Banc of California Reports Second Quarter Results

IRVINE, Calif.--()--Banc of California, Inc. (NYSE: BANC) today reported net income of $15.9 million and net income available to common shareholders of $13.1 million, or $0.32 per diluted common share for the quarter ended June 30, 2015. This compares to net income available to common shareholders of $11.7 million, or $0.29 per diluted common share, for the quarter ended March 31, 2015, and net income available to common shareholders of $7.2 million, or $0.27 per diluted common share, for the year ago quarter ended June 30, 2014.

“Second quarter performance was highlighted by record net income as well as record loan originations of $1.9 billion,” said Steven Sugarman, President and Chief Executive Officer. “We are seeing continued progress realizing the financial returns from the investments we have made in our people, products and infrastructure over the past few years. We continue to remain optimistic about our position as California’s Bank and we are committed to realizing increasing returns for shareholders.”

The Company’s consolidated assets totaled $6.4 billion at June 30, 2015, an increase of $0.3 billion compared to the prior quarter, and an increase of $2.1 billion compared to a year ago. Return on average assets for the second quarter was 1.0%, and return on average tangible common equity was 15% for the second quarter.

Total loans and leases, representing both loans held for investment and held for sale, of $5.2 billion at June 30, 2015 increased by $45 million compared to the prior quarter, and have increased by $1.5 billion compared to the year ago quarter. Loan growth during the second quarter was muted by the sale of $214 million of multifamily loan balances during the quarter. Second quarter origination volumes increased to a record $1.9 billion. Held for investment loan balances increased by $539 million from the prior quarter, as a result of growth in the C&I, CRE and residential portfolios and the transfer of $475 million of jumbo mortgages from held for sale to held for investment during the second quarter.

Total deposits of $5.1 billion at June 30, 2015 increased by $243 million, or 5%, compared to the prior quarter, and have increased by $1.8 billion, or 53%, compared to the year ago quarter. Noninterest-bearing deposits increased by $132 million, or 18%, compared to the prior quarter, and have increased by $472 million, or 116%, compared to the year ago quarter.

Total revenue of $120.8 million for the second quarter increased by $22.8 million, or 23%, compared with the prior quarter, and increased by $49.9 million, or 70%, compared to the year ago quarter.

Second quarter net interest income of $54.1 million increased by $2.1 million, or 4%, from the prior quarter, and increased by $18.5 million, or 52%, compared to the year ago quarter.

The consolidated net interest margin for the second quarter was 3.64%, a decrease of 5 basis points from 3.69% reported in the prior quarter, largely driven by increased interest expense associated with the April debt offering. The net interest margin for Banc of California, N.A. was 3.92% for the second quarter, an increase of 8 basis points from the prior quarter. Cost of total deposits for the second quarter was 0.50%, down 4 basis points from the prior quarter.

Noninterest income for the second quarter totaled $66.7 million, including $9.9 million related to the sale of the Costa Mesa building, compared to $46.0 million for the prior quarter and $35.4 million for the year ago quarter. Mortgage banking income totaled $39.4 million for the second quarter, compared to $37.9 million for the prior quarter and $26.1 million for the year ago quarter. Agency and conforming origination and sales volumes increased from the prior quarter, while the gain on sale margin compressed from the prior quarter, contributing to net higher mortgage banking income for the second quarter.

Total noninterest expense for the first quarter totaled $87.9 million, an increase of $12.0 million compared to the prior quarter. Higher noninterest expense during the second quarter included approximately $2.3 million of non-recurring costs related to the sale of the Costa Mesa building as well as $4.8 million of higher volume and bonus-related compensation expense, primarily as a result of increased origination volumes and profitability.

The Company’s allowance for loan and lease losses (ALLL) ended the quarter at $34.8 million, and equaled 1.27% of originated loans, and represented a coverage ratio of 81% of nonperforming loans at June 30, 2015. Second quarter provision for loan losses was $5.5 million, which included a one-time provision of $4.5 million to establish an initial ALLL for the loans transferred to held for investment during the quarter. The ratio of delinquent non-PCI loans to total non-PCI loans equaled 1.66% for the second quarter, flat from the prior quarter, and down from 2.69% a year ago. The ratio of nonperforming assets to total assets stood at 0.66% for the second quarter. Net charge offs for the second quarter were less than $0.1 million, relatively flat from $0.1 million during the prior quarter.

The Company remains well-capitalized with a Tier 1 Risk-Based Capital Ratio of 13.2%, a Tier 1 Leverage Ratio of 9.6%, Common Equity Tier 1 Capital Ratio of 9.0%, and a Tangible Equity to Tangible Assets Ratio (TE/TA) of 9.1%, as of June 30, 2015. The Tier 1 Leverage Ratio for Banc of California, N.A. increased from 9.5% to 10.3% as of June 30, 2015.

The Company will host a conference call to discuss its second quarter financial results at 8:00 a.m. Pacific Time (PT) on Thursday, July 30, 2015. Interested parties are welcome to attend the conference call by dialing 888-317-6003, and referencing event code 7245884. A live audio webcast will also be available and the webcast link will be posted on the Company’s website under the Investors section. The slide presentation for the call will also be available on the Company's website prior to the call.

About Banc of California, Inc.

Banc of California, Inc. (NYSE: BANC) provides comprehensive banking services to California’s diverse private businesses, entrepreneurs and homeowners. Banc of California operates over 100 offices in California and the West.

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.

 

Banc of California, Inc.

Consolidated Statements of Financial Condition
(Dollars in thousands)
(Unaudited)
                   
June 30, March 31, December 31, September 30, June 30,
2015 2015 2014 2014 2014
ASSETS
Cash and cash equivalents $ 458,990 $ 265,402 $ 231,199 $ 184,985 $ 258,051
Time deposits in financial institutions 1,900 1,900 1,900 1,900 2,145
Securities available for sale 487,293 393,586 345,695 310,385 233,013
Securities held to maturity 53,414 - - - -
Loans held for sale 746,651 1,240,942 1,187,090 1,127,339 1,095,741
Loans and leases receivable 4,473,095 3,933,715 3,949,122 2,712,068 2,602,213
Allowance for loan and lease losses (34,787 ) (29,345 ) (29,480 ) (25,283 ) (22,627 )
Federal Home Loan Bank and other bank stock 34,187 39,844 42,241 35,432 34,392
Servicing rights, net 34,942 21,829 19,566 11,745 10,191
Other real estate owned, net 50 498 423 605 605
Premises and equipment, net 35,229 78,285 78,685 67,323 67,457
Goodwill 31,591 31,591 31,591 31,591 32,150
Other intangible assets, net 21,905 23,708 25,252 10,829 10,959
Deferred income tax (1) 12,081 14,157 16,373 8,663 2,546
Income tax receivable 3,091 - - - -
Bank-owned life insurance investment 19,201 19,154 19,095 19,038 18,984
Other assets (1)   59,049     62,089     52,545     41,206     40,511  
Total assets $ 6,437,882   $ 6,097,355   $ 5,971,297   $ 4,537,826   $ 4,386,331  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Noninterest-bearing deposits $ 867,930 $ 749,129 $ 662,295 $ 457,743 $ 408,404
Interest-bearing deposits 4,184,260 4,112,863 4,009,536 3,173,967 2,938,951
Deposits held for sale   52,820     -     -     -     -  
Total deposits 5,105,010 4,861,992 4,671,831 3,631,710 3,347,355
Advances from Federal Home Loan Bank 350,000 545,000 633,000 305,000 450,000
Other borrowings - 15,000 - - -
Notes payable, net 264,077 92,668 93,569 95,549 96,481
Reserve for loss reimbursements on sold loans 9,411 8,432 8,303 7,045 6,174
Income taxes payable - 4,488 56 2,158 31
Accrued expenses and other liabilities   75,502     55,615     61,223     49,653     47,163  
Total liabilities 5,804,000 5,583,195 5,467,982 4,091,115 3,947,204
Commitments and contingent liabilities
 
Preferred stock, Series A, non-cumulative perpetual preferred stock 31,934 31,934 31,934 31,934 31,934
Preferred stock, Series B, non-cumulative perpetual preferred stock 10,000 10,000 10,000 10,000 10,000
Preferred stock, Series C, 8.00% non-cumulative perpetual preferred stock 37,943 37,943 37,943 37,943 37,943
Preferred stock, Series D, 7.375% non-cumulative perpetual preferred stock 110,873 - - - -
Common stock 372 367 358 297 287
Common stock, class B non-voting non-convertible - - 6 6 6
Additional paid-in capital 425,784 424,636 422,910 371,738 369,530
Retained earnings (1) 45,494 36,880 29,589 24,692 18,588
Treasury stock (29,070 ) (29,798 ) (29,798 ) (29,798 ) (29,652 )
Accumulated other comprehensive (loss)/income, net   552     2,198     373     (101 )   491  
Total stockholders’ equity   633,882     514,160     503,315     446,711     439,127  
Total liabilities and stockholders’ equity $ 6,437,882   $ 6,097,355   $ 5,971,297   $ 4,537,826   $ 4,386,331  

 

(1)

 

Amounts for 2014 periods have been updated to reflect the first quarter 2015 adoption of ASU 2014-1 related to investment in low income housing tax credit.

 

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,
2015 2015 2014 2014 2014 2015 2014
Interest and dividend income
Loans, including fees $ 60,699 $ 58,155 $ 52,599 $ 44,555 $ 42,077 $ 118,854 $ 83,607
Securities 2,119 1,927 1,781 1,460 993 4,046 1,917
Dividends and other interest-earning assets   2,026   698   700     634   564   2,724   886
Total interest and dividend income 64,844 60,780 55,080 46,649 43,634 125,624 86,410
Interest expense
Deposits 6,165 6,361 6,440 6,165 6,071 12,526 11,806
Federal Home Loan Bank advances 290 353 210 118 99 643 199
Notes payable and other interest-bearing liabilities   4,285   2,069   2,099     2,180   1,889   6,354   3,645
Total interest expense   10,740   8,783   8,749     8,463   8,059   19,523   15,650
Net interest income 54,104 51,997 46,331 38,186 35,575 106,101 70,760
Provision for loan and lease losses   5,474   -   4,159     2,780   2,108   5,474   4,037
Net interest income after provision for loan and lease losses 48,630 51,997 42,172 35,406 33,467 100,627 66,723
Noninterest income
Customer service fees 1,072 910 651 230 356 1,982 609
Net gain on sale of loans 7,838 4,472 3,927 10,260 3,038 12,310 5,641
Mortgage banking income 39,403 37,933 25,030 26,943 26,133 77,336 43,457
Advisory service fees 4,435 1,197 6,722 3,264 1,808 5,632 2,918
Loan brokerage income 661 1,141 2,314 2,033 2,416 1,802 4,327

Gain on sale of building

9,919 - - - - 9,919 -
All other income   3,365   327   2,245     1,368   1,621   3,692   3,698
Total noninterest income 66,693 45,980 40,889 44,098 35,372 112,673 60,650
Noninterest expense
Salaries and employee benefits 56,120 49,771 47,974 41,094 39,130 105,891 73,811
Occupancy and equipment 10,325 9,771 9,512 7,969 7,425 20,096 15,962
Professional fees 6,689 3,435 7,096 4,758 3,528 10,124 7,393
Data processing 2,075 1,835 1,884 1,286 1,270 3,910 2,061
Amortization of intangible assets 1,545 1,544 1,306 890 944 3,089 1,883
All other expenses (1)   11,166   9,523   10,448     11,357   8,007   20,689   16,788
Total noninterest expense   87,920   75,879   78,220     67,354   60,304   163,799   117,898
Income before income taxes 27,403 22,098 4,841 12,150 8,535 49,501 9,475
Income tax (benefit) expense (1)   11,479   9,524   (5,269 )   903   436   21,003   627
Net income 15,924 12,574 10,110 11,247 8,099 28,498 8,848
Preferred stock dividends   2,843   910   910     910   910   3,753   1,820
Net income available to common stockholders $ 13,081 $ 11,664 $ 9,200   $ 10,337 $ 7,189 $ 24,745 $ 7,028
 
Basic earnings per total common share $ 0.33 $ 0.30 $ 0.25 $ 0.31 $ 0.27 $ 0.62 $ 0.30
Diluted earnings per total common share $ 0.32 $ 0.29 $ 0.25 $ 0.31 $ 0.27 $ 0.62 $ 0.30

 

(1)

 

Amounts for 2014 periods have been updated to reflect the first quarter 2015 adoption of ASU 2014-1 related to investment in low income housing tax credit.

 

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,
2015 2015 2014 2014 2014 2015 2014
Average balances:
Total assets $ 6,253,350 $ 5,931,426 $ 5,223,463 $ 4,391,523 $ 4,034,447 $ 6,093,277 $ 3,882,154
Total gross loans and leases 5,254,729 5,139,399 4,534,428 3,829,204 3,553,693 5,197,382 3,422,420
Investment Securities 402,366 354,475 310,454 257,067 168,230 378,553 165,633
Total interest earning assets 5,967,200 5,713,766 5,033,973 4,228,555 3,858,772 5,841,183 3,714,235
Total interest-bearing deposits 4,078,540 4,085,673 3,699,464 3,070,130 2,855,650 4,082,087 2,724,992
Total borrowings 635,460 583,979 406,531 378,671 319,774 609,862 335,117
Total interest bearing liabilities 4,714,000 4,669,652 4,105,995 3,448,801 3,175,424 4,691,949 3,060,109
Total stockholders’ equity 630,547 517,335 487,578 449,392 385,098 574,254 357,511
Profitability and other ratios:
Return on average assets (1) 1.02 % 0.86 % 0.77 % 1.02 % 0.81 % 0.94 % 0.46 %
Return on average equity (1) 10.13 % 9.86 % 8.23 % 9.93 % 8.44 % 10.01 % 4.99 %
Dividend payout ratio (2) 36.36 % 40.00 % 48.00 % 38.71 % 44.44 % 38.71 % 80.00 %
Net interest spread 3.45 % 3.55 % 3.49 % 3.41 % 3.52 % 3.50 % 3.66 %
Net interest margin (1) 3.64 % 3.69 % 3.65 % 3.58 % 3.70 % 3.66 % 3.84 %
Noninterest income to total revenue (3) 55.21 % 46.93 % 46.88 % 53.59 % 49.86 % 51.50 % 46.15 %
Noninterest income to average total assets (1) 4.28 % 3.14 % 3.11 % 3.98 % 3.52 % 3.73 % 3.15 %
Noninterest expense to average total assets (1) 5.64 % 5.19 % 5.94 % 6.08 % 6.00 % 5.42 % 6.12 %
Efficiency ratio (4) 72.78 % 77.45 % 89.68 % 81.86 % 85.00 % 74.87 % 89.72 %
Average held for investment loans and leases to average deposits 79.87 % 81.72 % 79.08 % 75.39 % 74.60 % 74.60 % 74.60 %
Average investment securities to average total assets 6.43 % 5.98 % 5.94 % 5.85 % 4.17 % 6.21 % 4.27 %
Average stockholders’ equity to average total assets 10.08 % 8.72 % 9.33 % 10.23 % 9.55 % 9.42 % 9.21 %
Allowance for loan and lease losses (ALLL):
Balance at beginning of period $ 29,345 $ 29,480 $ 25,283 $ 22,627 $ 20,003 $ 29,480 $ 18,805
Loans and leases charged off (79 ) (357 ) (25 ) (312 ) (383 ) (436 ) (586 )
Recoveries of loans and leases previously charged off 47 222 63 96 641 269 1,076
Transfer of loans from (to) held-for-sale - - - 92 258 - (705 )
Provision for loan and lease losses   5,474     -     4,159     2,780     2,108     5,474     4,037  
Balance at end of period $ 34,787   $ 29,345   $ 29,480   $ 25,283   $ 22,627   $ 34,787   $ 22,627  
Reserve for loss on repurchased loans
Balance at beginning of period $ 8,432 $ 8,303 $ 7,045 $ 6,174 $ 5,866 $ 8,303 $ 5,427
Provision for loan repurchases 1,573 1,328 1,149 1,556 968 2,901 1,539
Payment made for loss reimbursement on sold loans   (594 )   (1,199 )   109     (685 )   (660 )   (1,793 )   (792 )
Balance at end of period $ 9,411   $ 8,432   $ 8,303   $ 7,045   $ 6,174   $ 9,411   $ 6,174  

 

(1)

 

Ratios are presented on an annualized basis.

(2)

Dividends declared per common share divided by basic earnings per share.

(3)

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

(4)

The ratios were 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,
2015 2015 2014 2014 2014
Asset quality information and ratios:
30 to 89 days delinquent, excluding PCI loans $ 46,820 $ 40,641 $ 40,694 $ 35,531 $ 44,894
90+ days delinquent, excluding PCI loans   22,855     20,538     16,835     15,672     16,925  
Total delinquent loans, excluding PCI loans   69,675     61,179     57,529     51,203     61,819  
PCI loans, 30 to 89 days delinquent 17,351 16,375 17,641 18,743 25,109
PCI loans, 90+ days delinquent   8,648     6,986     5,761     4,017     12,398  
Total delinquent PCI loans   25,999     23,361     23,402     22,760     37,507  
Total delinquent loans $ 95,674   $ 84,540   $ 80,931   $ 73,963   $ 99,326  
Total delinquent non-PCI loans to total non-PCI loans 1.66 % 1.66 % 1.55 % 2.08 % 2.69 %
Total delinquent loans to gross loans 2.14 % 2.15 % 2.05 % 2.73 % 3.82 %
 
Non-performing loans, excluding PCI loans $ 42,708 $ 42,754 $ 38,381 $ 38,333 $ 41,611
90+ days delinquent and still accruing loans, excluding PCI loans - - - - -
Other real estate owned   50     498     423     605     605  
Non-performing assets $ 42,758   $ 43,252   $ 38,804   $ 38,938   $ 42,216  
ALLL to non-performing loans 81.45 % 68.64 % 76.81 % 65.96 % 54.38 %
Non-performing loans to gross loans 0.95 % 1.09 % 0.97 % 1.41 % 1.60 %
Non-performing assets to total assets 0.66 % 0.71 % 0.65 % 0.86 % 0.96 %
 

Troubled Debt Restructurings (TDRs)

Performing TDRs $ 7,402 $ 7,431 $ 6,346 $ 5,071 $ 4,853
Non-performing TDRs   1,937     1,964     1,665     2,860     1,879  
Total TDRs $ 9,339   $ 9,395   $ 8,011   $ 7,931   $ 6,732  
 
 

Banc of California, Inc.

Selected Financial Data, Continued
(Dollars in thousands)
(Unaudited)
                   
June 30, March 31, December 31, September 30, June 30,
2015 2015 2014 2014 2014
Loan and lease breakdown by ALLL evaluation type:
Originated loans and leases
Individually evaluated for impairment $ 31,791 $ 29,301 $ 29,287 $ 29,030 $ 29,763
Collectively evaluated for impairment 2,489,347 1,947,212 1,892,240 1,668,004 1,447,077
Acquired loans through business acquisitions - non-impaired
Individually evaluated for impairment 8 2,818 4,191 8,004 6,173
Collectively evaluated for impairment 1,294,384 1,358,184 1,411,927 377,554 409,745
Seasoned SFR mortgage loan pools - non-impaired 391,193 354,402 364,580 376,575 404,398
Acquired with deteriorated credit quality   266,372     241,798     246,897     252,901     305,057  
Total loans $ 4,473,095   $ 3,933,715   $ 3,949,122   $ 2,712,068   $ 2,602,213  
ALLL breakdown:
Originated loans and leases
Individually evaluated for impairment $ 686 $ 1,199 $ 1,288 $ 517 $ 309
Collectively evaluated for impairment 31,440 25,474 25,263 22,011 19,427
Acquired loans through business acquisitions - non-impaired
Individually evaluated for impairment - - - 7 -
Collectively evaluated for impairment 2,455 2,466 2,906 2,748 2,570
Seasoned SFR mortgage loan pools - non-impaired - - - - -
Acquired with deteriorated credit quality   206     206     23     -     321  
Total ALLL $ 34,787   $ 29,345   $ 29,480   $ 25,283   $ 22,627  
Discount on Purchased/Acquired Loans:
Acquired loans through business acquisitions - non-impaired $ 15,245 $ 16,877 $ 17,866 $ 6,512 $ 6,536
Seasoned SFR mortgage loan pools - non-impaired 29,201 28,967 29,955 30,811 33,044
Acquired with deteriorated credit quality   52,394     53,381     55,865     57,961     84,876  
Total Discount $ 96,840   $ 99,225   $ 103,686   $ 95,284   $ 124,456  
Ratios:
To originated loans:
Individually evaluated for impairment 2.16 % 4.09 % 4.40 % 1.78 % 1.04 %
Collectively evaluated for impairment 1.26 % 1.31 % 1.34 % 1.32 % 1.34 %
Total ALLL 1.27 % 1.35 % 1.38 % 1.33 % 1.34 %
To originated and acquired non-impaired loans:
Individually evaluated for impairment 2.16 % 3.73 % 3.85 % 1.41 % 0.86 %
Collectively evaluated for impairment 0.90 % 0.85 % 0.85 % 1.21 % 1.18 %
Total ALLL 0.91 % 0.87 % 0.88 % 1.21 % 1.18 %
Total ALLL and discount (1) 1.31 % 1.38 % 1.42 % 1.53 % 1.52 %
To total loans:
Individually evaluated for impairment 2.16 % 3.73 % 3.85 % 1.41 % 0.86 %
Collectively evaluated for impairment 0.81 % 0.76 % 0.77 % 1.02 % 0.97 %
Total ALLL 0.78 % 0.75 % 0.75 % 0.93 % 0.87 %
Total ALLL and discount (1) 2.94 % 3.27 % 3.37 % 4.45 % 5.65 %

 

(1)

 

The ratios were calculated by dividing a sum of ALLL and discounts by carrying value of loans.

 

Banc of California, Inc.

Selected Financial Data, Continued
(Dollars in thousands)
(Unaudited)
                   
June 30, March 31, December 31, September 30, June 30,
2015 2015 2014 2014 2014
Composition of held for investment loans and leases
Commercial real estate $ 807,146 $ 975,734 $ 999,857 $ 521,867 $ 535,744
Multi-family 696,768 940,053 955,683 367,364 234,179
Construction 32,022 38,081 42,198 25,997 30,761
Commercial and industrial 771,477 489,229 490,900 366,416 368,540
SBA 56,887 48,254 36,155 25,729 28,684
Lease financing   131,189     102,012     85,749     72,027     57,754  
Total commercial loans   2,495,489     2,593,363     2,610,542     1,379,400     1,255,662  
Single family residential mortgage 1,840,924 1,169,134 1,171,662 1,191,021 1,212,813
Other consumer   136,682     171,218     166,918     141,647     133,738  
Total consumer loans   1,977,606     1,340,352     1,338,580     1,332,668     1,346,551  
Total gross loans and leases $ 4,473,095   $ 3,933,715   $ 3,949,122   $ 2,712,068   $ 2,602,213  
Composition percentage of held for investment loans and leases
Commercial real estate 18.0 % 24.8 % 25.3 % 19.2 % 20.6 %
Multi-family 15.6 % 23.9 % 24.2 % 13.5 % 9.0 %
Construction 0.7 % 1.0 % 1.1 % 1.0 % 1.2 %
Commercial and industrial 17.2 % 12.4 % 12.4 % 13.5 % 14.2 %
SBA 1.3 % 1.2 % 0.9 % 0.9 % 1.1 %
Lease financing   2.9 %   2.6 %   2.2 %   2.7 %   2.2 %
Total commercial loans   55.7 %   65.9 %   66.1 %   50.8 %   48.3 %
Single family residential mortgage 41.2 % 29.7 % 29.7 % 44.0 % 46.6 %
Other consumer   3.1 %   4.4 %   4.2 %   5.2 %   5.1 %
Total consumer loans   44.3 %   34.1 %   33.9 %   49.2 %   51.7 %
Total gross loans and leases   100.0 %   100.0 %   100.0 %   100.0 %   100.0 %
Composition of deposits
Noninterest-bearing checking $ 880,766 $ 749,129 $ 662,295 $ 457,743 $ 408,404
Interest-bearing checking 1,002,443 1,032,482 1,054,828 779,704 688,699
Money market 1,393,751 1,136,562 1,074,432 769,291 618,231
Savings 843,274 898,483 985,646 932,133 985,028
Certificates of deposit   984,776     1,045,336     894,630     692,839     646,993  
Total deposits $ 5,105,010   $ 4,861,992   $ 4,671,831   $ 3,631,710   $ 3,347,355  
Composition percentage of deposits
Noninterest-bearing checking 17.3 % 15.4 % 14.2 % 12.6 % 12.2 %
Interest-bearing checking 19.6 % 21.2 % 22.6 % 21.5 % 20.6 %
Money market 27.3 % 23.4 % 23.0 % 21.2 % 18.5 %
Savings 16.5 % 18.5 % 21.1 % 25.6 % 29.4 %
Certificates of deposit   19.3 %   21.5 %   19.1 %   19.1 %   19.3 %
Total deposits   100.0 %   100.0 %   100.0 %   100.0 %   100.0 %
 
 

Banc of California, Inc.

Average Balance, Average Yield Earned, and Average Cost Paid
(Dollars in thousands)
(Unaudited)
                                   
Three Months Ended
June 30, 2015 March 31, 2015 December 31, 2014
Average Yield Average Yield Average Yield
Balance Interest / Cost Balance Interest / Cost Balance Interest / Cost
Interest earning assets:
Loans held for sale and SFR mortgage $ 1,959,738 $ 18,984 3.89 % $ 1,868,085 $ 17,477 3.79 % $ 1,778,112 $ 16,741 3.74 %
Seasoned SFR mortgage loan pools 591,460 9,690 6.57 % 591,724 9,413 6.45 % 606,879 9,605 6.28 %
Commercial real estate, multi-family, and construction 1,848,780 21,552 4.68 % 1,956,830 22,508 4.66 % 1,486,406 17,993 4.80 %
Commercial and industrial, SBA, and lease financing 697,291 8,871 5.10 % 572,726 7,239 5.13 % 523,194 6,192 4.70 %
Other consumer   157,460     1,602 4.08 %   150,034     1,518 4.10 %   139,837     2,068 5.87 %
Gross loans and leases 5,254,729 60,699 4.63 % 5,139,399 58,155 4.59 % 4,534,428 52,599 4.60 %
Securities 402,366 2,119 2.11 % 354,475 1,927 2.20 % 310,454 1,781 2.28 %
Other interest-earning assets   310,105     2,026 2.62 %   219,892     698 1.29 %   189,091     700 1.47 %
Total interest-earning assets 5,967,200 64,844 4.36 % 5,713,766 60,780 4.31 % 5,033,973 55,080 4.34 %
Allowance for loan and lease losses (29,445 ) (29,623 ) (26,105 )
BOLI and non-interest earning assets   315,595     247,283     215,595  
Total assets $ 6,253,350   $ 5,931,426   $ 5,223,463  
 
Interest-bearing liabilities:
Savings $ 867,532 $ 1,606 0.74 % $ 945,530 $ 1,748 0.75 % $ 960,253 $ 1,963 0.81 %
Interest-bearing checking 1,012,211 1,996 0.79 % 1,042,895 2,041 0.79 % 937,623 2,078 0.88 %
Money market 1,142,858 1,028 0.36 % 1,092,987 958 0.36 % 964,414 841 0.35 %
Certificates of deposit   1,055,939     1,535 0.58 %   1,004,261     1,614 0.65 %   837,174     1,558 0.74 %
Total interest-bearing deposits 4,078,540 6,165 0.61 % 4,085,673 6,361 0.63 % 3,699,464 6,440 0.69 %
FHLB advances 375,385 290 0.31 % 487,600 353 0.29 % 307,859 210 0.27 %
Long-term debt and other interest-bearing liabilities   260,075     4,285 6.61 %   96,379     2,069 8.71 %   98,672     2,099 8.44 %
Total interest-bearing liabilities 4,714,000 10,740 0.91 % 4,669,652 8,783 0.76 % 4,105,995 8,749 0.85 %
Noninterest-bearing deposits 859,420 682,492 577,623
Non-interest-bearing liabilities   49,383     61,947     52,267  
Total liabilities 5,622,803 5,414,091 4,735,885
Total stockholders’ equity   630,547     517,335     487,578  
Total liabilities and stockholders’ equity $ 6,253,350   $ 5,931,426   $ 5,223,463  
 
Net interest income/spread $ 54,104 3.45 % $ 51,997 3.55 % $ 46,331 3.49 %
 
Net interest margin 3.64 % 3.69 % 3.65 %
 
Ratio of interest-earning assets to interest-bearing liabilities 126.58 % 122.36 % 122.60 %
 
Total deposits $ 4,937,960 $ 6,165 0.50 % $ 4,768,165 $ 6,361 0.54 % $ 4,277,087 $ 6,440 0.60 %
Total funding (1) $ 5,573,420 $ 10,740 0.77 % $ 5,352,144 $ 8,783 0.67 % $ 4,683,618 $ 8,749 0.76 %

 

(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 fundings.

 

Banc of California, Inc.

Average Balance, Average Yield Earned, and Average Cost Paid, Continued
(Dollars in thousands)
(Unaudited)
                       
Three Months Ended
September 30, 2014 June 30, 2014
Average Yield Average Yield
Balance Interest / Cost Balance Interest / Cost
Interest earning assets:
Loans held for sale and SFR mortgage $ 1,757,890 $ 16,979 3.83 % $ 1,590,982 $ 15,158 3.82 %
Seasoned SFR mortgage loan pools 675,083 11,753 6.91 % 701,006 11,723 6.71 %
Commercial real estate, multi-family, and construction 827,934 9,592 4.60 % 734,472 8,689 4.75 %
Commercial and industrial, SBA, and lease financing 451,992 5,060 4.44 % 418,170 5,413 5.19 %
Other consumer   116,305     1,171 3.99 %   109,063     1,094 4.02 %
Gross loans and leases 3,829,204 44,555 4.62 % 3,553,693 42,077 4.75 %
Securities 257,067 1,460 2.25 % 168,230 993 2.37 %
Other interest-earning assets   142,284     634 1.77 %   136,849     564 1.65 %
Total interest-earning assets 4,228,555 46,649 4.38 % 3,858,772 43,634 4.54 %
Allowance for loan and lease losses (23,266 ) (20,567 )
BOLI and non-interest earning assets   186,234     196,242  
Total assets $ 4,391,523   $ 4,034,447  
 
Interest-bearing liabilities:
Savings $ 953,925 $ 2,215 0.92 % $ 990,894 $ 2,425 0.98 %
Interest-bearing checking 745,635 2,037 1.08 % 660,341 1,864 1.13 %
Money market 681,576 673 0.39 % 603,917 639 0.42 %
Certificates of deposit   688,994     1,240 0.71 %   600,498     1,143 0.76 %
Total interest-bearing deposits 3,070,130 6,165 0.80 % 2,855,650 6,071 0.85 %
FHLB advances 276,739 118 0.17 % 226,429 99 0.18 %
Long-term debt and other interest-bearing liabilities   101,932     2,180 8.48 %   93,345     1,889 8.12 %
Total interest-bearing liabilities 3,448,801 8,463 0.97 % 3,175,424 8,059 1.02 %
Noninterest-bearing deposits 448,825 428,221
Non-interest-bearing liabilities   44,505     45,704  
Total liabilities 3,942,131 3,649,349
Total stockholders’ equity   449,392     385,098  
Total liabilities and stockholders’ equity $ 4,391,523   $ 4,034,447  
 
Net interest income/spread $ 38,186 3.41 % $ 35,575 3.52 %
 
Net interest margin 3.58 % 3.70 %
 
Ratio of interest-earning assets to interest-bearing liabilities 122.61 % 121.52 %
 
Total deposits $ 3,518,955 $ 6,165 0.70 % $ 3,283,871 $ 6,071 0.74 %
Total funding (1) $ 3,897,626 $ 8,463 0.88 % $ 3,603,645 $ 8,059 0.90 %

 

(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 fundings.

 

Banc of California, Inc.

Average Balance, Average Yield Earned, and Average Cost Paid, Continued
(Dollars in thousands)
(Unaudited)
                       
Six Months Ended
June 30, 2015 June 30, 2014
Average Yield Average Yield
Balance Interest / Cost Balance Interest / Cost
Interest earning assets:
Loans held for sale and SFR mortgage $ 1,914,165 $ 36,461 3.84 % $ 1,494,850 $ 28,549 3.85 %
Seasoned SFR mortgage loan pools 591,591 19,103 6.51 % 725,960 24,795 6.89 %
Commercial real estate, multi-family, and construction 1,902,507 44,060 4.67 % 709,407 16,909 4.81 %
Commercial and industrial, SBA, and lease financing 635,353 16,110 5.11 % 388,089 11,306 5.87 %
Other consumer   153,766     3,120 4.09 %   104,114     2,048 3.97 %
Gross loans and leases 5,197,382 118,854 4.61 % 3,422,420 83,607 4.93 %
Securities 378,553 4,046 2.16 % 165,633 1,917 2.33 %
Other interest-earning assets   265,248     2,724 2.07 %   126,182     886 1.42 %
Total interest-earning assets 5,841,183 125,624 4.34 % 3,714,235 86,410 4.69 %
Allowance for loan and lease losses (29,533 ) (19,983 )
BOLI and non-interest earning assets   281,627     187,902  
Total assets $ 6,093,277   $ 3,882,154  
 
Interest-bearing liabilities:
Savings $ 906,316 $ 3,354 0.75 % $ 978,695 $ 4,942 1.02 %
Interest-bearing checking 1,027,468 4,037 0.79 % 626,919 3,515 1.13 %
Money market 1,118,060 1,986 0.36 % 559,769 1,275 0.46 %
Certificates of deposit   1,030,243     3,149 0.62 %   559,609     2,074 0.75 %
Total interest-bearing deposits 4,082,087 12,526 0.62 % 2,724,992 11,806 0.87 %
FHLB advances 431,182 643 0.30 % 242,928 199 0.17 %
Long-term debt and other interest-bearing liabilities   178,680     6,354 7.17 %   92,189     3,645 7.97 %
Total interest-bearing liabilities 4,691,949 19,523 0.84 % 3,060,109 15,650 1.03 %
Noninterest-bearing deposits 771,445 422,181
Non-interest-bearing liabilities   55,629     42,353  
Total liabilities 5,519,023 3,524,643
Total stockholders’ equity   574,254     357,511  
Total liabilities and stockholders’ equity $ 6,093,277   $ 3,882,154  
 
Net interest income/spread $ 106,101 3.50 % $ 70,760 3.66 %
 
Net interest margin 3.66 % 3.84 %
 
Ratio of interest-earning assets to interest-bearing liabilities
 
Total deposits $ 4,853,532 $ 12,526 0.52 % $ 3,147,173 $ 11,806 0.76 %
Total funding (1) $ 5,463,394 $ 19,523 0.72 % $ 3,482,290 $ 15,650 0.91 %

 

(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 fundings.

 

Banc of California, Inc.

Capital Ratios
(Unaudited)
                   
June 30, March 31, December 31, September 30, June 30,
2015

2015 (1)

2014 2014 2014
Capital Ratios:
Banc of California, Inc.
Total risk-based capital ratio: 14.01 % 11.55 % 11.28 % 14.97 % 15.19 %
Tier 1 risk-based capital ratio: 13.19 % 10.83 % 10.54 % 14.03 % 14.10 %
Common equity tier 1 capital ratio (1) 8.96 % 9.01 % N/A N/A N/A
Tier 1 leverage ratio: 9.55 % 7.99 % 8.57 % 9.28 % 9.89 %
Banc of California, NA
Total risk-based capital ratio: 14.86 % 13.58 % 12.04 % 15.75 % 14.88 %
Tier 1 risk-based capital ratio: 14.04 % 12.86 % 11.29 % 14.80 % 13.79 %
Common equity tier 1 capital ratio (1) 14.04 % 12.86 % N/A N/A N/A
Tier 1 leverage ratio: 10.26 % 9.49 % 9.17 % 9.80 % 9.72 %

 

(1)

 

From the first quarter of 2015, BASEL III common equity tier 1 capital ratio is required.

 

Banc of California, Inc.

Non-GAAP Measures
(Dollars in thousands, except per share data)
(Unaudited)
                   
Non-GAAP performance measure:
 
Tangible common equity to tangible assets ratio and return on average tangible common equity are supplemental financial information determined by a method other than in accordance with U.S. generally accepted accounting principles ("GAAP"). These non-GAAP measures are used by management in the analysis of Banc of California, Inc.’s capital strength and performance of businesses. Tangible equity is calculated by subtracting goodwill and other intangible assets from total stockholders' equity. Banking and financial institution regulators also exclude goodwill and other intangible assets from total stockholders' equity when assessing the capital adequacy of a financial institution. Management believes the presentation of this financial measure excluding the impact of these items provides useful supplemental information that is essential to a proper understanding of the capital strength of Banc of California, Inc. This disclosure should not be viewed as a substitution 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 reconcile this non-GAAP performance measures to the GAAP performance measures for the periods indicated:
 
June 30, March 31, December 31, September 30, June 30,
2015 2015 2014 2014 2014
Tangible common equity to tangible assets ratio
Total assets $ 6,437,882 $ 6,097,355 $ 5,971,297 $ 4,537,826 $ 4,386,331
Less goodwill (31,591 ) (31,591 ) (31,591 ) (31,591 ) (32,150 )
Less other intangible assets   (21,905 )   (23,708 )   (25,252 )   (10,829 )   (10,959 )
Tangible assets $ 6,384,386   $ 6,042,056   $ 5,914,454   $ 4,495,406   $ 4,343,222  
 
Total stockholders' equity $ 633,882 $ 514,160 $ 503,315 $ 446,711 $ 439,127
Less preferred stock (190,750 ) (79,877 ) (79,877 ) (79,877 ) (79,877 )
Less goodwill (31,591 ) (31,591 ) (31,591 ) (31,591 ) (32,150 )
Less other intangible assets   (21,905 )   (23,708 )   (25,252 )   (10,829 )   (10,959 )
Tangible common equity $ 389,636   $ 378,984   $ 366,595   $ 324,414   $ 316,141  
 
Total stockholders' equity to total assets 9.85 % 8.43 % 8.43 % 9.84 % 10.01 %
Tangible common equity to tangible assets 6.10 % 6.27 % 6.20 % 7.22 % 7.28 %
 
Common stock outstanding 35,647,476 35,063,199 34,190,740 28,023,701 27,032,464
Class B non-voting non-convertible common stock outstanding   -     11     609,195     602,783     596,018  
Total common stock outstanding   35,647,476     35,063,210     34,799,935     28,626,484     27,628,482  
Minimum number of shares issuable under purchase contracts (1)   2,883,892     2,984,367     3,215,538     4,198,425     5,101,326  
Total common stock outstanding and shares issuable under purchase contracts   38,531,368     38,047,577     38,015,473     32,824,909     32,729,808  
(1) Purchase contracts relating to the tangible equity units
 
Tangible common equity per common stock $ 10.93 $ 10.81 $ 10.53 $ 11.33 $ 11.44
Book value per common stock $ 12.43 $ 12.39 $ 12.17 $ 12.81 $ 13.00
 
Tangible equity per common stock and shares issuable under purchase contracts $ 10.11 $ 9.96 $ 9.64 $ 9.88 $ 9.66
Book value per common stock and shares issuable under purchase contracts $ 11.50 $ 11.41 $ 11.14 $ 11.18 $ 10.98
 
 

Banc of California, Inc.

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,
2015 2015 2014 2014 2014 2015 2014
Return on tangible common equity
Average total stockholders' equity $ 630,547 $ 517,335 $ 487,578 $ 449,392 $ 385,098 $ 574,254 $ 357,511
Less average preferred stock (182,233 ) (79,877 ) (79,877 ) (79,877 ) (79,877 ) (131,338 ) (79,877 )
Less average goodwill (31,591 ) (31,591 ) (33,129 ) (32,209 ) (33,020 ) (31,591 ) (31,978 )
Less average other intangible assets   (23,032 )   (24,720 )   (13,611 )   (10,634 )   (10,871 )   (23,871 )   (11,349 )
Average tangible common equity $ 393,691   $ 381,147   $ 360,961   $ 326,672   $ 261,330   $ 387,454   $ 234,307  
 
Net income $ 15,924 $ 12,574 $ 10,110 $ 11,247 $ 8,099 $ 28,498 $ 8,848
Less preferred stock dividends (2,843 ) (910 ) (910 ) (910 ) (910 ) (3,753 ) (1,820 )
Add tax-effected amortization of intangible assets (1) 1,004 1,004 849 579 614 2,008 1,224
Add tax-effected impairment on intangible assets (1)   168     -     31     -     -     168     -  
Net income available to common stockholders $ 14,253   $ 12,668   $ 10,080   $ 10,916   $ 7,803   $ 26,921   $ 8,252  
(1) Utilized a 35% effective tax rate
 
Return on average equity 10.13 % 9.86 % 8.23 % 9.93 % 8.44 % 10.01 % 4.99 %
Return on average tangible common equity 14.52 % 13.48 % 11.08 % 13.26 % 11.98 % 14.01 % 7.10 %
 

Contacts

INVESTOR RELATIONS INQUIRIES:
Banc of California, Inc.
Timothy Sedabres, 855-361-2262
or
MEDIA INQUIRIES:
Vectis Strategies
David Herbst, 213-973-4113 x101

Contacts

INVESTOR RELATIONS INQUIRIES:
Banc of California, Inc.
Timothy Sedabres, 855-361-2262
or
MEDIA INQUIRIES:
Vectis Strategies
David Herbst, 213-973-4113 x101