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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% | 16.99 | 1 | 13:29:50 |
From Oct 2024 to Dec 2024
Banc of California, Inc. (NYSE: BANC):
$(0.01) Loss Per Share $0.25 Adjusted Earnings Per Share(1)
$17.75 Book Value Per Share $15.63 Tangible Book Value Per Share(1)
10.45% CET1 Ratio
28% Average Noninterest-Bearing Deposits to Average Total Deposits
Banc of California, Inc. (NYSE: BANC) (“Banc of California” or the “Company”), the parent company of wholly-owned subsidiary Banc of California (the “Bank”), today reported financial results for the third quarter ended September 30, 2024. The Company reported a net loss available to common and equivalent stockholders of $1.2 million, or a loss of $0.01 per diluted common share, for the third quarter of 2024. On an adjusted basis, net earnings available to common and equivalent stockholders were $41.4 million, or $0.25 per diluted common share.(1) This compares to 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. The third quarter of 2024 includes $60 million of pre-tax losses from repositioning a portion of the securities portfolio.
Third quarter highlights include:
(1)
Non-GAAP measure; refer to section 'Non-GAAP Measures'
Jared Wolff, President & CEO of Banc of California, commented, “During the third quarter, we made significant progress growing our core earnings and we achieved our year-end targets for net interest margin, noninterest expenses, and balance sheet metrics a quarter early. We strengthened our franchise through several strategic balance sheet repositioning actions including completing the sale of $1.95 billion of Civic loans, which had a positive impact on our capital and liquidity. We leveraged the proceeds and capital to reposition a portion of our securities portfolio and significantly reduce higher cost funding, which resulted in strong net interest margin expansion and increased our tangible book value per share and capital position. Furthermore, we continued to make solid progress reducing noninterest expenses, completed our core system conversion successfully, and consolidated 12 branches during the quarter.”
Mr. Wolff continued, “With these major balance sheet and operational initiatives behind us, Banc of California is now at an inflection point, shifting our focus from transforming our internal infrastructure to external growth. We are capitalizing on the strength of the franchise and balance sheet we have built and the exceptional customer experience we can offer to expand existing relationships and add attractive new client relationships. As economic conditions improve, we believe we are well positioned to increase our market share, expand our client roster, generate profitable growth and continue to enhance the long-term value of our franchise.”
INCOME STATEMENT HIGHLIGHTS
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
Summary Income Statement2024
2024
2023
2024
2023
(In thousands)
Total interest income$
446,893
$
462,589
$
446,084
$
1,388,186
$
1,503,760
Total interest expense
214,718
233,101
315,355
697,421
907,683
Net interest income
232,175
229,488
130,729
690,765
596,077
Provision for credit losses
9,000
11,000
-
30,000
5,000
(Loss) gain on sale of loans
(62
)
1,135
(1,901
)
625
(157,820
)
Loss on sale of securities
(59,946
)
-
-
(59,946
)
-
Other noninterest income
44,556
28,657
45,709
107,477
109,937
Total noninterest (loss) income
(15,452
)
29,792
43,808
48,156
(47,883
)
Total revenue
216,723
259,280
174,537
738,921
548,194
Goodwill impairment
-
-
-
-
1,376,736
Acquisition, integration and reorganization costs
(510
)
(12,650
)
9,925
(13,160
)
30,833
Other noninterest expense
196,719
216,293
191,178
623,530
686,974
Total noninterest expense
196,209
203,643
201,103
610,370
2,094,543
Earnings (loss) before income taxes
11,514
44,637
(26,566
)
98,551
(1,551,349
)
Income tax expense (benefit)
2,730
14,304
(3,222
)
28,582
(135,167
)
Net earnings (loss)
8,784
30,333
(23,344
)
69,969
(1,416,182
)
Preferred stock dividends
9,947
9,947
9,947
29,841
29,841
Net (loss) earnings available to common and equivalent stockholders
$
(1,163
)
$
20,386
$
(33,291
)
$
40,128
$
(1,446,023
)
Net Interest Income
Q3-2024 vs Q2-2024
Net interest income increased by $2.7 million to $232.2 million for the third quarter from $229.5 million for the second 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 $1.4 billion to $31.6 billion for the third quarter due mainly to the sale in July 2024 of $1.95 billion of Civic loans which had been moved to held for sale during the second quarter of 2024. The proceeds of the sale were used primarily to pay down higher-cost brokered deposits and borrowings. The net interest margin increased by 13 basis points to 2.93% for the third quarter compared to 2.80% for the second quarter due to a 2 basis point decrease in the average yield on interest-earning assets being more than offset by a 13 basis point decrease in the average total cost of funds, which was positively impacted by a decrease in average borrowings.
The average yield on interest-earning assets decreased by 2 basis points to 5.63% for the third quarter from 5.65% in the second quarter due mainly to the average yield on deposits in financial institutions decreasing by 3 basis points and the average yield on loans and leases being flat.
The average yield on loans and leases was unchanged at 6.18% for the third quarter compared to the second quarter as a result of new originations being at rates higher than the existing portfolio, slightly higher loan discount accretion, and the change in the mix of loan product balances including the impact of the sale of the $1.95 billion Civic loan portfolio.
The average total cost of funds decreased by 13 basis points to 2.82% for the third quarter from 2.95% in the second quarter due mainly to lower market interest rates and reduced average borrowings. The average cost of interest-bearing liabilities decreased by 13 basis points to 3.80% for the third quarter from 3.93% in the second quarter. The average total cost of deposits decreased by 6 basis points to 2.54% for the third quarter compared to 2.60% in the second quarter. Average noninterest-bearing deposits decreased by $35.0 million for the third quarter compared to the second quarter, average total deposits decreased by $474.2 million, and average borrowings decreased by $950.1 million.
YTD September 30, 2024 vs YTD September 30, 2023
Net interest income increased by $94.7 million to $690.8 million for the nine months ended September 30, 2024 from $596.1 million for the nine months ended September 30, 2023 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 $5.7 billion to $33.0 billion for the first nine months of 2024 due to lower average balances in loans and leases, investments securities, and deposits in financial institutions. Average loans and leases decreased by $1.0 billion primarily due to the sale in July 2024 of $1.95 billion of Civic loans which had been moved to held for sale during the second quarter of 2024 and the sales of non-core loan portfolios in the second quarter of 2023, offset partially by the acquisition of legacy Banc of California loans completed in the fourth quarter of 2023. Average investment securities decreased by $2.4 billion mostly due to securities sales completed in the fourth quarter of 2023. Average deposits in financial institutions decreased by $2.3 billion due to lower cash balances which were used to pay down higher-cost borrowings. The net interest margin increased by 72 basis points to 2.79% for the nine months ended September 30, 2024 compared to 2.07% for the same period in 2023 due to the average yield on interest-earning assets increasing by 41 basis points, while the average total cost of funds decreased by 31 basis points.
The average yield on interest-earning assets increased by 41 basis points to 5.61% for the first nine months of 2024 from 5.20% 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 nine months ended September 30, 2024 from 67% for the nine months ended September 30, 2023, the decrease in the balance of average investment securities as a percentage of average interest-earning assets to 14% for the first nine months of 2024 from 18% for the same period in 2023, and the decrease in the balance of average deposits in financial institutions as a percentage of average interest-earning assets to 10% for the nine months ended September 30, 2024 from 15% for the same period in 2023.
The average yield on loans and leases increased by 19 basis points to 6.14% for the first nine months of 2024 from 5.95% for the same period in 2023 as a result of changes in portfolio mix and higher net accretion of loan discounts.
The average total cost of funds decreased by 31 basis points to 2.93% for the nine months ended September 30, 2024 from 3.24% for the nine months ended September 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 91% for the first nine months of 2024 from 77% for the same period in 2023, and the decrease in the balance of higher cost average borrowings as a percentage of average total funds to 6% for the nine months ended September 30, 2024 from 21% for the same period in 2023. The average cost of interest-bearing liabilities decreased by 14 basis points to 3.89% for the first nine months of 2024 from 4.03% for the same period in 2023. The average total cost of deposits increased by 10 basis points to 2.60% for the nine months ended September 30, 2024 compared to 2.50% for the nine months ended September 30, 2023. Average noninterest-bearing deposits increased by $480.9 million for the first nine months of 2024 compared to the same period in 2023 and average total deposits decreased by $60.3 million.
Provision For Credit Losses
Q3-2024 vs Q2-2024
The provision for credit losses was $9.0 million for the third quarter compared to $11.0 million for the second quarter. The $9.0 million third quarter provision was driven primarily by increases in qualitative reserves, for loans secured by office properties and concentrations of credit, and specific reserves for nonperforming loan downgrades. 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.
YTD September 30, 2024 vs YTD September 30, 2023
The provision for credit losses increased by $25.0 million to $30.0 million for the nine months ended September 30, 2024 compared to $5.0 million for the nine months ended September 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 in the second quarter of 2024 and sold in the third quarter of 2024.
Noninterest Income
Q3-2024 vs Q2-2024
Noninterest income decreased by $45.2 million to a loss of $15.5 million for the third quarter due mainly to a $60 million loss on the sale of $742 million of securities in the third quarter of 2024, offset partially by a $7.5 million increase in other income and a $5.7 million increase in leased equipment income. The increase in other income was due primarily to a $6.8 million increase in the positive fair value mark on the credit-linked notes. The increase in leased equipment income was due mostly to higher gains from early lease terminations and sale of leased assets.
YTD September 30, 2024 vs YTD September 30, 2023
Noninterest income increased by $96.0 million to $48.2 million for the nine months ended September 30, 2024 due mostly to a decrease in the loss on sale of loans and leases of $158.4 million, offset partially by a $60 million loss on the sale of $742 million of securities in the third quarter of 2024. The Company sold $2.5 billion of loans for a net gain of $0.6 million in the nine months ended September 30, 2024 and $6.1 billion of loans for a net loss of $157.8 million in the nine months ended September 30, 2023.
Noninterest Expense
Q3-2024 vs Q2-2024
Noninterest expense decreased by $7.4 million to $196.2 million for the third quarter due mainly to decreases of $13.7 million in insurance and assessments expense and $5.8 million in other expense, offset partially by a $12.1 million increase in acquisition, integration and reorganization costs. The decrease in insurance and assessments expense was due to lower assessment rates for both the regular FDIC assessment and the special assessment. The decrease in other expense was mostly due to a repurchase reserve recorded in the second quarter of 2024 for standard representations and warranties associated with the Civic loan sale. The increase in acquisition, integration and reorganization costs was due mainly to an adjustment of $12.7 million in the second quarter of 2024 due to actual amounts for certain expenses being lower than the estimated amounts accrued at merger close.
YTD September 30, 2024 vs YTD September 30, 2023
Noninterest expense decreased by $1.5 billion to $610.4 million for the nine-month period ended September 30, 2024 due mainly to a $1.4 billion goodwill impairment recorded in the same period in 2023.
Income Taxes
Q3-2024 vs Q2-2024
Income tax expense of $2.7 million was recorded for the third quarter resulting in an effective tax rate of 23.7% compared to income tax expense of $14.3 million for the second quarter and an effective tax rate of 32.0%. The lower third quarter effective tax rate was due primarily to a true-up to the full year tax rate, offset partially by an increase in disallowed executive compensation expense and loss of tax benefits with respect to restricted stock vested during the second quarter.
YTD September 30, 2024 vs YTD September 30, 2023
Income tax expense of $28.6 million was recorded for the nine-month period ended September 30, 2024 resulting in an effective tax rate of 29.0% compared to an income tax benefit of $135.2 million for the same period in 2023 and an effective tax rate of 8.7%. Excluding goodwill impairment, the effective tax rate for the nine-month period in 2023 was 21.7%. The lower effective tax rate in 2023 was due primarily to higher FDIC insurance premiums in relation to the reported net loss for 2023.
BALANCE SHEET HIGHLIGHTS
September 30,
June 30,
September 30,
Increase (Decrease)
Selected Balance Sheet Items2024
2024
2023
QoQ
YoY
(In thousands)
Cash and cash equivalents$
2,554,227
$
2,698,810
$
6,069,667
$
(144,583
)
$
(3,515,440
)
Securities available-for-sale
2,300,284
2,244,031
4,487,172
56,253
(2,186,888
)
Securities held-to-maturity
2,301,263
2,296,708
2,282,586
4,555
18,677
Loans held for sale
28,639
1,935,455
188,866
(1,906,816
)
(160,227
)
Loans and leases held for investment, net of deferred fees
23,527,777
23,228,909
21,920,946
298,868
1,606,831
Total assets
33,432,613
35,243,839
36,877,833
(1,811,226
)
(3,445,220
)
Noninterest-bearing deposits$
7,811,796
$
7,825,007
$
5,579,033
$
(13,211
)
$
2,232,763
Total deposits
26,828,269
28,804,450
26,598,681
(1,976,181
)
229,588
Borrowings
1,591,833
1,440,875
6,294,525
150,958
(4,702,692
)
Total liabilities
29,936,415
31,835,991
34,478,556
(1,899,576
)
(4,542,141
)
Total stockholders' equity
3,496,198
3,407,848
2,399,277
88,350
1,096,921
Securities
The balance of securities held-to-maturity (“HTM”) remained consistent through the third quarter and totaled $2.3 billion at September 30, 2024. As of September 30, 2024, HTM securities had aggregate unrealized net after-tax losses in accumulated other comprehensive income (loss) (“AOCI”) of $163.9 million remaining from the balance established at the time of transfer on June 1, 2022.
Securities available-for-sale (“AFS”) increased by $56.3 million during the third quarter to $2.3 billion at September 30, 2024. AFS securities had aggregate unrealized net after-tax losses in AOCI of $161.7 million. These AFS unrealized net losses related primarily to changes in overall interest rates and spreads and the resulting impact on valuations.
Loans and Leases
The following table sets forth the composition, by loan category, of our loan and lease portfolio held for investment, net of deferred fees, as of the dates indicated:
September 30,
June 30,
March 31,
December 31,
September 30,
Composition of Loans and Leases2024
2024
2024
2023
2023
(Dollars in thousands)
Real estate mortgage: Commercial$
4,557,939
$
4,722,585
$
4,896,544
$
5,026,497
$
3,526,308
Multi-family
6,009,280
5,984,930
6,121,472
6,025,179
5,279,659
Other residential
2,767,187
2,866,085
4,949,383
5,060,309
5,228,524
Total real estate mortgage
13,334,406
13,573,600
15,967,399
16,111,985
14,034,491
Real estate construction and land: Commercial
836,902
784,166
775,021
759,585
465,266
Residential
2,622,507
2,573,431
2,470,333
2,399,684
2,272,271
Total real estate construction and land
3,459,409
3,357,597
3,245,354
3,159,269
2,737,537
Total real estate
16,793,815
16,931,197
19,212,753
19,271,254
16,772,028
Commercial: Asset-based
2,115,311
1,968,713
2,061,016
2,189,085
2,287,893
Venture capital
1,353,626
1,456,122
1,513,641
1,446,362
1,464,160
Other commercial
2,850,535
2,446,974
2,245,910
2,129,860
1,002,377
Total commercial
6,319,472
5,871,809
5,820,567
5,765,307
4,754,430
Consumer
414,490
425,903
439,702
453,126
394,488
Total loans and leases held for investment, net of deferred fees
$
23,527,777
$
23,228,909
$
25,473,022
$
25,489,687
$
21,920,946
Total unfunded loan commitments
$
5,008,449
$
5,256,473
$
5,482,672
$
5,578,907
$
5,289,221
Composition as % of Total
September 30,
June 30,
March 31,
December 31,
September 30,
Loans and Leases2024
2024
2024
2023
2023
Real estate mortgage: Commercial
19
%
20
%
19
%
20
%
16
%
Multi-family
25
%
26
%
24
%
23
%
24
%
Other residential
12
%
12
%
19
%
20
%
24
%
Total real estate mortgage
56
%
58
%
62
%
63
%
64
%
Real estate construction and land: Commercial
4
%
4
%
3
%
3
%
2
%
Residential
11
%
11
%
10
%
9
%
10
%
Total real estate construction and land
15
%
15
%
13
%
12
%
12
%
Total real estate
71
%
73
%
75
%
75
%
76
%
Commercial: Asset-based
9
%
8
%
8
%
9
%
10
%
Venture capital
6
%
6
%
6
%
6
%
7
%
Other commercial
12
%
11
%
9
%
8
%
5
%
Total commercial
27
%
25
%
23
%
23
%
22
%
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, increased by $298.9 million in the third quarter and totaled $23.5 billion at September 30, 2024. The increase in loans and leases held for investment was due primarily to increased balances in the lender finance, warehouse lending, and real estate construction portfolios. Loan fundings were $699.6 million in the third quarter at a weighted average interest rate of 8.29%.
Credit Quality
September 30,
June 30,
March 31,
December 31,
September 30,
Asset Quality Information and Ratios2024
2024
2024
2023
2023
(Dollars in thousands)
Delinquent loans and leases held for investment: 30 to 89 days delinquent$
52,927
$
27,962
$
178,421
$
113,307
$
49,970
90+ days delinquent
72,037
55,792
57,573
30,881
77,327
Total delinquent loans and leases
$
124,964
$
83,754
$
235,994
$
144,188
$
127,297
Total delinquent loans and leases to loans and leases held for investment
0.53
%
0.36
%
0.93
%
0.57
%
0.58
%
Nonperforming assets, excluding loans held for sale: Nonaccrual loans and leases$
168,341
$
117,070
$
145,785
$
62,527
$
125,396
90+ days delinquent loans and still accruing
-
-
-
11,750
-
Total nonperforming loans and leases ("NPLs")
168,341
117,070
145,785
74,277
125,396
Foreclosed assets, net
8,661
13,302
12,488
7,394
6,829
Total nonperforming assets ("NPAs")
$
177,002
$
130,372
$
158,273
$
81,671
$
132,225
Classified loans and leases held for investment
$
533,591
$
415,498
$
366,729
$
228,417
$
211,095
Allowance for loan and lease losses
$
254,345
$
247,762
$
291,503
$
281,687
$
222,297
Allowance for loan and lease losses to NPLs
151.09
%
211.64
%
199.95
%
379.24
%
177.28
%
NPLs to loans and leases held for investment
0.72
%
0.50
%
0.57
%
0.29
%
0.57
%
NPAs to total assets
0.53
%
0.37
%
0.44
%
0.21
%
0.36
%
Classified loans and leases to loans and leases held for investment
2.27
%
1.79
%
1.44
%
0.90
%
0.96
%
During the third quarter, we continued to remain conservative on risk rating of loans and leases. Increases to classified loans and leases that remained on accrual status resulted from downward migration for groups of loans and leases where performance deteriorated or increased borrower financial information was determined to be necessary. Nonaccrual loans and leases increased in the quarter primarily due to two commercial loans and one legacy Civic loan that migrated to nonperforming status. Delinquencies were also impacted by the aforementioned nonperforming loans. Our overall loan portfolio continues to benefit from strong underwriting, borrower strength and good credit metrics.
At September 30, 2024, total delinquent loans and leases were $125.0 million, compared to $83.8 million at June 30, 2024. The $41.2 million increase in total delinquent loans was due mainly to increases in the 30 to 89 days delinquent category of $17.1 million in commercial real estate mortgage loans and $9.1 million in other commercial loans. In the 90 or more days delinquent category, there was a $20.5 million increase in other residential real estate mortgage loans, offset partially by a $3.3 million decrease in other commercial loans. Total delinquent loans and leases as a percentage of total loans and leases increased to 0.53% at September 30, 2024, as compared to 0.36% at June 30, 2024.
At September 30, 2024, nonperforming assets were $177.0 million, or 0.53% of total assets, compared to $130.4 million, or 0.37% of total assets, as of June 30, 2024. At September 30, 2024, nonperforming assets included $8.7 million of foreclosed assets, consisting entirely of single-family residences.
At September 30, 2024, nonperforming loans were $168.3 million, compared to $117.1 million at June 30, 2024. During the third quarter, nonperforming loans increased by $51.3 million due to additions of $69.5 million, offset partially by borrowers that became current of $1.2 million, charge-offs of $1.1 million, and payoffs and paydowns of $15.9 million. The additions were driven primarily by two commercial loans and one Civic loan.
Nonperforming loans and leases as a percentage of loans and leases held for investment increased to 0.72% at September 30, 2024 compared to 0.50% at June 30, 2024.
Allowance for Credit Losses – Loans
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
Allowance for Credit Losses - Loans2024
2024
2023
2024
2023
(Dollars in thousands)
Allowance for loan and lease losses ("ALLL"): Balance at beginning of period$
247,762
$
291,503
$
219,234
$
281,687
$
200,732
Charge-offs
(4,163
)
(58,070
)
(6,695
)
(67,247
)
(48,800
)
Recoveries
1,746
2,329
1,758
7,905
3,865
Net charge-offs
(2,417
)
(55,741
)
(4,937
)
(59,342
)
(44,935
)
Provision for loan losses
9,000
12,000
8,000
32,000
66,500
Balance at end of period
$
254,345
$
247,762
$
222,297
$
254,345
$
222,297
Reserve for unfunded loan commitments ("RUC"): Balance at beginning of period
$
27,571
$
28,571
$
37,571
$
29,571
$
91,071
(Negative provision) provision for credit losses
-
(1,000
)
(8,000
)
(2,000
)
(61,500
)
Balance at end of period$
27,571
$
27,571
$
29,571
$
27,571
$
29,571
Allowance for credit losses ("ACL") - Loans: Balance at beginning of period
$
275,333
$
320,074
$
256,805
$
311,258
$
291,803
Charge-offs
(4,163
)
(58,070
)
(6,695
)
(67,247
)
(48,800
)
Recoveries
1,746
2,329
1,758
7,905
3,865
Net charge-offs
(2,417
)
(55,741
)
(4,937
)
(59,342
)
(44,935
)
Provision for credit losses
9,000
11,000
-
30,000
5,000
Balance at end of period
$
281,916
$
275,333
$
251,868
$
281,916
$
251,868
ALLL to loans and leases held for investment
1.08
%
1.07
%
1.01
%
1.08
%
1.01
%
ACL to loans and leases held for investment
1.20
%
1.19
%
1.15
%
1.20
%
1.15
%
ACL to NPLs
167.47
%
235.19
%
200.86
%
167.47
%
200.86
%
ACL to NPAs
159.27
%
211.19
%
190.48
%
159.27
%
190.48
%
Annualized net charge-offs to average loans and leases
0.04
%
0.89
%
0.09
%
0.32
%
0.23
%
The allowance for credit losses, which includes the reserve for unfunded loan commitments, totaled $281.9 million, or 1.20% of total loans and leases, at September 30, 2024, compared to $275.3 million, or 1.19% of total loans and leases, at June 30, 2024. The $6.6 million increase in the allowance was due to the $9.0 million provision, offset partially by net charge-offs of $2.4 million. The ACL coverage of nonperforming loans was 167% at September 30, 2024 compared to 235% at June 30, 2024.
Net charge-offs were 0.04% of average loans and leases (annualized) for the third quarter, compared to 0.89% for the second quarter. The decrease in net charge-offs in the third quarter was attributable primarily to the second quarter $28.7 million of Civic charge-offs as a result of the related $1.9 billion of Civic loans reclassified to held for sale and two large charge-offs of commercial real estate loans secured by office properties.
Deposits and Client Investment Funds
The following table sets forth the composition of our deposits at the dates indicated:
September 30,
June 30,
March 31,
December 31,
September 30,
Composition of Deposits2024
2024
2024
2023
2023
(Dollars in thousands)
Noninterest-bearing checking$
7,811,796
$
7,825,007
$
7,833,608
$
7,774,254
$
5,579,033
Interest-bearing: Checking
7,539,899
7,309,833
7,836,097
7,808,764
7,038,808
Money market
5,039,607
4,837,025
5,020,110
6,187,889
5,424,347
Savings
1,992,364
2,040,461
2,016,398
1,997,989
1,441,700
Time deposits: Non-brokered
2,451,340
2,758,067
2,761,836
3,139,270
3,038,005
Brokered
1,993,263
4,034,057
3,424,358
3,493,603
4,076,788
Total time deposits
4,444,603
6,792,124
6,186,194
6,632,873
7,114,793
Total interest-bearing
19,016,473
20,979,443
21,058,799
22,627,515
21,019,648
Total deposits
$
26,828,269
$
28,804,450
$
28,892,407
$
30,401,769
$
26,598,681
September 30,
June 30,
March 31,
December 31,
September 30,
Composition as % of Total Deposits2024
2024
2024
2023
2023
Noninterest-bearing checking
29
%
27
%
27
%
26
%
21
%
Interest-bearing: Checking
28
%
25
%
27
%
26
%
27
%
Money market
19
%
17
%
17
%
20
%
20
%
Savings
7
%
7
%
7
%
6
%
5
%
Time deposits: Non-brokered
9
%
10
%
10
%
10
%
12
%
Brokered
8
%
14
%
12
%
12
%
15
%
Total time deposits
17
%
24
%
22
%
22
%
27
%
Total interest-bearing
71
%
73
%
73
%
74
%
79
%
Total deposits
100
%
100
%
100
%
100
%
100
%
Total deposits decreased by $2.0 billion during the third quarter to $26.8 billion at September 30, 2024, due primarily to a decrease in brokered time deposits.
Noninterest-bearing checking totaled $7.81 billion and represented 29% of total deposits at September 30, 2024, compared to $7.83 billion, or 27% of total deposits, at June 30, 2024.
Uninsured and uncollateralized deposits of $6.7 billion represented 25% of total deposits at September 30, 2024 compared to uninsured and uncollateralized deposits of $6.8 billion or 24% of total deposits at June 30, 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 $1.3 billion as of September 30, 2024, of which $0.6 billion was managed by BAM.
Borrowings
Borrowings increased by approximately $151 million to $1.6 billion at September 30, 2024 from $1.4 billion at June 30, 2024. Higher borrowings included the addition of a $500 million long-term Federal Home Loan Bank (“FHLB”) advance (maturing in 10 years but callable by the FHLB after 2 years) offset partially by the $545 million payoff of the Bank Term Funding Program balance.
Equity
During the third quarter, total stockholders’ equity increased by $88.4 million to $3.5 billion and tangible common equity(1) increased by $95.8 million to $2.6 billion at September 30, 2024. The increase in total stockholders’ equity for the third quarter resulted primarily from a decrease in the unrealized after-tax net loss in AOCI for AFS securities of $103.0 million and net earnings of $8.8 million, partially offset by common and preferred stock dividends of $26.3 million.
At September 30, 2024, book value per common share increased to $17.75 compared to $17.23 at June 30, 2024, and tangible book value per common share(1) increased to $15.63 compared to $15.07 at June 30, 2024.
(1)
Non-GAAP measures; refer to section 'Non-GAAP Measures'
CAPITAL AND LIQUIDITY
Capital ratios remain strong with total risk-based capital at 16.98% and a tier 1 leverage ratio of 9.83% at September 30, 2024.
The following table sets forth our regulatory capital ratios as of the dates indicated:
September 30,
June 30,
March 31,
December 31,
September 30,
Capital Ratios2024 (1)
2024
2024
2023
2023
Banc of California, Inc. Total risk-based capital ratio16.98
%
16.57
%
16.40
%
16.43
%
17.83
%
Tier 1 risk-based capital ratio12.87
%
12.62
%
12.38
%
12.44
%
13.84
%
Common equity tier 1 capital ratio10.45
%
10.27
%
10.09
%
10.14
%
11.23
%
Tier 1 leverage capital ratio9.83
%
9.51
%
9.12
%
9.00
%
8.65
%
Banc of California Total risk-based capital ratio16.59
%
16.19
%
15.88
%
15.75
%
16.37
%
Tier 1 risk-based capital ratio14.07
%
13.77
%
13.34
%
13.27
%
13.72
%
Common equity tier 1 capital ratio14.07
%
13.77
%
13.34
%
13.27
%
13.72
%
Tier 1 leverage capital ratio10.74
%
10.38
%
9.84
%
9.62
%
8.57
%
____________________(1)
Capital information for September 30, 2024 is preliminary.
At September 30, 2024, immediately available cash and cash equivalents were $2.4 billion, a decrease of $143.9 million from June 30, 2024. Combined with total available borrowing capacity of $11.7 billion and unpledged AFS securities of $2.1 billion, total available liquidity was $16.2 billion at the end of the third quarter.
Conference Call
The Company will host a conference call to discuss its third quarter 2024 financial results at 10:00 a.m. Pacific Time (PT) on Tuesday, October 22, 2024. Interested parties are welcome to attend the conference call by dialing (888) 317-6003 and referencing event code 6084667. 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 8866602.
About Banc of California, Inc.
Banc of California, Inc. (NYSE: BANC) is a bank holding company with over $33 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 80 full-service branches located 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 and Other Matters
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 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.
Non-GAAP Financial Measures
Included in this press release are certain non-GAAP financial measures, such as tangible assets, tangible equity to tangible assets, tangible book value per common share, adjusted net earnings (loss), return on average tangible common equity, and adjusted return on average tangible common equity, designed to complement the financial information presented in accordance with U.S. GAAP because management believes such measures are useful to investors. These non-GAAP financial measures should be considered only as supplemental to, and not superior to, financial measures provided in accordance with GAAP. Please refer to the “Non-GAAP Measures” section of this release for additional detail including reconciliations of the non-GAAP financial measures included in this press release to the most directly comparable financial measures prepared in accordance with GAAP.
BANC OF CALIFORNIA, INC. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)September 30,
June 30,
March 31,
December 31,
September 30,
2024
2024
2024
2023
2023
(Dollars in thousands)
ASSETS: Cash and due from banks$
251,869
$
203,467
$
199,922
$
202,427
$
182,261
Interest-earning deposits in financial institutions
2,302,358
2,495,343
2,885,306
5,175,149
5,887,406
Total cash and cash equivalents
2,554,227
2,698,810
3,085,228
5,377,576
6,069,667
Securities available-for-sale
2,300,284
2,244,031
2,286,682
2,346,864
4,487,172
Securities held-to-maturity
2,301,263
2,296,708
2,291,984
2,287,291
2,282,586
FRB and FHLB stock
145,123
132,380
129,314
126,346
17,250
Total investment securities
4,746,670
4,673,119
4,707,980
4,760,501
6,787,008
Loans held for sale
28,639
1,935,455
80,752
122,757
188,866
Gross loans and leases held for investment
23,553,534
23,255,297
25,517,028
25,534,730
21,969,789
Deferred fees, net
(25,757
)
(26,388
)
(44,006
)
(45,043
)
(48,843
)
Total loans and leases held for investment, net of deferred fees
23,527,777
23,228,909
25,473,022
25,489,687
21,920,946
Allowance for loan and lease losses
(254,345
)
(247,762
)
(291,503
)
(281,687
)
(222,297
)
Total loans and leases held for investment, net
23,273,432
22,981,147
25,181,519
25,208,000
21,698,649
Equipment leased to others under operating leases
314,998
335,968
339,925
344,325
352,330
Premises and equipment, net
143,200
145,734
144,912
146,798
50,236
Bank owned life insurance
343,212
341,779
341,806
339,643
207,946
Goodwill
216,770
215,925
198,627
198,627
-
Intangible assets, net
140,562
148,894
157,226
165,477
24,192
Deferred tax asset, net
706,849
738,534
741,158
739,111
506,248
Other assets
964,054
1,028,474
1,094,383
1,131,249
992,691
Total assets
$
33,432,613
$
35,243,839
$
36,073,516
$
38,534,064
$
36,877,833
LIABILITIES: Noninterest-bearing deposits
$
7,811,796
$
7,825,007
$
7,833,608
$
7,774,254
$
5,579,033
Interest-bearing deposits
19,016,473
20,979,443
21,058,799
22,627,515
21,019,648
Total deposits
26,828,269
28,804,450
28,892,407
30,401,769
26,598,681
Borrowings
1,591,833
1,440,875
2,139,498
2,911,322
6,294,525
Subordinated debt
942,151
939,287
937,717
936,599
870,896
Accrued interest payable and other liabilities
574,162
651,379
709,744
893,609
714,454
Total liabilities
29,936,415
31,835,991
32,679,366
35,143,299
34,478,556
STOCKHOLDERS' EQUITY: Preferred stock
498,516
498,516
498,516
498,516
498,516
Common stock
1,586
1,583
1,583
1,577
1,231
Class B non-voting common stock
5
5
5
5
-
Non-voting common stock equivalents
98
101
101
108
-
Additional paid-in-capital
3,802,314
3,813,312
3,827,777
3,840,974
2,798,611
Retained deficit
(478,173
)
(477,010
)
(497,396
)
(518,301
)
(25,399
)
Accumulated other comprehensive loss, net
(328,148
)
(428,659
)
(436,436
)
(432,114
)
(873,682
)
Total stockholders’ equity
3,496,198
3,407,848
3,394,150
3,390,765
2,399,277
Total liabilities and stockholders’ equity
$
33,432,613
$
35,243,839
$
36,073,516
$
38,534,064
$
36,877,833
Common shares outstanding (1)
168,879,566
168,875,712
169,013,629
168,959,063
78,806,969
____________________
(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
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
2024
2024
2023
2024
2023
(In thousands, except per share amounts)
Interest income: Loans and leases$
369,913
$
388,853
$
310,392
$
1,144,231
$
1,150,049
Investment securities
34,912
33,836
45,326
103,051
133,716
Deposits in financial institutions
42,068
39,900
90,366
140,904
219,995
Total interest income
446,893
462,589
446,084
1,388,186
1,503,760
Interest expense: Deposits
180,986
186,106
205,982
561,899
540,663
Borrowings
16,970
30,311
94,234
85,405
324,270
Subordinated debt
16,762
16,684
15,139
50,117
42,750
Total interest expense
214,718
233,101
315,355
697,421
907,683
Net interest income
232,175
229,488
130,729
690,765
596,077
Provision for credit losses
9,000
11,000
-
30,000
5,000
Net interest income after provision for credit losses
223,175
218,488
130,729
660,765
591,077
Noninterest income: Service charges on deposit accounts
4,568
4,540
4,018
13,813
11,906
Other commissions and fees
8,256
8,629
7,641
25,027
29,226
Leased equipment income
17,176
11,487
14,554
40,379
50,798
(Loss) gain on sale of loans and leases
(62
)
1,135
(1,901
)
625
(157,820
)
Loss on sale of securities
(59,946
)
-
-
(59,946
)
-
Dividends and gains on equity investments
3,730
1,166
3,837
7,964
7,593
Warrant income (loss)
211
(324
)
(88
)
65
(545
)
LOCOM HFS adjustment
(74
)
(38
)
307
218
(11,636
)
Other income
10,689
3,197
15,440
20,011
22,595
Total noninterest (loss) income
(15,452
)
29,792
43,808
48,156
(47,883
)
Noninterest expense: Compensation
85,585
85,914
71,642
263,735
242,999
Occupancy
16,892
17,455
15,293
52,315
45,743
Information technology and data processing
14,995
15,459
12,840
45,872
38,706
Other professional services
5,101
5,183
5,597
15,359
21,643
Insurance and assessments
12,708
26,431
38,298
59,600
75,650
Intangible asset amortization
8,485
8,484
2,389
25,373
7,189
Leased equipment depreciation
7,144
7,511
8,333
22,175
26,796
Acquisition, integration and reorganization costs
(510
)
(12,650
)
9,925
(13,160
)
30,833
Customer related expense
34,475
32,405
26,971
97,799
78,278
Loan expense
3,994
4,332
4,243
12,817
16,012
Goodwill impairment
-
-
-
-
1,376,736
Other expense
7,340
13,119
5,572
28,485
133,958
Total noninterest expense
196,209
203,643
201,103
610,370
2,094,543
Earnings (loss) before income taxes
11,514
44,637
(26,566
)
98,551
(1,551,349
)
Income tax expense (benefit)
2,730
14,304
(3,222
)
28,582
(135,167
)
Net earnings (loss)
8,784
30,333
(23,344
)
69,969
(1,416,182
)
Preferred stock dividends
9,947
9,947
9,947
29,841
29,841
Net (loss) earnings available to common and equivalent stockholders
$
(1,163
)
$
20,386
$
(33,291
)
$
40,128
$
(1,446,023
)
Basic and diluted (loss) earnings per common share (1)$
(0.01
)
$
0.12
$
(0.42
)
$
0.24
$
(18.61
)
Basic and diluted weighted average number of common shares outstanding (1)
168,583
168,432
77,881
168,386
77,678
____________________
(1)
Common shares include non-voting common equivalents that are participating securities.
BANC OF CALIFORNIA, INC. SELECTED FINANCIAL DATA (UNAUDITED)Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
Profitability and Other Ratios2024
2024
2023
2024
2023
Return on average assets (1)0.10
%
0.34
%
(0.24
)%
0.26
%
(4.60
)%
Adjusted ROAA (1)(2)0.59
%
0.34
%
(0.16
)%
0.41
%
0.40
%
Return on average equity (1)1.01
%
3.59
%
(3.73
)%
2.74
%
(61.86
)%
Return on average tangible common equity (1)(2)0.70
%
4.42
%
(6.47
)%
3.13
%
(11.66
)%
Adjusted return on average tangible common equity (1)(2)7.30
%
4.42
%
(4.64
)%
5.12
%
6.31
%
Dividend payout ratio (3)(1000.00
)%
83.33
%
(2.38
)%
125.00
%
(1.45
)%
Average yield on loans and leases (1)6.18
%
6.18
%
5.54
%
6.14
%
5.95
%
Average yield on interest-earning assets (1)5.63
%
5.65
%
4.94
%
5.61
%
5.20
%
Average cost of interest-bearing deposits (1)3.52
%
3.58
%
3.78
%
3.57
%
3.35
%
Average total cost of deposits (1)2.54
%
2.60
%
2.98
%
2.60
%
2.50
%
Average cost of interest-bearing liabilities (1)3.80
%
3.93
%
4.34
%
3.89
%
4.03
%
Average total cost of funds (1)2.82
%
2.95
%
3.61
%
2.93
%
3.24
%
Net interest spread1.83
%
1.72
%
0.60
%
1.72
%
1.17
%
Net interest margin (1)2.93
%
2.80
%
1.45
%
2.79
%
2.07
%
Noninterest income to total revenue (4)(7.13
)%
11.49
%
25.10
%
6.52
%
(8.73
)%
Noninterest expense to average total assets (1)2.27
%
2.29
%
2.11
%
2.27
%
6.80
%
Loans to deposits ratio87.80
%
87.36
%
83.12
%
87.80
%
83.12
%
Average loans and leases to average deposits84.05
%
87.95
%
81.03
%
86.22
%
89.61
%
Average investment securities to average total assets13.55
%
13.00
%
18.30
%
13.03
%
17.23
%
Average stockholders' equity to average total assets10.03
%
9.48
%
6.56
%
9.50
%
7.43
%
____________________(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
September 30, 2024
June 30, 2024
September 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)$
23,803,691
$
369,913
6.18
%
$
25,325,578
$
388,853
6.18
%
$
22,226,390
$
310,392
5.54
%
Investment securities
4,665,549
34,912
2.98
%
4,658,690
33,836
2.92
%
6,919,948
45,326
2.60
%
Deposits in financial institutions
3,106,227
42,068
5.39
%
2,960,292
39,900
5.42
%
6,645,335
90,366
5.40
%
Total interest-earning assets
31,575,467
446,893
5.63
%
32,944,560
462,589
5.65
%
35,791,673
446,084
4.94
%
Other assets
2,850,718
2,889,907
2,016,085
Total assets$
34,426,185
$
35,834,467
$
37,807,758
Liabilities and Stockholders' Equity: Interest checking$
7,644,515
61,880
3.22
%
$
7,673,902
61,076
3.20
%
$
6,983,013
57,237
3.25
%
Money market
4,958,777
32,361
2.60
%
4,962,567
32,776
2.66
%
5,662,980
42,516
2.98
%
Savings
2,028,931
17,140
3.36
%
2,002,670
16,996
3.41
%
1,163,827
10,255
3.50
%
Time
5,841,965
69,605
4.74
%
6,274,242
75,258
4.82
%
7,801,880
95,974
4.88
%
Total interest-bearing deposits
20,474,188
180,986
3.52
%
20,913,381
186,106
3.58
%
21,611,700
205,982
3.78
%
Borrowings
1,063,541
16,970
6.35
%
2,013,600
30,311
6.05
%
6,325,537
94,234
5.91
%
Subordinated debt
940,480
16,762
7.09
%
938,367
16,684
7.15
%
870,968
15,139
6.90
%
Total interest-bearing liabilities
22,478,209
214,718
3.80
%
23,865,348
233,101
3.93
%
28,808,205
315,355
4.34
%
Noninterest-bearing demand deposits
7,846,641
7,881,620
5,817,488
Other liabilities
648,760
692,149
701,355
Total liabilities
30,973,610
32,439,117
35,327,048
Stockholders' equity
3,452,575
3,395,350
2,480,710
Total liabilities and stockholders' equity$
34,426,185
$
35,834,467
$
37,807,758
Net interest income (1)$
232,175
$
229,488
$
130,729
Net interest spread1.83
%
1.72
%
0.60
%
Net interest margin2.93
%
2.80
%
1.45
%
Total deposits (2)$
28,320,829
$
180,986
2.54
%
$
28,795,001
$
186,106
2.60
%
$
27,429,188
$
205,982
2.98
%
Total funds (3)$
30,324,850
$
214,718
2.82
%
$
31,746,968
$
233,101
2.95
%
$
34,625,693
$
315,355
3.61
%
____________________(1)
Includes net loan discount accretion of $23.0 million and $21.8 million for the three months ended September 30, 2024 and June 30, 2024 and net loan premium amortization of $1.7 million for the three months ended September 30, 2023.
(2)
Total deposits is the sum of total interest-bearing deposits and noninterest-bearing demand deposits. The cost of total deposits is calculated as annualized interest expense on total deposits divided by average total deposits.
(3)
Total funds is the sum of total interest-bearing liabilities and noninterest-bearing demand deposits. The cost of total funds is calculated as annualized total interest expense divided by average total funds.
BANC OF CALIFORNIA, INC. AVERAGE BALANCE, AVERAGE YIELD EARNED, AND AVERAGE COST PAID (UNAUDITED)Nine Months Ended
September 30, 2024
September 30, 2023
Interest
Average
Interest
Average
Average
Income/
Yield/
Average
Income/
Yield/
Balance
Expense
Cost
Balance
Expense
Cost
(Dollars in thousands)
Assets: Loans and leases (1)(2)(3)$
24,878,682
$
1,144,231
6.14
%
$
25,910,694
$
1,152,393
5.95
%
Investment securities
4,681,872
103,051
2.94
%
7,097,438
133,716
2.52
%
Deposits in financial institutions
3,479,130
140,904
5.41
%
5,731,733
219,995
5.13
%
Total interest-earning assets (1)
33,039,684
1,388,186
5.61
%
38,739,865
1,506,104
5.20
%
Other assets
2,888,600
2,447,563
Total assets$
35,928,284
$
41,187,428
Liabilities and Stockholders' Equity: Interest checking$
7,733,588
184,505
3.19
%
$
6,890,661
159,992
3.10
%
Money market
5,218,774
106,488
2.73
%
7,049,910
145,748
2.76
%
Savings
2,022,600
52,166
3.45
%
833,719
14,532
2.33
%
Time
6,073,993
218,740
4.81
%
6,815,786
220,391
4.32
%
Total interest-bearing deposits
21,048,955
561,899
3.57
%
21,590,076
540,663
3.35
%
Borrowings
1,986,468
85,405
5.74
%
7,688,698
324,270
5.64
%
Subordinated debt
938,624
50,117
7.13
%
869,353
42,750
6.57
%
Total interest-bearing liabilities
23,974,047
697,421
3.89
%
30,148,127
907,683
4.03
%
Noninterest-bearing demand deposits
7,804,534
7,323,673
Other liabilities
736,739
654,932
Total liabilities
32,515,320
38,126,732
Stockholders' equity
3,412,964
3,060,696
Total liabilities and stockholders' equity$
35,928,284
$
41,187,428
Net interest income (1)(2)$
690,765
$
598,421
Net interest spread (1)1.72
%
1.17
%
Net interest margin (1)2.79
%
2.07
%
Total deposits (4)$
28,853,489
$
561,899
2.60
%
$
28,913,749
$
540,663
2.50
%
Total funds (5)$
31,778,581
$
697,421
2.93
%
$
37,471,800
$
907,683
3.24
%
____________________(1)
Tax equivalent.
(2)
Includes net loan discount accretion of $67.3 million for the nine months ended September 30, 2024 and net loan premium amortization of $6.0 million for the nine months ended September 30, 2023.
(3)
Includes tax-equivalent adjustments of $0.0 million and $2.3 million for the nine months ended September 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, return on average tangible common equity and adjusted net earnings (loss). 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. Adjusted return on average tangible common equity is calculated by dividing adjusted net earnings available to common stockholders, after adjustment for amortization of intangible assets, goodwill impairment, and any unusual one-time items, 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.
Adjusted net earnings (loss) is calculated by adjusting net earnings (loss) by unusual, one-time items. ROAA is calculated by dividing annualized net earnings (loss) by average assets. Adjusted ROAA is calculated by dividing annualized adjusted net earnings (loss) by average assets.
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 to financial measures defined by GAAP.
BANC OF CALIFORNIA, INC. NON-GAAP MEASURES (UNAUDITED) Tangible Common Equity to Tangible Assets and TangibleSeptember 30,
June 30,
March 31,
December 31,
September 30,
Book Value Per Common Share2024
2024
2024
2023
2023
(Dollars in thousands, except per share amounts)
Stockholders' equity$
3,496,198
$
3,407,848
$
3,394,150
$
3,390,765
$
2,399,277
Less: Preferred stock
498,516
498,516
498,516
498,516
498,516
Total common equity
2,997,682
2,909,332
2,895,634
2,892,249
1,900,761
Less: Goodwill and Intangible assets
357,332
364,819
355,853
364,104
24,192
Tangible common equity
$
2,640,350
$
2,544,513
$
2,539,781
$
2,528,145
$
1,876,569
Total assets
$
33,432,613
$
35,243,839
$
36,073,516
$
38,534,064
$
36,877,833
Less: Goodwill and Intangible assets
357,332
364,819
355,853
364,104
24,192
Tangible assets
$
33,075,281
$
34,879,020
$
35,717,663
$
38,169,960
$
36,853,641
Total stockholders' equity to total assets
10.46
%
9.67
%
9.41
%
8.80
%
6.51
%
Tangible common equity to tangible assets
7.98
%
7.30
%
7.11
%
6.62
%
5.09
%
Book value per common share (1)$
17.75
$
17.23
$
17.13
$
17.12
$
24.12
Tangible book value per common share (2)
$
15.63
$
15.07
$
15.03
$
14.96
$
23.81
Common shares outstanding (3)
168,879,566
168,875,712
169,013,629
168,959,063
78,806,969
____________________
(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
Nine Months Ended
Return on Average TangibleSeptember 30,
June 30,
September 30,
September 30,
Common Equity ("ROATCE")2024
2024
2023
2024
2023
(Dollars in thousands)
Net earnings (loss)$
8,784
$
30,333
$
(23,344
)
$
69,969
$
(1,416,182
)
Earnings (loss) before income taxes$
11,514
$
44,637
$
(26,566
)
$
98,551
$
(1,551,349
)
Add: Intangible asset amortization
8,485
8,484
2,389
25,373
7,189
Add: Goodwill impairment
-
-
-
-
1,376,736
Adjusted earnings (loss) before income taxes used for ROATCE
19,999
53,121
(24,177
)
123,924
(167,424
)
Adjusted income tax expense (benefit) (1)
5,522
15,203
(2,212
)
34,215
(15,319
)
Adjusted net earnings (loss) for ROATCE
14,477
37,918
(21,965
)
89,709
(152,105
)
Less: Preferred stock dividends
9,947
9,947
9,947
29,841
29,841
Adjusted net earnings (loss) available to common and equivalent stockholders for ROATCE
$
4,530
$
27,971
$
(31,912
)
$
59,868
$
(181,946
)
Average stockholders' equity$
3,452,575
$
3,395,350
$
2,480,710
$
3,412,964
$
3,060,696
Less: Average goodwill and intangible assets
361,316
352,934
25,499
358,321
476,721
Less: Average preferred stock
498,516
498,516
498,516
498,516
498,516
Average tangible common equity
$
2,592,743
$
2,543,900
$
1,956,695
$
2,556,127
$
2,085,459
Return on average equity (2)
1.01
%
3.59
%
(3.73
)%
2.74
%
(61.86
)%
ROATCE (3)
0.70
%
4.42
%
(6.47
)%
3.13
%
(11.66
)%
____________________(1)
Effective tax rates of 27.61%, 28.62%, and 9.15% used for the three months ended September 30, 2024, June 30, 2024, and September 30, 2023, respectively. Effective tax rates of 27.61% and 9.15% used for the nine months ended September 30, 2024 and 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.
(4)
Annualized adjusted net earnings available to common and equivalent stockholders for adjusted ROATCE divided by average tangible common equity.
BANC OF CALIFORNIA, INC. NON-GAAP MEASURES (UNAUDITED)Three Months Ended
Nine Months Ended
Adjusted Return on AverageSeptember 30,
September 30,
September 30,
Tangible Common Equity ("ROATCE")2024
2023
2024
2023
(Dollars in thousands)
Net earnings (loss)$
8,784
$
(23,344
)
$
69,969
$
(1,416,182
)
Earnings (loss) before income taxes$
11,514
$
(26,566
)
$
98,551
$
(1,551,349
)
Add: Intangible asset amortization
8,485
2,389
25,373
7,189
Add: Goodwill impairment
-
-
-
1,376,736
Add: FDIC special assessment
-
-
5,816
-
Add: Loss on sale of securities
59,946
-
59,946
-
Less: Acquisition, integration, and reorganization costs
(510
)
9,925
(13,160
)
30,833
Add: Loan fair value loss adjustments
-
-
-
170,971
Add: Unfunded commitments fair value loss adjustments
-
-
-
106,767
Adjusted earnings before income taxes used for adjusted ROATCE
79,435
(14,252
)
176,526
141,147
Adjusted income tax expense (1)
21,932
(1,304
)
48,739
12,915
Adjusted net earnings for adjusted ROATCE
57,503
(12,948
)
127,787
128,232
Less: Preferred stock dividends
9,947
9,947
29,841
29,841
Adjusted net earnings available to common and equivalent stockholders for adjusted ROATCE
$
47,556
$
(22,895
)
$
97,946
$
98,391
Average stockholders' equity
$
3,452,575
$
2,480,710
$
3,412,964
$
3,060,696
Less: Average goodwill and intangible assets
361,316
25,499
358,321
476,721
Less: Average preferred stock
498,516
498,516
498,516
498,516
Average tangible common equity
$
2,592,743
$
1,956,695
$
2,556,127
$
2,085,459
Adjusted ROATCE (2)
7.30
%
(4.64
)%
5.12
%
6.31
%
____________________(1)
Effective tax rates of 27.61% used for the 2024 periods and 9.15% for the 2023 periods.
(2)
Annualized adjusted net earnings available to common and equivalent stockholders for adjusted ROATCE divided by average tangible common equity.
BANC OF CALIFORNIA, INC. NON-GAAP MEASURES (UNAUDITED) Adjusted Net Earnings, Net EarningsThree Months Ended
Nine Months Ended
Available to Common and EquivalentSeptember 30,
September 30,
September 30,
Stockholders, Diluted EPS, and ROAA2024
2023
2024
2023
(In thousands, except per share amounts)
Net earnings (loss)$
8,784
$
(23,344
)
$
69,969
$
(1,416,182
)
Earnings (loss) before income taxes$
11,514
$
(26,566
)
$
98,551
$
(1,551,349
)
Add: FDIC special assessment
-
-
5,816
-
Add: Loss on sale of securities
59,946
-
59,946
-
Less: Acquisition, integration, and reorganization costs
(510
)
9,925
(13,160
)
30,833
Add: Loan fair value loss adjustments
-
-
-
170,971
Add: Unfunded commitments fair value loss adjustments
-
-
-
106,767
Add: Goodwill impairment
-
-
-
1,376,736
Adjusted earnings (loss) before income taxes
70,950
(16,641
)
151,153
133,958
Adjusted income tax expense (benefit) (1)
19,589
(1,523
)
41,733
12,257
Adjusted net earnings (loss)
51,361
(15,118
)
109,420
121,701
Less: Preferred stock dividends
(9,947
)
(9,947
)
(29,841
)
(29,841
)
Adjusted net earnings (loss) available to common and equivalent stockholders$
41,414
$
(25,065
)
$
79,579
$
91,860
Weighted average common shares outstanding
168,583
77,881
168,386
77,678
Diluted (loss) earnings per common share
$
(0.01
)
$
(0.42
)
$
0.24
$
(18.61
)
Adjusted diluted earnings per common share (2)$
0.25
$
(0.32
)
$
0.47
$
1.18
Average total assets
$
34,426,185
$
37,807,758
$
35,928,284
$
41,187,428
Return on average assets ("ROAA") (3)
0.10
%
(0.24
)%
0.26
%
(4.60
)%
Adjusted ROAA (4)
0.59
%
(0.16
)%
0.41
%
0.40
%
____________________(1)
Effective tax rates of 27.61% used for the 2024 periods and 9.15% for the 2023 periods.
(2)
Adjusted net earnings (loss) available to common and equivalent stockholders divided by weighted average common shares outstanding.
(3)
Annualized net earnings (loss) divided by average assets.
(4)
Annualized adjusted net earnings (loss) divided by average assets.
View source version on businesswire.com: https://www.businesswire.com/news/home/20241022100943/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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