068 | 8,996 | 9,539 | 7,392 | 5,402 | 34,995 | 12,951 | |||||||||||||||||||||
Securities sold under repurchase agreements |
25 | 47 | 211 | 750 | 194 | 1,033 | 880 | |||||||||||||||||||||
Notes payable and other interest-bearing liabilities |
2,383 | 2,385 | 2,356 | 2,332 | 2,344 | 9,456 | 10,755 | |||||||||||||||||||||
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Total interest expense |
40,448 | 36,582 | 32,421 | 27,269 | 23,984 | 136,720 | 85,000 | |||||||||||||||||||||
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Net interest income |
70,682 | 71,192 | 72,764 | 71,438 | 73,173 | 286,076 | 304,190 | |||||||||||||||||||||
Provision for loan and lease losses |
6,653 | 1,410 | 2,653 | 19,499 | 5,052 | 30,215 | 13,699 | |||||||||||||||||||||
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Net interest income after provision for loan and lease losses |
64,029 | 69,782 | 70,111 | 51,939 | 68,121 | 255,861 | 290,491 | |||||||||||||||||||||
Noninterest income |
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Customer service fees |
1,786 | 1,446 | 1,491 | 1,592 | 1,624 | 6,315 | 6,492 | |||||||||||||||||||||
Loan servicing income (loss) |
22 | 439 | 948 | 2,311 | (2,416 | ) | 3,720 | 1,025 | ||||||||||||||||||||
Impairment loss on investment securities |
(3,252 | ) | | | | | (3,252 | ) | | |||||||||||||||||||
Net gain on sale of securities available for sale |
| 13 | 278 | 5,241 | 2,688 | 5,532 | 14,768 | |||||||||||||||||||||
Net gain (loss) on sale of loans |
873 | 279 | 821 | (41 | ) | 1,205 | 1,932 | 11,942 | ||||||||||||||||||||
All other income (loss) |
3,019 | 2,647 | 4,523 | (521 | ) | 2,594 | 9,668 | 10,443 | ||||||||||||||||||||
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Total noninterest income |
2,448 | 4,824 | 8,061 | 8,582 | 5,695 | 23,915 | 44,670 | |||||||||||||||||||||
Noninterest expense |
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Salaries and employee benefits |
24,587 | 24,832 | 29,440 | 31,115 | 33,146 | 109,974 | 129,153 | |||||||||||||||||||||
Occupancy and equipment |
8,064 | 8,213 | 7,883 | 7,687 | 9,565 | 31,847 | 38,391 | |||||||||||||||||||||
Professional fees |
6,206 | 11,966 | 6,303 | 9,177 | 7,853 | 33,652 | 42,417 | |||||||||||||||||||||
Data processing |
1,733 | 1,884 | 1,678 | 1,656 | 1,562 | 6,951 | 7,888 | |||||||||||||||||||||
Advertising |
3,371 | 3,152 | 2,864 | 3,277 | 1,420 | 12,664 | 5,313 | |||||||||||||||||||||
Regulatory assessments |
1,252 | 2,138 | 2,196 | 2,092 | 2,174 | 7,678 | 8,105 | |||||||||||||||||||||
Reversal of provision for loan repurchases |
(122 | ) | (360 | ) | (218 | ) | (1,788 | ) | (335 | ) | (2,488 | ) | (1,812 | ) | ||||||||||||||
Amortization of intangible assets |
644 | 693 | 827 | 843 | 866 | 3,007 | 3,928 | |||||||||||||||||||||
Restructuring expense |
(105 | ) | 553 | 3,983 | | (43 | ) | 4,431 | 5,326 | |||||||||||||||||||
All other expenses |
3,153 | 5,322 | 5,775 | 5,775 | 6,179 | 20,025 | 38,773 | |||||||||||||||||||||
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Total noninterest expense excluding loss (gain) on investments in alternative energy partnerships |
48,783 | 58,393 | 60,731 | 59,834 | 62,387 | 227,741 | 277,482 | |||||||||||||||||||||
Loss (gain) on investments in alternative energy partnerships |
786 | 2,484 | 1,808 | (34 | ) | 3,995 | 5,044 | 30,786 | ||||||||||||||||||||
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Total noninterest expense |
49,569 | 60,877 | 62,539 | 59,800 | 66,382 | 232,785 | 308,268 | |||||||||||||||||||||
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Income from continuing operations before income taxes |
16,908 | 13,729 | 15,633 | 721 | 7,434 | 46,991 | 26,893 | |||||||||||||||||||||
Income tax expense (benefit) |
6,117 | 3,301 | 1,779 | (6,353 | ) | (3,418 | ) | 4,844 | (26,581 | ) | ||||||||||||||||||
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Income from continuing operations |
10,791 | 10,428 | 13,854 | 7,074 | 10,852 | 42,147 | 53,474 | |||||||||||||||||||||
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Income from discontinued operations before income taxes |
347 | 924 | 1,281 | 2,044 | 765 | 4,596 | 7,164 | |||||||||||||||||||||
Income tax expense |
100 | 256 | 355 | 560 | 315 | 1,271 | 2,929 | |||||||||||||||||||||
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Income from discontinued operations |
247 | 668 | 926 | 1,484 | 450 | 3,325 | 4,235 | |||||||||||||||||||||
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Net income |
11,038 | 11,096 | 14,780 | 8,558 | 11,302 | 45,472 | 57,709 | |||||||||||||||||||||
Preferred stock dividends |
4,308 | 4,970 | 5,113 | 5,113 | 5,113 | 19,504 | 20,451 | |||||||||||||||||||||
Impact of preferred stock redemption |
| 2,307 | | | | 2,307 | | |||||||||||||||||||||
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Net income available to common stockholders |
$ | 6,730 | $ | 3,819 | $ | 9,667 | $ | 3,445 | $ | 6,189 | $ | 23,661 | $ | 37,258 | ||||||||||||||
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Basic earnings per common share |
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Income from continuing operations |
$ | 0.12 | $ | 0.06 | $ | 0.17 | $ | 0.03 | $ | 0.11 | $ | 0.38 | $ | 0.64 | ||||||||||||||
Income from discontinued operations |
0.01 | 0.01 | 0.02 | 0.03 | 0.01 | 0.07 | 0.08 | |||||||||||||||||||||
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Net income |
$ | 0.13 | $ | 0.07 | $ | 0.19 | $ | 0.06 | $ | 0.12 | $ | 0.45 | $ | 0.72 | ||||||||||||||
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Diluted earnings per common share |
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Income from continuing operations |
$ | 0.12 | $ | 0.06 | $ | 0.16 | $ | 0.03 | $ | 0.11 | $ | 0.38 | $ | 0.63 | ||||||||||||||
Income from discontinued operations |
0.01 | 0.01 | 0.02 | 0.03 | 0.01 | 0.07 | 0.08 | |||||||||||||||||||||
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Net income |
$ | 0.13 | $ | 0.07 | $ | 0.18 | $ | 0.06 | $ | 0.12 | $ | 0.45 | $ | 0.71 | ||||||||||||||
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Weighted average number of common shares outstanding |
||||||||||||||||||||||||||||
Basic |
50,651,805 | 50,656,076 | 50,593,429 | 50,590,545 | 50,532,544 | 50,623,222 | 50,254,595 | |||||||||||||||||||||
Diluted |
50,812,874 | 50,899,464 | 50,919,091 | 50,925,530 | 50,943,165 | 50,851,594 | 50,819,790 | |||||||||||||||||||||
Dividends declared per common share |
$ | 0.13 | $ | 0.13 | $ | 0.13 | $ | 0.13 | $ | 0.13 | $ | 0.52 | $ | 0.52 |
2
Banc of California, Inc.
Reconciliation of Consolidated Statements of Operations between Continuing and Discontinued Operations
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended December 31, 2018 | Year Ended December 31, 2018 | |||||||||||||||||||||||
Continuing | Discontinued | Consolidated | Continuing | Discontinued | Consolidated | |||||||||||||||||||
Operations | Operations | Operations | Operations | Operations | Operations | |||||||||||||||||||
Interest and dividend income |
$ | 111,130 | $ | 160 | $ | 111,290 | $ | 422,796 | $ | 665 | $ | 423,461 | ||||||||||||
Interest expense |
40,448 | | 40,448 | 136,720 | | 136,720 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net interest income |
70,682 | 160 | 70,842 | 286,076 | 665 | 286,741 | ||||||||||||||||||
Provision for loan and lease losses |
6,653 | | 6,653 | 30,215 | | 30,215 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net interest income after provision for loan and lease losses |
64,029 | 160 | 64,189 | 255,861 | 665 | 256,526 | ||||||||||||||||||
Noninterest income |
||||||||||||||||||||||||
Customer service fees |
1,786 | | 1,786 | 6,315 | | 6,315 | ||||||||||||||||||
Loan servicing income |
22 | | 22 | 3,720 | | 3,720 | ||||||||||||||||||
Impairment loss on investment securities |
(3,252 | ) | | (3,252 | ) | (3,252 | ) | | (3,252 | ) | ||||||||||||||
Net gain on sale of securities available for sale |
| | | 5,532 | | 5,532 | ||||||||||||||||||
Net gain on sale of loans |
873 | | 873 | 1,932 | | 1,932 | ||||||||||||||||||
Mortgage banking income |
| 32 | 32 | | 428 | 428 | ||||||||||||||||||
Gain on disposal of discontinued operations |
| 164 | 164 | | 1,439 | 1,439 | ||||||||||||||||||
All other income |
3,019 | | 3,019 | 9,668 | 2,200 | 11,868 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total noninterest income |
2,448 | 196 | 2,644 | 23,915 | 4,067 | 27,982 | ||||||||||||||||||
Noninterest expense |
||||||||||||||||||||||||
Salaries and employee benefits |
24,587 | | 24,587 | 109,974 | 20 | 109,994 | ||||||||||||||||||
Occupancy and equipment |
8,064 | | 8,064 | 31,847 | | 31,847 | ||||||||||||||||||
Professional fees |
6,206 | | 6,206 | 33,652 | | 33,652 | ||||||||||||||||||
Data processing |
1,733 | 8 | 1,741 | 6,951 | 8 | 6,959 | ||||||||||||||||||
Advertising |
3,371 | | 3,371 | 12,664 | | 12,664 | ||||||||||||||||||
Regulatory assessments |
1,252 | | 1,252 | 7,678 | | 7,678 | ||||||||||||||||||
Reversal of provision for loan repurchases |
(122 | ) | | (122 | ) | (2,488 | ) | | (2,488 | ) | ||||||||||||||
Loss on investments in alternative energy partnerships |
786 | | 786 | 5,044 | | 5,044 | ||||||||||||||||||
Amortization of intangible assets |
644 | | 644 | 3,007 | | 3,007 | ||||||||||||||||||
Restructuring expense |
(105 | ) | | (105 | ) | 4,431 | | 4,431 | ||||||||||||||||
All other expenses |
3,153 | 1 | 3,154 | 20,025 | 108 | 20,133 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total noninterest expense |
49,569 | 9 | 49,578 | 232,785 | 136 | 232,921 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Income before income taxes |
16,908 | 347 | 17,255 | 46,991 | 4,596 | 51,587 | ||||||||||||||||||
Income tax expense |
6,117 | 100 | 6,217 | 4,844 | 1,271 | 6,115 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net income |
$ | 10,791 | $ | 247 | $ | 11,038 | $ | 42,147 | $ | 3,325 | $ | 45,472 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
3
Banc of California, Inc.
Selected Financial Data
(Dollars in thousands)
(Unaudited)
Three Months Ended | Year Ended | |||||||||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | ||||||||||||||||||||||
2018 | 2018 | 2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||
Profitability and other ratios of consolidated operations |
||||||||||||||||||||||||||||
Return on average assets (1) |
0.43 | % | 0.43 | % | 0.58 | % | 0.34 | % | 0.44 | % | 0.44 | % | 0.55 | % | ||||||||||||||
Return on average equity (1) |
4.56 | % | 4.40 | % | 5.92 | % | 3.40 | % | 4.42 | % | 4.57 | % | 5.72 | % | ||||||||||||||
Return on average tangible common equity (2) |
4.19 | % | 2.49 | % | 6.03 | % | 2.37 | % | 3.84 | % | 3.76 | % | 5.79 | % | ||||||||||||||
Dividend payout ratio (3) |
100.00 | % | 185.71 | % | 68.42 | % | 216.67 | % | 108.33 | % | 115.56 | % | 72.22 | % | ||||||||||||||
Net interest spread |
2.56 | % | 2.62 | % | 2.75 | % | 2.74 | % | 2.79 | % | 2.67 | % | 2.92 | % | ||||||||||||||
Net interest margin (1) |
2.88 | % | 2.93 | % | 3.01 | % | 2.98 | % | 3.01 | % | 2.95 | % | 3.11 | % | ||||||||||||||
Noninterest income to total revenue (4) |
3.60 | % | 7.42 | % | 11.16 | % | 12.73 | % | 8.07 | % | 8.89 | % | 25.19 | % | ||||||||||||||
Noninterest income to average total assets (1) |
0.10 | % | 0.22 | % | 0.36 | % | 0.41 | % | 0.25 | % | 0.27 | % | 0.99 | % | ||||||||||||||
Noninterest expense to average total assets (1) |
1.92 | % | 2.38 | % | 2.45 | % | 2.36 | % | 2.59 | % | 2.28 | % | 3.50 | % | ||||||||||||||
Efficiency ratio (5) |
67.47 | % | 79.15 | % | 76.17 | % | 72.87 | % | 83.37 | % | 74.01 | % | 88.52 | % | ||||||||||||||
Adjusted efficiency ratio including the pre-tax effect of investments in alternative energy partnerships (2) , (5) |
67.09 | % | 77.88 | % | 73.50 | % | 65.70 | % | 75.46 | % | 70.87 | % | 77.18 | % | ||||||||||||||
Average held-for-investment loans and leases to average deposits |
97.40 | % | 97.00 | % | 98.63 | % | 94.87 | % | 86.09 | % | 96.99 | % | 75.92 | % | ||||||||||||||
Average investment securities to average total assets |
19.85 | % | 21.28 | % | 22.27 | % | 24.60 | % | 26.10 | % | 21.99 | % | 28.04 | % | ||||||||||||||
Average stockholders equity to average total assets |
9.38 | % | 9.85 | % | 9.78 | % | 9.94 | % | 9.98 | % | 9.73 | % | 9.58 | % | ||||||||||||||
Allowance for loan and lease losses (ALLL) |
||||||||||||||||||||||||||||
Balance at beginning of period |
$ | 57,782 | $ | 56,678 | $ | 54,763 | $ | 49,333 | $ | 45,072 | $ | 49,333 | $ | 40,444 | ||||||||||||||
Loans and leases charged off |
(2,522 | ) | (388 | ) | (950 | ) | (14,639 | ) | (1,367 | ) | (18,499 | ) | (5,581 | ) | ||||||||||||||
Recoveries |
279 | 82 | 212 | 570 | 576 | 1,143 | 771 | |||||||||||||||||||||
Provision for loan and lease losses |
6,653 | 1,410 | 2,653 | 19,499 | 5,052 | 30,215 | 13,699 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at end of period |
$ | 62,192 | $ | 57,782 | $ | 56,678 | $ | 54,763 | $ | 49,333 | $ | 62,192 | $ | 49,333 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Annualized net loan charge-offs to average total loans and leases held-for-investment |
0.12 | % | 0.02 | % | 0.04 | % | 0.84 | % | 0.05 | % | 0.25 | % | 0.11 | % | ||||||||||||||
Reserve for loss on repurchased loans |
||||||||||||||||||||||||||||
Balance at beginning of period |
$ | 2,575 | $ | 3,149 | $ | 3,426 | $ | 6,306 | $ | 6,173 | 6,306 | $ | 7,974 | |||||||||||||||
Reversal of provision for loan repurchases |
(69 | ) | (342 | ) | (165 | ) | (1,786 | ) | (326 | ) | (2,362 | ) | (190 | ) | ||||||||||||||
Utilization of reserve for loan repurchases |
| (232 | ) | (112 | ) | (1,094 | ) | (301 | ) | (1,438 | ) | (2,238 | ) | |||||||||||||||
Other adjustments |
| | | | 760 | | 760 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at end of period |
$ | 2,506 | $ | 2,575 | $ | 3,149 | $ | 3,426 | $ | 6,306 | $ | 2,506 | $ | 6,306 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Ratios are presented on an annualized basis. |
(2) | The ratios are determined by methods other than in accordance with U.S. generally accepted accounting principles (GAAP). |
See Non-GAAP measures section for reconciliation of the calculation.
(3) | The ratio is calculated by dividing dividends declared per common share by basic earnings per common share. |
(4) | Total revenue is equal to the sum of net interest income before provision for loan and lease losses and noninterest income. |
(5) | The ratios are calculated by dividing noninterest expense by the sum of net interest income before provision for loan and lease losses and noninterest income. |
4
Banc of California, Inc.
Selected Financial Data, Continued
(Dollars in thousands)
(Unaudited)
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
2018 | 2018 | 2018 | 2018 | 2017 | ||||||||||||||||
Asset quality information and ratios |
||||||||||||||||||||
Delinquent loans and leases held-for-investment 30 to 89 days delinquent |
$ | 26,684 | $ | 20,265 | $ | 15,097 | $ | 31,936 | $ | 32,087 | ||||||||||
90+ days delinquent |
13,846 | 15,269 | 11,453 | 11,526 | 9,542 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total delinquent loans |
$ | 40,530 | $ | 35,534 | $ | 26,550 | $ | 43,462 | $ | 41,629 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total delinquent loans and leases to total loans and leases |
0.53 | % | 0.49 | % | 0.38 | % | 0.63 | % | 0.63 | % | ||||||||||
Non-performing assets, excluding loans held-for-sale |
||||||||||||||||||||
Non-performing loans and leases |
$ | 21,585 | $ | 25,523 | $ | 22,290 | $ | 21,220 | $ | 19,382 | ||||||||||
90+ days delinquent and still accruing loans and leases |
470 | | | | | |||||||||||||||
Other real estate owned |
672 | 434 | 710 | 1,024 | 1,796 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Non-performing assets |
$ | 22,727 | $ | 25,957 | $ | 23,000 | $ | 22,244 | $ | 21,178 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
ALLL to non-performing loans and leases |
281.99 | % | 226.39 | % | 254.28 | % | 258.07 | % | 254.53 | % | ||||||||||
Non-performing loans and leases to total loans and leases |
0.29 | % | 0.35 | % | 0.32 | % | 0.31 | % | 0.29 | % | ||||||||||
Non-performing assets to total assets |
0.21 | % | 0.25 | % | 0.22 | % | 0.22 | % | 0.21 | % | ||||||||||
Troubled debt restructurings (TDRs) |
||||||||||||||||||||
Performing TDRs |
$ | 5,745 | $ | 5,580 | $ | 5,648 | $ | 5,787 | $ | 5,646 | ||||||||||
Non-performing TDRs |
2,276 | 2,684 | 2,701 | 2,632 | 2,675 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total TDRs |
$ | 8,021 | $ | 8,264 | $ | 8,349 | $ | 8,419 | $ | 8,321 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Loans and leases and ALLL by loan origination type |
||||||||||||||||||||
Loan and lease breakdown by origination type |
||||||||||||||||||||
Originated loans and leases |
$ | 7,105,171 | $ | 6,683,683 | $ | 6,446,127 | $ | 6,295,843 | $ | 5,988,101 | ||||||||||
Acquired loans not impaired at acquisition |
595,702 | 569,610 | 589,877 | 634,664 | 671,306 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total loans and leases |
$ | 7,700,873 | $ | 7,253,293 | $ | 7,036,004 | $ | 6,930,507 | $ | 6,659,407 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
ALLL breakdown by origination type |
||||||||||||||||||||
Originated loans and leases |
$ | 61,256 | $ | 56,672 | $ | 55,534 | $ | 53,605 | $ | 48,110 | ||||||||||
Acquired loans not impaired at acquisition |
937 | 1,110 | 1,144 | 1,158 | 1,223 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total ALLL |
$ | 62,193 | $ | 57,782 | $ | 56,678 | $ | 54,763 | $ | 49,333 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Discount on Purchased/Acquired Loans |
||||||||||||||||||||
Acquired loans not impaired at acquisition |
$ | 11,645 | $ | 12,311 | $ | 12,932 | $ | 14,255 | $ | 14,943 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Discount |
$ | 11,645 | $ | 12,311 | $ | 12,932 | $ | 14,255 | $ | 14,943 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Percentage of ALLL to: |
||||||||||||||||||||
Originated loans and leases |
0.86 | % | 0.85 | % | 0.86 | % | 0.85 | % | 0.80 | % | ||||||||||
Originated loans and leases and acquired loans not impaired at acquisition |
0.81 | % | 0.80 | % | 0.81 | % | 0.79 | % | 0.74 | % | ||||||||||
Total loans and leases |
0.81 | % | 0.80 | % | 0.81 | % | 0.79 | % | 0.74 | % |
5
Banc of California, Inc.
Selected Financial Data, Continued
(Dollars in thousands)
(Unaudited)
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
2018 | 2018 | 2018 | 2018 | 2017 | ||||||||||||||||
Composition of held-for-investment loans and leases |
||||||||||||||||||||
Commercial real estate |
$ | 867,013 | $ | 823,193 | $ | 793,855 | $ | 773,193 | $ | 717,415 | ||||||||||
Multifamily |
2,241,246 | 2,112,190 | 1,959,965 | 1,944,082 | 1,816,141 | |||||||||||||||
Construction |
203,976 | 200,294 | 211,110 | 200,766 | 182,960 | |||||||||||||||
Commercial and industrial |
1,944,142 | 1,673,055 | 1,742,559 | 1,638,559 | 1,701,951 | |||||||||||||||
SBA |
68,741 | 71,494 | 78,092 | 79,022 | 78,699 | |||||||||||||||
Lease financing |
| | | 3 | 13 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total commercial loans |
5,325,118 | 4,880,226 | 4,785,581 | 4,635,625 | 4,497,179 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Single family residential mortgage |
2,305,490 | 2,300,069 | 2,174,183 | 2,201,358 | 2,055,649 | |||||||||||||||
Other consumer |
70,265 | 72,998 | 76,240 | 93,524 | 106,579 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total consumer loans |
2,375,755 | 2,373,067 | 2,250,423 | 2,294,882 | 2,162,228 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total gross loans and leases |
$ | 7,700,873 | $ | 7,253,293 | $ | 7,036,004 | $ | 6,930,507 | $ | 6,659,407 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Composition percentage of held-for-investment loans and leases |
||||||||||||||||||||
Commercial real estate |
11.3 | % | 11.3 | % | 11.3 | % | 11.2 | % | 10.8 | % | ||||||||||
Multifamily |
29.2 | % | 29.1 | % | 27.9 | % | 28.1 | % | 27.3 | % | ||||||||||
Construction |
2.6 | % | 2.8 | % | 3.0 | % | 2.9 | % | 2.7 | % | ||||||||||
Commercial and industrial |
25.2 | % | 23.1 | % | 24.8 | % | 23.6 | % | 25.5 | % | ||||||||||
SBA |
0.9 | % | 1.0 | % | 1.1 | % | 1.1 | % | 1.2 | % | ||||||||||
Lease financing |
0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total commercial loans |
69.2 | % | 67.3 | % | 68.1 | % | 66.9 | % | 67.5 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Single family residential mortgage |
29.9 | % | 31.7 | % | 30.9 | % | 31.8 | % | 30.9 | % | ||||||||||
Other consumer |
0.9 | % | 1.0 | % | 1.0 | % | 1.3 | % | 1.6 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total consumer loans |
30.8 | % | 32.7 | % | 31.9 | % | 33.1 | % | 32.5 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total gross loans and leases |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Composition of deposits |
||||||||||||||||||||
Noninterest-bearing checking |
$ | 1,023,360 | $ | 1,061,557 | $ | 1,005,032 | $ | 1,039,116 | $ | 1,071,608 | ||||||||||
Interest-bearing checking |
1,556,410 | 1,713,790 | 1,778,400 | 1,864,629 | 2,089,016 | |||||||||||||||
Money market |
873,153 | 856,886 | 1,136,335 | 1,091,735 | 1,146,859 | |||||||||||||||
Savings |
1,265,847 | 1,269,489 | 1,175,275 | 1,051,267 | 1,059,628 | |||||||||||||||
Brokered certificates of deposit |
1,543,269 | 987,771 | 686,203 | 974,706 | 915,623 | |||||||||||||||
Non-brokered certificates of deposit |
1,654,605 | 1,512,249 | 1,354,549 | 1,088,712 | 1,010,169 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total deposits |
$ | 7,916,644 | $ | 7,401,742 | $ | 7,135,794 | $ | 7,110,165 | $ | 7,292,903 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Composition percentage of deposits |
||||||||||||||||||||
Noninterest-bearing checking |
12.9 | % | 14.3 | % | 14.1 | % | 14.6 | % | 14.7 | % | ||||||||||
Interest-bearing checking |
19.7 | % | 23.2 | % | 24.9 | % | 26.2 | % | 28.7 | % | ||||||||||
Money market |
11.0 | % | 11.6 | % | 15.9 | % | 15.4 | % | 15.7 | % | ||||||||||
Savings |
16.0 | % | 17.2 | % | 16.5 | % | 14.8 | % | 14.5 | % | ||||||||||
Brokered certificates of deposit |
19.5 | % | 13.3 | % | 9.6 | % | 13.7 | % | 12.5 | % | ||||||||||
Non-brokered certificates of deposit |
20.9 | % | 20.4 | % | 19.0 | % | 15.3 | % | 13.9 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total deposits |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Capital Ratios |
||||||||||||||||||||
Banc of California, Inc. |
||||||||||||||||||||
Total risk-based capital ratio |
13.71 | % | 14.05 | % | 14.71 | % | 14.60 | % | 14.56 | % | ||||||||||
Tier 1 risk-based capital ratio |
12.77 | % | 13.15 | % | 13.83 | % | 13.74 | % | 13.79 | % | ||||||||||
Common equity tier 1 capital ratio |
9.53 | % | 9.80 | % | 9.90 | % | 9.80 | % | 9.92 | % | ||||||||||
Tier 1 leverage ratio |
8.95 | % | 8.99 | % | 9.30 | % | 9.21 | % | 9.39 | % | ||||||||||
Banc of California, NA |
||||||||||||||||||||
Total risk-based capital ratio |
15.71 | % | 15.94 | % | 16.63 | % | 16.53 | % | 16.56 | % | ||||||||||
Tier 1 risk-based capital ratio |
14.77 | % | 15.04 | % | 15.74 | % | 15.67 | % | 15.78 | % | ||||||||||
Common equity tier 1 capital ratio |
14.77 | % | 15.04 | % | 15.74 | % | 15.67 | % | 15.78 | % | ||||||||||
Tier 1 leverage ratio |
10.36 | % | 10.29 | % | 10.58 | % | 10.50 | % | 10.67 | % |
6
Banc of California, Inc.
Average Balance, Average Yield Earned, and Average Cost Paid
(Dollars in thousands)
(Unaudited)
Three Months Ended | ||||||||||||||||||||||||||||||||||||
December 31, 2018 | September 30, 2018 | June 30, 2018 | ||||||||||||||||||||||||||||||||||
Average | Yield | Average | Yield | Average | Yield | |||||||||||||||||||||||||||||||
Balance | Interest | / Cost | Balance | Interest | / Cost | Balance | Interest | / Cost | ||||||||||||||||||||||||||||
Interest earning assets |
||||||||||||||||||||||||||||||||||||
Loans held-for-sale (1) |
$ | 33,243 | $ | 221 | 2.64 | % | $ | 42,754 | $ | 263 | 2.44 | % | $ | 54,791 | $ | 328 | 2.40 | % | ||||||||||||||||||
SFR mortgage |
2,260,205 | 23,585 | 4.14 | % | 2,222,602 | 23,461 | 4.19 | % | 2,223,608 | 22,790 | 4.11 | % | ||||||||||||||||||||||||
Seasoned SFR mortgage loan pools |
| | | | | | | | | |||||||||||||||||||||||||||
Commercial real estate, multifamily, and construction |
3,246,860 | 37,403 | 4.57 | % | 3,091,706 | 35,838 | 4.60 | % | 2,989,014 | 33,736 | 4.53 | % | ||||||||||||||||||||||||
Commercial and industrial, SBA, and lease financing |
1,791,708 | 26,219 | 5.81 | % | 1,739,711 | 24,382 | 5.56 | % | 1,707,478 | 23,664 | 5.56 | % | ||||||||||||||||||||||||
Other consumer |
68,479 | 990 | 5.74 | % | 69,600 | 981 | 5.59 | % | 80,188 | 978 | 4.89 | % | ||||||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Gross loans and leases |
7,400,495 | 88,418 | 4.74 | % | 7,166,373 | 84,925 | 4.70 | % | 7,055,079 | 81,496 | 4.63 | % | ||||||||||||||||||||||||
Securities |
2,032,632 | 19,882 | 3.88 | % | 2,163,037 | 20,599 | 3.78 | % | 2,279,416 | 21,455 | 3.78 | % | ||||||||||||||||||||||||
Other interest-earning assets |
318,419 | 2,990 | 3.73 | % | 335,160 | 2,380 | 2.82 | % | 392,342 | 2,423 | 2.48 | % | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Total interest-earning assets |
9,751,546 | 111,290 | 4.53 | % | 9,664,570 | 107,904 | 4.43 | % | 9,726,837 | 105,374 | 4.35 | % | ||||||||||||||||||||||||
Allowance for loan and lease losses |
(58,099 | ) | (56,730 | ) | (54,903 | ) | ||||||||||||||||||||||||||||||
BOLI and non-interest earning assets |
544,302 | 554,636 | 565,224 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Total assets |
$ | 10,237,749 | $ | 10,162,476 | $ | 10,237,158 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Interest-bearing liabilities |
||||||||||||||||||||||||||||||||||||
Savings |
$ | 1,279,155 | 5,663 | 1.76 | % | $ | 1,231,696 | 5,122 | 1.65 | % | $ | 1,055,693 | 3,886 | 1.48 | % | |||||||||||||||||||||
Interest-bearing checking |
1,666,884 | 4,916 | 1.17 | % | 1,789,679 | 5,054 | 1.12 | % | 1,822,856 | 4,182 | 0.92 | % | ||||||||||||||||||||||||
Money market |
803,157 | 3,168 | 1.56 | % | 966,165 | 3,455 | 1.42 | % | 1,134,280 | 3,689 | 1.30 | % | ||||||||||||||||||||||||
Certificates of deposit |
2,759,665 | 15,225 | 2.19 | % | 2,332,181 | 11,523 | 1.96 | % | 2,079,932 | 8,558 | 1.65 | % | ||||||||||||||||||||||||
|
|
|
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|
|
|
|
|
|
|
|||||||||||||||||||||||||
Total interest-bearing deposits |
6,508,861 | 28,972 | 1.77 | % | 6,319,721 | 25,154 | 1.58 | % | 6,092,761 | 20,315 | 1.34 | % | ||||||||||||||||||||||||
FHLB advances |
1,447,348 | 9,068 | 2.49 | % | 1,528,674 | 8,996 | 2.33 | % | 1,827,307 | 9,539 | 2.09 | % | ||||||||||||||||||||||||
Securities sold under repurchase agreements |
3,116 | 25 | 3.18 | % | 6,418 | 47 | 2.91 | % | 29,907 | 211 | 2.83 | % | ||||||||||||||||||||||||
Long-term debt and other interest-bearing liabilities |
174,281 | 2,383 | 5.42 | % | 174,361 | 2,385 | 5.43 | % | 174,296 | 2,356 | 5.42 | % | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Total interest-bearing liabilities |
8,133,606 | 40,448 | 1.97 | % | 8,029,174 | 36,582 | 1.81 | % | 8,124,271 | 32,421 | 1.60 | % | ||||||||||||||||||||||||
Noninterest-bearing deposits |
1,054,790 | 1,023,890 | 1,004,502 | |||||||||||||||||||||||||||||||||
Non-interest-bearing liabilities |
89,111 | 108,593 | 107,529 | |||||||||||||||||||||||||||||||||
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|
|
|
|
|
|||||||||||||||||||||||||||||||
Total liabilities |
9,277,507 | 9,161,657 | 9,236,302 | |||||||||||||||||||||||||||||||||
Total stockholders equity |
960,242 | 1,000,819 | 1,000,856 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Total liabilities and stockholders equity |
$ | 10,237,749 | $ | 10,162,476 | $ | 10,237,158 | ||||||||||||||||||||||||||||||
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|
|
|
|
|
|||||||||||||||||||||||||||||||
Net interest income/spread |
$ | 70,842 | 2.56 | % | $ | 71,322 | 2.62 | % | $ | 72,953 | 2.75 | % | ||||||||||||||||||||||||
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|
|
|
|
|
|||||||||||||||||||||||||||||||
Net interest margin |
2.88 | % | 2.93 | % | 3.01 | % | ||||||||||||||||||||||||||||||
Ratio of interest-earning assets to interest-bearing liabilities |
119.89 | % | 120.37 | % | 119.73 | % | ||||||||||||||||||||||||||||||
Total deposits |
$ | 7,563,651 | $ | 28,972 | 1.52 | % | $ | 7,343,611 | $ | 25,154 | 1.36 | % | $ | 7,097,263 | $ | 20,315 | 1.15 | % | ||||||||||||||||||
Total funding (2) |
$ | 9,188,396 | $ | 40,448 | 1.75 | % | $ | 9,053,064 | $ | 36,582 | 1.60 | % | $ | 9,128,773 | $ | 32,421 | 1.42 | % |
(1) | Includes loans held-for-sale of discontinued operations. |
(2) | Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding. |
7
Banc of California, Inc.
Average Balance, Average Yield Earned, and Average Cost Paid, Continued
(Dollars in thousands)
(Unaudited)
Three Months Ended | ||||||||||||||||||||||||
March 31, 2018 | December 31, 2017 | |||||||||||||||||||||||
Average | Yield | Average | Yield | |||||||||||||||||||||
Balance | Interest | / Cost | Balance | Interest | / Cost | |||||||||||||||||||
Interest earning assets |
||||||||||||||||||||||||
Loans held-for-sale (1) |
$ | 97,095 | $ | 297 | 1.24 | % | $ | 127,139 | $ | 363 | 1.13 | % | ||||||||||||
SFR mortgage |
2,122,666 | 21,352 | 4.08 | % | 1,957,754 | 19,487 | 3.95 | % | ||||||||||||||||
Seasoned SFR mortgage loan pools |
| | | | | | ||||||||||||||||||
Commercial real estate, multifamily, and construction |
2,856,290 | 31,439 | 4.46 | % | 2,613,940 | 29,696 | 4.51 | % | ||||||||||||||||
Commercial and industrial, SBA, and lease financing |
1,625,549 | 20,850 | 5.20 | % | 1,630,886 | 20,989 | 5.11 | % | ||||||||||||||||
Other consumer |
103,676 | 1,160 | 4.54 | % | 107,664 | 1,233 | 4.54 | % | ||||||||||||||||
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|
|
|
|
|
|
|
|||||||||||||||||
Gross loans and leases |
6,805,276 | 75,098 | 4.48 | % | 6,437,383 | 71,768 | 4.42 | % | ||||||||||||||||
Securities |
2,525,220 | 21,631 | 3.47 | % | 2,653,838 | 23,170 | 3.46 | % | ||||||||||||||||
Other interest-earning assets |
407,064 | 2,164 | 2.16 | % | 548,171 | 2,292 | 1.66 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Total interest-earning assets |
9,737,560 | 98,893 | 4.12 | % | 9,639,392 | 97,230 | 4.00 | % | ||||||||||||||||
Allowance for loan and lease losses |
(49,257 | ) | (45,681 | ) | ||||||||||||||||||||
BOLI and non-interest earning assets |
574,930 | 572,692 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Total assets |
$ | 10,263,233 | $ | 10,166,403 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Interest-bearing liabilities |
||||||||||||||||||||||||
Savings |
$ | 1,055,338 | 3,300 | 1.27 | % | $ | 1,019,659 | 2,947 | 1.15 | % | ||||||||||||||
Interest-bearing checking |
1,976,160 | 4,108 | 0.84 | % | 2,082,677 | 4,267 | 0.81 | % | ||||||||||||||||
Money market |
1,076,117 | 2,834 | 1.07 | % | 1,294,537 | 3,262 | 1.00 | % | ||||||||||||||||
Certificates of deposit |
1,906,556 | 6,553 | 1.39 | % | 1,822,010 | 5,568 | 1.21 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Total interest-bearing deposits |
6,014,171 | 16,795 | 1.13 | % | 6,218,883 | 16,044 | 1.02 | % | ||||||||||||||||
FHLB advances |
1,711,089 | 7,392 | 1.75 | % | 1,448,326 | 5,402 | 1.48 | % | ||||||||||||||||
Securities sold under repurchase agreements |
119,543 | 750 | 2.54 | % | 33,513 | 194 | 2.30 | % | ||||||||||||||||
Long-term debt and other interest-bearing liabilities |
174,424 | 2,332 | 5.42 | % | 174,066 | 2,344 | 5.34 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Total interest-bearing liabilities |
8,019,227 | 27,269 | 1.38 | % | 7,874,788 | 23,984 | 1.21 | % | ||||||||||||||||
Noninterest-bearing deposits |
1,056,700 | 1,110,815 | ||||||||||||||||||||||
Non-interest-bearing liabilities |
167,345 | 166,432 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Total liabilities |
9,243,272 | 9,152,035 | ||||||||||||||||||||||
Total stockholders equity |
1,019,961 | 1,014,368 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Total liabilities and stockholders equity |
$ | 10,263,233 | $ | 10,166,403 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Net interest income/spread |
$ | 71,624 | 2.74 | % | $ | 73,246 | 2.79 | % | ||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Net interest margin |
2.98 | % | 3.01 | % | ||||||||||||||||||||
Ratio of interest-earning assets to interest-bearing liabilities |
121.43 | % | 122.41 | % | ||||||||||||||||||||
Total deposits |
$ | 7,070,871 | $ | 16,795 | 0.96 | % | $ | 7,329,698 | $ | 16,044 | 0.87 | % | ||||||||||||
Total funding (2) |
$ | 9,075,927 | $ | 27,269 | 1.22 | % | $ | 8,985,603 | $ | 23,984 | 1.06 | % |
(1) | Includes loans held-for-sale of discontinued operations. |
(2) | Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding. |
8
Banc of California, Inc.
Average Balance, Average Yield Earned, and Average Cost Paid, Continued
(Dollars in thousands)
(Unaudited)
Year Ended | ||||||||||||||||||||||||
December 31, 2018 | December 31, 2017 | |||||||||||||||||||||||
Average | Yield | Average | Yield | |||||||||||||||||||||
Balance | Interest | / Cost | Balance | Interest | / Cost | |||||||||||||||||||
Interest earning assets |
||||||||||||||||||||||||
Loans held-for-sale (1) |
$ | 56,757 | $ | 1,109 | 1.95 | % | $ | 410,266 | $ | 13,669 | 3.33 | % | ||||||||||||
SFR mortgage |
2,207,689 | 91,188 | 4.13 | % | 1,882,086 | 74,033 | 3.93 | % | ||||||||||||||||
Seasoned SFR mortgage loan pools |
| | | 97,195 | 5,474 | 5.63 | % | |||||||||||||||||
Commercial real estate, multifamily, and construction |
3,047,164 | 138,416 | 4.54 | % | 2,460,614 | 108,508 | 4.41 | % | ||||||||||||||||
Commercial and industrial, SBA, and lease financing |
1,716,631 | 95,115 | 5.54 | % | 1,565,065 | 81,175 | 5.19 | % | ||||||||||||||||
Other consumer |
80,359 | 4,109 | 5.11 | % | 115,843 | 5,264 | 4.54 | % | ||||||||||||||||
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|
|
|
|
|
|
|
|||||||||||||||||
Gross loans and leases |
7,108,600 | 329,937 | 4.64 | % | 6,531,069 | 288,123 | 4.41 | % | ||||||||||||||||
Securities |
2,248,488 | 83,567 | 3.72 | % | 2,954,235 | 99,742 | 3.38 | % | ||||||||||||||||
Other interest-earning assets |
362,927 | 9,957 | 2.74 | % | 516,832 | 8,377 | 1.62 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Total interest-earning assets |
9,720,015 | 423,461 | 4.36 | % | 10,002,136 | 396,242 | 3.96 | % | ||||||||||||||||
Allowance for loan and lease losses |
(54,777 | ) | (43,150 | ) | ||||||||||||||||||||
BOLI and non-interest earning assets |
559,675 | 575,363 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Total assets |
$ | 10,224,913 | $ | 10,534,349 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Interest-bearing liabilities |
||||||||||||||||||||||||
Savings |
$ | 1,156,292 | 17,971 | 1.55 | % | $ | 1,007,990 | 9,764 | 0.97 | % | ||||||||||||||
Interest-bearing checking |
1,812,980 | 18,261 | 1.01 | % | 2,035,954 | 15,161 | 0.74 | % | ||||||||||||||||
Money market |
994,103 | 13,146 | 1.32 | % | 2,076,847 | 18,530 | 0.89 | % | ||||||||||||||||
Certificates of deposit |
2,272,093 | 41,858 | 1.84 | % | 1,730,652 | 16,959 | 0.98 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Total interest-bearing deposits |
6,235,468 | 91,236 | 1.46 | % | 6,851,443 | 60,414 | 0.88 | % | ||||||||||||||||
FHLB advances |
1,627,608 | 34,995 | 2.15 | % | 1,054,978 | 12,951 | 1.23 | % | ||||||||||||||||
Securities sold under repurchase agreements |
39,336 | 1,033 | 2.63 | % | 39,907 | 880 | 2.21 | % | ||||||||||||||||
Long-term debt and other interest-bearing liabilities |
174,340 | 9,456 | 5.42 | % | 207,734 | 10,755 | 5.18 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Total interest-bearing liabilities |
8,076,752 | 136,720 | 1.69 | % | 8,154,062 | 85,000 | 1.04 | % | ||||||||||||||||
Noninterest-bearing deposits |
1,034,937 | 1,182,667 | ||||||||||||||||||||||
Non-interest-bearing liabilities |
117,904 | 188,625 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Total liabilities |
9,229,593 | 9,525,354 | ||||||||||||||||||||||
Total stockholders equity |
995,320 | 1,008,995 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Total liabilities and stockholders equity |
$ | 10,224,913 | $ | 10,534,349 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Net interest income/spread |
$ | 286,741 | 2.67 | % | $ | 311,242 | 2.92 | % | ||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Net interest margin |
2.95 | % | 3.11 | % | ||||||||||||||||||||
Ratio of interest-earning assets to interest-bearing liabilities |
120.35 | % | 122.66 | % | ||||||||||||||||||||
Total deposits |
$ | 7,270,405 | $ | 91,236 | 1.25 | % | $ | 8,034,110 | $ | 60,414 | 0.75 | % | ||||||||||||
Total funding (2) |
$ | 9,111,689 | $ | 136,720 | 1.50 | % | $ | 9,336,729 | $ | 85,000 | 0.91 | % |
(1) | Includes loans held-for-sale of discontinued operations. |
(2) | Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding. |
9
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 companys management believes that presentation of the non-GAAP financial measure provides useful information to investors regarding the companys financial condition and results of operations and, to the extent material, a statement of the additional purposes, if any, for which the companys management uses the non-GAAP financial measure.
Return on average tangible common equity and efficiency ratio, as adjusted, tangible common equity to tangible assets, and tangible common equity per common share constitute supplemental financial information determined by methods other than in accordance with GAAP. These non-GAAP measures are used by management in its analysis of the Companys performance.
Tangible common equity is calculated by subtracting preferred stock, goodwill, and other intangible assets from stockholders equity. Tangible assets is calculated by subtracting goodwill and other intangible assets from total assets. Banking regulators also exclude goodwill and other intangible assets from stockholders equity when assessing the capital adequacy of a financial institution.
Adjusted efficiency ratio is calculated by subtracting loss on investments in alternative energy partnerships from noninterest expense and adding total pre-tax return, which includes the loss on investments in alternative energy partnerships, to the sum of net interest income and noninterest income (total revenue). Management believes the presentation of these financial measures adjusting the impact of these items provides useful supplemental information that is essential to a proper understanding of the financial results and operating performance of the Company.
This disclosure should not be viewed as a substitute for results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.
The following tables provide reconciliations of the non-GAAP measures with financial measures defined by GAAP.
December 31, 2018 |
September 30, 2018 |
June 30, 2018 |
March 31, 2018 |
December 31, 2017 |
||||||||||||||||
Tangible common equity to tangible assets ratio |
||||||||||||||||||||
Total assets |
$ | 10,630,067 | $ | 10,260,822 | $ | 10,319,280 | $ | 10,329,319 | $ | 10,327,852 | ||||||||||
Less goodwill |
(37,144 | ) | (37,144 | ) | (37,144 | ) | (37,144 | ) | (37,144 | ) | ||||||||||
Less other intangible assets |
(6,346 | ) | (6,990 | ) | (7,683 | ) | (8,510 | ) | (9,353 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Tangible assets |
$ | 10,586,577 | $ | 10,216,688 | $ | 10,274,453 | $ | 10,283,665 | $ | 10,281,355 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total stockholders equity |
$ | 945,534 | $ | 946,678 | $ | 988,688 | $ | 993,756 | $ | 1,012,308 | ||||||||||
Less goodwill |
(37,144 | ) | (37,144 | ) | (37,144 | ) | (37,144 | ) | (37,144 | ) | ||||||||||
Less other intangible assets |
(6,346 | ) | (6,990 | ) | (7,683 | ) | (8,510 | ) | (9,353 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Tangible equity |
902,044 | 902,544 | 943,861 | 948,102 | 965,811 | |||||||||||||||
Less preferred stock |
(231,128 | ) | (231,128 | ) | (269,071 | ) | (269,071 | ) | (269,071 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Tangible common equity |
$ | 670,916 | $ | 671,416 | $ | 674,790 | $ | 679,031 | $ | 696,740 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total stockholders equity to total assets |
8.89 | % | 9.23 | % | 9.58 | % | 9.62 | % | 9.80 | % | ||||||||||
Tangible equity to tangible assets |
8.52 | % | 8.83 | % | 9.19 | % | 9.22 | % | 9.39 | % | ||||||||||
Tangible common equity to tangible assets |
6.34 | % | 6.57 | % | 6.57 | % | 6.60 | % | 6.78 | % | ||||||||||
Common shares outstanding |
50,172,018 | 50,180,607 | 50,142,955 | 50,079,736 | 50,083,345 | |||||||||||||||
Class B non-voting non-convertible common shares outstanding |
477,321 | 477,321 | 403,778 | 508,107 | 508,107 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total common shares outstanding |
50,649,339 | 50,657,928 | 50,546,733 | 50,587,843 | 50,591,452 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
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Tangible common equity per common share |
$ | 13.25 | $ | 13.25 | $ | 13.35 | $ | 13.42 | $ | 13.77 | ||||||||||
Book value per common share |
$ | 14.10 | $ | 14.13 | $ | 14.24 | $ | 14.33 | $ | 14.69 |
10
Banc of California, Inc.
Consolidated Operations
Non-GAAP Measures, Continued
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended | Year Ended | |||||||||||||||||||||||||||
December 31, 2018 |
September 30, 2018 |
June 30, 2018 |
March 31, 2018 |
December 31, 2017 |
December 31, 2018 |
December 31, 2017 |
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Return on tangible common equity |
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Average total stockholders equity |
$ | 960,242 | $ | 1,000,819 | $ | 1,000,856 | $ | 1,019,961 | $ | 1,014,368 | $ | 995,320 | $ | 1,008,995 | ||||||||||||||
Less average preferred stock |
(231,128 | ) | (260,822 | ) | (269,071 | ) | (269,071 | ) | (269,071 | ) | (257,428 | ) | (269,071 | ) | ||||||||||||||
Less average goodwill |
(37,144 | ) | (37,144 | ) | (37,144 | ) | (37,144 | ) | (37,144 | ) | (37,144 | ) | (37,656 | ) | ||||||||||||||
Less average other intangible assets |
(6,731 | ) | (7,412 | ) | (8,110 | ) | (8,972 | ) | (9,788 | ) | (7,799 | ) | (11,375 | ) | ||||||||||||||
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Average tangible common equity |
$ | 685,239 | $ | 695,441 | $ | 686,531 | $ | 704,774 | $ | 698,365 | $ | 692,949 | $ | 690,893 | ||||||||||||||
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Net income |
$ | 11,038 | $ | 11,096 | $ | 14,780 | $ | 8,558 | $ | 11,302 | $ | 45,472 | $ | 57,709 | ||||||||||||||
Less preferred stock dividends and impact of preferred stock redemption |
(4,308 | ) | (7,277 | ) | (5,113 | ) | (5,113 | ) | (5,113 | ) | (21,811 | ) | (20,451 | ) | ||||||||||||||
Add amortization of intangible assets |
644 | 693 | 827 | 843 | 866 | 3,007 | 3,928 | |||||||||||||||||||||
Add impairment on intangible assets |
| | | | | | 336 | |||||||||||||||||||||
Less tax effect on amortization and impairment of intangible assets |
(135 | ) | (146 | ) | (174 | ) | (177 | ) | (303 | ) | (631 | ) | (1,492 | ) | ||||||||||||||
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Net income available to common stockholders |
$ | 7,239 | $ | 4,366 | $ | 10,320 | $ | 4,111 | $ | 6,752 | $ | 26,037 | $ | 40,030 | ||||||||||||||
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Return on average equity |
4.56 | % | 4.40 | % | 5.92 | % | 3.40 | % | 4.42 | % | 4.57 | % | 5.72 | % | ||||||||||||||
Return on average tangible common equity |
4.19 | % | 2.49 | % | 6.03 | % | 2.37 | % | 3.84 | % | 3.76 | % | 5.79 | % | ||||||||||||||
Statutory tax rate utilized for calculating tax effect on amortization and impairment of intangible assets |
21.00 | % | 21.00 | % | 21.00 | % | 21.00 | % | 35.00 | % | 21.00 | % | 35.00 | % | ||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||||||||||||
December 31, 2018 |
September 30, 2018 |
June 30, 2018 |
March 31, 2018 |
December 31, 2017 |
December 31, 2018 |
December 31, 2017 |
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Adjusted efficiency ratio including the pre-tax effect of investments in alternative energy partnerships |
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Noninterest expense |
$ | 49,578 | $ | 60,977 | $ | 62,554 | $ | 59,812 | $ | 66,424 | $ | 232,921 | $ | 368,263 | ||||||||||||||
(Loss) gain on investments in alternative energy partnerships |
(786 | ) | (2,484 | ) | (1,808 | ) | 34 | (3,995 | ) | (5,044 | ) | (30,786 | ) | |||||||||||||||
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Adjusted noninterest expense |
$ | 48,792 | $ | 58,493 | $ | 60,746 | $ | 59,846 | $ | 62,429 | $ | 227,877 | $ | 337,477 | ||||||||||||||
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Net interest income |
$ | 70,842 | $ | 71,322 | $ | 72,953 | $ | 71,624 | $ | 73,246 | $ | 286,741 | $ | 311,242 | ||||||||||||||
Noninterest income |
2,644 | 5,718 | 9,168 | 10,452 | 6,429 | 27,982 | 104,777 | |||||||||||||||||||||
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Total revenue |
73,486 | 77,040 | 82,121 | 82,076 | 79,675 | 314,723 | 416,019 | |||||||||||||||||||||
Tax credit from investments in alternative energy partnerships |
| 412 | 1,912 | 7,323 | 4,908 | 9,647 | 38,196 | |||||||||||||||||||||
Deferred tax expense on investments in alternative energy partnerships |
| (43 | ) | (211 | ) | (769 | ) | (859 | ) | (1,023 | ) | (6,684 | ) | |||||||||||||||
Tax effect on tax credit and deferred tax expense |
26 | 180 | 631 | 2,422 | 3,004 | 3,259 | 20,531 | |||||||||||||||||||||
(Loss) gain on investments in alternative energy partnerships |
(786 | ) | (2,484 | ) | (1,808 | ) | 34 | (3,995 | ) | (5,044 | ) | (30,786 | ) | |||||||||||||||
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Total pre-tax adjustments for investments in alternative energy partnerships |
(760 | ) | (1,935 | ) | 524 | 9,010 | 3,058 | 6,839 | 21,257 | |||||||||||||||||||
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Adjusted total revenue |
$ | 72,726 | $ | 75,105 | $ | 82,645 | $ | 91,086 | $ | 82,733 | $ | 321,562 | $ | 437,276 | ||||||||||||||
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Efficiency ratio |
67.47 | % | 79.15 | % | 76.17 | % | 72.87 | % | 83.37 | % | 74.01 | % | 88.52 | % | ||||||||||||||
Adjusted efficiency ratio including the pre-tax effect of investments in alternative energy partnerships |
67.09 | % | 77.88 | % | 73.50 | % | 65.70 | % | 75.46 | % | 70.87 | % | 77.18 | % | ||||||||||||||
Effective tax rate utilized for calculating tax effect on tax credit and deferred tax expense |
100.00 | % | 32.81 | % | 27.07 | % | 26.98 | % | 42.59 | % | 27.42 | % | 39.45 | % |
11
January 24, 2019 2018 Fourth Quarter Earnings Investor Presentation Exhibit 99.2
When used in this presentation and in documents filed with or furnished to the Securities and Exchange Commission (the “SEC”), in press releases or other public stockholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases “believe,” “will,” “should,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “plans,” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made. These statements may relate to future financial performance, strategic plans or objectives, revenue, expense or earnings projections, or other financial items of Banc of California Inc. and its affiliates (“BANC,” the “Company,” “we,” “us” or “our”). By their nature, these statements are subject to numerous uncertainties that could cause actual results to differ materially from those anticipated in the statements. Factors that could cause actual results to differ materially from the results anticipated or projected include, but are not limited to, the following: (i) an ongoing investigation by the SEC as well as any related litigation or other litigation may result in adverse findings, reputational damage, the imposition of sanctions, increased costs, the diversion of management time and resources, and other negative consequences; (ii) the costs and effects of litigation generally, including legal fees and other expenses, settlements and judgments; (iii) the risk that the savings we actually realize from our recently announced reduction in force and planned reduction in use of third party advisors will be less than anticipated and the risk that the costs associated with the reduction in force will be greater than anticipated; (iv) risks that the Company’s merger and acquisition transactions may disrupt current plans and operations and lead to difficulties in customer and employee retention, risks that the costs, fees, expenses and charges related to these transactions could be significantly higher than anticipated and risks that the expected revenues, cost savings, synergies and other benefits of these transactions might not be realized to the extent anticipated, within the anticipated timetables, or at all; (v) the credit risks of lending activities, which may be affected by deterioration in real estate markets and the financial condition of borrowers, and the operational risk of lending activities, including but not limited to the effectiveness of our underwriting practices and the risk of fraud, any of which credit and operational risks may lead to increased loan and lease delinquencies, losses and nonperforming assets in our loan and lease portfolio, and may result in our allowance for loan and lease losses not being adequate to cover actual losses and require us to materially increase our loan and lease loss reserves; (vi) the quality and composition of our securities portfolio; (vii) changes in general economic conditions, either nationally or in our market areas, or changes in financial markets; (viii) continuation of or changes in the short-term interest rate environment, changes in the levels of general interest rates, volatility in the interest rate environment, the relative differences between short- and long-term interest rates, deposit interest rates, our net interest margin and funding sources; (ix) fluctuations in the demand for loans and leases, the number of unsold homes and other properties and fluctuations in commercial and residential real estate values in our market area; (x) our ability to develop and maintain a strong core deposit base or other low cost funding sources necessary to fund our activities; (xi) results of examinations of us by regulatory authorities and the possibility that any such regulatory authority may, among other things, limit our business activities, require us to change our business mix, increase our allowance for loan and lease losses, write-down asset values or increase our capital levels, or affect our ability to borrow funds or maintain or increase deposits, any of which could adversely affect our liquidity and earnings; (xii) legislative or regulatory changes that adversely affect our business, including, without limitation, changes in tax laws and policies and changes in regulatory capital or other rules, and the availability of resources to address or respond to such changes; (xiii) our ability to control operating costs and expenses; (xiv) staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our work force and potential associated charges; (xv) the risk that our enterprise risk management framework may not be effective in mitigating risk and reducing the potential for losses; (xvi) errors in estimates of the fair values of certain of our assets and liabilities, which may result in significant changes in valuation; (xvii) the network and computer systems on which we depend could fail or experience a security breach; (xviii) our ability to attract and retain key members of our senior management team; (xix) the dependency of our single family residential mortgage loan origination business on third party mortgage brokers who are not contractually obligated to business with us; (xx) increased competitive pressures among financial services companies; (xxi) changes in consumer spending, borrowing and saving habits; (xxii) the effects of severe weather, natural disasters, acts of war or terrorism and other external events on our business; (xxiii) the ability of key third-party providers to perform their obligations to us; (xxiv) changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies or the Financial Accounting Standards Board or their application to our business, including additional guidance and interpretation on accounting issues and details of the implementation of new accounting methods; (xxv) share price volatility and reputational risks, related to, among other things, speculative trading and certain traders shorting our common shares and attempting to generate negative publicity about us; (xxvi) war or terrorist activities; and (xxvii) other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services and the other risks described from time to time in other documents that we file with or furnish to the SEC. You should not place undue reliance on forward-looking statements, and we undertake 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. Forward-looking Statements
Strong Organic Loan Growth Continuation of Balance Sheet Re-Mix Disciplined Expense Management Held for investment loans grew by $448 million, or 6% QoQ (25% annualized) – Gross loan commitment originations of $1 billion at an average production yield of 5.26% – C&I portfolio grew by $268 million on $445 million of new commitments Noninterest expense totaled $49.6 million Net benefit of $3.4 million from non-recurring items, primarily comprised of $2.7 million in net recoveries of legal fees, $1.1 million in project related expense, and $1.8 million in gain from the sale of an owned branch Credit and Capital Net charge-offs totaled $2.2 million, primarily from two credits: one C&I and one SBA NPAs1 / Assets of 0.21%, unchanged from a year ago, and ALLL / Loans1 of 0.81%, up from 0.74% a year ago Total delinquencies (delinquent non-PCI loans to total non-PCI loans) of 0.53% Common Equity Tier 1 ratio of 9.53% Fourth Quarter 2018 Highlights Continuing to Build a Core Commercial Banking Platform Reduced securities by $67 million, primarily driven by a net decline in collateralized loan obligations (“CLOs”) from call activity totaling $129 million, offset by purchases of $79 million Sold remaining $132 million portfolio of commercial mortgage-backed securities (“CMBS”) in early January 2019 and recognized a $3.3 million other than temporary impairment (“OTTI”) in the fourth quarter Held for investment. Core deposit balances stable from prior quarter owing to a focus on gathering lower costing deposits Deposit outflows primarily in transactional accounts Stabilization of Core Deposits
Dollars in millions. Q4 Strategic Asset Sheet Re-Mix Activities 1 2 Total Assets1 2 1 Strategic Asset Re-Mix Continues Re-Mix of Balance Sheet Toward Core Held for Investment (“HFI”) Loans Through Reduced Securities Securities declined by $67 million in Q4 primarily due to $129 million in CLO call activity, $11 million related to an MBS repayment, and a $6 million decrease in fair value. This activity was partially offset by $79 million in CLO purchases. HFI loans increased by $448 million, or 6% from the prior quarter
BANC Strategic Roadmap: Scorecard Building Core Earnings Power for Sustainable Growth and Returns Over the Long Term Strategy Components Tracking Guideposts FY 2018 Results Build Core Deposits Core Deposit Balance Growth Core deposits increased $579 million (10%) In Q1, completed the run-off of $207 million of legacy high-rate, high-volatility deposits Amplify Lending Annual Net Loan Growth Loan Originations Securities / Total Assets (%) HFI loan growth of $1 billion, or 16% $3.55 billion of gross loan commitment originations Securities / Total Assets of 19%, down from 25% at prior YE Normalize Expenses Noninterest Expenses1 / Average Assets NIE1 / Average Assets of 2.11%, down from 2.33% for Q4’17 Continuing to invest in sales and origination teams while driving efficiencies in support areas Creating Stockholder Value ROAA ROATCE2 0.44% 3.76% Called $40 million of preferred equity with an 8% dividend Operating expenses, non-GAAP measure, see reconciliation on slide 21. Non-GAAP measure, see reconciliation on slide 20.
Dollars in millions. Core deposits defined as non-brokered deposits. Deposit Composition1 Build Core Deposits: Stabilization of Core Deposit Base Core Deposits Stable from prior quarter BANC 2
Gross loan commitment originations. Dollars in thousands. CRE includes Construction. 2018 gross loan production1 of $3.55 billion at 5.14% average production yield HFI Loan Production Yields vs. Portfolio Yields2 14% 28% Amplify Lending: Growing Loan Balances Higher average production Yields driven by 15% sequential growth in C&I portfolio BANC 14% 28% 31% Q/Q Q/Q Q/Q 3
Net Interest Margin Re-mix of Assets, Liability Funding and Deposit Strategy In Process Net Interest Margin Components Interest Earning Assets1 Average, dollars in billions. Includes loans held for sale and other interest-earning assets. Dollars in millions, consolidated operations. Interest Income3 2
Loss on investments in alternative energy partnerships create tax credits to offset expense incurred. Continuing operations operating expense less non-recurring adjustments. Non-GAAP measure: Reconciliation table above. Continuing operations noninterest expense excluding loss on investments in alternative energy partnerships, annualized, over average consolidated assets. Normalize Expenses: Leveraging Expenses Efficiently Simplifying Operating Model and Delivering Operational Efficiencies BANC < 2
Includes non-recurring items, loss on investments in alternative energy partnerships, and income tax expense required to reach a normalized rate of 20%. Non-GAAP measure: Reconciliation table above. Loss on investments in alternative energy partnerships create tax credits to offset expense incurred. Q4 includes a $1.6mm return to tax provision adjustment. Focusing on Core, Sustainable Returns Q4 Including Non-Recurring Items Shown Below Diluted EPS – Continuing Operations Reported Adjusted for non-recurring items $ $ $ $
Financial Metric Long-Term Strategic Operating Targets FY 2018 Plan Tracking Comments Growth / Balance Sheet: - Loan Growth (HFI)¹ Mid-Teens +16% Fourth quarter realized an annualized growth rate of 25% - Deposit Growth (ex-brokered)2 Low-to-Mid Teens +10% Early Innings of Deposit & Treasury Management Build Out - Securities / Total Assets 15% – 20% 19% High end of Target Operating Metrics: - NIM 3.00% – 3.20% 2.95% Deposit competition pressuring NIM - NIE3 / Average Assets <2.00% 2.11% Trending Toward Target - Tax Rate 20% – 25% 11.85% FY 2018 Tax Rate Normalized in 2nd Half Returns: - ROAA 1%+ 0.44% - ROATCE4 12%+ 3.76% Annualized. 2 Annualized ex-brokered, ex-IB run off deposits. 3 Continuing operations noninterest expenses excluding loss on investments in alternative energy partnerships, annualized, over average consolidated assets. See page 21 for Non-GAAP reconciliation. 4 Non-GAAP measure, see reconciliation on slide 20. Creating Stockholder Value: Strategic Target Tracking Focused on Building Core Earnings Power for Sustainable Growth and Returns Over the Long Term BANC
NPLs & REO1 Asset Quality Remains Strong Disciplined Credit Culture Continues to Drive Strong Asset Quality NPL: Non-performing loans and leases. OREO: Other real estate owned. Dollars in millions, held for investment. ALLL: Allowance for loan and lease losses. NPAs / Equity ALLL2 and NPL Coverage Total Delinquent Loans / Total Loans
Tangible Equity / Tangible Assets1 Capital Ratios Exceeding Basel III Guidelines Tier 1 Risk-Based Capital Ratio Supported by $231 Million of Preferred Equity Common Equity Tier 1 Ratio (“CET1”) Tangible Common Equity / Tangible Assets1 Tier 1 Risk-Based Capital Ratio Non-GAAP measure. Reconciliation on slide 20. % % % %
Appendix
Securities Portfolio Dollars in millions. 2 Based on par value balances of rated securities, data at December 31, 2018. 3 Sold remaining $132 million portfolio of CMBS in early January 2019 and recognized a $3.3 million OTTI in 2018 Q4. 4 Dollars in billions. 5 BBB less than 0.05% but greater than 0.00%. Securities Portfolio Detail1 Security Type Amortized Cost 4Q18 Amortized Cost 3Q18 Q4 Change Fair Value 4Q18 Book Yield 4Q18 Duration 4Q18 Gov’t & Agency (Agency MBS) $ 462 $ 473 ($ 11) $ 437 2.57% 7.17 CLOs 1,431 1,481 (50) 1,422 4.23% 0.33 CMBS 132 136 (4) 132 3.75% 5.95 Other 2 1 1 2 n/m n/m Total Securities 2,027 2,091 (64) 1,993 3.82% 2.27 Portfolio Profile2 Credit Rating1,5 Portfolio Average Balances and Yields4 Composition3
Collateralized Loan Obligation ("CLO") Portfolio Composition Diversified, Highly Rated Portfolio with Historically Low Credit Risk Data as of December 31, 2018 From 4,322 S&P rates US “1.0” CLO tranches from 1994-2009. S&P has also rated over 5,700 US CLO tranches since 2009, with zero defaults. Source: Wells Fargo Securities, S&P Top 10 Industry Holdings1 Balanced Portfolio of Mostly Senior Debt Adheres to Strong Credit Culture1 BANC’s portfolio is well diversified across a wide spectrum of industries Top 10 holdings represent 62% of portfolio No industries outside of top 10 represent more than 3.4% of total holdings Exposure to Oil & Gas and Metal & Mining industries total 3.1% No single manager represents more than 8% of total holdings S&P Rated CLOs Historically Have Low Default Rates2 1994 – 2009 AA and AAA rated tranches had default rate of 0.2% in total Since 2009, there have been no defaults of AA and AAA rated tranches BANC’s CLO Portfolio Composition, Yields and Performance1
All figures from continuing operations unless noted; dollars in millions unless noted per share or percentage. Consolidated operations; Efficiency ratio adjusted for including the pre-tax effect of investments in alternative energy partnerships. Excluding loss on investments in alternative energy partnerships. 4 Non-GAAP measure. Reconciliation within table above. 5 Non-GAAP measure. Reconciliation on slide 18. Preferred Equity Class / Series CUSIP Issue Date Amount Out ($000) Dividend Rate / Coupon (%) First Callable Date Preferred Equity: Non-Cumulative, Perpetual E 05990K874 2/8/2016 125,000 7.00% 3/15/2021 Preferred Equity: Non-Cumulative, Perpetual D 05990K882 4/8/2015 115,000 7.375% 6/15/2020 Total Preferred Equity $240,000 BANC Fast Facts & Preferred Equity Capital Structure
This presentation contains certain financial measures determined by methods other than in accordance with U.S. generally accepted accounting principles (GAAP). These measures include noninterest expense from continuing operations, operating expense from continuing operations, non-interest expense to average assets, and diluted earnings per common share from continuing operations, adjusted for non-recurring items, each excluding loss on investments in alternative energy partnerships and the latter three adjusted for non-recurring items. Management believes that these particular measures provide useful supplemental information in understanding our core operating performance. These measures should not be viewed as substitutes for measures determined in accordance with GAAP, nor are they necessarily comparable to non‐GAAP measures that may be presented by other companies. Reconciliations of these measures to measures determined in accordance with GAAP are contained on slides 8, 9, 18, and 21 of this presentation. Non-GAAP measures in this presentation also include tangible equity to tangible assets, tangible common equity to tangible assets, return on average tangible common equity, and adjusted efficiency ratio including the pre-tax effect of investments in alternative energy partnerships. These particular measures are used by management in its analysis of the Company's capital strength and the performance of the Company’s businesses. 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 these measures excluding the impact of these items provides useful supplemental information that is essential to a proper understanding of the capital and financial strength of the Company and the performance of its businesses. These measures should not be viewed as substitutes for results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP measures that may be presented by other companies. Reconciliations of these measures to measures determined in accordance with GAAP are contained on slides 18-21 of this presentation. Non-GAAP Financial Information
Non-GAAP Reconciliation Adjusted Efficiency Ratio Including the Pre-tax Effect of Investments in Alternative Energy Partnerships
Non-GAAP Reconciliation Tangible Common Equity to Tangible Assets and Tangible Equity to Tangible Assets
Non-GAAP Reconciliation Return on Average Tangible Common Equity
Non-GAAP Reconciliation Non-Interest Expense / Average Assets 1. Continuing operations noninterest expenses excluding loss on investments in alternative energy partnerships, annualized, over average consolidated assets.
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