Banc of California Reports Second Quarter 2021 Financial Results

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Banc of California, Inc. (NYSE: BANC) today reported net income of $19.1 million and net income available to common stockholders for the second quarter of 2021 of $17.3 million, or diluted earnings per common share of $0.34.

Highlights for the second quarter included:

  • Return on average assets of 0.98%
  • Total loan production of $904.1 million, including loan fundings of $847.0 million
  • Period-end total cost of deposits of 0.20% and average cost of total deposits of 0.23%, a 5 basis point decrease from the prior quarter
  • Net interest margin expanded to 3.27%, an 8 basis point increase from the prior quarter
  • Noninterest-bearing deposit balances represented 29% of total deposits at June 30, 2021, up from 23% a year earlier
  • Allowance for credit losses at 1.33% of total loans and 155% of non-performing loans
  • Total deferrals/forbearances declined to $86.6 million at June 30, 2021 from $108.7 million at March 31, 2021
  • Common Equity Tier 1 capital at 11.14%

Jared Wolff, President & CEO of Banc of California, commented, “Our strong second quarter results reflect the acceleration of our organic growth and our success in attracting new commercial client relationships. During the second quarter, our total loans increased at an annualized rate of 15%. The significant loan growth combined with an expanding net interest margin and disciplined expense control helped to produce a solid quarter of earnings.”

Mr. Wolff continued, “Our loan pipeline remains strong. We believe that we are well positioned to deliver continued organic balance sheet growth and even greater profitability in the second half of the year, barring any setbacks to the economic recovery. We will also benefit from the significant earnings accretion that we expect from the Pacific Mercantile Bancorp acquisition, which we anticipate to close during the third quarter. We now have visibility on cost savings of at least 40%, with substantially all of the savings expected to be realized by the end of this year.”

Lynn Hopkins, Chief Financial Officer of Banc of California, said, “The continued decline in our deposit costs combined with the redeployment of our excess liquidity into higher yielding earning assets drove an eight basis point increase in our net interest margin to 3.27%. We continued to drive a positive shift in the composition of our funding base with eight consecutive quarters of demand deposit growth, which now account for 65% of our total deposits. We also saw improved asset quality with declines in total delinquencies, deferrals and non-performing loans. As a result of the positive trends in asset quality and improving economic forecasts, we had a reserve release this quarter while still maintaining a high coverage ratio of allowance to total loans of 1.33%. Our capital optimization actions resulted in a $1.4 million increase to net income available to common stockholders in the second quarter following the redemption of our Series D Preferred Stock, and we continue to view the redemption of our Series E Preferred Stock as a late 2021 or early 2022 event, subject to regulatory approval, which we expect to provide additional earnings accretion.”

Income Statement Highlights

 

Three Months Ended

 

Six Months Ended

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

 

September 30,
2020

 

June 30,
2020

 

June 30,
2021

 

June 30,
2020

 

($ in thousands)

Total interest and dividend income

$

69,677

 

 

 

$

68,618

 

 

 

$

73,530

 

 

$

69,666

 

 

$

72,697

 

 

 

$

138,295

 

 

 

$

147,411

 

 

Total interest expense

9,830

 

 

 

10,702

 

 

 

11,967

 

 

13,811

 

 

17,382

 

 

 

20,532

 

 

 

40,235

 

 

Net interest income

59,847

 

 

 

57,916

 

 

 

61,563

 

 

55,855

 

 

55,315

 

 

 

117,763

 

 

 

107,176

 

 

Total noninterest income

4,170

 

 

 

4,381

 

 

 

6,975

 

 

3,954

 

 

5,528

 

 

 

8,551

 

 

 

7,589

 

 

Total revenue

64,017

 

 

 

62,297

 

 

 

68,538

 

 

59,809

 

 

60,843

 

 

 

126,314

 

 

 

114,765

 

 

Total noninterest expense

40,559

 

 

 

46,735

 

 

 

38,950

 

 

40,394

 

 

72,770

 

 

 

87,294

 

 

 

119,689

 

 

Pre-tax / pre-provision income (loss)

23,458

 

 

 

15,562

 

 

 

29,588

 

 

19,415

 

 

(11,927

)

 

 

39,020

 

 

 

(4,924

)

 

(Reversal of) provision for credit losses

(2,154

)

 

 

(1,107

)

 

 

991

 

 

1,141

 

 

11,826

 

 

 

(3,261

)

 

 

27,587

 

 

Income tax expense (benefit)

6,562

 

 

 

2,294

 

 

 

6,894

 

 

2,361

 

 

(5,304

)

 

 

8,856

 

 

 

(7,469

)

 

Net income (loss)

$

19,050

 

 

 

$

14,375

 

 

 

$

21,703

 

 

$

15,913

 

 

$

(18,449

)

 

 

$

33,425

 

 

 

$

(25,042

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

$

17,323

 

 

 

$

7,825

 

 

 

$

17,706

 

 

$

12,084

 

 

$

(21,936

)

 

 

$

25,088

 

 

 

$

(31,630

)

 

(1)

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

Net interest income

Q2-2021 vs Q1-2021

Net interest income increased $1.9 million to $59.8 million for the second quarter due to the higher yield on earning-assets, the lower cost and volume of interest-bearing liabilities, and the impact of one additional day in the current quarter.

The net interest margin increased 8 basis points to 3.27% for the second quarter from 3.19% for the first quarter as the average earning-assets yield increased 3 basis points and the average cost of total funding decreased 6 basis points. The yield on average interest-earning assets increased to 3.81% for the second quarter from 3.78% for the first quarter due mostly to an improved earning-asset mix as excess liquidity was redeployed. Average securities increased $72.1 million while average other interest-earning assets decreased $77.5 million and loans decreased by $12.6 million. The average yield on loans remained unchanged at 4.30% during the second quarter and included the impact of prepayment penalty fees, net reversal of nonaccrual loan interest, and accelerated fees from PPP loan forgiveness; these items increased the second quarter loan yield by 18 basis points and the first quarter loan yield by 13 basis points. The average yield on securities increased 1 basis point to 2.14% between quarters, including a 4 basis points decrease in the average yield on collateralized loan obligations (CLOs) to 1.87% for the second quarter due mostly to an increase in fair value of such investments.

The average cost of funds decreased 6 basis points to 0.57% for the second quarter from 0.63% for the first quarter. This decrease was driven by the lower average cost of interest-bearing liabilities and improved funding mix, including higher average noninterest-bearing deposits. During the second quarter, average deposits increased $52.8 million, consisting of higher average noninterest-bearing deposits of $114.2 million and lower average interest-bearing deposits of $61.4 million. Average noninterest-bearing deposits represented 28% of total average deposits for the second quarter compared to 27% of total average deposits for the first quarter. Average Federal Home Loan Bank (FHLB) advances decreased $28.5 million due to lower average term advances during the second quarter from maturities of term advances in the first and second quarters of 2021. Average long-term debt and other interest-bearing liabilities increased $13.9 million as a result of an increase in unsecured overnight borrowings from various financial institutions through the American Financial Exchange platform. The average cost of interest-bearing liabilities decreased 6 basis points to 0.77% for the second quarter from 0.83% for the first quarter due to continuing to actively managing down the cost of interest-bearing deposits. The average cost of interest-bearing deposits declined 6 basis points to 0.32% for the second quarter from 0.38% for the first quarter. The average cost of total deposits decreased 5 basis points to 0.23% for the second quarter. The spot rate of total deposits at the end of the second quarter was 0.20%.

YTD 2021 vs YTD 2020

Net interest income for the six months ended June 30, 2021 increased $10.6 million to $117.8 million from $107.2 million for the same 2020 period. Net interest income was positively impacted by higher average interest-earning assets, lower average interest-earning liabilities and improved funding costs, offset by lower yields on average interest-earning assets. For the six months ended June 30, 2021, average interest-earning assets increased $233.8 million to $7.35 billion, and the net interest margin increased 20 basis points to 3.23% for the six months ended June 30, 2021 compared to 3.03% for the same 2020 period.

The net interest margin expanded due to a 62 basis point decrease in the average cost of funds outpacing a 37 basis point decline in the average interest-earning assets yield. The average yield on interest-earning assets decreased to 3.80% for the six months ended June 30, 2021, from 4.17% for same 2020 period due mostly to the impact of lower market interest rates on loan and securities yields over this time period. The average fed funds rate for the six months ended June 30, 2021 was 0.08% compared to 0.66% for the same 2020 period. The average yield on loans was 4.30% for the six months ended June 30, 2021, compared to 4.52% for the same 2020 period and the average yield on securities decreased 98 basis points to 2.14% due mostly to CLOs repricing into the lower rate environment.

The average cost of funds decreased to 0.60% for the six months ended June 30, 2021, from 1.22% for the same 2020 period. This decrease was driven by the lower average cost of interest-bearing liabilities and the improved funding mix, including higher average noninterest-bearing deposits. The average cost of interest-bearing liabilities decreased 70 basis points to 0.80% for the six months ended June 30, 2021 from 1.50% for the same 2020 period due to the combination of actively managing deposit pricing down into the lower interest rate environment and the lower average cost of FHLB term advances resulting from maturities, early termination and refinancing of certain term advances during 2020. Compared to the same 2020 period, the average cost of interest-bearing deposits declined 81 basis points to 0.35% and the average cost of total deposits decreased 65 basis points to 0.25%. Additionally, average noninterest-bearing deposits increased by $469.4 million or 37.8% for the six months ended June 30, 2021 when compared to the same 2020 period.

Provision for credit losses

Q2-2021 vs Q1-2021

The provision for credit losses was a reversal of $2.2 million for the second quarter, compared to a reversal of $1.1 million for the first quarter. The second quarter reversal of credit losses was due primarily to improvements in key macro-economic forecast variables, such as unemployment and gross domestic product, and consideration of credit quality metrics, offset by higher period end loan balances of $221.1 million.

YTD 2021 vs YTD 2020

During the six months ended June 30, 2021, the provision for credit losses was a reversal of $3.3 million, compared to a provision of $27.6 million during the same 2020 period. The lower provision for credit losses was due primarily to improvements in key macro-economic forecast variables, such as unemployment and gross domestic product, and consideration of credit quality metrics, offset by higher period end loan balances of $357.8 million.

Noninterest income

Q2-2021 vs Q1-2021

Noninterest income decreased $211 thousand, to $4.2 million for the second quarter due mostly to certain legal settlements for the benefit of the Company occurring in the first quarter and recorded in other income. Customer service fees increased by $232 thousand due to higher loan fees of $91 thousand due to extension fees and higher deposit activity fees of $140 thousand attributed to higher average deposit balances and our initiative to bring our service fee schedules more in line with market.

YTD 2021 vs YTD 2020

Noninterest income for the six months ended June 30, 2021 increased $1.0 million to $8.6 million compared to the same 2020 period. The increase in noninterest income was mainly due to higher customer service fees and lower fair value adjustment for loans held for sale, offset by lower net gain on sale of securities. The $1.4 million increase in customer services fees was due to higher loan fees of $363 thousand and higher deposit and interchange fees of $1.1 million. The increase in deposit activity fees is attributed to higher average deposit balances, and our initiative to bring our service fee schedules more in line with market. Fair value adjustment for loans held for sale improved $1.6 million as the comparable period included valuation losses on loans held for sale due to the impact of the decreases in market interest rates; there were no similar losses in 2021. The were no gains from sale of securities for the six months ended June 30, 2021, compared to $2.0 million in net gains in the same 2020 period from the sale of $20.7 million in securities, primarily consisting of corporate securities.

Noninterest expense

Q2-2021 vs Q1-2021

Noninterest expense decreased $6.2 million to $40.6 million for the second quarter compared to the prior quarter. The decrease was primarily due to lower professional fees of $2.3 million and higher net gain in alternative energy partnership investments of $4.5 million, offset by higher all other expense of $1.2 million. Professional fees included net recoveries of indemnified legal expenses of $1.3 million in the second quarter compared to net indemnified legal expenses of $721 thousand during the first quarter. The increase in all other expense was due to a $1.2 million increase in net losses on equity investments due to net losses of $727 thousand in the second quarter compared to net gains of $428 thousand in the prior quarter. Our equity investments without readily determinable fair values include investments in privately held companies and limited partnerships and our income or loss from these investments fluctuates based on their underlying performance. Total operating costs, defined as noninterest expense adjusted for certain non-core items (refer to section Non-GAAP Measures), increased $288 thousand to $42.0 million for the second quarter compared to $41.7 million for the prior quarter primarily due to the aforementioned net losses on equity investments offset by lower salaries and benefits and professional fees.

YTD 2021 vs YTD 2020

Noninterest expense for the six months ended June 30, 2021 decreased $32.4 million to $87.3 million compared to the prior year. The decrease was primarily due to: (i) the same 2020 period including a $26.8 million one-time charge related to the termination of our LAFC naming rights agreements and a $2.5 million debt extinguishment fee associated with the early repayment of certain FHLB term advances, (ii) lower professional fees of $4.8 million, due to overall reductions in indemnified legal fees for resolved legal proceedings and various other litigations, (iii) lower advertising fees of $2.7 million due to the termination of our LAFC agreements in May 2020 and (iv) lower all other expense of $4.2 million resulting from overall expense reduction efforts, the comparable 2020 period including the aforementioned $2.5 million debt extinguishment fee and a $1.2 million charge to settle and conclude two legacy legal matters, and a $304 thousand increase in loss on equity investments between periods. These decreases were partially offset by higher (i) salaries and employee benefits of $3.1 million due to higher commissions and incentive-based compensation, (ii) merger-related costs of $1.4 million associated with our proposed merger with PMB, and (iii) net losses in alternative energy partnership investments of $1.1 million.

Income taxes

Q2-2021 vs Q1-2021

Income tax expense totaled $6.6 million for the second quarter resulting in an effective tax rate of 25.6% compared to $2.3 million for the first quarter and an effective tax rate of 13.8%. The higher effective tax rate between quarters was due to the first quarter including a net tax benefit of $2.1 million resulting from the exercise of all previously issued outstanding stock appreciation rights. The effective tax rate is expected to be in the 25% to 27% range for the remaining quarters in 2021.

YTD 2021 vs YTD 2020

Income tax expense totaled $8.9 million for the six months ended June 30, 2021, representing an effective tax rate of 20.9%, compared to an income tax benefit of $7.5 million and an effective tax rate of 23.0% for the same 2020 period. The effective tax rate for the six months ended June 30, 2021 differs from the 21% federal statutory rate due primarily to the aforementioned tax benefit resulting from the exercise of all previously issued outstanding stock appreciation rights.

Balance Sheet

At June 30, 2021, total assets were $8.03 billion, which represented a linked-quarter increase of $94.0 million. The following table shows selected balance sheet line items as of the dates indicated.

 

 

 

Amount Change

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

 

September 30,
2020

 

June 30,
2020

 

Q2-21 vs. Q1-
21

 

Q2-21 vs. Q2-
20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

Securities available-for-sale

$

1,353,154

 

 

$

1,270,830

 

 

$

1,231,431

 

 

$

1,245,867

 

 

$

1,176,029

 

 

$

82,324

 

 

 

$

177,125

 

 

Loans held-for-investment

$

5,985,477

 

 

$

5,764,401

 

 

$

5,898,405

 

 

$

5,678,002

 

 

$

5,627,696

 

 

$

221,076

 

 

 

$

357,781

 

 

Loans held-for-sale

$

2,853

 

 

$

1,408

 

 

$

1,413

 

 

$

1,849

 

 

$

19,768

 

 

$

1,445

 

 

 

$

(16,915

)

 

Total assets

$

8,027,413

 

 

$

7,933,459

 

 

$

7,877,334

 

 

$

7,738,106

 

 

$

7,770,138

 

 

$

93,954

 

 

 

$

257,275

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

$

1,808,918

 

 

$

1,700,343

 

 

$

1,559,248

 

 

$

1,450,744

 

 

$

1,391,504

 

 

$

108,575

 

 

 

$

417,414

 

 

Total deposits

$

6,206,544

 

 

$

6,142,042

 

 

$

6,085,800

 

 

$

6,032,266

 

 

$

6,037,465

 

 

$

64,502

 

 

 

$

169,079

 

 

Borrowings (1)

$

871,973

 

 

$

891,546

 

 

$

796,110

 

 

$

733,105

 

 

$

790,707

 

 

$

(19,573

)

 

 

$

81,266

 

 

Total liabilities

$

7,198,051

 

 

$

7,128,766

 

 

$

6,980,127

 

 

$

6,863,852

 

 

$

6,923,179

 

 

$

69,285

 

 

 

$

274,872

 

 

Total equity

$

829,362

 

 

$

804,693

 

 

$

897,207

 

 

$

874,254

 

 

$

846,959

 

 

$

24,669

 

 

 

$

(17,597

)

 

(1)

Represents Advances from Federal Home Loan Bank, Notes Payable, Net and Other Borrowings

Investments

Securities available-for-sale increased $82.3 million during the second quarter to $1.35 billion at June 30, 2021 primarily due to purchases of $174.0 million, offset by calls and maturities of $100.2 million and principal payments of $4.6 million, and higher unrealized net gains of $13.5 million. The increase in unrealized net gains was due mostly to increases in the value of mortgage-backed securities as a result of decreases in longer term interest rates during the second quarter, coupled with improved pricing of CLOs and corporate debt securities due to lower credit spreads. As of June 30, 2021, our securities portfolio included $584.3 million of CLOs, $462.9 million of agency securities, $121.0 million of municipal securities, $168.6 million of corporate debt securities, and $16.2 million of SBA pool securities. The CLO portfolio, which is comprised only of AA and AAA rated securities, represented 43.2% of the total securities portfolio and the carrying value included an unrealized net loss of $3.0 million at June 30, 2021 compared to an unrealized net loss of $3.6 million at March 31, 2021.

Loans

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

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

 

September 30,
2020

 

June 30,
2020

 

($ in thousands)

Composition of held-for-investment loans

 

 

 

 

 

 

 

 

 

Commercial real estate

$

871,790

 

 

$

839,965

 

 

$

807,195

 

 

$

826,683

 

 

$

822,694

 

Multifamily

1,325,770

 

 

1,258,278

 

 

1,289,820

 

 

1,476,803

 

 

1,434,071

 

Construction

150,557

 

 

169,122

 

 

176,016

 

 

197,629

 

 

212,979

 

Commercial and industrial

725,596

 

 

760,150

 

 

748,299

 

 

710,667

 

 

764,839

 

Commercial and industrial - warehouse lending

1,345,314

 

 

1,118,175

 

 

1,340,009

 

 

876,157

 

 

672,151

 

SBA

253,924

 

 

338,903

 

 

273,444

 

 

320,573

 

 

310,784

 

Total commercial loans

4,672,951

 

 

4,484,593

 

 

4,634,783

 

 

4,408,512

 

 

4,217,518

 

Single-family residential mortgage

1,288,176

 

 

1,253,251

 

 

1,230,236

 

 

1,234,479

 

 

1,370,785

 

Other consumer

24,350

 

 

26,557

 

 

33,386

 

 

35,011

 

 

39,393

 

Total consumer loans

1,312,526

 

 

1,279,808

 

 

1,263,622

 

 

1,269,490

 

 

1,410,178

 

Total gross loans

$

5,985,477

 

 

$

5,764,401

 

 

$

5,898,405

 

 

$

5,678,002

 

 

$

5,627,696

 

Composition percentage of held-for-investment loans

 

 

 

 

 

 

 

 

 

Commercial real estate

14.6

%

 

14.6

%

 

13.7

%

 

14.6

%

 

14.6

%

Multifamily

22.2

%

 

21.8

%

 

21.9

%

 

26.0

%

 

25.5

%

Construction

2.5

%

 

2.9

%

 

3.0

%

 

3.5

%

 

3.8

%

Commercial and industrial

12.1

%

 

13.2

%

 

12.7

%

 

12.5

%

 

13.6

%

Commercial and industrial - warehouse lending

22.5

%

 

19.4

%

 

22.6

%

 

15.5

%

 

11.9

%

SBA

4.2

%

 

5.9

%

 

4.6

%

 

5.6

%

 

5.5

%

Total commercial loans

78.1

%

 

77.8

%

 

78.5

%

 

77.7

%

 

74.9

%

Single-family residential mortgage

21.5

%

 

21.7

%

 

20.9

%

 

21.7

%

 

24.4

%

Other consumer

0.4

%

 

0.5

%

 

0.6

%

 

0.6

%

 

0.7

%

Total consumer loans

21.9

%

 

22.2

%

 

21.5

%

 

22.3

%

 

25.1

%

Total gross loans

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

Held-for-investment loans increased $221.1 million to $5.99 billion from the prior quarter, resulting from higher commercial and industrial (C&I) loans related to our warehouse credit facilities of $227.1 million and increases in multifamily loans of $67.5 million and commercial real estate loans of $31.8 million. The increases were partially offset by decreases in construction loans of $18.6 million due to prepayment activity and SBA loans of $85.0 million due mostly to the forgiveness of $94.9 million in PPP loans during the quarter, offset by $11.8 million of PPP loans originated and outstanding at June 30, 2021. At June 30, 2021, SBA loans included $193.9 million of PPP loans, net of fees, of which $65.5 million related to PPP loans originated in 2020.

The C&I industry concentrations in dollars and as a percentage of total outstanding C&I loan balances are summarized below:

 

June 30, 2021

 

Amount

 

% of Portfolio

 

($ in thousands)

C&I Portfolio by Industry

 

 

 

Finance and Insurance - Warehouse Lending

$

1,345,314

 

 

65

%

Real Estate & Rental Leasing

192,323

 

 

9

%

Finance and Insurance - Other

84,528

 

 

4

%

Gas Stations

73,169

 

 

4

%

Healthcare

71,941

 

 

3

%

Wholesale Trade

40,757

 

 

2

%

Manufacturing

34,086

 

 

2

%

Television / Motion Pictures

30,002

 

 

1

%

Food Services

29,371

 

 

1

%

Other Retail Trade

28,999

 

 

1

%

Professional Services

19,448

 

 

1

%

Transportation

4,739

 

 

%

Accommodations

2,200

 

 

%

All Other

114,033

 

 

6

%

Total

$

2,070,910

 

 

100

%

Deposits

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

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

 

September 30,
2020

 

June 30,
2020

 

($ in thousands)

Composition of deposits

 

 

 

 

 

 

 

 

 

Noninterest-bearing checking

$

1,808,918

 

 

$

1,700,343

 

 

$

1,559,248

 

 

$

1,450,744

 

 

$

1,391,504

 

Interest-bearing checking

2,217,306

 

 

2,088,528

 

 

2,107,942

 

 

2,045,115

 

 

1,846,698

 

Savings

901,334

 

 

909,631

 

 

932,363

 

 

946,293

 

 

939,018

 

Money market

692,390

 

 

775,072

 

 

714,297

 

 

689,769

 

 

765,854

 

Non-brokered certificates of deposit

586,596

 

 

668,468

 

 

755,727

 

 

820,531

 

 

924,630

 

Brokered certificates of deposit

 

 

 

 

16,223

 

 

79,814

 

 

169,761

 

Total deposits

$

6,206,544

 

 

$

6,142,042

 

 

$

6,085,800

 

 

$

6,032,266

 

 

$

6,037,465

 

Composition percentage of deposits

 

 

 

 

 

 

 

 

 

Noninterest-bearing checking

29.1

%

 

27.7

%

 

25.6

%

 

24.1

%

 

23.0

%

Interest-bearing checking

35.7

%

 

34.0

%

 

34.6

%

 

33.9

%

 

30.6

%

Savings

14.5

%

 

14.8

%

 

15.3

%

 

15.7

%

 

15.6

%

Money market

11.2

%

 

12.6

%

 

11.7

%

 

11.4

%

 

12.7

%

Non-brokered certificates of deposit

9.5

%

 

10.9

%

 

12.4

%

 

13.6

%

 

15.3

%

Brokered certificates of deposit

%

 

%

 

0.4

%

 

1.3

%

 

2.8

%

Total deposits

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

Total deposits increased $64.5 million during the second quarter of 2021 to $6.21 billion due to higher noninterest-bearing checking balances of $108.6 million and interest-bearing checking of $128.8 million, offset by lower money market balances of $82.7 million, savings balances of $8.3 million, and non-brokered certificates of deposit of $81.9 million. We continue to focus on growing relationship-based deposits, strategically augmented by wholesale funding, as we actively managed down deposit costs in response to the current interest rate environment. Noninterest-bearing deposits totaled $1.81 billion and represented 29.1% of total deposits at June 30, 2021 compared to $1.70 billion, or 27.7% of total deposits, at March 31, 2021.

Debt

Advances from the FHLB decreased $144.7 million to $490.4 million, as of June 30, 2021, due to lower overnight advances, and maturities of $5.0 million in term advances during the second quarter. At June 30, 2021, FHLB advances included $85.0 million in overnight borrowings and $411.0 million in term advances with a weighted average life of 4.5 years and weighted average interest rate of 2.53%. Other borrowings totaled $125.0 million at June 30, 2021 and related to unsecured overnight borrowing from various financial institutions through the American Financial Exchange platform.

Equity

At June 30, 2021, total stockholders’ equity increased by $24.7 million to $829.4 million and tangible common equity increased by $25.0 million to $695.2 million on a linked-quarter basis. The increase in total stockholders’ equity for the second quarter included net income of $19.1 million, share-based award compensation of $1.3 million, and higher net accumulated other comprehensive income of $9.6 million, offset by dividends to common and preferred stockholders of $4.7 million and the impact of vested and exercised share-based awards of $0.5 million. Tangible book value per share increased to $13.69 as of June 30, 2021 from $13.24 at March 31, 2021.

Capital ratios remain strong with total risk-based capital at 15.33% and a tier 1 leverage ratio of 9.89%. The following table sets forth our regulatory capital ratios at June 30, 2021 and the previous four quarters. The interim capital relief related to the adoption of the current expected credit losses (CECL) accounting standard increased the Bank's leverage ratio by approximately 8 basis points at June 30, 2021.

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

 

September 30,
2020

 

June 30,
2020

Capital Ratios(1)

 

 

 

 

 

 

 

 

 

Banc of California, Inc.

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

15.33

%

 

15.87

%

 

17.01

%

 

16.19

%

 

16.35

%

Tier 1 risk-based capital ratio

12.71

%

 

13.17

%

 

14.35

%

 

14.94

%

 

15.10

%

Common equity tier 1 capital ratio

11.14

%

 

11.50

%

 

11.19

%

 

11.59

%

 

11.68

%

Tier 1 leverage ratio

9.89

%

 

9.62

%

 

10.90

%

 

10.79

%

 

10.56

%

Banc of California, NA

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

17.25

%

 

17.82

%

 

17.27

%

 

18.14

%

 

18.17

%

Tier 1 risk-based capital ratio

16.09

%

 

16.57

%

 

16.02

%

 

16.89

%

 

16.92

%

Common equity tier 1 capital ratio

16.09

%

 

16.57

%

 

16.02

%

 

16.89

%

 

16.92

%

Tier 1 leverage ratio

12.52

%

 

12.13

%

 

12.19

%

 

12.21

%

 

11.84

%

(1)

June 30, 2021 capital ratios are preliminary.

Credit Quality

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

 

September 30,
2020

 

June 30,
2020

Asset quality information and ratios

($ in thousands)

Delinquent loans held-for-investment

 

 

 

 

 

 

 

 

 

30 to 89 days delinquent

$

16,983

 

 

$

31,005

 

 

$

13,981

 

 

$

51,229

 

 

$

49,810

 

90+ days delinquent

17,998

 

 

30,292

 

 

17,636

 

 

31,809

 

 

45,384

 

Total delinquent loans

$

34,981

 

 

$

61,297

 

 

$

31,617

 

 

$

83,038

 

 

$

95,194

 

Total delinquent loans to total loans

0.58

%

 

1.06

%

 

0.54

%

 

1.46

%

 

1.69

%

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

 

 

 

 

 

 

 

 

 

Non-accrual loans

$

51,299

 

 

$

55,920

 

 

$

35,900

 

 

$

66,337

 

 

$

72,703

 

90+ days delinquent and still accruing loans

 

 

 

 

728

 

 

547

 

 

 

Non-performing loans

51,299

 

 

55,920

 

 

36,628

 

 

66,884

 

 

72,703

 

Other real estate owned

3,253

 

 

 

 

 

 

 

 

 

Non-performing assets

$

54,552

 

 

$

55,920

 

 

$

36,628

 

 

$

66,884

 

 

$

72,703

 

ALL to non-performing loans

147.93

%

 

141.90

%

 

221.22

%

 

135.95

%

 

124.30

%

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

0.86

%

 

0.97

%

 

0.62

%

 

1.18

%

 

1.29

%

Non-performing assets to total assets

0.68

%

 

0.70

%

 

0.46

%

 

0.86

%

 

0.94

%

Troubled debt restructurings (TDRs)

 

 

 

 

 

 

 

 

 

Performing TDRs

$

6,029

 

 

$

6,347

 

 

$

4,733

 

 

$

5,408

 

 

$

5,597

 

Non-performing TDRs

3,120

 

 

4,130

 

 

4,264

 

 

20,002

 

 

20,275

 

Total TDRs

$

9,149

 

 

$

10,477

 

 

$

8,997

 

 

$

25,410

 

 

$

25,872

 

Total delinquent loans decreased $26.3 million in the second quarter to $35.0 million at June 30, 2021, due to $45.5 million returning to current status offset by $19.8 million of additions including $4.3 million in guaranteed SBA loans that were repurchased and are pending resolution. Delinquent loans included single-family residential (SFR) loans of $21.7 million, or 62% of the total delinquent balance at quarter end, and represented $26.1 million of the quarter over quarter decrease. Excluding delinquent SFR loans, the remaining delinquent loans totaled $13.3 million, or 0.28% of total loans at June 30, 2021.

Non-performing loans decreased $4.6 million to $51.3 million as of June 30, 2021, of which $32.0 million, or 62%, relates to loans in a current payment status. The second quarter decrease was due to $16.1 million in cured loans and payoffs offset by $11.5 million of loans placed on non-accrual status, including $6.6 million in guaranteed SBA loans that were repurchased and are pending resolution. At June 30, 2021, non-performing loans included (i) a legacy relationship totaling $7.2 million that is well-secured by a combination of commercial real estate and SFR properties with an average loan-to-value ratio of 50%, (ii) SFR loans totaling $21.2 million, (iii) repurchased guaranteed SBA loans of $6.6 million, and (iv) other commercial loans of $16.3 million.

At June 30, 2021, non-performing assets includes other real estate, consisting of one SFR property, totaling $3.3 million.

In light of the pandemic, we provided support to clients by granting loan deferments or forbearances. The loans on deferment or forbearance status as of the dates indicated are shown below:

 

June 30, 2021

 

March 31, 2021

 

Count

 

Amount(1)

 

% of Loans in
Category

 

Count

 

Amount

 

% of Loans
in Category

 

($ in thousands)

Single-family residential mortgage

46

 

 

$

52,384

 

 

4

%

 

47

 

 

$

48,831

 

 

4

%

All other loans

10

 

 

34,174

 

 

1

%

 

15

 

 

59,858

 

 

1

%

Total

56

 

 

$

86,558

 

 

1

%

 

62

 

 

$

108,689

 

 

2

%

(1)

Includes loans in the process of deferment or forbearance which are not reported as delinquent.

Allowance for Credit Losses

 

Three Months Ended

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

 

September 30,
2020

 

June 30,
2020

 

($ in thousands)

Allowance for loan losses (ALL)

 

 

 

 

 

 

 

 

 

Balance at beginning of period

$

79,353

 

 

 

$

81,030

 

 

 

$

90,927

 

 

 

$

90,370

 

 

 

$

78,243

 

 

Loans charged off

(886

)

 

 

(565

)

 

 

(11,520

)

 

 

(1,821

)

 

 

 

 

Recoveries

26

 

 

 

172

 

 

 

609

 

 

 

248

 

 

 

608

 

 

Net (charge-offs) recoveries

(860

)

 

 

(393

)

 

 

(10,911

)

 

 

(1,573

)

 

 

608

 

 

(Reversal of) provision for loan losses

(2,608

)

 

 

(1,284

)

 

 

1,014

 

 

 

2,130

 

 

 

11,519

 

 

Balance at end of period

$

75,885

 

 

 

$

79,353

 

 

 

$

81,030

 

 

 

$

90,927

 

 

 

$

90,370

 

 

Reserve for unfunded loan commitments

 

 

 

 

 

 

 

 

 

Balance at beginning of period

$

3,360

 

 

 

$

3,183

 

 

 

$

3,206

 

 

 

$

4,195

 

 

 

$

3,888

 

 

Provision for (reversal of) credit losses

454

 

 

 

177

 

 

 

(23

)

 

 

(989

)

 

 

307

 

 

Balance at end of period

3,814

 

 

 

3,360

 

 

 

3,183

 

 

 

3,206

 

 

 

4,195

 

 

Allowance for credit losses (ACL)

$

79,699

 

 

 

$

82,713

 

 

 

$

84,213

 

 

 

$

94,133

 

 

 

$

94,565

 

 

 

 

 

 

 

 

 

 

 

 

ALL to total loans

1.27

 

%

 

1.38

 

%

 

1.37

 

%

 

1.60

 

%

 

1.61

 

%

ACL to total loans

1.33

 

%

 

1.43

 

%

 

1.43

 

%

 

1.66

 

%

 

1.68

 

%

ACL to total loans, excluding PPP loans

1.38

 

%

 

1.51

 

%

 

1.48

 

%

 

1.74

 

%

 

1.76

 

%

ACL to NPLs

155.36

 

%

 

147.91

 

%

 

229.91

 

%

 

140.74

 

%

 

130.07

 

%

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

0.06

 

%

 

0.03

 

%

 

0.77

 

%

 

0.12

 

%

 

(0.04

)

%

 

 

 

 

 

 

 

 

 

 

Reserve for loss on repurchased loans

 

 

 

 

 

 

 

 

 

Balance at beginning of period

$

5,383

 

 

 

$

5,515

 

 

 

$

5,487

 

 

 

$

5,567

 

 

 

$

5,601

 

 

Initial provision for loan repurchases

 

 

 

 

 

 

 

 

 

11

 

 

 

 

 

(Reversal of) provision for loan repurchases

(99

)

 

 

(132

)

 

 

28

 

 

 

(91

)

 

 

(34

)

 

Utilization of reserve for loan repurchases

(189

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at end of period

$

5,095

 

 

 

$

5,383

 

 

 

$

5,515

 

 

 

$

5,487

 

 

 

$

5,567

 

 

The allowance for expected credit losses (ACL), which includes the reserve for unfunded loan commitments, totaled $79.7 million, or 1.33% of total loans, at June 30, 2021, compared to $82.7 million, or 1.43% of total loans, at March 31, 2021. The $3.0 million decrease in the ACL was due to: (i) lower general reserves of $3.3 million from portfolio mix, including higher portfolio balances, offset by improved economic assumptions and asset quality trends, (ii) net charge-offs of $860 thousand, and (iii) higher specific reserves of $1.2 million. The ACL coverage of non-performing loans was 155% at June 30, 2021 compared to 148% at March 31, 2021.

Our ACL methodology uses a nationally recognized, third-party model that includes many assumptions based on historical and peer loss data, current loan portfolio risk profile including risk ratings, and economic forecasts including macroeconomic variables (MEVs) released by our model provider during June 2021. In contrast to the March 2021 forecasts, the assumptions in the June 2021 forecasts generally reflect a more favorable view of the economy (i.e. higher GDP growth rates and lower unemployment rates). While the June 2021 forecasts reflect an improving economy with the rollout of the vaccine and other factors, there continues to be uncertainty regarding the impact of inflation (lasting or transitory), COVID-19 variants and the ultimate pace of the recovery. Accordingly, our economic assumptions and the resulting ACL level and provision reversal consider both the positive assumptions and potential uncertainties. The ACL also incorporated qualitative factors to account for certain loan portfolio characteristics that are not taken into consideration by the third-party model including underlying strengths and weaknesses in various segments of the loan portfolio. As is the case with all estimates, the ACL is expected to be impacted in future periods by economic volatility, changing economic forecasts, underlying model assumptions, and asset quality metrics, all of which may be better than or worse than current estimates.

The Company will host a conference call to discuss its second quarter 2021 financial results at 10:00 a.m. Pacific Time (PT) on Thursday, July 22, 2021. Interested parties are welcome to attend the conference call by dialing (888) 317-6003, and referencing event code 7494802. 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 10157715.

About Banc of California, Inc.

Banc of California, Inc. (NYSE: BANC) is a bank holding company with approximately $8.0 billion in assets and one wholly-owned banking subsidiary, Banc of California, N.A. (the Bank). The Bank has 36 offices including 30 full-service branches located throughout Southern California. Through our dedicated professionals, we provide customized and innovative banking and lending solutions to businesses, entrepreneurs and individuals throughout California. We help to improve the communities where we live and work, by supporting organizations that provide financial literacy and job training, small business support and affordable housing. With a commitment to service and to building enduring relationships, we provide a higher standard of banking. We look forward to helping you achieve your goals. For more information, please visit us at www.bancofcal.com.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the “Safe-Harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are necessarily subject to risk and uncertainty and actual results could differ materially from those anticipated due to various factors, including those set forth from time to time in the documents filed or furnished by Banc of California, Inc. with the Securities and Exchange Commission (SEC). In addition to those, statements about the potential effects of the COVID-19 pandemic on the business, financial results and condition of Banc of California, Inc. and its subsidiaries may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond the control of Banc of California, Inc., including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on Banc of California Inc. and its subsidiaries, their customers and third parties. Further, statements about the potential effects of the proposed acquisition of Pacific Mercantile Bancorp on the business, financial results and condition of Banc of California, Inc. and its subsidiaries may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond the control of Banc of California, Inc., including (i) the possibility that the merger does not close when expected or at all because required regulatory approvals, financial tests or other conditions to closing are not received or satisfied on a timely basis or at all; (ii) changes in Banc of California Inc.’s or Pacific Mercantile Bancorp’s stock price before closing, including as a result of its financial performance prior to closing, or more generally due to broader stock market movements, and the performance of financial companies and peer group companies; (iii) the risk that the benefits from the transaction may not be fully realized or may take longer to realize than expected, including as a result of changes in general economic and market conditions, interest and exchange rates, monetary policy, laws and regulations and their enforcement, and the degree of competition in the geographic and business areas in which Banc of California Inc. and Pacific Mercantile Bancorp operate; (iv) the ability to promptly and effectively integrate the businesses of Banc of California Inc. and Pacific Mercantile Bancorp; (v) the reaction to the transaction of the companies’ customers, employees and counterparties; (vi) diversion of management time on merger-related issues; (vii) lower than expected revenues, credit quality deterioration or a reduction in real estate values or a reduction in net earnings; and (viii) other risks that are described in Banc of California Inc.’s and Pacific Mercantile Bancorp’s public filings with the SEC. You should not place undue reliance on forward-looking statements and Banc of California, Inc. undertakes no obligation to update any such statements to reflect circumstances or events that occur after the date on which the forward-looking statement is made.

Banc of California, Inc.

Consolidated Statements of Financial Condition (Unaudited)

(Dollars in thousands)

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

 

September 30,
2020

 

June 30,
2020

ASSETS

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

163,332

 

 

 

$

379,509

 

 

 

$

220,819

 

 

 

$

292,490

 

 

 

$

420,640

 

 

Securities available-for-sale

1,353,154

 

 

 

1,270,830

 

 

 

1,231,431

 

 

 

1,245,867

 

 

 

1,176,029

 

 

Loans held-for-sale

2,853

 

 

 

1,408

 

 

 

1,413

 

 

 

1,849

 

 

 

19,768

 

 

Loans held-for-investment

5,985,477

 

 

 

5,764,401

 

 

 

5,898,405

 

 

 

5,678,002

 

 

 

5,627,696

 

 

Allowance for loan losses

(75,885

)

 

 

(79,353

)

 

 

(81,030

)

 

 

(90,927

)

 

 

(90,370

)

 

Federal Home Loan Bank and other bank stock

44,569

 

 

 

44,964

 

 

 

44,506

 

 

 

44,809

 

 

 

46,585

 

 

Servicing rights, net

1,162

 

 

 

1,407

 

 

 

1,454

 

 

 

1,621

 

 

 

1,753

 

 

Other real estate owned, net

3,253

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Premises and equipment, net

118,649

 

 

 

120,071

 

 

 

121,520

 

 

 

123,812

 

 

 

125,247

 

 

Alternative energy partnership investments, net

24,068

 

 

 

23,809

 

 

 

27,977

 

 

 

27,786

 

 

 

26,967

 

 

Goodwill

37,144

 

 

 

37,144

 

 

 

37,144

 

 

 

37,144

 

 

 

37,144

 

 

Other intangible assets, net

2,069

 

 

 

2,351

 

 

 

2,633

 

 

 

2,939

 

 

 

3,292

 

 

Deferred income tax, net

41,628

 

 

 

47,877

 

 

 

45,957

 

 

 

43,744

 

 

 

48,288

 

 

Income tax receivable

4,084

 

 

 

210

 

 

 

1,105

 

 

 

10,701

 

 

 

13,094

 

 

Bank owned life insurance investment

113,168

 

 

 

112,479

 

 

 

111,807

 

 

 

111,115

 

 

 

110,487

 

 

Right of use assets

20,364

 

 

 

22,069

 

 

 

19,633

 

 

 

18,909

 

 

 

19,408

 

 

Other assets

188,324

 

 

 

184,283

 

 

 

192,560

 

 

 

188,245

 

 

 

184,110

 

 

Total assets

$

8,027,413

 

 

 

$

7,933,459

 

 

 

$

7,877,334

 

 

 

$

7,738,106

 

 

 

$

7,770,138

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

$

1,808,918

 

 

 

$

1,700,343

 

 

 

$

1,559,248

 

 

 

$

1,450,744

 

 

 

$

1,391,504

 

 

Interest-bearing deposits

4,397,626

 

 

 

4,441,699

 

 

 

4,526,552

 

 

 

4,581,522

 

 

 

4,645,961

 

 

Total deposits

6,206,544

 

 

 

6,142,042

 

 

 

6,085,800

 

 

 

6,032,266

 

 

 

6,037,465

 

 

Advances from Federal Home Loan Bank

490,419

 

 

 

635,105

 

 

 

539,795

 

 

 

559,482

 

 

 

617,170

 

 

Other borrowings

125,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt, net

256,554

 

 

 

256,441

 

 

 

256,315

 

 

 

173,623

 

 

 

173,537

 

 

Reserve for loss on repurchased loans

5,095

 

 

 

5,383

 

 

 

5,515

 

 

 

5,487

 

 

 

5,567

 

 

Lease liabilities

21,588

 

 

 

23,173

 

 

 

20,647

 

 

 

19,938

 

 

 

20,531

 

 

Due on unsettled securities purchases

28,629

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accrued expenses and other liabilities

64,222

 

 

 

66,622

 

 

 

72,055

 

 

 

73,056

 

 

 

68,909

 

 

Total liabilities

7,198,051

 

 

 

7,128,766

 

 

 

6,980,127

 

 

 

6,863,852

 

 

 

6,923,179

 

 

Commitments and contingent liabilities

 

 

 

 

 

 

 

 

 

Preferred stock

94,956

 

 

 

94,956

 

 

 

184,878

 

 

 

184,878

 

 

 

185,037

 

 

Common stock

527

 

 

 

526

 

 

 

522

 

 

 

522

 

 

 

522

 

 

Common stock, class B non-voting non-convertible

5

 

 

 

5

 

 

 

5

 

 

 

5

 

 

 

5

 

 

Additional paid-in capital

630,654

 

 

 

629,844

 

 

 

634,704

 

 

 

633,409

 

 

 

632,117

 

 

Retained earnings

129,307

 

 

 

115,004

 

 

 

110,179

 

 

 

95,001

 

 

 

85,670

 

 

Treasury stock

(40,827

)

 

 

(40,827

)

 

 

(40,827

)

 

 

(40,827

)

 

 

(40,827

)

 

Accumulated other comprehensive income (loss), net

14,740

 

 

 

5,185

 

 

 

7,746

 

 

 

1,266

 

 

 

(15,565

)

 

Total stockholders’ equity

829,362

 

 

 

804,693

 

 

 

897,207

 

 

 

874,254

 

 

 

846,959

 

 

Total liabilities and stockholders’ equity

$

8,027,413

 

 

 

$

7,933,459

 

 

 

$

7,877,334

 

 

 

$

7,738,106

 

 

 

$

7,770,138

 

 

Banc of California, Inc.

Consolidated Statements of Operations (Unaudited)

(Dollars in thousands, except per share data)

 

Three Months Ended

 

Six Months Ended

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

 

September 30,
2020

 

June 30,
2020

 

June 30,
2021

 

June 30,
2020

Interest and dividend income

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

$

61,900

 

 

 

$

61,345

 

 

 

$

66,105

 

 

 

$

62,019

 

 

 

$

63,642

 

 

 

$

123,245

 

 

 

$

129,176

 

 

Securities

6,986

 

 

 

6,501

 

 

 

6,636

 

 

 

6,766

 

 

 

7,816

 

 

 

13,487

 

 

 

15,636

 

 

Other interest-earning assets

791

 

 

 

772

 

 

 

789

 

 

 

881

 

 

 

1,239

 

 

 

1,563

 

 

 

2,599

 

 

Total interest and dividend income

69,677

 

 

 

68,618

 

 

 

73,530

 

 

 

69,666

 

 

 

72,697

 

 

 

138,295

 

 

 

147,411

 

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

3,543

 

 

 

4,286

 

 

 

5,436

 

 

 

7,564

 

 

 

10,205

 

 

 

7,829

 

 

 

24,816

 

 

Federal Home Loan Bank advances

2,944

 

 

 

3,112

 

 

 

3,479

 

 

 

3,860

 

 

 

4,818

 

 

 

6,056

 

 

 

10,701

 

 

Notes payable and other interest-bearing liabilities

3,343

 

 

 

3,304

 

 

 

3,052

 

 

 

2,387

 

 

 

2,359

 

 

 

6,647

 

 

 

4,718

 

 

Total interest expense

9,830

 

 

 

10,702

 

 

 

11,967

 

 

 

13,811

 

 

 

17,382

 

 

 

20,532

 

 

 

40,235

 

 

Net interest income

59,847

 

 

 

57,916

 

 

 

61,563

 

 

 

55,855

 

 

 

55,315

 

 

 

117,763

 

 

 

107,176

 

 

(Reversal of) provision for credit losses

(2,154

)

 

 

(1,107

)

 

 

991

 

 

 

1,141

 

 

 

11,826

 

 

 

(3,261

)

 

 

27,587

 

 

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

62,001

 

 

 

59,023

 

 

 

60,572

 

 

 

54,714

 

 

 

43,489

 

 

 

121,024

 

 

 

79,589

 

 

Noninterest income

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer service fees

1,990

 

 

 

1,758

 

 

 

1,953

 

 

 

1,498

 

 

 

1,224

 

 

 

3,748

 

 

 

2,320

 

 

Loan servicing income

38

 

 

 

268

 

 

 

149

 

 

 

186

 

 

 

95

 

 

 

306

 

 

 

170

 

 

Income from bank owned life insurance

690

 

 

 

672

 

 

 

691

 

 

 

629

 

 

 

591

 

 

 

1,362

 

 

 

1,169

 

 

Net gain on sale of securities available for sale

 

 

 

 

 

 

 

 

 

 

 

 

2,011

 

 

 

 

 

 

2,011

 

 

Fair value adjustment on loans held for sale

20

 

 

 

 

 

 

36

 

 

 

24

 

 

 

25

 

 

 

20

 

 

 

(1,561

)

 

Net gain (loss) on sale of loans

 

 

 

 

 

 

 

 

 

272

 

 

 

 

 

 

 

 

 

(27

)

 

All other income

1,432

 

 

 

1,683

 

 

 

4,146

 

 

 

1,345

 

 

 

1,582

 

 

 

3,115

 

 

 

3,507

 

 

Total noninterest income

4,170

 

 

 

4,381

 

 

 

6,975

 

 

 

3,954

 

 

 

5,528

 

 

 

8,551

 

 

 

7,589

 

 

Noninterest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

25,042

 

 

 

25,719

 

 

 

25,836

 

 

 

23,277

 

 

 

24,260

 

 

 

50,761

 

 

 

47,696

 

 

Naming rights termination

 

 

 

 

 

 

 

 

 

 

 

 

26,769

 

 

 

 

 

 

26,769

 

 

Occupancy and equipment

7,277

 

 

 

7,196

 

 

 

7,560

 

 

 

7,457

 

 

 

7,090

 

 

 

14,473

 

 

 

14,333

 

 

Professional fees

1,749

 

 

 

4,022

 

 

 

29

 

 

 

5,147

 

 

 

4,596

 

 

 

5,771

 

 

 

10,560

 

 

Data processing

1,621

 

 

 

1,655

 

 

 

1,608

 

 

 

1,657

 

 

 

1,536

 

 

 

3,276

 

 

 

3,309

 

 

Advertising

78

 

 

 

118

 

 

 

171

 

 

 

219

 

 

 

1,157

 

 

 

196

 

 

 

2,913

 

 

Regulatory assessments

769

 

 

 

774

 

 

 

748

 

 

 

784

 

 

 

725

 

 

 

1,543

 

 

 

1,209

 

 

(Reversal of) provision for loan repurchase reserves

(99

)

 

 

(132

)

 

 

28

 

 

 

(91

)

 

 

(34

)

 

 

(231

)

 

 

(634

)

 

Amortization of intangible assets

282

 

 

 

282

 

 

 

306

 

 

 

353

 

 

 

430

 

 

 

564

 

 

 

859

 

 

Merger-related costs

700

 

 

 

700

 

 

 

 

 

 

 

 

 

 

 

 

1,400

 

 

 

 

 

All other expense

3,969

 

 

 

2,771

 

 

 

3,337

 

 

 

3,021

 

 

 

6,408

 

 

 

6,740

 

 

 

10,937

 

 

Total noninterest expense before (gain) loss in alternative energy partnership investments

41,388

 

 

 

43,105

 

 

 

39,623

 

 

 

41,824

 

 

 

72,937

 

 

 

84,493

 

 

 

117,951

 

 

(Gain) loss in alternative energy partnership investments

(829

)

 

 

3,630

 

 

 

(673

)

 

 

(1,430

)

 

 

(167

)

 

 

2,801

 

 

 

1,738

 

 

Total noninterest expense

40,559

 

 

 

46,735

 

 

 

38,950

 

 

 

40,394

 

 

 

72,770

 

 

 

87,294

 

 

 

119,689

 

 

Income (loss) before income taxes

25,612

 

 

 

16,669

 

 

 

28,597

 

 

 

18,274

 

 

 

(23,753

)

 

 

42,281

 

 

 

(32,511

)

 

Income tax expense (benefit)

6,562

 

 

 

2,294

 

 

 

6,894

 

 

 

2,361

 

 

 

(5,304

)

 

 

8,856

 

 

 

(7,469

)

 

Net income (loss)

19,050

 

 

 

14,375

 

 

 

21,703

 

 

 

15,913

 

 

 

(18,449

)

 

 

33,425

 

 

 

(25,042

)

 

Preferred stock dividends

1,727

 

 

 

3,141

 

 

 

3,447

 

 

 

3,447

 

 

 

3,442

 

 

 

4,868

 

 

 

6,975

 

 

Income allocated to participating securities

 

 

 

62

 

 

 

456

 

 

 

281

 

 

 

 

 

 

122

 

 

 

 

 

Participating securities dividends

 

 

 

 

 

 

94

 

 

 

94

 

 

 

94

 

 

 

 

 

 

188

 

 

Impact of preferred stock redemption

 

 

 

3,347

 

 

 

 

 

 

7

 

 

 

(49

)

 

 

3,347

 

 

 

(575

)

 

Net income (loss) available to common stockholders

$

17,323

 

 

 

$

7,825

 

 

 

$

17,706

 

 

 

$

12,084

 

 

 

$

(21,936

)

 

 

$

25,088

 

 

 

$

(31,630

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.34

 

 

 

$

0.16

 

 

 

$

0.35

 

 

 

$

0.24

 

 

 

$

(0.44

)

 

 

$

0.50

 

 

 

$

(0.63

)

 

Diluted

$

0.34

 

 

 

$

0.15

 

 

 

$

0.35

 

 

 

$

0.24

 

 

 

$

(0.44

)

 

 

$

0.49

 

 

 

$

(0.63

)

 

Weighted average number of common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

50,650,186

 

 

 

50,350,897

 

 

 

50,125,462

 

 

 

50,108,655

 

 

 

50,030,919

 

 

 

50,501,369

 

 

 

50,247,848

 

 

Diluted

50,892,202

 

 

 

50,750,522

 

 

 

50,335,271

 

 

 

50,190,933

 

 

 

50,030,919

 

 

 

50,810,285

 

 

 

50,247,848

 

 

Dividends declared per common share

$

0.06

 

 

 

$

0.06

 

 

 

$

0.06

 

 

 

$

0.06

 

 

 

$

0.06

 

 

 

$

0.12

 

 

 

$

0.12

 

 

Banc of California, Inc.

Selected Financial Data

(Unaudited)

 

Three Months Ended

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

 

September 30,
2020

 

June 30,
2020

Profitability and other ratios of consolidated operations

 

 

 

 

 

 

 

 

 

Return on average assets(1)

0.98

%

 

0.74

%

 

1.11

%

 

0.82

%

 

(0.96)

%

Return on average equity(1)

9.38

%

 

6.56

%

 

9.67

%

 

7.32

%

 

(8.69)

%

Return on average tangible common equity(2)

10.34

%

 

4.77

%

 

10.69

%

 

7.68

%

 

(13.83)

%

Pre-tax pre-provision income (loss) ROAA(2)

1.20

%

 

0.80

%

 

1.52

%

 

1.00

%

 

(0.62)

%

Adjusted pre-tax pre-provision income ROAA(1)(2)

1.13

%

 

1.06

%

 

1.25

%

 

0.98

%

 

0.83

%

Dividend payout ratio(3)

17.65

%

 

37.50

%

 

17.14

%

 

25.00

%

 

(13.64)

%

Average loan yield

4.30

%

 

4.30

%

 

4.58

%

 

4.46

%

 

4.48

%

Average cost of interest-bearing deposits

0.32

%

 

0.38

%

 

0.47

%

 

0.66

%

 

0.93

%

Average cost of total deposits

0.23

%

 

0.28

%

 

0.36

%

 

0.51

%

 

0.71

%

Net interest spread

3.04

%

 

2.95

%

 

3.15

%

 

2.84

%

 

2.77

%

Net interest margin(1)

3.27

%

 

3.19

%

 

3.38

%

 

3.09

%

 

3.09

%

Noninterest income to total revenue(4)

6.51

%

 

7.03

%

 

10.18

%

 

6.61

%

 

9.09

%

Noninterest income to average total assets(1)

0.21

%

 

0.23

%

 

0.36

%

 

0.20

%

 

0.29

%

Noninterest expense to average total assets(1)

2.08

%

 

2.41

%

 

2.00

%

 

2.09

%

 

3.78

%

Adjusted noninterest expense to average total assets(1)(2)

2.15

%

 

2.15

%

 

2.26

%

 

2.10

%

 

2.22

%

Efficiency ratio(2)(5)

63.36

%

 

75.02

%

 

56.83

%

 

67.54

%

 

119.60

%

Adjusted efficiency ratio(2)(5)

65.58

%

 

66.91

%

 

64.26

%

 

68.31

%

 

72.74

%

Average loans held-for-investment to average deposits

92.74

%

 

93.74

%

 

95.65

%

 

92.86

%

 

98.51

%

Average securities available-for-sale to average total assets

16.71

%

 

15.73

%

 

15.96

%

 

15.49

%

 

13.75

%

Average stockholders’ equity to average total assets

10.41

%

 

11.30

%

 

11.49

%

 

11.26

%

 

11.04

%

(1)

Ratios are presented on an annualized basis.

(2)

The ratios are determined by methods other than in accordance with U.S. generally accepted accounting principles (GAAP). See Non-GAAP measures section for reconciliation of the calculation.

(3)

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

(4)

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

(5)

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

Banc of California, Inc.

Average Balance, Average Yield Earned, and Average Cost Paid

(Dollars in thousands)

(Unaudited)

 

Three Months Ended

 

June 30, 2021

 

March 31, 2021

 

December 31, 2020

 

Average

 

 

 

Yield

 

Average

 

 

 

Yield

 

Average

 

 

 

Yield

 

Balance

 

Interest

 

/ Cost

 

Balance

 

Interest

 

/ Cost

 

Balance

 

Interest

 

/ Cost

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held-for-sale

$

1,987

 

 

 

$

15

 

 

3.03

%

 

$

1,413

 

 

 

$

7

 

 

2.01

%

 

$

1,564

 

 

 

$

8

 

 

2.03

%

SFR mortgage

1,277,552

 

 

 

11,410

 

 

3.58

%

 

1,210,105

 

 

 

11,747

 

 

3.94

%

 

1,224,865

 

 

 

12,955

 

 

4.21

%

Commercial real estate, multifamily, and construction

2,313,483

 

 

 

27,222

 

 

4.72

%

 

2,322,509

 

 

 

26,387

 

 

4.61

%

 

2,507,950

 

 

 

30,371

 

 

4.82

%

Commercial and industrial, SBA, and lease financing

2,154,512

 

 

 

22,978

 

 

4.28

%

 

2,221,494

 

 

 

22,910

 

 

4.18

%

 

1,978,684

 

 

 

21,984

 

 

4.42

%

Other consumer

23,881

 

 

 

275

 

 

4.62

%

 

28,520

 

 

 

294

 

 

4.18

%

 

31,856

 

 

 

787

 

 

9.83

%

Gross loans and leases

5,771,415

 

 

 

61,900

 

 

4.30

%

 

5,784,041

 

 

 

61,345

 

 

4.30

%

 

5,744,919

 

 

 

66,105

 

 

4.58

%

Securities

1,308,230

 

 

 

6,986

 

 

2.14

%

 

1,236,138

 

 

 

6,501

 

 

2.13

%

 

1,239,295

 

 

 

6,636

 

 

2.13

%

Other interest-earning assets

258,915

 

 

 

791

 

 

1.23

%

 

336,443

 

 

 

772

 

 

0.93

%

 

262,363

 

 

 

789

 

 

1.20

%

Total interest-earning assets

7,338,560

 

 

 

69,677

 

 

3.81

%

 

7,356,622

 

 

 

68,618

 

 

3.78

%

 

7,246,577

 

 

 

73,530

 

 

4.04

%

Allowance for loan losses

(79,103

)

 

 

 

 

 

 

(81,111

)

 

 

 

 

 

 

(83,745

)

 

 

 

 

 

BOLI and noninterest-earning assets

567,549

 

 

 

 

 

 

 

585,441

 

 

 

 

 

 

 

602,165

 

 

 

 

 

 

Total assets

$

7,827,006

 

 

 

 

 

 

 

$

7,860,952

 

 

 

 

 

 

 

$

7,764,997

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing checking

$

2,182,419

 

 

 

$

679

 

 

0.12

%

 

$

2,140,314

 

 

 

$

901

 

 

0.17

%

 

$

2,086,146

 

 

 

$

1,131

 

 

0.22

%

Savings

903,940

 

 

 

1,974

 

 

0.88

%

 

928,446

 

 

 

2,013

 

 

0.88

%

 

937,649

 

 

 

2,128

 

 

0.90

%

Money market

734,165

 

 

 

270

 

 

0.15

%

 

726,079

 

 

 

377

 

 

0.21

%

 

671,949

 

 

 

414

 

 

0.25

%

Certificates of deposit

633,101

 

 

 

620

 

 

0.39

%

 

720,180

 

 

 

995

 

 

0.56

%

 

860,131

 

 

 

1,763

 

 

0.82

%

Total interest-bearing deposits

4,453,625

 

 

 

3,543

 

 

0.32

%

 

4,515,019

 

 

 

4,286

 

 

0.38

%

 

4,555,875

 

 

 

5,436

 

 

0.47

%

FHLB advances

418,111

 

 

 

2,944

 

 

2.82

%

 

446,618

 

 

 

3,112

 

 

2.83

%

 

534,303

 

 

 

3,479

 

 

2.59

%

Long-term debt and other interest-bearing liabilities

274,412

 

 

 

3,343

 

 

4.89

%

 

260,488

 

 

 

3,304

 

 

5.14

%

 

238,265

 

 

 

3,052

 

 

5.10

%

Total interest-bearing liabilities

5,146,148

 

 

 

9,830

 

 

0.77

%

 

5,222,125

 

 

 

10,702

 

 

0.83

%

 

5,328,443

 

 

 

11,967

 

 

0.89

%

Noninterest-bearing deposits

1,767,711

 

 

 

 

 

 

 

1,653,517

 

 

 

 

 

 

 

1,448,422

 

 

 

 

 

 

Noninterest-bearing liabilities

98,174

 

 

 

 

 

 

 

97,136

 

 

 

 

 

 

 

95,567

 

 

 

 

 

 

Total liabilities

7,012,033

 

 

 

 

 

 

 

6,972,778

 

 

 

 

 

 

 

6,872,432

 

 

 

 

 

 

Total stockholders’ equity

814,973

 

 

 

 

 

 

 

888,174

 

 

 

 

 

 

 

892,565

 

 

 

 

 

 

Total liabilities and stockholders’ equity

$

7,827,006

 

 

 

 

 

 

 

$

7,860,952

 

 

 

 

 

 

 

$

7,764,997

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income/spread

 

 

$

59,847

 

 

3.04

%

 

 

 

$

57,916

 

 

2.95

%

 

 

 

$

61,563

 

 

3.15

%

Net interest margin

 

 

 

 

3.27

%

 

 

 

 

 

3.19

%

 

 

 

 

 

3.38

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of interest-earning assets to interest-bearing liabilities

143

 

%

 

 

 

 

 

141

 

%

 

 

 

 

 

136

 

%

 

 

 

 

Total deposits

$

6,221,336

 

 

 

$

3,543

 

 

0.23

%

 

$

6,168,536

 

 

 

$

4,286

 

 

0.28

%

 

$

6,004,297

 

 

 

$

5,436

 

 

0.36

%

Total funding (1)

$

6,913,859

 

 

 

$

9,830

 

 

0.57

%

 

$

6,875,642

 

 

 

$

10,702

 

 

0.63

%

 

$

6,776,865

 

 

 

$

11,967

 

 

0.70

%

(1)

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

 

Three Months Ended

 

September 30, 2020

 

June 30, 2020

 

Average

 

 

 

Yield

 

Average

 

 

 

Yield

 

Balance

 

Interest

 

/ Cost

 

Balance

 

Interest

 

/ Cost

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

Loans held-for-sale

$

19,544

 

 

 

$

139

 

 

2.83

%

 

$

19,967

 

 

 

$

155

 

 

3.12

%

SFR mortgage

1,311,513

 

 

 

13,178

 

 

4.00

%

 

1,416,358

 

 

 

14,187

 

 

4.03

%

Commercial real estate, multifamily, and construction

2,493,408

 

 

 

29,666

 

 

4.73

%

 

2,524,477

 

 

 

29,459

 

 

4.69

%

Commercial and industrial, SBA, and lease financing

1,673,548

 

 

 

18,585

 

 

4.42

%

 

1,706,120

 

 

 

19,392

 

 

4.57

%

Other consumer

35,563

 

 

 

451

 

 

5.05

%

 

40,697

 

 

 

449

 

 

4.44

%

Gross loans and leases

5,533,576

 

 

 

62,019

 

 

4.46

%

 

5,707,619

 

 

 

63,642

 

 

4.48

%

Securities

1,190,765

 

 

 

6,766

 

 

2.26

%

 

1,063,941

 

 

 

7,816

 

 

2.95

%

Other interest-earning assets

457,558

 

 

 

881

 

 

0.77

%

 

424,776

 

 

 

1,239

 

 

1.17

%

Total interest-earning assets

7,181,899

 

 

 

69,666

 

 

3.86

%

 

7,196,336

 

 

 

72,697

 

 

4.06

%

Allowance for loan losses

(89,679

)

 

 

 

 

 

 

(78,528

)

 

 

 

 

 

BOLI and noninterest-earning assets

594,885

 

 

 

 

 

 

 

622,398

 

 

 

 

 

 

Total assets

$

7,687,105

 

 

 

 

 

 

 

$

7,740,206

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing checking

$

1,919,327

 

 

 

$

1,660

 

 

0.34

%

 

$

1,710,038

 

 

 

$

2,186

 

 

0.51

%

Savings

948,898

 

 

 

2,353

 

 

0.99

%

 

905,997

 

 

 

2,718

 

 

1.21

%

Money market

681,421

 

 

 

645

 

 

0.38

%

 

592,872

 

 

 

850

 

 

0.58

%

Certificates of deposit

1,030,829

 

 

 

2,906

 

 

1.12

%

 

1,214,939

 

 

 

4,451

 

 

1.47

%

Total interest-bearing deposits

4,580,475

 

 

 

7,564

 

 

0.66

%

 

4,423,846

 

 

 

10,205

 

 

0.93

%

FHLB advances

608,169

 

 

 

3,860

 

 

2.52

%

 

819,166

 

 

 

4,818

 

 

2.37

%

Securities sold under repurchase agreements

1,309

 

 

 

2

 

 

0.61

%

 

1,024

 

 

 

2

 

 

0.79

%

Long-term debt and other interest-bearing liabilities

173,911

 

 

 

2,385

 

 

5.46

%

 

173,977

 

 

 

2,357

 

 

5.45

%

Total interest-bearing liabilities

5,363,864

 

 

 

13,811

 

 

1.02

%

 

5,418,013

 

 

 

17,382

 

 

1.29

%

Noninterest-bearing deposits

1,357,411

 

 

 

 

 

 

 

1,349,735

 

 

 

 

 

 

Noninterest-bearing liabilities

100,424

 

 

 

 

 

 

 

118,208

 

 

 

 

 

 

Total liabilities

6,821,699

 

 

 

 

 

 

 

6,885,956

 

 

 

 

 

 

Total stockholders’ equity

865,406

 

 

 

 

 

 

 

854,250

 

 

 

 

 

 

Total liabilities and stockholders’ equity

$

7,687,105

 

 

 

 

 

 

 

$

7,740,206

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income/spread

 

 

$

55,855

 

 

2.84

%

 

 

 

$

55,315

 

 

2.77

%

Net interest margin

 

 

 

 

3.09

%

 

 

 

 

 

3.09

%

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of interest-earning assets to interest-bearing liabilities

134

 

%

 

 

 

 

 

133

 

%

 

 

 

 

Total deposits

$

5,937,886

 

 

 

$

7,564

 

 

0.51

%

 

$

5,773,581

 

 

 

$

10,205

 

 

0.71

%

Total funding (1)

$

6,721,275

 

 

 

$

13,811

 

 

0.82

%

 

$

6,767,748

 

 

 

$

17,382

 

 

1.03

%

(1)

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

 

Six Months Ended

 

June 30, 2021

 

June 30, 2020

 

Average

 

 

 

Yield

 

Average

 

 

 

Yield

 

Balance

 

Interest

 

/ Cost

 

Balance

 

Interest

 

/ Cost

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

Loans held-for-sale

$

1,701

 

 

$

21

 

 

2.49

%

 

$

21,120

 

 

$

376

 

 

3.58

%

SFR mortgage

1,244,015

 

 

23,157

 

 

3.75

%

 

1,474,663

 

 

29,481

 

 

4.02

%

Commercial real estate, multifamily, and construction

2,317,971

 

 

53,610

 

 

4.66

%

 

2,544,480

 

 

59,682

 

 

4.72

%

Commercial and industrial, SBA, and lease financing

2,187,818

 

 

45,888

 

 

4.23

%

 

1,659,722

 

 

38,550

 

 

4.67

%

Other consumer

26,188

 

 

569

 

 

4.38

%

 

44,229

 

 

1,087

 

 

4.94

%

Gross loans and leases

5,777,693

 

 

123,245

 

 

4.30

%

 

5,744,214

 

 

129,176

 

 

4.52

%

Securities

1,272,383

 

 

13,487

 

 

2.14

%

 

1,008,454

 

 

15,636

 

 

3.12

%

Other interest-earning assets

297,465

 

 

1,563

 

 

1.06

%

 

361,110

 

 

2,599

 

 

1.45

%

Total interest-earning assets

7,347,541

 

 

138,295

 

 

3.80

%

 

7,113,778

 

 

147,411

 

 

4.17

%

Allowance for credit losses

(80,102)

 

 

 

 

 

 

(69,499)

 

 

 

 

 

BOLI and noninterest-earning assets

576,446

 

 

 

 

 

 

607,296

 

 

 

 

 

Total assets

$

7,843,885

 

 

 

 

 

 

$

7,651,575

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing checking

$

2,161,483

 

 

$

1,581

 

 

0.15

%

 

$

1,615,480

 

 

$

5,915

 

 

0.74

%

Savings

916,125

 

 

3,987

 

 

0.88

%

 

898,414

 

 

6,013

 

 

1.35

%

Money market

730,144

 

 

647

 

 

0.18

%

 

600,899

 

 

2,610

 

 

0.87

%

Certificates of deposit

676,400

 

 

1,614

 

 

0.48

%

 

1,183,229

 

 

10,278

 

 

1.75

%

Total interest-bearing deposits

4,484,152

 

 

7,829

 

 

0.35

%

 

4,298,022

 

 

24,816

 

 

1.16

%

FHLB advances

432,286

 

 

6,056

 

 

2.83

%

 

929,110

 

 

10,701

 

 

2.32

%

Securities sold under repurchase agreements

 

 

 

 

%

 

512

 

 

2

 

 

0.79

%

Long-term debt and other interest-bearing liabilities

267,488

 

 

6,647

 

 

5.01

%

 

174,017

 

 

4,716

 

 

5.45

%

Total interest-bearing liabilities

5,183,926

 

 

20,532

 

 

0.80

%

 

5,401,661

 

 

40,235

 

 

1.50

%

Noninterest-bearing deposits

1,710,930

 

 

 

 

 

 

1,241,521

 

 

 

 

 

Noninterest-bearing liabilities

97,658

 

 

 

 

 

 

123,244

 

 

 

 

 

Total liabilities

6,992,514

 

 

 

 

 

 

6,766,426

 

 

 

 

 

Total stockholders’ equity

851,371

 

 

 

 

 

 

885,149

 

 

 

 

 

Total liabilities and stockholders’ equity

$

7,843,885

 

 

 

 

 

 

$

7,651,575

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income/spread

 

 

$

117,763

 

 

3.00

%

 

 

 

$

107,176

 

 

2.67

%

Net interest margin

 

 

 

 

3.23

%

 

 

 

 

 

3.03

%

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of interest-earning assets to interest-bearing liabilities

142

%

 

 

 

 

 

132

%

 

 

 

 

Total deposits

$

6,195,082

 

 

$

7,829

 

 

0.25

%

 

$

5,539,543

 

 

$

24,816

 

 

0.90

%

Total funding (1)

$

6,894,856

 

 

$

20,532

 

 

0.60

%

 

$

6,643,182

 

 

$

40,235

 

 

1.22

%

(1)

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

Banc of California, Inc.
Consolidated Operations
Non-GAAP Measures
(Dollars in thousands, except per share data)
(Unaudited)

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

Tangible assets, tangible equity, tangible common equity, tangible equity to tangible assets, tangible common equity to tangible assets, tangible common equity per common share, return on average tangible common equity, adjusted noninterest income, adjusted noninterest expense, adjusted noninterest expense to average total assets, pre-tax pre-provision (PTPP) income (loss), adjusted PTPP income (loss), PTPP income (loss) ROAA, adjusted PTPP income (loss) ROAA, efficiency ratio, adjusted efficiency ratio, adjusted total revenue, adjusted net income, adjusted net income available to common stockholders, adjusted diluted earnings per share (EPS) and adjusted return on average assets (ROAA) constitute supplemental financial information determined by methods other than in accordance with GAAP. These non-GAAP measures are used by management in its analysis of the Company's performance.

Tangible assets and tangible equity are calculated by subtracting goodwill and other intangible assets from total assets and total equity. Tangible common equity is calculated by subtracting preferred stock from tangible equity. Return on average tangible common equity is computed by dividing net income (loss) available to common stockholders 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.

PTPP income is calculated by adding net interest income and noninterest income (total revenue) and subtracting noninterest expense. Adjusted PTPP income is calculated by adding net interest income and adjusted noninterest income (adjusted total revenue) and subtracting adjusted noninterest expense. PTPP income ROAA is computed by dividing annualized PTPP income by average assets. Adjusted PTPP income ROAA is computed by dividing annualized adjusted PTPP income by average assets. Efficiency ratio is computed by dividing noninterest expense by total revenue. Adjusted efficiency ratio is computed by dividing adjusted noninterest expense by adjusted total revenue.

Adjusted net income (loss) is calculated by adjusting net income (loss) for tax-effected noninterest income and expense adjustments and the tax impact from the exercise of stock appreciation rights. Adjusted ROAA is computed by dividing annualized adjusted net income by average assets. Adjusted net income (loss) available to common shareholders is computed by removing the impact of preferred stock redemptions from adjusted net income (loss).

Management believes the presentation of these financial measures adjusting the impact of these items provides useful supplemental information that is essential to a proper understanding of the financial results and operating performance of the Company. This disclosure should not be viewed as a substitute for results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.

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

Banc of California, Inc.

Consolidated Operations

Non-GAAP Measures, Continued

(Dollars in thousands, except per share data)

(Unaudited)

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

 

September 30,
2020

 

June 30,
2020

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

 

 

 

 

 

 

 

 

 

Total assets

$

8,027,413

 

 

 

$

7,933,459

 

 

 

$

7,877,334

 

 

 

$

7,738,106

 

 

 

$

7,770,138

 

 

Less goodwill

(37,144

)

 

 

(37,144

)

 

 

(37,144

)

 

 

(37,144

)

 

 

(37,144

)

 

Less other intangible assets

(2,069

)

 

 

(2,351

)

 

 

(2,633

)

 

 

(2,939

)

 

 

(3,292

)

 

Tangible assets(1)

$

7,988,200

 

 

 

$

7,893,964

 

 

 

$

7,837,557

 

 

 

$

7,698,023

 

 

 

$

7,729,702

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity

$

829,362

 

 

 

$

804,693

 

 

 

$

897,207

 

 

 

$

874,254

 

 

 

$

846,959

 

 

Less goodwill

(37,144

)

 

 

(37,144

)

 

 

(37,144

)

 

 

(37,144

)

 

 

(37,144

)

 

Less other intangible assets

(2,069

)

 

 

(2,351

)

 

 

(2,633

)

 

 

(2,939

)

 

 

(3,292

)

 

Tangible equity(1)

790,149

 

 

 

765,198

 

 

 

857,430

 

 

 

834,171

 

 

 

806,523

 

 

Less preferred stock

(94,956

)

 

 

(94,956

)

 

 

(184,878

)

 

 

(184,878

)

 

 

(185,037

)

 

Tangible common equity(1)

$

695,193

 

 

 

$

670,242

 

 

 

$

672,552

 

 

 

$

649,293

 

 

 

$

621,486

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity to total assets

10.33

 

%

 

10.14

 

%

 

11.39

 

%

 

11.30

 

%

 

10.90

 

%

Tangible equity to tangible assets(1)

9.89

 

%

 

9.69

 

%

 

10.94

 

%

 

10.84

 

%

 

10.43

 

%

Tangible common equity to tangible assets(1)

8.70

 

%

 

8.49

 

%

 

8.58

 

%

 

8.43

 

%

 

8.04

 

%

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

50,313,228

 

 

 

50,150,447

 

 

 

49,767,489

 

 

 

49,760,543

 

 

 

49,750,958

 

 

Class B non-voting non-convertible common shares outstanding

477,321

 

 

 

477,321

 

 

 

477,321

 

 

 

477,321

 

 

 

477,321

 

 

Total common shares outstanding

50,790,549

 

 

 

50,627,768

 

 

 

50,244,810

 

 

 

50,237,864

 

 

 

50,228,279

 

 

 

 

 

 

 

 

 

 

 

 

Tangible common equity per common share(1)

$

13.69

 

 

 

$

13.24

 

 

 

$

13.39

 

 

 

$

12.92

 

 

 

$

12.37

 

 

Book value per common share

$

14.46

 

 

 

$

14.02

 

 

 

$

14.18

 

 

 

$

13.72

 

 

 

$

13.18

 

 

(1)

Non-GAAP measure.

Banc of California, Inc.

Consolidated Operations

Non-GAAP Measures, Continued

(Dollars in thousands, except per share data)

(Unaudited)

 

Three Months Ended

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

 

September 30,
2020

 

June 30,
2020

Return on tangible common equity

 

 

 

 

 

 

 

 

 

Average total stockholders' equity

$

814,973

 

 

 

$

888,174

 

 

 

$

892,565

 

 

 

$

865,406

 

 

 

$

854,250

 

 

Less average preferred stock

(94,956

)

 

 

(164,895

)

 

 

(184,878

)

 

 

(184,910

)

 

 

(185,471

)

 

Less average goodwill

(37,144

)

 

 

(37,144

)

 

 

(37,144

)

 

 

(37,144

)

 

 

(37,144

)

 

Less average other intangible assets

(2,224

)

 

 

(2,517

)

 

 

(2,826

)

 

 

(3,172

)

 

 

(3,574

)

 

Average tangible common equity(1)

$

680,649

 

 

 

$

683,618

 

 

 

$

667,717

 

 

 

$

640,180

 

 

 

$

628,061

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) available to common stockholders

17,323

 

 

 

7,825

 

 

 

17,706

 

 

 

12,084

 

 

 

(21,936

)

 

Add amortization of intangible assets

282

 

 

 

282

 

 

 

306

 

 

 

353

 

 

 

430

 

 

Less tax effect on amortization of intangible assets

(59

)

 

 

(59

)

 

 

(64

)

 

 

(74

)

 

 

(90

)

 

Net income (loss) available to common stockholders after adjustments for intangible assets(1)

$

17,546

 

 

 

$

8,048

 

 

 

$

17,948

 

 

 

$

12,363

 

 

 

$

(21,596

)

 

 

 

 

 

 

 

 

 

 

 

Return on average equity

9.38

 

%

 

6.56

 

%

 

9.67

 

%

 

7.32

 

%

 

(8.69

)

%

Return on average tangible common equity(1)

10.34

 

%

 

4.77

 

%

 

10.69

 

%

 

7.68

 

%

 

(13.83

)

%

 

 

 

 

 

 

 

 

 

 

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

21.00

 

%

 

21.00

 

%

 

21.00

 

%

 

21.00

 

%

 

21.00

 

%

(1)

Non-GAAP measure.

Banc of California, Inc.

Consolidated Operations

Non-GAAP Measures, Continued

(Dollars in thousands, except per share data)

(Unaudited)

 

Three Months Ended

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

 

September 30,
2020

 

June 30,
2020

Adjusted noninterest income and expense