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Banc of California Reports Second Quarter 2018 Earnings

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Banc of California Reports Second Quarter 2018 Earnings

PR Newswire

SANTA ANA, Calif., July 26, 2018 /PRNewswire/ -- Banc of California, Inc. (NYSE:BANC) today reported net income available to common stockholders of $9.7 million, for the second quarter of 2018, resulting in diluted earnings per common share of $0.18 for the quarter. 

Highlights for the second quarter included:

  • Strong Core Deposit Growth: Core deposits grew by $357 million allowing for the reduction of brokered deposits by $332 million and the reduction of FHLB advances by $100 million.
  • Organic Loan Growth: Held for investment loans increased by $105 million during the quarter to $7.0 billion. Annualized growth in the portfolio is 11% for the first half of 2018.
    • Gross loan commitment originations totaled $765 million for the second quarter at an average production yield of 5.05%.
  • Continuation of Balance Sheet Re-Mix: Reduced securities by $127 million, or 5%, driven by the continued reduction of Collateralized Loan Obligations ("CLO"). Additionally, the Company completed the sale of mortgage servicing rights ("MSRs") totaling $3 million.
  • Bolstered Talent: Added key leadership talent in Jim Hazboun as Chief Human Resources Officer.
  • Disciplined Expense Management: Second quarter noninterest expense totaled $62.5 million. Previously announced expense reduction initiative expected to reduce noninterest expense by approximately $15 million annually.
  • Strong Credit Performance: Non-performing assets of 0.22% and total delinquencies declined to 0.38%. Net charge-offs totaled $738,000 and included $372,000 related to the sale of a performing loan. The ALLL / total loan ratio was 0.81% at quarter end, up from 0.79% at the prior quarter end and up from 0.71% a year ago.
  • Strong Capital Ratios: Common equity tier 1 capital ratio of 9.90%, compared to 9.83% a year ago.

The Company's second quarter reported financial results included $6.9 million of legal and professional fees partially offset by a $5.4 million insurance recovery related to ongoing indemnification expense, a $4.0 million restructuring expense and $900,000 of other expense. The aggregate impact of these items resulted in $6.4 million of net, nonrecurring expenses for the quarter.

"We continue to be very focused on our strategic plan and the second quarter saw yet more progress," said Doug Bowers, President and Chief Executive Officer of Banc of California.  "We are seeing early signs of core deposit growth with balances increasing $357 million for the quarter or 25% annualized.  Alongside varying key metrics, we remain committed to achieving operational efficiencies as noninterest expense, excluding non-recurring items, once again declined.  Credit quality also remained very strong with non-performing assets to total assets at 0.22%."   

The Company will host a conference call to discuss its second quarter 2018 financial results at 7:00 a.m. Pacific Time (PT) on Thursday, July 26, 2018.  Interested parties are welcome to attend the conference call by dialing 888-317-6003, and referencing event code 7007407.  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.

About Banc of California, Inc.
Banc of California, Inc. (NYSE:BANC) provides comprehensive banking services to California's diverse businesses, entrepreneurs and communities. Banc of California operates 34 offices in California.

Forward-Looking Statements
This press release includes forward-looking statements within the meaning of the "Safe-Harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are necessarily subject to risk and uncertainty and actual results could differ materially from those anticipated due to various factors, including those set forth from time to time in the documents filed or furnished by Banc of California, Inc. with the Securities and Exchange Commission. You should not place undue reliance on forward-looking statements and Banc of California, Inc. undertakes no obligation to update any such statements to reflect circumstances or events that occur after the date on which the forward-looking statement is made.

INVESTOR RELATIONS INQUIRIES:

MEDIA INQUIRIES:

Banc of California, Inc.

Abernathy MacGregor

John A. Bogler, (949) 236-5400

Ian Campbell / James Bourne / Sarah Dhanaphatana, (213) 630-6550


idc@abmac.com / jab@abmac.com / skd@abmac.com

 

Banc of California, Inc.

Consolidated Statements of Financial Condition

(Dollars in thousands)

(Unaudited)








June 30,

March 31,

December 31,

September 30,

June 30,


2018

2018

2017

2017

2017

ASSETS






Cash and cash equivalents

$      385,691

$       346,704

$      387,699

$       611,826

$       511,190

Time deposits in financial institutions

-

-

-

1,000

1,000

Securities available-for-sale

2,297,124

2,424,593

2,575,469

2,755,664

2,915,103

Loans held-for-sale

13,753

20,180

67,069

50,130

278,824

Loans and leases receivable

7,036,004

6,930,507

6,659,407

6,226,897

5,956,337

Allowance for loan and lease losses

(56,678)

(54,763)

(49,333)

(45,072)

(42,385)

Federal Home Loan Bank and other bank stock

75,737

82,715

75,654

67,063

63,438

Servicing rights, net

3,869

6,739

33,708

40,448

43,834

Other real estate owned, net

710

1,024

1,796

3,682

3,267

Premises and equipment, net

135,478

135,198

135,699

139,326

143,398

Investments in alternative energy partnerships, net

44,806

48,344

48,826

43,817

37,605

Goodwill

37,144

37,144

37,144

37,144

37,144

Other intangible assets, net

7,683

8,510

9,353

10,219

11,135

Deferred income tax, net

42,334

43,192

31,074

23,333

9,499

Income tax receivable

7,995

10,126

8,739

7,699

14,984

Bank owned life insurance investment

105,917

105,384

104,851

104,292

103,709

Other assets

155,298

153,834

161,797

142,985

113,534

Assets of discontinued operations

26,415

29,888

38,900

59,575

164,152

Total assets 

$ 10,319,280

$  10,329,319

$ 10,327,852

$  10,280,028

$  10,365,768







LIABILITIES AND STOCKHOLDERS' EQUITY






Noninterest-bearing deposits

$   1,005,032

$    1,039,116

$   1,071,608

$    1,075,782

$    1,138,095

Interest-bearing deposits

6,130,762

6,071,049

6,221,295

6,327,811

6,906,816

Total deposits

7,135,794

7,110,165

7,292,903

7,403,593

8,044,911

Advances from Federal Home Loan Bank

1,805,000

1,905,000

1,695,000

1,470,000

870,000

Securities sold under repurchase agreements

-

-

-

36,520

53,242

Notes payable, net

173,017

172,966

172,941

172,865

172,790

Reserve for loss on repurchased loans

3,149

3,426

6,306

6,173

8,028

Due on unsettled securities purchases

132,546

59,000

-

54,500

116,090

Accrued expenses and other liabilities

81,086

84,997

140,575

109,969

77,186

Liabilities of discontinued operations

-

9

7,819

12,500

17,229

Total liabilities

9,330,592

9,335,563

9,315,544

9,266,120

9,359,476

Commitments and contingent liabilities






Preferred stock

269,071

269,071

269,071

269,071

269,071

Common stock

517

517

517

542

540

Common stock, class B non-voting non-convertible

4

5

5

4

4

Additional paid-in capital

623,372

623,483

621,435

619,849

616,251

Retained earnings

143,880

141,008

144,839

145,420

140,331

Treasury stock

(28,786)

(28,786)

(28,786)

(28,786)

(28,786)

Accumulated other comprehensive income/(loss), net

(19,370)

(11,542)

5,227

7,808

8,881

Total stockholders' equity

988,688

993,756

1,012,308

1,013,908

1,006,292

Total liabilities and stockholders' equity 

$ 10,319,280

$  10,329,319

$ 10,327,852

$  10,280,028

$  10,365,768

 

Banc of California, Inc.

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

(Unaudited)


Three Months Ended

Six Months Ended


June 30,

March 31,

December 31,

September 30,

June 30,

June 30,

June 30,


2018

2018

2017

2017

2017

2018

2017

Interest and dividend income








Loans, including fees

$        81,307

$         74,912

$        71,695

$         70,208

$         69,661

$      156,219

$     139,168

Securities

21,455

21,631

23,170

24,337

24,996

43,086

52,235

Other interest-earning assets

2,423

2,164

2,292

2,206

1,783

4,587

3,879

Total interest and dividend income

105,185

98,707

97,157

96,751

96,440

203,892

195,282

Interest expense








Deposits

20,315

16,795

16,044

15,468

14,942

37,110

28,902

Federal Home Loan Bank advances

9,539

7,392

5,402

3,352

2,774

16,931

4,197

Securities sold under repurchase agreements

211

750

194

500

180

961

186

Notes payable and other interest-bearing liabilities

2,356

2,332

2,344

2,395

3,044

4,688

6,016

Total interest expense

32,421

27,269

23,984

21,715

20,940

59,690

39,301

Net interest income

72,764

71,438

73,173

75,036

75,500

144,202

155,981

Provision for loan and lease losses

2,653

19,499

5,052

3,561

2,503

22,152

5,086

Net interest income after provision for loan and lease losses

70,111

51,939

68,121

71,475

72,997

122,050

150,895

Noninterest income








Customer service fees

1,491

1,592

1,624

1,576

1,669

3,083

3,292

Loan servicing income (loss) 

948

2,311

(2,416)

553

132

3,259

2,888

Net gain on sale of securities available for sale

278

5,241

2,688

7,625

1,099

5,519

4,455

Net gain (loss) on sale of loans

821

(41)

1,205

5,735

983

780

5,002

All other income

4,523

(521)

2,594

2,876

1,824

4,002

4,973

Total noninterest income

8,061

8,582

5,695

18,365

5,707

16,643

20,610

Noninterest expense








Salaries and employee benefits

29,440

31,115

33,146

30,216

33,348

60,555

65,791

Occupancy and equipment

7,883

7,687

9,565

10,085

9,776

15,570

20,444

Professional fees

6,303

9,177

7,853

7,697

11,794

15,480

26,867

Data processing

1,678

1,656

1,562

1,901

2,246

3,334

4,425

Advertising

2,864

3,277

1,420

1,051

1,117

6,141

2,842

Regulatory assessments

2,196

2,092

2,174

2,350

1,140

4,288

3,581

Reversal of provision for loan repurchases

(218)

(1,788)

(335)

(749)

(403)

(2,006)

(728)

Amortization of intangible assets

827

843

866

916

1,056

1,670

2,146

Restructuring expense

3,983

-

(43)

-

82

3,983

5,369

All other expenses

5,775

5,775

6,179

13,856

6,402

11,550

17,035

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

60,731

59,834

62,387

67,323

66,558

120,565

147,772

(Gain) loss on investments in alternative energy partnerships

1,808

(34)

3,995

8,348

9,761

1,774

18,443

Total noninterest expense

62,539

59,800

66,382

75,671

76,319

122,339

166,215

Income from continuing operations before income taxes

15,633

721

7,434

14,169

2,385

16,354

5,290

Income tax expense (benefit)

1,779

(6,353)

(3,418)

(3,939)

(12,753)

(4,574)

(19,224)

Income from continuing operations

13,854

7,074

10,852

18,108

15,138

20,928

24,514

Income (loss) from discontinued operations before income taxes

1,281

2,044

765

(1,958)

(4,991)

3,325

8,357

Income tax expense (benefit)

355

560

315

(799)

(2,110)

915

3,413

Income (loss) from discontinued operations

926

1,484

450

(1,159)

(2,881)

2,410

4,944

Net income

14,780

8,558

11,302

16,949

12,257

23,338

29,458

Preferred stock dividends

5,113

5,113

5,113

5,112

5,113

10,226

10,226

Net income available to common stockholders

$          9,667

$           3,445

$          6,189

$         11,837

$           7,144

$        13,112

$       19,232

Basic earnings per total common share








Income from continuing operations

$            0.17

$             0.03

$            0.11

$             0.25

$             0.20

$            0.20

$           0.27

Income (loss) from discontinued operations

0.02

0.03

0.01

(0.02)

(0.06)

0.05

0.10

Net income

$            0.19

$             0.06

$            0.12

$             0.23

$             0.14

$            0.25

$           0.37

Diluted earnings per total common share








Income from continuing operations

$            0.16

$             0.03

$            0.11

$             0.25

$             0.20

$            0.20

$           0.27

Income (loss) from discontinued operations

0.02

0.03

0.01

(0.02)

(0.06)

0.05

0.10

Net income

$            0.18

$             0.06

$            0.12

$             0.23

$             0.14

$            0.25

$           0.37

Weighted average number of shares outstanding








Basic

50,593,429

50,590,545

50,532,544

50,362,314

50,289,590

50,591,995

50,058,540

Diluted

50,919,091

50,925,530

50,943,165

50,933,358

50,942,324

50,900,887

50,736,098

Dividends declared per common share

$            0.13

$             0.13

$            0.13

$             0.13

$             0.13

$            0.26

$           0.26

 

Banc of California, Inc.

Reconciliation of Consolidated Statements of Operations between Continuing and Discontinued Operations

(Dollars in thousands, except per share data)

(Unaudited)


Three Months Ended June 30, 2018

Six Months Ended June 30, 2018


Continuing

Discontinued

Consolidated

Continuing

Discontinued

Consolidated


Operations

Operations

Operations

Operations

Operations

Operations

Interest and dividend income

$      105,185

$              189

$      105,374

$       203,892

$              375

$      204,267

Interest expense

32,421

-

32,421

59,690

-

59,690

Net interest income

72,764

189

72,953

144,202

375

144,577

Provision for loan and lease losses

2,653

-

2,653

22,152

-

22,152

Net interest income after provision for loan and lease losses

70,111

189

70,300

122,050

375

122,425

Noninterest income







Customer service fees

1,491

-

1,491

3,083

-

3,083

Loan servicing income

948

-

948

3,259

-

3,259

Net gain on sale of securities available for sale

278

-

278

5,519

-

5,519

Net gain on sale of loans

821

-

821

780

-

780

Mortgage banking income

-

56

56

-

288

288

Gain on disposal of discontinued operations

-

272

272

-

1,275

1,275

All other income

4,523

779

5,302

4,002

1,414

5,416

Total noninterest income

8,061

1,107

9,168

16,643

2,977

19,620

Noninterest expense







Salaries and employee benefits

29,440

6

29,446

60,555

15

60,570

Occupancy and equipment

7,883

-

7,883

15,570

-

15,570

Professional fees

6,303

-

6,303

15,480

-

15,480

Data processing

1,678

-

1,678

3,334

-

3,334

Advertising

2,864

-

2,864

6,141

-

6,141

Regulatory assessments

2,196

-

2,196

4,288

-

4,288

Reversal for loan repurchases

(218)

-

(218)

(2,006)

-

(2,006)

Loss on investments in alternative energy partnerships

1,808

-

1,808

1,774

-

1,774

Amortization of intangible assets

827

-

827

1,670

-

1,670

Restructuring expense

3,983

-

3,983

3,983

-

3,983

All other expenses

5,775

9

5,784

11,550

12

11,562

Total noninterest expense

62,539

15

62,554

122,339

27

122,366

Income before income taxes

15,633

1,281

16,914

16,354

3,325

19,679

Income tax (benefit) expense

1,779

355

2,134

(4,574)

915

(3,659)

Net income

$        13,854

$              926

$        14,780

$         20,928

$           2,410

$        23,338

 

Banc of California, Inc.

Selected Financial Data

(Dollars in thousands)

(Unaudited)


Three Months Ended

Six Months Ended


June 30,

March 31,

December 31,

September 30,

June 30,

June 30,

June 30,


2018

2018

2017

2017

2017

2018

2017

Profitability and other ratios of consolidated operations








Return on average assets(1)

0.58%

0.34%

0.44%

0.67%

0.46%

0.46%

0.54%

Return on average equity (1)

5.92%

3.40%

4.42%

6.69%

4.85%

4.66%

5.89%

Return on average tangible common equity(2)

6.03%

2.37%

3.84%

7.16%

4.51%

4.18%

6.11%

Dividend payout ratio (3)

68.42%

216.67%

108.33%

56.52%

92.86%

104.00%

70.27%

Net interest spread

2.75%

2.74%

2.79%

2.92%

2.90%

2.74%

2.97%

Net interest margin(1)

3.01%

2.98%

3.01%

3.15%

3.09%

3.00%

3.14%

Noninterest income to total revenue (4)

11.16%

12.73%

8.07%

19.86%

20.20%

11.95%

32.92%

Noninterest income to average total assets(1)

0.36%

0.41%

0.25%

0.74%

0.74%

0.39%

1.47%

Noninterest expense to average total assets(1)

2.45%

2.36%

2.59%

3.10%

3.68%

2.41%

4.11%

Efficiency ratio(5)

76.17%

72.87%

83.37%

83.36%

100.10%

74.52%

92.25%

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

73.50%

65.70%

75.46%

72.49%

80.51%

69.41%

79.51%

Average held-for-investment loans and leases to average deposits

98.63%

94.87%

86.09%

77.33%

73.54%

96.77%

70.85%

Average investment securities to average total assets

22.27%

24.60%

26.10%

27.64%

28.09%

23.43%

29.15%

Average stockholders' equity to average total assets

9.78%

9.94%

9.98%

9.95%

9.48%

9.86%

9.21%

Allowance for loan and lease losses (ALLL)








Balance at beginning of period

$        54,763

$         49,333

$        45,072

$         42,385

$         42,736

$        49,333

$       40,444

Loans and leases charged off

(950)

(14,639)

(1,367)

(959)

(2,898)

(15,589)

(3,255)

Recoveries

212

570

576

85

44

782

110

Provision for loan and lease losses

2,653

19,499

5,052

3,561

2,503

22,152

5,086

Balance at end of period

$        56,678

$         54,763

$        49,333

$         45,072

$         42,385

$        56,678

$       42,385

Annualized net loan charge-offs to average total loans and leases held-for-investment

0.04%

0.84%

0.05%

0.06%

0.19%

0.43%

0.10%

Reserve for loss on repurchased loans








Balance at beginning of period

$          3,426

$           6,306

$          6,173

$           8,028

$           8,118

$         6,306

$         7,974

Provision (reversal) for loan repurchases

(165)

(1,786)

(326)

(651)

270

(1,951)

787

Utilization of reserve for loan repurchases

(112)

(1,094)

(301)

(1,204)

(360)

(1,206)

(733)

Other adjustments

-

-

760

-

-

-

-

Balance at end of period

$          3,149

$           3,426

$          6,306

$           6,173

$           8,028

$          3,149

$         8,028



(1)

Ratios are presented on an annualized basis.

(2)

The ratios are determined by methods other than in accordance with U.S. generally accepted accounting principles (GAAP). 


See Non-GAAP measures section for reconciliation of the calculation.

(3)

The ratio is calculated by dividing dividends declared per common share by basic earnings per share.

(4)

Total revenue is equal to the sum of net interest income before provision for loan and lease losses and noninterest income.

(5)

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

 

Banc of California, Inc.

Selected Financial Data, Continued

(Dollars in thousands)

(Unaudited)








June 30,

March 31,

December 31,

September 30,

June 30,


2018

2018

2017

2017

2017

Asset quality information and ratios






Delinquent loans and leases held-for-investment






30 to 89 days delinquent, excluding purchased credit impaired (PCI) loans

$        15,097

$         31,936

$        32,087

$         20,286

$         23,305

90+ days delinquent, excluding PCI loans

11,453

11,526

9,542

11,150

6,508

Total delinquent loans, excluding PCI loans

26,550

43,462

41,629

31,436

29,813

PCI loans, 30 to 89 days delinquent

-

-

-

-

343

PCI loans, 90+ days delinquent

-

-

-

-

807

Total delinquent PCI loans

-

-

-

-

1,150

Total delinquent loans

$        26,550

$         43,462

$        41,629

$         31,436

$         30,963

Total delinquent non-PCI loans to total non-PCI loans

0.38%

0.63%

0.63%

0.50%

0.50%

Total delinquent loans and leases to total loans and leases

0.38%

0.63%

0.63%

0.50%

0.52%

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






Non-performing loans and leases, excluding PCI loans

$        22,290

$         21,220

$        19,382

$         12,275

$           9,064

90+ days delinquent and still accruing loans and leases, excluding PCI loans  

-

-

-

-

-

Other real estate owned

710

1,024

1,796

3,682

3,267

Non-performing assets

$        23,000

$         22,244

$        21,178

$         15,957

$         12,331

ALLL to non-performing loans and leases

254.28%

258.07%

254.53%

367.19%

467.62%

Non-performing loans and leases to total loans and leases

0.32%

0.31%

0.29%

0.20%

0.15%

Non-performing assets to total assets

0.22%

0.22%

0.21%

0.16%

0.12%

Troubled debt restructurings (TDRs)






Performing TDRs

$          5,648

$           5,787

$          5,646

$           5,668

$           4,579

Non-performing TDRs

2,701

2,632

2,675

-

1,125

Total TDRs

$          8,349

$           8,419

$          8,321

$           5,668

$           5,704

Loans and leases and ALLL by loan origination type






Loan and lease breakdown by origination type






Originated loans and leases

$   6,446,127

$    6,295,843

$   5,988,101

$    5,488,018

$    5,159,823

Acquired loans not impaired at acquisition

589,877

634,664

671,306

738,879

792,213

Acquired with deteriorated credit quality

-

-

-

-

4,301

Total loans and leases

$   7,036,004

$    6,930,507

$   6,659,407

$    6,226,897

$    5,956,337

ALLL breakdown by origination type






Originated loans and leases

$        55,534

$         53,605

$        48,110

$         43,723

$         41,090

Acquired loans not impaired at acquisition

1,144

1,158

1,223

1,349

1,271

Acquired with deteriorated credit quality

-

-

-

-

24

Total ALLL

$        56,678

$         54,763

$        49,333

$         45,072

$         42,385

Discount on Purchased/Acquired Loans






Acquired loans not impaired at acquisition

$        12,932

$         14,255

$        14,943

$         15,983

$         15,446

Acquired with deteriorated credit quality

-

-

-

-

1,754

Total Discount

$        12,932

$         14,255

$        14,943

$         15,983

$         17,200

Percentage of ALLL to:






Originated loans and leases

0.86%

0.85%

0.80%

0.80%

0.80%

Originated loans and leases and acquired loans not impaired at acquisition

0.81%

0.79%

0.74%

0.72%

0.71%

Total loans and leases

0.81%

0.79%

0.74%

0.72%

0.71%

 

Banc of California, Inc.

Selected Financial Data, Continued

(Dollars in thousands)

(Unaudited)








June 30,

March 31,

December 31,

September 30,

June 30,


2018

2018

2017

2017

2017

Composition of held-for-investment loans and leases






Commercial real estate

$      793,855

$       773,193

$      717,415

$       713,120

$       716,771

Multifamily

1,959,965

1,944,082

1,816,141

1,617,890

1,545,888

Construction

211,110

200,766

182,960

176,397

156,246

Commercial and industrial

1,742,559

1,638,559

1,701,951

1,602,805

1,560,916

SBA

78,092

79,022

78,699

78,604

77,254

Lease financing

-

3

13

91

173

Total commercial loans

4,785,581

4,635,625

4,497,179

4,188,907

4,057,248

Single family residential mortgage

2,174,183

2,201,358

2,055,649

1,920,310

1,778,536

Other consumer

76,240

93,524

106,579

117,680

120,553

Total consumer loans

2,250,423

2,294,882

2,162,228

2,037,990

1,899,089

Total gross loans and leases

$   7,036,004

$    6,930,507

$   6,659,407

$    6,226,897

$    5,956,337

Composition percentage of held-for-investment loans and leases






Commercial real estate

11.3%

11.2%

10.8%

11.5%

12.0%

Multifamily

27.9%

28.1%

27.3%

26.0%

26.0%

Construction

3.0%

2.9%

2.7%

2.8%

2.6%

Commercial and industrial

24.8%

23.6%

25.5%

25.7%

26.2%

SBA

1.1%

1.1%

1.2%

1.3%

1.3%

Lease financing

0.0%

0.0%

0.0%

0.0%

0.0%

Total commercial loans

68.1%

66.9%

67.5%

67.3%

68.1%

Single family residential mortgage

30.9%

31.8%

30.9%

30.8%

29.9%

Other consumer

1.0%

1.3%

1.6%

1.9%

2.0%

Total consumer loans

31.9%

33.1%

32.5%

32.7%

31.9%

Total gross loans and leases

100.0%

100.0%

100.0%

100.0%

100.0%

Composition of deposits






Noninterest-bearing checking

$   1,005,032

$    1,039,116

$   1,071,608

$    1,075,782

$    1,138,095

Interest-bearing checking

1,778,400

1,864,629

2,089,016

2,011,943

2,058,130

Money market

1,136,335

1,091,735

1,146,859

1,728,937

2,265,380

Savings

1,175,275

1,051,267

1,059,628

945,699

985,001

Certificates of deposit

2,040,752

2,063,418

1,925,792

1,641,232

1,598,305

Total deposits

$   7,135,794

$    7,110,165

$   7,292,903

$    7,403,593

$    8,044,911

Composition percentage of deposits






Noninterest-bearing checking

14.1%

14.6%

14.7%

14.5%

14.1%

Interest-bearing checking

24.9%

26.2%

28.7%

27.2%

25.6%

Money market

15.9%

15.4%

15.7%

23.3%

28.2%

Savings

16.5%

14.8%

14.5%

12.8%

12.2%

Certificates of deposit

28.6%

29.0%

26.4%

22.2%

19.9%

Total deposits

100.0%

100.0%

100.0%

100.0%

100.0%

Capital Ratios






Banc of California, Inc.






Total risk-based capital ratio

14.71%

14.60%

14.56%

14.48%

14.39%

Tier 1 risk-based capital ratio

13.83%

13.74%

13.79%

13.77%

13.72%

Common equity tier 1 capital ratio

9.90%

9.80%

9.92%

9.91%

9.83%

Tier 1 leverage ratio

9.30%

9.21%

9.39%

9.55%

8.93%

Banc of California, NA






Total risk-based capital ratio

16.63%

16.53%

16.56%

16.39%

16.13%

Tier 1 risk-based capital ratio

15.74%

15.67%

15.78%

15.68%

15.45%

Common equity tier 1 capital ratio

15.74%

15.67%

15.78%

15.68%

15.45%

Tier 1 leverage ratio

10.58%

10.50%

10.67%

10.88%

10.05%

 

Banc of California, Inc.

Average Balance, Average Yield Earned, and Average Cost Paid 

(Dollars in thousands)

(Unaudited)












Three Months Ended


June 30, 2018

March 31, 2018

December 31, 2017


Average


Yield 

Average


Yield 

Average


Yield 


Balance

Interest

/ Cost

Balance

Interest

/ Cost

Balance

Interest

/ Cost

Interest earning assets










Loans held-for-sale (1)

$        54,791

$        328

2.40%

$        97,095

$        297

1.24%

$      127,139

$      363

1.13%

SFR mortgage

2,223,608

22,790

4.11%

2,122,666

21,352

4.08%

1,957,754

19,487

3.95%

Seasoned SFR mortgage loan pools

-

-

-

-

-

-

-

-

-

Commercial real estate, multifamily, and construction

2,989,014

33,736

4.53%

2,856,290

31,439

4.46%

2,613,940

29,696

4.51%

Commercial and industrial, SBA, and lease financing

1,707,478

23,664

5.56%

1,625,549

20,850

5.20%

1,630,886

20,989

5.11%

Other consumer

80,188

978

4.89%

103,676

1,160

4.54%

107,664

1,233

4.54%

Gross loans and leases

7,055,079

81,496

4.63%

6,805,276

75,098

4.48%

6,437,383

71,768

4.42%

Securities

2,279,416

21,455

3.78%

2,525,220

21,631

3.47%

2,653,838

23,170

3.46%

Other interest-earning assets

392,342

2,423

2.48%

407,064

2,164

2.16%

548,171

2,292

1.66%

Total interest-earning assets

9,726,837

105,374

4.35%

9,737,560

98,893

4.12%

9,639,392

97,230

4.00%

Allowance for loan and lease losses

(54,903)



(49,257)



(45,681)



BOLI and non-interest earning assets

565,224



574,930



572,692



Total assets

$ 10,237,158



$ 10,263,233



$ 10,166,403













Interest-bearing liabilities










Savings

$   1,055,693

3,886

1.48%

$   1,055,338

3,300

1.27%

$   1,019,659

2,947

1.15%

Interest-bearing checking

1,822,856

4,182

0.92%

1,976,160

4,108

0.84%

2,082,677

4,267

0.81%

Money market

1,134,280

3,689

1.30%

1,076,117

2,834

1.07%

1,294,537

3,262

1.00%

Certificates of deposit

2,079,932

8,558

1.65%

1,906,556

6,553

1.39%

1,822,010

5,568

1.21%

Total interest-bearing deposits

6,092,761

20,315

1.34%

6,014,171

16,795

1.13%

6,218,883

16,044

1.02%

FHLB advances

1,827,307

9,539

2.09%

1,711,089

7,392

1.75%

1,448,326

5,402

1.48%

Securities sold under repurchase agreements

29,907

211

2.83%

119,543

750

2.54%

33,513

194

2.30%

Long-term debt and other interest-bearing liabilities

174,296

2,356

5.42%

174,424

2,332

5.42%

174,066

2,344

5.34%

Total interest-bearing liabilities

8,124,271

32,421

1.60%

8,019,227

27,269

1.38%

7,874,788

23,984

1.21%

Noninterest-bearing deposits

1,004,502



1,056,700



1,110,815



Non-interest-bearing liabilities

107,529



167,345



166,432



Total liabilities

9,236,302



9,243,272



9,152,035



Total stockholders' equity

1,000,856



1,019,961



1,014,368



Total liabilities and stockholders' equity

$ 10,237,158



$ 10,263,233



$ 10,166,403













Net interest income/spread


$   72,953

2.75%


$   71,624

2.74%


$ 73,246

2.79%











Net interest margin



3.01%



2.98%



3.01%











Ratio of interest-earning assets to interest-bearing liabilities

119.73%



121.43%



122.41%













Total deposits

$   7,097,263

$   20,315

1.15%

$   7,070,871

$   16,795

0.96%

$   7,329,698

$ 16,044

0.87%

Total funding (2)

$   9,128,773

$   32,421

1.42%

$   9,075,927

$   27,269

1.22%

$   8,985,603

$ 23,984

1.06%



(1)

Includes loans held-for-sale of discontinued operations.

(2)

Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.

 

Banc of California, Inc.

Average Balance, Average Yield Earned, and Average Cost Paid, Continued

(Dollars in thousands)

(Unaudited)









Three Months Ended


September 30, 2017

June 30, 2017


Average


Yield 

Average


Yield 


Balance

Interest

/ Cost

Balance

Interest

/ Cost

Interest earning assets







Loans held-for-sale (1)

$      246,675

$     2,319

3.73%

$      575,669

$     4,876

3.40%

SFR mortgage

1,775,443

17,435

3.90%

1,832,524

18,006

3.94%

Seasoned SFR mortgage loan pools

84,128

1,208

5.70%

151,759

2,121

5.61%

Commercial real estate, multifamily, and construction

2,494,284

28,659

4.56%

2,394,487

27,038

4.53%

Commercial and industrial, SBA, and lease financing

1,553,816

20,141

5.14%

1,565,583

18,991

4.87%

Other consumer

114,569

1,363

4.72%

119,644

1,425

4.78%

Gross loans and leases

6,268,915

71,125

4.50%

6,639,666

72,457

4.38%

Securities

2,791,585

24,337

3.46%

3,004,551

24,996

3.34%

Other interest-earning assets

519,593

2,206

1.68%

517,349

1,783

1.38%

Total interest-earning assets

9,580,093

97,668

4.04%

10,161,566

99,236

3.92%

Allowance for loan and lease losses

(42,696)



(42,896)



BOLI and non-interest earning assets

563,784



578,333



Total assets

$ 10,101,181



$ 10,697,003










Interest-bearing liabilities







Savings

$      968,158

2,263

0.93%

$   1,002,797

2,262

0.90%

Interest-bearing checking

2,037,729

3,871

0.75%

2,013,751

3,609

0.72%

Money market

1,935,262

5,095

1.04%

2,359,173

5,482

0.93%

Certificates of deposit

1,560,078

4,239

1.08%

1,606,270

3,589

0.90%

Total interest-bearing deposits

6,501,227

15,468

0.94%

6,981,991

14,942

0.86%

FHLB advances

962,391

3,352

1.38%

990,780

2,774

1.12%

Securities sold under repurchase agreements

88,810

500

2.23%

34,298

180

2.11%

Long-term debt and other interest-bearing liabilities

173,772

2,395

5.47%

240,201

3,044

5.08%

Total interest-bearing liabilities

7,726,200

21,715

1.12%

8,247,270

20,940

1.02%

Noninterest-bearing deposits

1,178,062



1,261,338



Non-interest-bearing liabilities

191,457



174,128



Total liabilities

9,095,719



9,682,736



Total stockholders' equity

1,005,462



1,014,267



Total liabilities and stockholders' equity

$ 10,101,181



$ 10,697,003










Net interest income/spread


$   75,953

2.92%


$   78,296

2.90%








Net interest margin



3.15%



3.09%








Ratio of interest-earning assets to interest-bearing liabilities

123.99%



123.21%










Total deposits

$   7,679,289

$   15,468

0.80%

$   8,243,329

$   14,942

0.73%

Total funding (2)

$   8,904,262

$   21,715

0.97%

$   9,508,608

$   20,940

0.88%



(1)

Includes loans held-for-sale of discontinued operations.

(2)

Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.

 

Banc of California, Inc.

Average Balance, Average Yield Earned, and Average Cost Paid, Continued

(Dollars in thousands)

(Unaudited)









Six Months Ended


June 30, 2018

June 30, 2017


Average


Yield 

Average


Yield 


Balance

Interest

/ Cost

Balance

Interest

/ Cost

Interest earning assets







Loans held-for-sale (1)

$        75,826

$        625

1.66%

$      374,916

$     6,062

3.26%

SFR mortgage

2,173,415

44,141

4.10%

2,160,241

42,038

3.92%

Seasoned SFR mortgage loan pools

-

-

-

153,240

4,266

5.61%

Commercial real estate, multifamily, and construction

2,923,019

65,175

4.50%

2,365,566

51,670

4.40%

Commercial and industrial, SBA, and lease financing

1,666,740

44,515

5.39%

1,537,326

38,527

5.05%

Other consumer

91,867

2,138

4.69%

120,649

2,667

4.46%

Gross loans and leases

6,930,867

156,594

4.56%

6,711,938

145,230

4.36%

Securities

2,401,639

43,086

3.62%

3,189,596

52,235

3.30%

Other interest-earning assets

399,662

4,587

2.31%

508,784

3,879

1.54%

Total interest-earning assets

9,732,168

204,267

4.23%

10,410,318

201,344

3.90%

Allowance for loan and lease losses

(52,095)



(42,095)



BOLI and non-interest earning assets

570,050



573,323



Total assets

$ 10,250,123



$ 10,941,546










Interest-bearing liabilities







Savings

$   1,055,516

7,186

1.37%

$   1,022,305

4,555

0.90%

Interest-bearing checking

1,899,085

8,291

0.88%

2,011,303

7,023

0.70%

Money market

1,105,359

6,523

1.19%

2,546,452

10,173

0.81%

Certificates of deposit

1,993,723

15,110

1.53%

1,770,916

7,151

0.81%

Total interest-bearing deposits

6,053,683

37,110

1.24%

7,350,976

28,902

0.79%

FHLB advances

1,769,520

16,931

1.93%

902,105

4,197

0.94%

Securities sold under repurchase agreements

74,477

961

2.60%

18,300

186

2.05%

Long-term debt and other interest-bearing liabilities

174,360

4,688

5.42%

242,110

6,016

5.01%

Total interest-bearing liabilities

8,072,040

59,690

1.49%

8,513,491

39,301

0.93%

Noninterest-bearing deposits

1,030,457



1,221,530



Non-interest-bearing liabilities

137,271



198,465



Total liabilities

9,239,768



9,933,486



Total stockholders' equity

1,010,355



1,008,060



Total liabilities and stockholders' equity

$ 10,250,123



$ 10,941,546










Net interest income/spread


$ 144,577

2.74%


$ 162,043

2.97%








Net interest margin



3.00%



3.14%








Ratio of interest-earning assets to interest-bearing liabilities

120.57%



122.28%










Total deposits

$   7,084,140

$   37,110

1.06%

$   8,572,506

$   28,902

0.68%

Total funding (2)

$   9,102,497

$   59,690

1.32%

$   9,735,021

$   39,301

0.81%



(1)

Includes loans held-for-sale of discontinued operations.

(2)

Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.

 

Banc of California, Inc.

Consolidated Operations

Non-GAAP Measures 

(Dollars in thousands, except per share data)

(Unaudited)


Under Item 10(e) of SEC Regulation S-K, public companies disclosing financial measures in filings with the SEC that are not calculated in accordance with GAAP must also disclose, along with each non-GAAP financial measure, certain additional information, including a presentation of the most directly comparable GAAP financial measure, a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure, as well as a statement of the reasons why the company's management believes that presentation of the non-GAAP financial measure provides useful information to investors regarding the company's financial condition and results of operations and, to the extent material, a statement of the additional purposes, if any, for which the company's management uses the non-GAAP financial measure.


Return on average tangible common equity and efficiency ratio, as adjusted, tangible common equity to tangible assets, and tangible common equity per common share and tangible common equity per common share and per common share issuable under purchase contracts constitute supplemental financial information determined by methods other than in accordance with GAAP. These non-GAAP measures are used by management in its analysis of the Company's performance.


Tangible common equity is calculated by subtracting preferred stock, goodwill, and other intangible assets from stockholders' equity. Tangible assets is calculated by subtracting goodwill and other intangible assets from total assets. Banking regulators also exclude goodwill and other intangible assets from stockholders' equity when assessing the capital adequacy of a financial institution.


Adjusted efficiency ratio is calculated by subtracting loss on investments in alternative energy partnerships from noninterest expense and adding total pre-tax return, which includes the loss on investments in alternative energy partnerships, to the sum of net interest income and noninterest income (total revenue). Management believes the presentation of these financial measures adjusting the impact of these items provides useful supplemental information that is essential to a proper understanding of the financial results and operating performance of the Company.


This disclosure should not be viewed as a substitute for results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.


The following tables provide reconciliations of the non-GAAP measures with financial measures defined by GAAP.

 


June 30,

March 31,

December 31,

September 30,

June 30,


2018

2018

2017

2017

2017

Tangible common equity to tangible assets ratio






Total assets

$ 10,319,280

$ 10,329,319

$ 10,327,852

$   10,280,028

$ 10,365,768

Less goodwill

(37,144)

(37,144)

(37,144)

(37,144)

(37,144)

Less other intangible assets

(7,683)

(8,510)

(9,353)

(10,219)

(11,135)

Tangible assets

$ 10,274,453

$ 10,283,665

$ 10,281,355

$   10,232,665

$ 10,317,489







Total stockholders' equity

$      988,688

$      993,756

$   1,012,308

$     1,013,908

$   1,006,292

Less goodwill

(37,144)

(37,144)

(37,144)

(37,144)

(37,144)

Less other intangible assets

(7,683)

(8,510)

(9,353)

(10,219)

(11,135)

Tangible equity

943,861

948,102

965,811

966,545

958,013

Less preferred stock

(269,071)

(269,071)

(269,071)

(269,071)

(269,071)

Tangible common equity

$      674,790

$      679,031

$      696,740

$        697,474

$      688,942







Total stockholders' equity to total assets

9.58%

9.62%

9.80%

9.86%

9.71%

Tangible equity to tangible assets

9.19%

9.22%

9.39%

9.45%

9.29%

Tangible common equity to tangible assets

6.57%

6.60%

6.78%

6.82%

6.68%







Common stock outstanding

50,142,955

50,079,736

50,083,345

50,096,056

49,991,395

Class B non-voting non-convertible common stock outstanding

403,778

508,107

508,107

430,694

355,173

Total common stock outstanding

50,546,733

50,587,843

50,591,452

50,526,750

50,346,568







Tangible common equity per common stock

$          13.35

$          13.42

$          13.77

$            13.80

$          13.68

Book value per common stock

$          14.24

$          14.33

$          14.69

$            14.74

$          14.64

 

Banc of California, Inc.

Consolidated Operations

Non-GAAP Measures, Continued

(Dollars in thousands, except per share data)

(Unaudited)


Three Months Ended

Six Months Ended


June 30,

March 31,

December 31,

September 30,

June 30,

June 30,

June 30,


2018

2018

2017

2017

2017

2018

2017

Return on tangible common equity








Average total stockholders' equity

$   1,000,856

$   1,019,961

$   1,014,368

$     1,005,462

$   1,014,267

$ 1,010,355

$ 1,008,060

Less average preferred stock

(269,071)

(269,071)

(269,071)

(269,071)

(269,071)

(269,071)

(269,071)

Less average goodwill

(37,144)

(37,144)

(37,144)

(37,144)

(37,144)

(37,144)

(38,177)

Less average other intangible assets

(8,110)

(8,972)

(9,788)

(10,760)

(11,808)

(8,539)

(12,495)

Average tangible common equity

$      686,531

$      704,774

$      698,365

$        688,487

$      696,244

$    695,601

$    688,317









Net income

$        14,780

$          8,558

$        11,302

$          16,949

$        12,257

$      23,338

$      29,458

Less preferred stock dividends

(5,113)

(5,113)

(5,113)

(5,112)

(5,113)

(10,226)

(10,226)

Add amortization of intangible assets

827

843

866

916

1,056

1,670

2,146

Add impairment on intangible assets

-

-

-

-

-

-

336

Less tax effect on amortization and impairment of intangible assets

(174)

(177)

(303)

(321)

(370)

(351)

(869)

Net income available to common stockholders

$        10,320

$          4,111

$          6,752

$          12,432

$          7,830

$      14,431

$      20,845









Return on average equity

5.92%

3.40%

4.42%

6.69%

4.85%

4.66%

5.89%

Return on average tangible common equity

6.03%

2.37%

3.84%

7.16%

4.51%

4.18%

6.11%









Effective tax rate utilized for calculating tax effect on amortization and impairment of intangible assets

21.00%

21.00%

35.00%

35.00%

35.00%

21.00%

35.00%










Three Months Ended

Six Months Ended


June 30,

March 31,

December 31,

September 30,

June 30,

June 30,

June 30,


2018

2018

2017

2017

2017

2018

2017

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








Noninterest expense

$        62,554

$        59,812

$        66,424

$          79,008

$        98,216

$    122,366

$    222,831

Gain (loss) on investments in alternative energy partnerships

(1,808)

34

(3,995)

(8,348)

(9,761)

(1,774)

(18,443)

Adjusted noninterest expense

$        60,746

$        59,846

$        62,429

$          70,660

$        88,455

$    120,592

$    204,388









Net interest income

$        72,953

$        71,624

$        73,246

$          75,953

$        78,296

$    144,577

$    162,043

Noninterest income

9,168

10,452

6,429

18,827

19,817

19,620

79,521

Total revenue

82,121

82,076

79,675

94,780

98,113

164,197

241,564

Tax credit from investments in alternative energy partnerships

1,912

7,323

4,908

8,777

15,681

9,235

24,510

Deferred tax expense on investments in alternative energy partnerships

(211)

(769)

(859)

(1,536)

(2,744)

(980)

(4,289)

Tax effect on tax credit and deferred tax expense

631

2,422

3,004

3,804

8,584

3,053

13,724

Gain (loss) on investments in alternative energy partnerships

(1,808)

34

(3,995)

(8,348)

(9,761)

(1,774)

(18,443)

Total pre-tax adjustments for investments in alternative energy partnerships

524

9,010

3,058

2,697

11,760

9,534

15,502

Adjusted total revenue

$        82,645

$        91,086

$        82,733

$          97,477

$      109,873

$    173,731

$    257,066









Efficiency ratio

76.17%

72.87%

83.37%

83.36%

100.10%

74.52%

92.25%

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

73.50%

65.70%

75.46%

72.49%

80.51%

69.41%

79.51%









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

27.07%

26.98%

42.59%

34.44%

39.89%

27.00%

40.43%

 

Cision View original content:http://www.prnewswire.com/news-releases/banc-of-california-reports-second-quarter-2018-earnings-300686856.html

SOURCE Banc of California, Inc.

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