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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Banc of California Inc | NYSE:BANC | NYSE | Common Stock |
| Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 16.74 | 0 | 09:02:56 |
From Jun 2024 to Dec 2024
Banc of California, Inc. (NYSE: BANC):
$0.12 Earnings Per Share
$17.23 Book Value Per Share $15.07 Tangible Book Value Per Share(1)
10.27% CET1 Ratio
27% Noninterest-Bearing Deposits
Banc of California, Inc. (NYSE: BANC) (“Banc of California”), the parent company of wholly-owned subsidiary Banc of California (the “Bank”), today reported financial results for the second quarter ended June 30, 2024. The Company recorded net earnings available to common and equivalent stockholders of $20.4 million, or $0.12 per diluted common share, for the second quarter of 2024. This compares to net earnings available to common and equivalent stockholders of $20.9 million, or $0.12 per diluted common share, for the first quarter of 2024.
Second quarter highlights include:
(1)
Non-GAAP measure; refer to section 'Non-GAAP Measures'
Subsequent to quarter-end, Banc of California closed on the sale of $1.95 billion of CIVIC loans which had been moved to held for sale during the second quarter. The loan sale generated net proceeds of $1.91 billion and is expected to increase our CET 1 capital ratio by more than 30 basis points. We intend to use the proceeds primarily to pay down higher-cost brokered deposits and borrowings.
Jared Wolff, President & CEO of Banc of California, commented, “During the second quarter, we continued to make solid progress executing on our plan, strengthening our franchise, and improving our core earnings power. We further reduced our cost of funds, expanded the net interest margin, and grew average noninterest-bearing deposits in a rate environment that has remained challenging. We are on track with respect to controllable cost savings and are focused on building a valuable franchise for the long term with an enviable deposit base and core franchise.”
Mr. Wolff continued, “This is a transformational year for our company and we will remain focused on optimizing our business to drive long-term sustainable growth and profitability. Our recently completed sale of $1.95 billion of CIVIC loans positively impacts our capital and liquidity ratios, which we will leverage to further reposition our balance sheet and optimize core earnings power. We are well-positioned to continue improving profitability through net interest margin expansion and our expense reduction initiatives. I am thrilled about the opportunities ahead of us to leverage our strong market position and deliver our exceptional customer experience and unique platform to our expanded customer base.”
Mr. Wolff added, “Thanks to the tireless efforts and dedication of our team, we successfully completed our core system conversion this past weekend. We are now operating on a single system across our entire platform and we are now able to serve our clients in all our markets as the combined Banc of California.”
INCOME STATEMENT HIGHLIGHTS
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
Summary Income Statement2024
2024
2023
2024
2023
(In thousands)
Total interest income$
462,589
$
478,704
$
539,888
$
941,293
$
1,057,676
Total interest expense
233,101
249,602
353,812
482,703
592,328
Net interest income
229,488
229,102
186,076
458,590
465,348
Provision for credit losses
11,000
10,000
2,000
21,000
5,000
Gain (loss) on sale of loans
1,135
(448
)
(158,881
)
687
(155,919
)
Other noninterest income
28,657
34,264
30,799
62,921
64,228
Total noninterest income (loss)
29,792
33,816
(128,082
)
63,608
(91,691
)
Total revenue
259,280
262,918
57,994
522,198
373,657
Goodwill impairment
-
-
-
-
1,376,736
Acquisition, integration and reorganization costs
(12,650
)
-
12,394
(12,650
)
20,908
Other noninterest expense
216,293
210,518
308,043
426,811
495,796
Total noninterest expense
203,643
210,518
320,437
414,161
1,893,440
Earnings (loss) before income taxes
44,637
42,400
(264,443
)
87,037
(1,524,783
)
Income tax expense (benefit)
14,304
11,548
(67,029
)
25,852
(131,945
)
Net earnings (loss)
30,333
30,852
(197,414
)
61,185
(1,392,838
)
Preferred stock dividends
9,947
9,947
9,947
19,894
19,894
Net earnings (loss) available to common and equivalent stockholders
$
20,386
$
20,905
$
(207,361
)
$
41,291
$
(1,412,732
)
Net Interest Income
Q2-2024 vs Q1-2024
Net interest income increased by $0.4 million to $229.5 million for the second quarter from $229.1 million for the first quarter due to lower interest expense on interest-bearing liabilities, offset partially by lower interest income on interest-earning assets.
Average interest-earning assets decreased by $1.7 billion to $32.9 billion for the second quarter due to lower cash balances which were used to pay down deposits and borrowings. The net interest margin increased by 14 basis points to 2.80% for the second quarter compared to 2.66% for the first quarter due to the average yield on interest-earning assets increasing by 9 basis points, while the average total cost of funds decreased by 7 basis points, which was positively impacted by an increase in average noninterest-bearing deposits.
The average yield on interest-earning assets increased by 9 basis points to 5.65% for the second quarter from 5.56% in the first quarter due mainly to the increase in the average yield on loans and leases.
The average yield on loans and leases increased by 10 basis points to 6.18% for the second quarter from 6.08% for the first quarter as a result of new originations being at rates higher than the existing portfolio and the change in the mix of loan product balances.
The average total cost of funds decreased by 7 basis points to 2.95% for the second quarter from 3.02% in the first quarter due mainly to decreases in interest-bearing deposits combined with an increase in average noninterest-bearing deposits. The average cost of interest-bearing liabilities increased by 1 basis point to 3.93% for the second quarter from 3.92% in the first quarter. The average total cost of deposits decreased by 6 basis points to 2.60% for the second quarter compared to 2.66% in the first quarter. Average noninterest-bearing deposits increased by $196.6 million for the second quarter compared to the first quarter and average total deposits decreased by $655.5 million.
YTD June 30, 2024 vs YTD June 30, 2023
Net interest income decreased by $6.8 million to $458.6 million for the six months ended June 30, 2024 from $465.3 million for the six months ended June 30, 2023 due to lower interest income on lower interest-earning assets and higher interest expense on deposits, offset partially by lower interest expense on borrowings.
Average interest-earning assets decreased by $6.5 billion to $33.8 billion for the first six months of 2024 due to sales of non-core loan portfolios in the second quarter of 2023 offset partially by the fourth quarter of 2023 acquisition of legacy Banc of California loans, fourth quarter of 2023 securities sales, and lower cash balances which were used to pay down higher-cost borrowings. The net interest margin increased by 39 basis points to 2.73% for the six months ended June 30, 2024 compared to 2.34% for the same period in 2023 due to the average yield on interest-earning assets increasing by 29 basis points, while the average total cost of funds decreased by 8 basis points.
The average yield on interest-earning assets increased by 29 basis points to 5.60% for the first six months of 2024 from 5.31% for the same period in 2023 due mainly to the change in the interest-earning asset mix. This was driven by the increase in the balance of average loans and leases as a percentage of average interest-earning assets to 75% for the six months ended June 30, 2024 from 69% for the six months ended June 30, 2023, the decrease in the balance of average investment securities as a percentage of average interest-earning assets to 14% for the first six months of 2024 from 18% for comparable period in 2023, and the decrease in the balance of average deposits in financial institutions as a percentage of average interest-earning assets to 11% for the six months ended June 30, 2024 from 13% for the same period in 2023.
The average yield on loans and leases increased by 2 basis points to 6.13% for the first six months of 2024 from 6.11% for the same period in 2023 as a result of changes in portfolio mix and higher net accretion of loan discounts/premiums.
The average total cost of funds decreased by 8 basis points to 2.99% for the six months ended June 30, 2024 from 3.07% for the six months ended June 30, 2023 due mainly to changes in the total funds mix. This was driven by the increase in the balance of lower cost average total deposits as a percentage of average total funds to 90% for the first six months of 2024 from 76% for the comparable period in 2023, and the decrease in the balance of higher cost average borrowings as a percentage of average total funds to 8% for the six months ended June 30, 2024 from 22% for the same period in 2023. The average cost of interest-bearing liabilities increased by 6 basis points to 3.93% for the first six months of 2024 from 3.87% for the comparable period in 2023. The average total cost of deposits increased by 36 basis points to 2.63% for the six months ended June 30, 2024 compared to 2.27% for the six months ended June 30, 2023. Average noninterest-bearing deposits decreased by $305.9 million for the first six months of 2024 compared to the same period in 2023 and average total deposits decreased by $545.6 million.
Provision For Credit Losses
Q2-2024 vs Q1-2024
The provision for credit losses was $11.0 million for the second quarter compared to $10.0 million for the first quarter. The $11.0 million second quarter provision was driven by higher net charge-offs and higher qualitative reserves for office loans and other concentrations of credit, offset partially by the reserves released for the CIVIC loans transferred to held for sale. The $10.0 million first quarter provision was driven by an increase in qualitative reserves related to loans secured by office properties and an increase in quantitative reserves due to an increase in nonaccrual and classified loans and leases.
YTD June 30, 2024 vs YTD June 30, 2023
The provision for credit losses increased by $16.0 million to $21.0 million for the six months ended June 30, 2024 compared to $5.0 million for the six months ended June 30, 2023. The higher provision in the 2024 period was generally due to higher net charge-offs and higher qualitative reserves, offset partially by the reserves released for the CIVIC loans transferred to held for sale.
Noninterest Income
Q2-2024 vs Q1-2024
Noninterest income decreased by $4.0 million to $29.8 million for the second quarter due mainly to a decrease of $2.9 million in other income (negative fair value mark on credit-linked notes) and a decrease of $1.9 million in dividends and gains on equity investments (negative fair value mark on Small Business Investment Company (“SBIC”) investments partially offset by higher income distributions from SBIC investments), offset partially by an increase of $1.6 million in gain on sale of loans.
YTD June 30, 2024 vs YTD June 30, 2023
Noninterest income increased by $155.3 million to $63.6 million for the six months ended June 30, 2024 due almost entirely to a decrease in the loss on sale of loans and leases of $156.6 million. The Company sold $529.6 million of loans for a net gain of $0.7 million in the six months ended June 30, 2024 and $5.4 billion of loans for a net loss of $155.9 million in the six months ended June 30, 2023.
Noninterest Expense
Q2-2024 vs Q1-2024
Noninterest expense decreased by $6.9 million to $203.6 million for the second quarter due mainly to decreases of $12.7 million in acquisition, integration and reorganization costs and $6.3 million in compensation expense, offset partially by increases of $6.0 million in insurance and assessments expense and $5.1 million in other expense. The decrease in acquisition, integration and reorganization costs was due to actual amounts for certain expenses being lower than the estimated amounts accrued at merger close. The decrease in compensation expense was mostly due to a lower headcount. The increase in insurance and assessments expense was due to higher assessment rates for both the regular FDIC assessment and the special assessment. The increase in other expense was mostly due to a repurchase reserve recorded for standard representations and warranties associated with the CIVIC loan sale.
YTD June 30, 2024 vs YTD June 30, 2023
Noninterest expense decreased by $1.5 billion to $414.2 million for the six-month period ended June 30, 2024 due mainly to a $1.4 billion goodwill impairment recorded in the same period in 2023.
Income Taxes
Q2-2024 vs Q1-2024
Income tax expense of $14.3 million was recorded for the second quarter resulting in an effective tax rate of 32.0% compared to tax expense of $11.5 million for the first quarter and an effective tax rate of 27.2%. The increase is due primarily to an increase in disallowed executive compensation expense and a higher shortfall on equity compensation expense from second quarter restricted stock vesting.
YTD June 30, 2024 vs YTD June 30, 2023
Income tax expense of $25.9 million was recorded for the six-month period ended June 30, 2024 resulting in an effective tax rate of 29.7% compared to a benefit of $131.9 million for the same period in 2023 and an effective tax rate of 8.7%. Excluding goodwill impairment, the effective tax rate for the six-month period in 2023 was 22.7%. The increase is primarily due to a higher shortfall on equity compensation expense from restricted stock vesting in the second quarter of 2024.
BALANCE SHEET HIGHLIGHTS
June 30,
March 31,
June 30,
Increase (Decrease)
Selected Balance Sheet Items2024
2024
2023
QoQ
YoY
(In thousands)
Cash and cash equivalents$
2,698,810
$
3,085,228
$
6,698,147
$
(386,418
)
$
(3,999,337
)
Securities available-for-sale
2,244,031
2,286,682
4,708,519
(42,651
)
(2,464,488
)
Securities held-to-maturity
2,296,708
2,291,984
2,278,202
4,724
18,506
Loans held for sale
1,935,455
80,752
478,146
1,854,703
1,457,309
Loan and leases held for investment, net of deferred fees
23,228,909
25,473,022
22,258,210
(2,244,113
)
970,699
Total assets
35,243,839
36,073,516
38,337,250
(829,677
)
(3,093,411
)
Noninterest-bearing deposits$
7,825,007
$
7,833,608
$
6,055,358
$
(8,601
)
$
1,769,649
Total deposits
28,804,450
28,892,407
27,897,083
(87,957
)
907,367
Borrowings
1,440,875
2,139,498
6,357,338
(698,623
)
(4,916,463
)
Total liabilities
31,835,991
32,679,366
35,804,055
(843,375
)
(3,968,064
)
Total stockholders' equity
3,407,848
3,394,150
2,533,195
13,698
874,653
Securities
The balance of securities held-to-maturity (“HTM”) remained consistent through the second quarter and totaled $2.3 billion at June 30, 2024. As of June 30, 2024, HTM securities had aggregate unrealized net after-tax losses in AOCI of $169.8 million remaining from the balance established at the time of transfer on June 1, 2022.
Securities available-for-sale (“AFS”) decreased by $42.7 million during the second quarter to $2.2 billion at June 30, 2024. AFS securities had aggregate unrealized net after-tax losses in AOCI of $264.8 million. These AFS unrealized net losses related primarily to changes in overall interest rates and spreads and the resulting impact on valuations.
Loans and Leases
The following table sets forth the composition, by loan category, of our loan and lease portfolio held for investment, net of deferred fees, as of the dates indicated:
Composition of Loans and LeasesJune 30, 2024
March 31, 2024
December 31, 2023
September 30, 2023
June 30, 2023
(Dollars in thousands)
Real estate mortgage: Commercial$
4,722,585
$
4,896,544
$
5,026,497
$
3,526,308
$
3,610,320
Multi-family
5,984,930
6,121,472
6,025,179
5,279,659
5,304,544
Other residential
2,866,085
4,949,383
5,060,309
5,228,524
5,373,178
Total real estate mortgage
13,573,600
15,967,399
16,111,985
14,034,491
14,288,042
Real estate construction and land: Commercial
784,166
775,021
759,585
465,266
415,997
Residential
2,573,431
2,470,333
2,399,684
2,272,271
2,049,526
Total real estate construction and land
3,357,597
3,245,354
3,159,269
2,737,537
2,465,523
Total real estate
16,931,197
19,212,753
19,271,254
16,772,028
16,753,565
Commercial: Asset-based
1,968,713
2,061,016
2,189,085
2,287,893
2,357,098
Venture capital
1,456,122
1,513,641
1,446,362
1,464,160
1,723,476
Other commercial
2,446,974
2,245,910
2,129,860
1,002,377
1,014,212
Total commercial
5,871,809
5,820,567
5,765,307
4,754,430
5,094,786
Consumer
425,903
439,702
453,126
394,488
409,859
Total loans and leases held for investment, net of deferred fees
$
23,228,909
$
25,473,022
$
25,489,687
$
21,920,946
$
22,258,210
Total unfunded loan commitments
$
5,256,473
$
5,482,672
$
5,578,907
$
5,289,221
$
5,845,375
Composition as % of Total Loans and Leases
June 30, 2024
March 31, 2024
December 31, 2023
September 30, 2023
June 30, 2023
Real estate mortgage: Commercial
20
%
19
%
20
%
16
%
16
%
Multi-family
26
%
24
%
23
%
24
%
24
%
Other residential
12
%
19
%
20
%
24
%
24
%
Total real estate mortgage
58
%
62
%
63
%
64
%
64
%
Real estate construction and land: Commercial
4
%
3
%
3
%
2
%
2
%
Residential
11
%
10
%
9
%
10
%
9
%
Total real estate construction and land
15
%
13
%
12
%
12
%
11
%
Total real estate
73
%
75
%
75
%
76
%
75
%
Commercial: Asset-based
8
%
8
%
9
%
10
%
11
%
Venture capital
6
%
6
%
6
%
7
%
8
%
Other commercial
11
%
9
%
8
%
5
%
4
%
Total commercial
25
%
23
%
23
%
22
%
23
%
Consumer
2
%
2
%
2
%
2
%
2
%
Total loans and leases held for investment, net of deferred fees
100
%
100
%
100
%
100
%
100
%
Total loans and leases held for investment, net of deferred fees, decreased by $2.2 billion in the second quarter and totaled $23.2 billion at June 30, 2024. The decrease in loans and leases held for investment was primarily due to $1.9 billion of CIVIC loans transferred to held for sale in the second quarter. Loan fundings were $382.5 million in the second quarter at a weighted-average interest rate of 7.80%.
Deposits and Client Investment Funds
The following table sets forth the composition of our deposits at the dates indicated:
Composition of DepositsJune 30, 2024
March 31, 2024
December 31, 2023
September 30, 2023
June 30, 2023
(Dollars in thousands)
Noninterest-bearing checking$
7,825,007
$
7,833,608
$
7,774,254
$
5,579,033
$
6,055,358
Interest-bearing: Checking
7,309,833
7,836,097
7,808,764
7,038,808
7,112,807
Money market
4,837,025
5,020,110
6,187,889
5,424,347
5,678,323
Savings
2,040,461
2,016,398
1,997,989
1,441,700
897,277
Time deposits: Non-brokered
2,758,067
2,761,836
3,139,270
3,038,005
2,725,265
Brokered
4,034,057
3,424,358
3,493,603
4,076,788
5,428,053
Total time deposits
6,792,124
6,186,194
6,632,873
7,114,793
8,153,318
Total interest-bearing
20,979,443
21,058,799
22,627,515
21,019,648
21,841,725
Total deposits
$
28,804,450
$
28,892,407
$
30,401,769
$
26,598,681
$
27,897,083
Composition as % of Total Deposits
June 30, 2024
March 31, 2024
December 31, 2023
September 30, 2023
June 30, 2023
Noninterest-bearing checking
27
%
27
%
26
%
21
%
22
%
Interest-bearing: Checking
25
%
27
%
26
%
27
%
26
%
Money market
17
%
17
%
20
%
20
%
20
%
Savings
7
%
7
%
6
%
5
%
3
%
Time deposits: Non-brokered
10
%
10
%
10
%
12
%
10
%
Brokered
14
%
12
%
12
%
15
%
19
%
Total time deposits
24
%
22
%
22
%
27
%
29
%
Total interest-bearing
73
%
73
%
74
%
79
%
78
%
Total deposits
100
%
100
%
100
%
100
%
100
%
Total deposits decreased by $88 million during the second quarter to $28.8 billion at June 30, 2024, due primarily to decreases of $526 million in interest checking accounts and $183 million in money market accounts, partially offset by an increase of $610 million in brokered time deposits.
Average noninterest-bearing checking totaled $7.88 billion and represented 27% of total average deposits in the second quarter, compared to 26% in the first quarter.
Uninsured and uncollateralized deposits of $6.8 billion represented 24% of total deposits at June 30, 2024, compared to uninsured and uncollateralized deposits of $7.1 billion or 24% of total deposits at March 31, 2024.
In addition to deposit products, we also offer alternative, non-depository corporate treasury solutions for select clients to invest excess liquidity. These alternative options include investments managed by BofCal Asset Management Inc. (“BAM”), our registered investment advisor subsidiary, and third-party sweep products. Total off-balance sheet client investment funds were $1.2 billion as of June 30, 2024, of which $0.7 billion was managed by BAM.
Borrowings
Borrowings decreased by approximately $700 million from $2.1 billion at March 31, 2024, to $1.4 billion at June 30, 2024 due primarily to the $1.0 billion paydown of the Bank Term Funding Program balance, offset partially by an increase of $300 million in long-term FHLB borrowings.
Equity
During the second quarter, total stockholders’ equity increased by $13.7 million to $3.4 billion and tangible common equity(1) increased by $4.7 million to $2.5 billion at June 30, 2024. The increase in total stockholders’ equity for the second quarter resulted primarily from net earnings in the second quarter, offset partially by dividends declared and paid.
At June 30, 2024, book value per common share increased to $17.23 compared to $17.13 at March 31, 2024, and tangible book value per common share(1) increased to $15.07 compared to $15.03 at March 31, 2024.
(1)
Non-GAAP measures; refer to section 'Non-GAAP Measures'
CAPITAL AND LIQUIDITY
Capital ratios remain strong with total risk-based capital at 16.57% and a tier 1 leverage ratio of 9.51% at June 30, 2024.
The following table sets forth our regulatory capital ratios as of the dates indicated:
June 30,
March 31,
December 31,
September 30,
June 30,
Capital Ratios2024 (1)
2024
2023
2023
2023
Banc of California, Inc. Total risk-based capital ratio16.57
%
16.40
%
16.43
%
17.83
%
17.61
%
Tier 1 risk-based capital ratio12.62
%
12.38
%
12.44
%
13.84
%
13.70
%
Common equity tier 1 capital ratio10.27
%
10.09
%
10.14
%
11.23
%
11.16
%
Tier 1 leverage capital ratio9.51
%
9.12
%
9.00
%
8.65
%
7.76
%
Banc of California Total risk-based capital ratio16.19
%
15.88
%
15.75
%
16.37
%
16.07
%
Tier 1 risk-based capital ratio13.77
%
13.34
%
13.27
%
13.72
%
13.48
%
Common equity tier 1 capital ratio13.77
%
13.34
%
13.27
%
13.72
%
13.48
%
Tier 1 leverage capital ratio10.38
%
9.84
%
9.62
%
8.57
%
7.62
%
____________________(1)
Capital information for June 30, 2024 is preliminary.
At June 30, 2024, immediately available cash and cash equivalents were $2.5 billion, a decrease of $0.4 billion from March 31, 2024. Combined with total available borrowing capacity of $12.3 billion and unpledged AFS securities of $2.1 billion, total available liquidity was $16.9 billion at the end of the second quarter.
CREDIT QUALITY
Asset Quality Information and RatiosJune 30, 2024
March 31, 2024
December 31, 2023
September 30, 2023
June 30, 2023
(Dollars in thousands)
Delinquent loans and leases held for investment: 30 to 89 days delinquent$
27,962
$
178,421
$
113,307
$
49,970
$
57,428
90+ days delinquent
55,792
57,573
30,881
77,327
62,322
Total delinquent loans and leases
$
83,754
$
235,994
$
144,188
$
127,297
$
119,750
Total delinquent loans and leases to loans and leases held for investment
0.36
%
0.93
%
0.57
%
0.58
%
0.54
%
Nonperforming assets, excluding loans held for sale: Nonaccrual loans and leases$
117,070
$
145,785
$
62,527
$
125,396
$
104,886
90+ days delinquent loans and still accruing
-
-
11,750
-
-
Total nonperforming loans and leases ("NPLs")
117,070
145,785
74,277
125,396
104,886
Foreclosed assets, net
13,302
12,488
7,394
6,829
8,426
Total nonperforming assets ("NPAs")
$
130,372
$
158,273
$
81,671
$
132,225
$
113,312
Allowance for loan and lease losses
$
247,762
$
291,503
$
281,687
$
222,297
$
219,234
Allowance for loan and lease losses to NPLs
211.64
%
199.95
%
379.24
%
177.28
%
209.02
%
NPLs to loans and leases held for investment
0.50
%
0.57
%
0.29
%
0.57
%
0.47
%
NPAs to total assets
0.37
%
0.44
%
0.21
%
0.36
%
0.30
%
At June 30, 2024, total delinquent loans and leases were $83.8 million, compared to $236.0 million at March 31, 2024. The $152.2 million decrease in total delinquent loans was due in part to the CIVIC loans transferred to held for sale and included decreases in the 30 to 89 days delinquent category of $69.0 million in commercial real estate mortgage loans, $55.0 million in other residential loans, $11.7 million in asset-based loans, and $8.8 million in multi-family loans. In the 90 or more days delinquent category, there was a $20.3 million decrease in other residential loans that was more than offset by a $21.6 million increase in commercial real estate loans. Total delinquent loans and leases as a percentage of total loans and leases decreased to 0.36% at June 30, 2024, as compared to 0.93% at March 31, 2024.
At June 30, 2024, nonperforming assets were $130.4 million, or 0.37% of total assets, compared to $158.3 million, or 0.44% of total assets, as of March 31, 2024. At June 30, 2024, nonperforming assets included $13.3 million of other real estate owned, consisting entirely of single-family residences.
At June 30, 2024, nonperforming loans were $117.1 million, compared to $145.8 million at March 31, 2024. During the second quarter, nonperforming loans decreased by $28.7 million due to borrowers that became current of $1.3 million, payoffs and paydowns of $24.1 million, net charge-offs of $12.2 million, and transfers to held for sale of $19.5 million, offset partially by additions of $28.3 million.
Nonperforming loans and leases as a percentage of loans and leases held for investment decreased to 0.50% at June 30, 2024 compared to 0.57% at March 31, 2024.
ALLOWANCE FOR CREDIT LOSSES - LOANS
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
Allowance for Credit Losses - Loans2024
2024
2023
2024
2023
(Dollars in thousands)
Allowance for loan and lease losses ("ALLL"): Balance at beginning of period$
291,503
$
281,687
$
210,055
$
281,687
$
200,732
Charge-offs
(58,070
)
(5,014
)
(31,708
)
(63,084
)
(42,105
)
Recoveries
2,329
3,830
887
6,159
2,107
Net charge-offs
(55,741
)
(1,184
)
(30,821
)
(56,925
)
(39,998
)
Provision for loan losses
12,000
11,000
40,000
23,000
58,500
Balance at end of period
$
247,762
$
291,503
$
219,234
$
247,762
$
219,234
Reserve for unfunded loan commitments ("RUC"): Balance at beginning of period
$
28,571
$
29,571
$
75,571
$
29,571
$
91,071
(Negative provision) provision for credit losses
(1,000
)
(1,000
)
(38,000
)
(2,000
)
(53,500
)
Balance at end of period$
27,571
$
28,571
$
37,571
$
27,571
$
37,571
Allowance for credit losses ("ACL") - Loans: Balance at beginning of period
$
320,074
$
311,258
$
285,626
$
311,258
$
291,803
Charge-offs
(58,070
)
(5,014
)
(31,708
)
(63,084
)
(42,105
)
Recoveries
2,329
3,830
887
6,159
2,107
Net charge-offs
(55,741
)
(1,184
)
(30,821
)
(56,925
)
(39,998
)
Provision for credit losses
11,000
10,000
2,000
21,000
5,000
Balance at end of period
$
275,333
$
320,074
$
256,805
$
275,333
$
256,805
ALLL to loans and leases held for investment
1.07
%
1.14
%
0.98
%
1.07
%
0.98
%
ACL to loans and leases held for investment
1.19
%
1.26
%
1.15
%
1.19
%
1.15
%
ACL to NPLs
235.19
%
219.55
%
244.84
%
235.19
%
244.84
%
ACL to NPAs
211.19
%
202.23
%
226.64
%
211.19
%
226.64
%
Annualized net charge-offs to average loans and leases
0.89
%
0.02
%
0.46
%
0.45
%
0.29
%
The allowance for credit losses, which includes the reserve for unfunded loan commitments, totaled $275.3 million, or 1.19% of total loans and leases, at June 30, 2024, compared to $320.1 million, or 1.26% of total loans and leases, at March 31, 2024. The $44.7 million decrease in the allowance was due to net charge-offs of $55.7 million, offset partially by the $11.0 million provision. The total net charge-offs of $55.7 million included $28.7 million of CIVIC charge-offs as a result of the related $1.9 billion CIVIC loans reclassified to held for sale. The ACL coverage of nonperforming loans was 235% at June 30, 2024 compared to 220% at March 31, 2024.
Net charge-offs were 0.89% of average loans and leases (annualized) for the second quarter, compared to 0.02% for the first quarter. The increase in net charge-offs in the second quarter was attributable primarily to $28.7 million of CIVIC charge-offs and two large charge-offs of commercial real estate loans secured by office properties.
Conference Call
The Company will host a conference call to discuss its second quarter 2024 financial results at 10:00 a.m. Pacific Time (PT) on Tuesday, July 23, 2024. Interested parties are welcome to attend the conference call by dialing (888) 317-6003 and referencing event code 3283432. 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 1656401.
About Banc of California, Inc.
Banc of California, Inc. (NYSE: BANC) is a bank holding company with over $35 billion in assets and the parent company of Banc of California. Banc of California is one of the nation’s premier relationship-based business banks, providing banking and treasury management services to small-, middle-market, and venture-backed businesses. Banc of California is the third largest bank headquartered in California and offers a broad range of loan and deposit products and services through more than 90 full-service branches throughout California and in Denver, Colorado, and Durham, North Carolina, as well as through regional offices nationwide. The bank also provides full-stack payment processing solutions through its subsidiary, Deepstack Technologies, and serves the Community Association Management industry nationwide with its technology-forward platform, SmartStreet™. The bank is committed to its local communities by supporting organizations that provide financial literacy and job training, small business support, affordable housing, and more. 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 include, but are not limited to, statements related to our expectations regarding the performance of our business, liquidity and capital ratios and other non-historical statements. Words or phrases such as “believe,” “will,” “should,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “plans,” “strategy,” or similar expressions are intended to identify these forward-looking statements. You are cautioned not to place undue reliance on any forward-looking statements. 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. (the “Company”) with the Securities and Exchange Commission (“SEC”). The Company undertakes no obligation to revise or publicly release any revision or update to these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made, except as required by law.
Factors that could cause actual results to differ materially from the results anticipated or projected include, but are not limited to: (i) changes in general economic conditions, either nationally or in our market areas, including the impact of supply chain disruptions, and the risk of recession or an economic downturn; (ii) changes in the interest rate environment, including the recent and potential future changes in the FRB benchmark rate, which could adversely affect our revenue and expenses, the value of assets and obligations, the realization of deferred tax assets, the availability and cost of capital and liquidity, and the impacts of continuing inflation; (iii) 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 the effectiveness of our underwriting practices and the risk of fraud, any of which may lead to increased loan delinquencies, losses, and non-performing assets, and may result in our allowance for credit losses not being adequate; (iv) fluctuations in the demand for loans, and fluctuations in commercial and residential real estate values in our market area; (v) the quality and composition of our securities portfolio; (vi) our ability to develop and maintain a strong core deposit base, including among our venture banking clients, or other low cost funding sources necessary to fund our activities particularly in a rising or high interest rate environment; (vii) the rapid withdrawal of a significant amount of demand deposits over a short period of time; (viii) the costs and effects of litigation; (ix) risks related to the Company’s acquisitions, including disruption to current plans and operations; difficulties in customer and employee retention; fees, expenses and charges related to these transactions being significantly higher than anticipated; and our inability to achieve expected revenues, cost savings, synergies, and other benefits; and in the case of our recent acquisition of PacWest Bancorp (“PacWest”), reputational risk, regulatory risk and potential adverse reactions of the Company's or PacWest's customers, suppliers, vendors, employees or other business partners; (x) results of examinations by regulatory authorities of the Company and the possibility that any such regulatory authority may, among other things, limit our business activities, restrict our ability to invest in certain assets, refrain from issuing an approval or non-objection to certain capital or other actions, increase our allowance for credit losses, result in write-downs of asset values, restrict our ability or that of our bank subsidiary to pay dividends, or impose fines, penalties or sanctions; (xi) legislative or regulatory changes that adversely affect our business, including changes in tax laws and policies, accounting policies and practices, privacy laws, and regulatory capital or other rules; (xii) the risk that our enterprise risk management framework may not be effective in mitigating risk and reducing the potential for losses; (xiii) errors in estimates of the fair values of certain of our assets and liabilities, which may result in significant changes in valuation; (xiv) failures or security breaches with respect to the network, applications, vendors and computer systems on which we depend, including due to cybersecurity threats; (xv) our ability to attract and retain key members of our senior management team; (xvi) the effects of climate change, severe weather events, natural disasters, pandemics, epidemics and other public health crises, acts of war or terrorism, and other external events on our business; (xvii) the impact of bank failures or other adverse developments at other banks on general depositor and investor sentiment regarding the stability and liquidity of banks; (xviii) the possibility that our recorded goodwill could become impaired, which may have an adverse impact on our earnings and capital; (xix) our existing indebtedness, together with any future incurrence of additional indebtedness, could adversely affect our ability to raise additional capital and to meet our debt obligations; (xx) the risk that we may incur significant losses on future asset sales; and (xxi) other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services and the other risks described in this press release and from time to time in other documents that we file with or furnish to the SEC.
BANC OF CALIFORNIA, INC. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)June 30,
March 31,
December 31,
September 30,
June 30,
2024
2024
2023
2023
2023
(Dollars in thousands)
ASSETS: Cash and due from banks$
203,467
$
199,922
$
202,427
$
182,261
$
208,300
Interest-earning deposits in financial institutions
2,495,343
2,885,306
5,175,149
5,887,406
6,489,847
Total cash and cash equivalents
2,698,810
3,085,228
5,377,576
6,069,667
6,698,147
Securities available-for-sale
2,244,031
2,286,682
2,346,864
4,487,172
4,708,519
Securities held-to-maturity
2,296,708
2,291,984
2,287,291
2,282,586
2,278,202
FRB and FHLB stock
132,380
129,314
126,346
17,250
17,250
Total investment securities
4,673,119
4,707,980
4,760,501
6,787,008
7,003,971
Loans held for sale
1,935,455
80,752
122,757
188,866
478,146
Gross loans and leases held for investment
23,255,297
25,517,028
25,534,730
21,969,789
22,311,292
Deferred fees, net
(26,388
)
(44,006
)
(45,043
)
(48,843
)
(53,082
)
Total loans and leases held for investment, net of deferred fees
23,228,909
25,473,022
25,489,687
21,920,946
22,258,210
Allowance for loan and lease losses
(247,762
)
(291,503
)
(281,687
)
(222,297
)
(219,234
)
Total loans and leases held for investment, net
22,981,147
25,181,519
25,208,000
21,698,649
22,038,976
Equipment leased to others under operating leases
335,968
339,925
344,325
352,330
380,022
Premises and equipment, net
145,734
144,912
146,798
50,236
57,078
Bank owned life insurance
341,779
341,806
339,643
207,946
206,812
Goodwill
215,925
198,627
198,627
-
-
Intangible assets, net
148,894
157,226
165,477
24,192
26,581
Deferred tax asset, net
738,534
741,158
739,111
506,248
426,304
Other assets
1,028,474
1,094,383
1,131,249
992,691
1,021,213
Total assets
$
35,243,839
$
36,073,516
$
38,534,064
$
36,877,833
$
38,337,250
LIABILITIES: Noninterest-bearing deposits
$
7,825,007
$
7,833,608
$
7,774,254
$
5,579,033
$
6,055,358
Interest-bearing deposits
20,979,443
21,058,799
22,627,515
21,019,648
21,841,725
Total deposits
28,804,450
28,892,407
30,401,769
26,598,681
27,897,083
Borrowings
1,440,875
2,139,498
2,911,322
6,294,525
6,357,338
Subordinated debt
939,287
937,717
936,599
870,896
870,378
Accrued interest payable and other liabilities
651,379
709,744
893,609
714,454
679,256
Total liabilities
31,835,991
32,679,366
35,143,299
34,478,556
35,804,055
STOCKHOLDERS' EQUITY: Preferred stock
498,516
498,516
498,516
498,516
498,516
Common stock
1,583
1,583
1,577
1,231
1,233
Class B non-voting common stock
5
5
5
-
-
Non-voting common stock equivalents
101
101
108
-
-
Additional paid-in-capital
3,813,312
3,827,777
3,840,974
2,798,611
2,799,357
Retained (deficit) earnings
(477,010
)
(497,396
)
(518,301
)
(25,399
)
7,892
Accumulated other comprehensive loss, net
(428,659
)
(436,436
)
(432,114
)
(873,682
)
(773,803
)
Total stockholders’ equity
3,407,848
3,394,150
3,390,765
2,399,277
2,533,195
Total liabilities and stockholders’ equity
$
35,243,839
$
36,073,516
$
38,534,064
$
36,877,833
$
38,337,250
Common shares outstanding (1)
168,875,712
169,013,629
168,959,063
78,806,969
78,939,024
____________________
(1)
Common shares outstanding include non-voting common equivalents that are participating securities.
BANC OF CALIFORNIA, INC. CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) (UNAUDITED)Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
2024
2024
2023
2024
2023
(In thousands, except per share amounts)
Interest income: Loans and leases$
388,853
$
385,465
$
408,972
$
774,318
$
839,657
Investment securities
33,836
34,303
44,153
68,139
88,390
Deposits in financial institutions
39,900
58,936
86,763
98,836
129,629
Total interest income
462,589
478,704
539,888
941,293
1,057,676
Interest expense: Deposits
186,106
194,807
178,789
380,913
334,681
Borrowings
30,311
38,124
160,914
68,435
230,036
Subordinated debt
16,684
16,671
14,109
33,355
27,611
Total interest expense
233,101
249,602
353,812
482,703
592,328
Net interest income
229,488
229,102
186,076
458,590
465,348
Provision for credit losses
11,000
10,000
2,000
21,000
5,000
Net interest income after provision for credit losses
218,488
219,102
184,076
437,590
460,348
Noninterest income: Service charges on deposit accounts
4,540
4,705
4,315
9,245
7,888
Other commissions and fees
8,629
8,142
11,241
16,771
21,585
Leased equipment income
11,487
11,716
22,387
23,203
36,244
Gain (loss) on sale of loans and leases
1,135
(448
)
(158,881
)
687
(155,919
)
Dividends and gains on equity investments
1,166
3,068
2,658
4,234
3,756
Warrant (loss) income
(324
)
178
(124
)
(146
)
(457
)
LOCOM HFS adjustment
(38
)
330
(11,943
)
292
(11,943
)
Other income
3,197
6,125
2,265
9,322
7,155
Total noninterest income (loss)
29,792
33,816
(128,082
)
63,608
(91,691
)
Noninterest expense: Compensation
85,914
92,236
82,881
178,150
171,357
Occupancy
17,455
17,968
15,383
35,423
30,450
Information technology and data processing
15,459
15,418
12,887
30,877
25,866
Other professional services
5,183
5,075
9,973
10,258
16,046
Insurance and assessments
26,431
20,461
25,635
46,892
37,352
Intangible asset amortization
8,484
8,404
2,389
16,888
4,800
Leased equipment depreciation
7,511
7,520
9,088
15,031
18,463
Acquisition, integration and reorganization costs
(12,650
)
-
12,394
(12,650
)
20,908
Customer related expense
32,405
30,919
27,302
63,324
51,307
Loan expense
4,332
4,491
5,245
8,823
11,769
Goodwill impairment
-
-
-
-
1,376,736
Other expense
13,119
8,026
117,260
21,145
128,386
Total noninterest expense
203,643
210,518
320,437
414,161
1,893,440
Earnings (loss) before income taxes
44,637
42,400
(264,443
)
87,037
(1,524,783
)
Income tax expense (benefit)
14,304
11,548
(67,029
)
25,852
(131,945
)
Net earnings (loss)
30,333
30,852
(197,414
)
61,185
(1,392,838
)
Preferred stock dividends
9,947
9,947
9,947
19,894
19,894
Net earnings (loss) available to common and equivalent stockholders
$
20,386
$
20,905
$
(207,361
)
$
41,291
$
(1,412,732
)
Basic and diluted earnings (loss) per common share (1)$
0.12
$
0.12
$
(2.67
)
$
0.25
$
(18.21
)
Basic and diluted weighted average number of common shares outstanding (1)
168,432
168,143
77,682
168,287
77,576
____________________
(1)
Common shares include non-voting common equivalents that are participating securities.
BANC OF CALIFORNIA, INC. SELECTED FINANCIAL DATA (UNAUDITED)Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
Profitability and Other Ratios2024
2024
2023
2024
2023
Return on average assets (1)0.34
%
0.33
%
(1.84
)%
0.34
%
(6.55
)%
Return on average equity (1)3.59
%
3.66
%
(29.12
)%
3.63
%
(83.71
)%
Return on average tangible common equity (1)(2)4.14
%
4.30
%
(37.62
)%
4.21
%
(11.00
)%
Dividend payout ratio (3)83.33
%
83.33
%
(0.37
)%
80.00
%
(1.43
)%
Average yield on loans and leases (1)6.18
%
6.08
%
6.08
%
6.13
%
6.11
%
Average yield on interest-earning assets (1)5.65
%
5.56
%
5.28
%
5.60
%
5.31
%
Average cost of interest-bearing deposits (1)3.58
%
3.60
%
3.35
%
3.59
%
3.13
%
Average total cost of deposits (1)2.60
%
2.66
%
2.62
%
2.63
%
2.27
%
Average cost of interest-bearing liabilities (1)3.93
%
3.92
%
4.21
%
3.93
%
3.87
%
Average total cost of funds (1)2.95
%
3.02
%
3.58
%
2.99
%
3.07
%
Net interest spread1.72
%
1.64
%
1.07
%
1.67
%
1.44
%
Net interest margin (1)2.80
%
2.66
%
1.82
%
2.73
%
2.34
%
Noninterest income to total revenue (4)11.49
%
12.86
%
(220.85
)%
12.18
%
(24.54
)%
Noninterest expense to average total assets (1)2.29
%
2.26
%
2.99
%
2.27
%
8.90
%
Loans to deposits ratio87.36
%
88.44
%
81.50
%
87.36
%
81.50
%
Average loans and leases to average deposits87.95
%
86.65
%
98.56
%
87.29
%
93.65
%
Average investment securities to average total assets13.00
%
12.58
%
16.69
%
12.78
%
16.75
%
Average stockholders' equity to average total assets9.48
%
9.03
%
6.32
%
9.25
%
7.82
%
____________________(1)
Annualized.
(2)
Non-GAAP measure.
(3)
Ratio calculated by dividing dividends declared per common and equivalent share by basic earnings per common and equivalent share.
(4)
Total revenue equals the sum of net interest income and noninterest income.
BANC OF CALIFORNIA, INC. AVERAGE BALANCE, AVERAGE YIELD EARNED, AND AVERAGE COST PAID (UNAUDITED)Three Months Ended
June 30, 2024
March 31, 2024
June 30, 2023
Interest
Average
Interest
Average
Interest
Average
Average
Income/
Yield/
Average
Income/
Yield/
Average
Income/
Yield/
Balance
Expense
Cost
Balance
Expense
Cost
Balance
Expense
Cost
(Dollars in thousands)
Assets: Loans and leases (1)$
25,325,578
$
388,853
6.18
%
$
25,518,590
$
385,465
6.08
%
$
26,992,283
$
408,972
6.08
%
Investment securities
4,658,690
33,836
2.92
%
4,721,556
34,303
2.92
%
7,183,986
44,153
2.47
%
Deposits in financial institutions
2,960,292
39,900
5.42
%
4,374,968
58,936
5.42
%
6,835,075
86,763
5.09
%
Total interest-earning assets
32,944,560
462,589
5.65
%
34,615,114
478,704
5.56
%
41,011,344
539,888
5.28
%
Other assets
2,889,907
2,925,593
2,028,985
Total assets$
35,834,467
$
37,540,707
$
43,040,329
Liabilities and Stockholders' Equity: Interest checking$
7,673,902
61,076
3.20
%
$
7,883,177
61,549
3.14
%
$
6,601,034
46,798
2.84
%
Money market
4,962,567
32,776
2.66
%
5,737,837
41,351
2.90
%
6,590,615
47,008
2.86
%
Savings
2,002,670
16,996
3.41
%
2,036,129
18,030
3.56
%
733,818
3,678
2.01
%
Time
6,274,242
75,258
4.82
%
6,108,321
73,877
4.86
%
7,492,094
81,305
4.35
%
Total interest-bearing deposits
20,913,381
186,106
3.58
%
21,765,464
194,807
3.60
%
21,417,561
178,789
3.35
%
Borrowings
2,013,600
30,311
6.05
%
2,892,406
38,124
5.30
%
11,439,742
160,914
5.64
%
Subordinated debt
938,367
16,684
7.15
%
937,005
16,671
7.16
%
869,419
14,109
6.51
%
Total interest-bearing liabilities
23,865,348
233,101
3.93
%
25,594,875
249,602
3.92
%
33,726,722
353,812
4.21
%
Noninterest-bearing demand deposits
7,881,620
7,685,027
5,968,625
Other liabilities
692,149
870,273
625,610
Total liabilities
32,439,117
34,150,175
40,320,957
Stockholders' equity
3,395,350
3,390,532
2,719,372
Total liabilities and stockholders' equity$
35,834,467
$
37,540,707
$
43,040,329
Net interest income$
229,488
$
229,102
$
186,076
Net interest spread1.72
%
1.64
%
1.07
%
Net interest margin2.80
%
2.66
%
1.82
%
Total deposits (2)$
28,795,001
$
186,106
2.60
%
$
29,450,491
$
194,807
2.66
%
$
27,386,186
$
178,789
2.62
%
Total funds (3)$
31,746,968
$
233,101
2.95
%
$
33,279,902
$
249,602
3.02
%
$
39,695,347
$
353,812
3.58
%
(1)
Includes net loan discount accretion of $21.8 million and $22.4 million for the three months ended June 30, 2024 and March 31, 2024 and net loan premium amortization of $1.6 million for the three months ended June 30, 2023.
(2)
Total deposits is the sum of total interest-bearing deposits and noninterest-bearing demand deposits. The cost of total deposits is calculated as annualized interest expense on total deposits divided by average total deposits.
(3)
Total funds is the sum of total interest-bearing liabilities and noninterest-bearing demand deposits. The cost of total funds is calculated as annualized total interest expense divided by average total funds.
BANC OF CALIFORNIA, INC.
AVERAGE BALANCE, AVERAGE YIELD EARNED, AND AVERAGE COST PAID
(UNAUDITED)
Six Months Ended
June 30, 2024
June 30, 2023
Interest
Average
Interest
Average
Average
Income/
Yield/
Average
Income/
Yield/
Balance
Expense
Cost
Balance
Expense
Cost
(Dollars in thousands)
Assets: Loans and leases (1)(2)(3)$
25,422,084
$
774,318
6.13
%
$
27,783,379
$
842,001
6.11
%
Investment securities
4,690,123
68,139
2.92
%
7,187,654
88,390
2.48
%
Deposits in financial institutions
3,667,630
98,836
5.42
%
5,267,361
129,629
4.96
%
Total interest-earning assets (1)
33,779,837
941,293
5.60
%
40,238,394
1,060,020
5.31
%
Other assets
2,907,750
2,666,878
Total assets
$
36,687,587
$
42,905,272
Liabilities and Stockholders' Equity:
Interest checking
$
7,778,540
122,625
3.17
%
$
6,843,720
102,755
3.03
%
Money market
5,350,202
74,127
2.79
%
7,754,868
103,232
2.68
%
Savings
2,019,399
35,026
3.49
%
665,929
4,277
1.30
%
Time
6,191,281
149,135
4.84
%
6,314,566
124,417
3.97
%
Total interest-bearing deposits
21,339,422
380,913
3.59
%
21,579,083
334,681
3.13
%
Borrowings
2,453,003
68,435
5.61
%
8,381,575
230,036
5.53
%
Subordinated debt
937,686
33,355
7.15
%
868,533
27,611
6.41
%
Total interest-bearing liabilities
24,730,111
482,703
3.93
%
30,829,191
592,328
3.87
%
Noninterest-bearing demand deposits
7,783,324
8,089,248
Other liabilities
781,211
631,338
Total liabilities
33,294,646
39,549,777
Stockholders' equity
3,392,941
3,355,495
Total liabilities and stockholders' equity
$
36,687,587
$
42,905,272
Net interest income (1)
$
458,590
$
467,692
Net interest spread (1)
1.67
%
1.44
%
Net interest margin (1)
2.73
%
2.34
%
Total deposits (4)
$
29,122,746
$
380,913
2.63
%
$
29,668,331
$
334,681
2.27
%
Total funds (5)$
32,513,435
$
482,703
2.99
%
$
38,918,439
$
592,328
3.07
%
(1)
Tax equivalent.
(2)
Includes net loan discount accretion of $44.3 million for the six months ended June 30, 2024 and net loan premium amortization of $4.4 million for the six months ended June 30, 2023.
(3)
Includes tax-equivalent adjustments of $0.0 million and $2.3 million for the six months ended June 30, 2024 and 2023 related to tax-exempt income on loans.
The federal statutory tax rate utilized was 21%.
(4)
Total deposits is the sum of total interest-bearing deposits and noninterest-bearing demand deposits.
The cost of total deposits is calculated as annualized interest expense on total deposits divided by average total deposits.
(5)
Total funds is the sum of total interest-bearing liabilities and noninterest-bearing demand deposits.
The cost of total funds is calculated as annualized total interest expense divided by average total funds.
BANC OF CALIFORNIA, INC.
NON-GAAP MEASURES
We refer to certain financial measures that are not recognized under U.S. generally accepted accounting principles (“GAAP”) in this press release, including: tangible assets, tangible common equity, tangible common equity to tangible assets, tangible book value per common share, and return on average tangible common equity 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 assets is calculated by subtracting goodwill and other intangible assets from total assets. Tangible common equity is calculated by subtracting preferred stock, as applicable, from tangible equity. Return on average tangible common equity is calculated by dividing net earnings available to common stockholders, after adjustment for amortization of intangible assets and goodwill impairment, by average tangible common equity. Banking regulators also exclude goodwill and other intangible assets from stockholders' equity when assessing the capital adequacy of a financial institution.
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.
BANC OF CALIFORNIA, INC. NON-GAAP MEASURES (UNAUDITED) Tangible Common Equity to Tangible Assets and Tangible Book Value Per Common ShareJune 30, 2024
March 31, 2024
December 31, 2023
September 30, 2023
June 30, 2023
(Dollars in thousands, except per share amounts) Stockholders' equity$
3,407,848
$
3,394,150
$
3,390,765
$
2,399,277
$
2,533,195
Less: Preferred stock
498,516
498,516
498,516
498,516
498,516
Total common equity
2,909,332
2,895,634
2,892,249
1,900,761
2,034,679
Less: Goodwill and Intangible assets
364,819
355,853
364,104
24,192
26,581
Tangible common equity
$
2,544,513
$
2,539,781
$
2,528,145
$
1,876,569
$
2,008,098
Total assets
$
35,243,839
$
36,073,516
$
38,534,064
$
36,877,833
$
38,337,250
Less: Goodwill and Intangible assets
364,819
355,853
364,104
24,192
26,581
Tangible assets
$
34,879,020
$
35,717,663
$
38,169,960
$
36,853,641
$
38,310,669
Total stockholders' equity to total assets
9.67
%
9.41
%
8.80
%
6.51
%
6.61
%
Tangible common equity to tangible assets
7.30
%
7.11
%
6.62
%
5.09
%
5.24
%
Book value per common share (1)$
17.23
$
17.13
$
17.12
$
24.12
$
25.78
Tangible book value per common share (2)
$
15.07
$
15.03
$
14.96
$
23.81
$
25.44
Common shares outstanding (3)
168,875,712
169,013,629
168,959,063
78,806,969
78,939,024
____________________
(1)
Total common equity divided by common shares outstanding.
(2)
Tangible common equity divided by common shares outstanding.
(3)
Common shares outstanding include non-voting common equivalents that are participating securities.
BANC OF CALIFORNIA, INC. NON-GAAP MEASURES (UNAUDITED)Three Months Ended
Six Months Ended
Return on Average TangibleJune 30,
March 31,
June 30,
June 30,
Common Equity ("ROATCE")2024
2024
2023
2024
2023
(Dollars in thousands)
Net earnings (loss)$
30,333
$
30,852
$
(197,414
)
$
61,185
$
(1,392,838
)
Earnings (loss) before income taxes$
44,637
$
42,400
$
(264,443
)
$
87,037
$
(1,524,783
)
Add: Intangible asset amortization
8,484
8,404
2,389
16,888
4,800
Add: Goodwill impairment
-
-
-
-
1,376,736
Adjusted earnings (loss) before income taxes used for ROATCE
53,121
50,804
(262,054
)
103,925
(143,247
)
Adjusted income tax expense (1)
16,999
13,819
(66,300
)
30,866
(45,839
)
Adjusted net earnings (loss) for ROATCE
36,122
36,985
(195,754
)
73,059
(97,408
)
Less: Preferred stock dividends
9,947
9,947
9,947
19,894
19,894
Adjusted net earnings (loss) available to common and equivalent stockholders for ROATCE
$
26,175
$
27,038
$
(205,701
)
$
53,165
$
(117,302
)
Average stockholders' equity$
3,395,350
$
3,390,532
$
2,719,372
$
3,392,941
$
3,355,495
Less: Average intangible assets
352,934
360,680
27,824
356,807
706,072
Less: Average preferred stock
498,516
498,516
498,516
498,516
498,516
Average tangible common equity
$
2,543,900
$
2,531,336
$
2,193,032
$
2,537,618
$
2,150,907
Return on average equity (2)
3.59
%
3.66
%
(29.12
)%
3.63
%
(83.71
)%
ROATCE (3)
4.14
%
4.30
%
(37.62
)%
4.21
%
(11.00
)%
____________________(1)
Effective tax rates of 32.0%, 27.2%, and 25.3% used for the three months ended June 30, 2024, March 31, 2024, and June 30, 2023, respectively. Effective tax rate of 29.7% used for the six months ended June 30, 2024. Adjusted effective tax rate of 32.0% used to normalize the effect of goodwill impairment for the six months ended June 30, 2023.
(2)
Annualized net earnings (loss) divided by average stockholders' equity.
(3)
Annualized adjusted net earnings (loss) available to common and equivalent stockholders for ROATCE divided by average tangible common equity.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240723125107/en/
Investor Relations Inquiries: Banc of California, Inc. (855) 361-2262 Jared Wolff, (310) 424-1230 Joe Kauder, (310) 844-5224 Ann DeVries, (646) 376-7011 Media Contact: Debora Vrana, Banc of California (213) 533-3122 Deb.Vrana@bancofcal.com
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