Banc of California Reports Fourth Quarter 2019 Financial Results

SANTA ANA, Calif.--()--Banc of California, Inc. (NYSE: BANC) today reported net income available to common stockholders for the fourth quarter of $10.4 million, resulting in diluted income per common share of $0.20.

Highlights for the fourth quarter (as compared to third quarter 2019) included:

  • Net interest margin increased 18 basis points to 3.04%
  • Cost of total deposits decreased by 21 basis points to 1.27%
  • Noninterest-bearing deposit balances increased to 20.1% of total deposits, up from 19.2%
  • Average noninterest-bearing deposits increased by $60 million, or 5.7%
  • Return on average assets was 0.71% and return on average equity was 6.20%

“2019 was the beginning of the transformation of Banc of California,” said Jared Wolff, President and Chief Executive Officer of Banc of California. “We successfully executed on each of our key strategic priorities, reducing cost of deposits, lowering expenses and right-sizing the balance sheet. As a result of our efforts, we have solidified our foundation as a relationship focused business bank, and are poised to create true franchise value going forward.”

Mr. Wolff continued, “As we enter 2020, we will continue to build on the momentum from 2019, remixing our loans and deposits to improve our franchise, and expanding our presence in the key lending segments we are targeting. Further, having built up excess capital, we will be looking for opportunities to deploy it that optimize our franchise and improve earnings in the future. We look forward to showing progress on these initiatives in 2020.”

Lynn Hopkins, Chief Financial Officer of Banc of California said, “The significant improvement in our cost of funds drove the 18 basis point increase in our net interest margin as interest earning asset yields remained steady at 4.50%. Our overall cost of funds decreased to 1.55% as we have been able to reduce our reliance on wholesale funding sources. The fourth quarter, average noninterest-bearing deposit balances increased for the third consecutive quarter and represented over 19% of our total average deposits. Looking forward, we expect to continue seeing benefits from the loan and securities remixing activities and we are well-positioned to show ongoing improvement on both sides of the balance sheet.”

Business Results - Income Statement Highlights

 

Three Months Ended

 

Year Ended

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

 

December 31,
2018

 

December 31,
2019

 

December 31,
2018

 

($ in thousands)

Total interest and dividend income

$

 

 

83,702

 

 

$

 

 

92,657

 

 

$

 

 

104,040

 

 

$

 

 

110,712

 

 

$

 

 

111,130

 

 

$

 

 

391,111

 

 

$

 

 

422,796

 

Total interest expense

 

27,042

 

 

 

33,742

 

 

 

39,260

 

 

 

42,904

 

 

 

40,448

 

 

 

142,948

 

 

 

136,720

 

Net interest income

 

56,660

 

 

 

58,915

 

 

 

64,780

 

 

 

67,808

 

 

 

70,682

 

 

 

248,163

 

 

 

286,076

 

(Reversal of) provision for loan and lease losses

 

(2,678

)

 

 

38,540

 

 

 

(1,987

)

 

 

2,512

 

 

 

6,653

 

 

 

36,387

 

 

 

30,215

 

Net interest income after provision for loan and lease losses

 

59,338

 

 

 

20,375

 

 

 

66,767

 

 

 

65,296

 

 

 

64,029

 

 

 

211,776

 

 

 

255,861

 

Total noninterest income (loss)

 

4,930

 

 

 

3,181

 

 

 

(2,290

)

 

 

6,295

 

 

 

2,448

 

 

 

12,116

 

 

 

23,915

 

Total noninterest expense

 

47,185

 

 

 

43,307

 

 

 

43,587

 

 

 

61,835

 

 

 

49,569

 

 

 

195,914

 

 

 

232,785

 

Income tax expense (benefit)

 

2,811

 

 

 

(5,619

)

 

 

4,308

 

 

 

2,719

 

 

 

6,117

 

 

 

4,219

 

 

 

4,844

 

Income (loss) from continuing operations

 

14,272

 

 

 

(14,132

)

 

 

16,582

 

 

 

7,037

 

 

 

10,791

 

 

 

23,759

 

 

 

42,147

 

Income from discontinued operations, net of tax

 

 

 

 

 

 

 

 

 

247

 

 

 

 

 

3,325

 

Net income (loss)

$

 

 

14,272

 

 

$

 

 

(14,132

)

 

$

 

 

16,582

 

 

$

 

 

7,037

 

 

$

 

 

11,038

 

 

$

 

 

23,759

 

 

$

 

 

45,472

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

$

 

 

10,415

 

 

$

 

 

(22,722

)

 

$

 

 

11,909

 

 

$

 

 

2,527

 

 

$

 

 

6,527

 

 

$

 

 

2,624

 

 

$

 

 

22,850

 

  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 Statement of Operations at the end for additional detail on these amounts.

Net interest income

Q4 2019 vs Q3 2019.

Net interest income for the fourth quarter decreased $2.3 million to $56.7 million due mostly to lower average loans and securities partially offset by an expanded net interest margin. Average interest-earning assets declined from the prior quarter by $781 million to $7.4 billion. During the prior quarter, we sold lower yielding, longer duration earning assets and used the sale proceeds to repay high cost funding liabilities; the full impact of this strategic objective was recognized during the fourth quarter.

The net interest margin improved 18 basis points to 3.04%. Our average yield on interest-earning assets remained flat quarter over quarter at 4.50%, primarily attributable to higher yielding loans representing a higher percentage of interest earning assets and a higher average yield on securities offset by a lower average loan yield. Our average yield on loans declined 4 basis points to 4.71% for the fourth quarter and the linked quarter decrease is due mostly to loans being originated and repriced into the lower rate environment, partially offset by higher average yields on commercial real estate, multifamily and construction loans. Our average yield on securities increased 12 basis points primarily as a result of our concentrated efforts to remix the securities portfolio and the high-yielding, variable rate CLOs representing a higher percentage of the portfolio, offset by these variable rate investments resetting into the lower interest rate environment.

Our average cost of interest-bearing liabilities decreased 18 basis points to 1.85% for the fourth quarter from 2.03% for the third quarter, driven by the lower average cost of interest-bearing deposits, which decreased by 21 basis points to 1.57% from the prior quarter. Additionally, average noninterest-bearing deposits increased by $60 million, or 5.7%, and represented 19.4% of total average deposits in the fourth quarter. Our total cost of deposits decreased 21 basis points to 1.27% for the fourth quarter. The decrease in our funding cost is due to a lower reliance on high cost transaction accounts and wholesale funds as we have managed down the balance sheet and continue to execute on our strategy to focus on relationship clients.

FY 2019 vs FY 2018.

Net interest income for the year ended December 31, 2019 decreased $37.9 million to $248.2 million as compared to $286.1 million for 2018 primarily as a result of targeted sales of securities and loans offset by the overall focus on remixing the loan portfolio towards relationship based lending during the year. For the year ended December 31, 2019, average interest-earning assets declined $1.12 billion to $8.60 billion, and the net interest margin decreased to 2.89% from 2.95% for the comparable 2018 period.

Our average yield on interest-earning assets increased 19 basis points to 4.55% for the year ended December 31, 2019 as compared to 4.36% for the full year of 2018, due to higher average yields on the loan and securities portfolios and an increased mix of loans versus securities. Our average yield on loans was 4.76% for the year ended December 31, 2019, compared to 4.64% for the full year of 2018, primarily attributable to higher average commercial and industrial balances in the portfolio mix and higher average yields on commercial real estate, multifamily and construction loans. Our average yield on securities increased 14 basis points primarily as a result of interest rate resets on our CLOs, partially offset by a decrease in our average balance attributable to the sale and calls of higher yielding CLOs between periods.

Provision for loan losses

Q4 2019 vs Q3 2019.

During the fourth quarter, we recognized a provision release of $2.7 million driven primarily by $431 million in lower loan balances. The provision release was partially offset by downgrades of several loans. In particular, a $24.9 million commercial and industrial (“C&I”) loan was downgraded during the quarter and classified loan balances increased $14.9 million.

FY 2019 vs FY 2018.

During the year ended December 31, 2019, we recognized a loan loss provision of $36.4 million, primarily attributable to a previously reported $35 million charge-off of a line of credit originated in November 2017 to a borrower purportedly the subject of a fraudulent scheme. We are actively evaluating all available sources of recovery, although no assurance can be given that we will be successful in that regard. For the comparable prior year period, $30.2 million of loan loss provisions were recorded, inclusive of a $13.9 million charge-off related to borrower fraud.

Noninterest income

Q4 2019 vs Q3 2019.

Noninterest income for the fourth quarter was $4.9 million, which represented an increase of $1.7 million, or 55% from the prior quarter. The increase was primarily due to no net loss on the sale of available-for-sale securities during the fourth quarter of 2019 as compared to a $5.1 million net loss during the third quarter of 2019, higher loan servicing income, and higher all other income. In addition, the Company had lower impairment losses on investment securities during the fourth quarter. These increases were partially offset by a lower gain on sale of loans of $5.2 million as the fourth quarter recognized a net loss of $833 thousand compared to a net gain of $4.3 million in the prior quarter.

FY 2019 vs FY 2018.

Noninterest income for the year ended December 31, 2019 was $12.1 million, which represented a decrease of $11.8 million, or 49.3% from the prior year. The decrease was primarily attributable to (1) a higher net loss on sale of investment securities of $10.4 million, (2) lower other income of $6.6 million due to the elimination of non-core assets in prior periods and the previously reported $9.6 million loss from interest rate swap agreements entered into in order to offset variability in the fair value of the Freddie Mac securitization completed in 2019, and (3) lower loan servicing income of $3.0 million as a result of the sale of mortgage servicing rights in 2018. These decreases are partially offset by a higher net gain on sale of loans of $5.9 million and a lower impairment loss on investment securities of $2.5 million.

Noninterest expense

Q4 2019 vs Q3 2019.

Noninterest expense for the fourth quarter was $47.2 million, representing an increase of $3.9 million over the prior quarter. Noninterest expense included: (1) $1.9 million lower salaries and benefits expense primarily related to lower headcount, (2) higher professional fees of $1.1 million, (3) $615 thousand higher regulatory assessments related to the one-time small bank assessment credit recorded in the third quarter, (4) $1.6 million in higher restructuring expense related to severance during the fourth quarter of 2019, and (5) a $2.0 million increase in loss on investments in alternative energy partnerships.

FY 2019 vs FY 2018.

Noninterest expense for the year ended December 31, 2019 was $195.9 million, which represented a decrease of $36.9 million, or 15.8% from the prior year. The lower noninterest expense primarily consisted of: (1) lower professional fees of $21.4 million, primarily attributable to $9.6 million of insurance recoveries net of expenses related to securities litigation, indemnification, investigation and other legal expenses, (2) lower salaries and benefits expense of $4.1 million resulting from lower headcount and lower consulting fees, (3) lower advertising costs of $4.2 million, and (4) a $3.4 million decrease in loss on investments in alternative energy partnerships.

Income taxes

Q4 2019 vs Q3 2019.

Income tax expense totaled $2.8 million for the quarter resulting in an effective tax rate of 16.5%. This compares to a $5.6 million tax benefit for the third quarter and an effective tax benefit rate of 28.5%.

FY 2019 vs FY 2018.

Income tax expense totaled $4.2 million for the year ended December 31, 2019, representing an effective tax rate of 15.1%, compared to $6.1 million and 11.9% for 2018. The higher effective tax rate in 2019 is due in part to a reduction in available tax credits generated by the Company compared to 2018. Looking forward, we expect our tax rate to normalize in the range of 22 — 24% as we expect a continued reduction in the generation of tax credits related to investments in alternative energy partnerships.

Balance Sheet

At December 31, 2019, total assets were $7.83 billion, which represented a linked quarter decrease of $796.9 million, consistent with our strategic shift towards reducing our balance sheet and focusing on relationship lending. The following table shows selected balance sheet line items as of the dates indicated.

 

As of and for the Three Months Ended

 

Amount Change

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

 

December 31,
2018

 

Q4-19 vs. Q3-
19

 

Q4-19 vs. Q4-
18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

Total assets

$

 

7,828,410

 

 

$

 

8,625,337

 

 

$

 

9,359,931

 

 

$

 

9,886,525

 

 

$

 

10,630,067

 

 

$

 

(796,927

)

 

$

 

(2,801,657

)

Securities available-for-sale

$

 

912,580

 

 

$

 

775,662

 

 

$

 

1,167,687

 

 

$

 

1,471,303

 

 

$

 

1,992,500

 

 

$

 

136,918

 

 

$

 

(1,079,920

)

Loans held-for-investment

$

 

5,951,885

 

 

$

 

6,383,259

 

 

$

 

6,719,570

 

 

$

 

7,557,200

 

 

$

 

7,700,873

 

 

$

 

(431,374

)

 

$

 

(1,748,988

)

Loans held-for-sale

$

 

22,642

 

 

$

 

23,936

 

 

$

 

597,720

 

 

$

 

25,191

 

 

$

 

8,116

 

 

$

 

(1,294

)

 

$

 

14,526

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

$

 

2,622,398

 

 

$

 

2,602,011

 

 

$

 

2,510,233

 

 

$

 

2,690,738

 

 

$

 

2,579,000

 

 

$

 

20,387

 

 

$

 

43,398

 

Other core deposits

 

2,794,769

 

 

 

3,074,936

 

 

 

3,301,080

 

 

 

3,575,140

 

 

 

3,629,100

 

 

 

(280,167

)

 

 

(834,331

)

Brokered deposits

 

10,000

 

 

 

93,111

 

 

 

480,977

 

 

 

1,459,054

 

 

 

1,708,544

 

 

 

(83,111

)

 

 

(1,698,544

)

Total Deposits

$

 

5,427,167

 

 

$

 

5,770,058

 

 

$

 

6,292,290

 

 

$

 

7,724,932

 

 

$

 

7,916,644

 

 

$

 

(342,891

)

 

$

 

(2,489,477

)

As percentage of total deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

48.32

%

 

 

45.10

%

 

 

39.89

%

 

 

34.83

%

 

 

32.58

%

 

 

3.22

%

 

 

15.74

%

Other core deposits

 

51.50

%

 

 

53.29

%

 

 

52.46

%

 

 

46.28

%

 

 

45.84

%

 

 

(1.79

)%

 

 

5.66

%

Brokered deposits

 

0.18

%

 

 

1.61

%

 

 

7.64

%

 

 

18.89

%

 

 

21.58

%

 

 

(1.43

)%

 

 

(21.40

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average loan yield

 

4.71

%

 

 

4.75

%

 

 

4.80

%

 

 

4.76

%

 

 

4.74

%

 

 

(0.04

)%

 

 

(0.03

)%

Average cost of interest-bearing deposits

 

1.57

%

 

 

1.78

%

 

 

1.89

%

 

 

1.92

%

 

 

1.77

%

 

 

(0.21

)%

 

 

(0.20

)%

Investments

Securities available-for-sale was $912.6 million at December 31, 2019, an increase of 17.7% from the previous quarter, primarily due to the purchase of $195.3 million of investment securities, comprised of $128.8 million of agency securities, $53.0 million of municipal bonds and $13.5 million of corporate debt securities during the quarter, partially offset by the sale of $39.4 million of our legacy agency MBS. The funds from the sales of our MBS during the quarter and other available cash balances were reinvested into a mix of security classes, resulting in an overall shorter duration for the securities portfolio. As of December 31, 2019, our securities portfolio included $718.4 million of CLOs, $127.8 million of agency securities, $52.7 million of municipal securities, and $13.6 million of corporate debt securities.

Loans

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

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

 

December 31,
2018

 

($ in thousands)

Composition of held-for-investment loans

 

 

 

 

 

 

 

 

 

Commercial real estate

$

 

818,817

 

 

$

 

891,029

 

 

$

 

856,497

 

 

$

 

865,521

 

 

$

 

867,013

 

Multifamily

 

1,494,528

 

 

 

1,563,757

 

 

 

1,598,978

 

 

 

2,332,527

 

 

 

2,241,246

 

Construction

 

231,350

 

 

 

228,561

 

 

 

209,029

 

 

 

211,549

 

 

 

203,976

 

Commercial and industrial

 

1,691,270

 

 

 

1,789,478

 

 

 

1,951,707

 

 

 

1,907,102

 

 

 

1,944,142

 

SBA

 

70,981

 

 

 

75,359

 

 

 

80,929

 

 

 

74,998

 

 

 

68,741

 

Total commercial loans

 

4,306,946

 

 

 

4,548,184

 

 

 

4,697,140

 

 

 

5,391,697

 

 

 

5,325,118

 

Single family residential mortgage

 

1,590,774

 

 

 

1,775,953

 

 

 

1,961,065

 

 

 

2,102,694

 

 

 

2,305,490

 

Other consumer

 

54,165

 

 

 

59,122

 

 

 

61,365

 

 

 

62,809

 

 

 

70,265

 

Total consumer loans

 

1,644,939

 

 

 

1,835,075

 

 

 

2,022,430

 

 

 

2,165,503

 

 

 

2,375,755

 

Total gross loans

$

 

5,951,885

 

 

$

 

6,383,259

 

 

$

 

6,719,570

 

 

$

 

7,557,200

 

 

$

 

7,700,873

 

Composition percentage of held-for-investment loans

 

 

 

 

 

 

 

 

 

Commercial real estate

 

13.8

%

 

 

14.0

%

 

 

12.7

%

 

 

11.5

%

 

 

11.3

%

Multifamily

 

25.1

%

 

 

24.5

%

 

 

23.8

%

 

 

30.9

%

 

 

29.2

%

Construction

 

3.9

%

 

 

3.6

%

 

 

3.1

%

 

 

2.8

%

 

 

2.6

%

Commercial and industrial

 

28.4

%

 

 

28.0

%

 

 

29.1

%

 

 

25.2

%

 

 

25.2

%

SBA

 

1.2

%

 

 

1.2

%

 

 

1.2

%

 

 

1.0

%

 

 

0.9

%

Total commercial loans

 

72.4

%

 

 

71.3

%

 

 

69.9

%

 

 

71.4

%

 

 

69.2

%

Single family residential mortgage

 

26.7

%

 

 

27.8

%

 

 

29.2

%

 

 

27.8

%

 

 

29.9

%

Other consumer

 

0.9

%

 

 

0.9

%

 

 

0.9

%

 

 

0.8

%

 

 

0.9

%

Total consumer loans

 

27.6

%

 

 

28.7

%

 

 

30.1

%

 

 

28.6

%

 

 

30.8

%

Total gross loans

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

Held-for-investment loans decreased $431 million to $6.0 billion from the prior quarter, due mostly to lower single family residential mortgage loans of $185 million, lower C&I loans of $98 million, lower commercial real estate of $72 million, and lower multifamily of $69 million. The decline in single family residential and multifamily is due to mostly to accelerated payoffs as the loans refinance in the lower rate environment. The decline in C&I loans is due primarily to the payoff of a few large loans and lower average outstanding balances on credit lines.

Single family residential mortgage and multifamily loans now comprise 51.8% of the total held-for-investment loan portfolio as compared to 59.1% one year ago. Commercial real estate loans comprised 13.8% of the loan portfolio and commercial and industrial loans constituted 28.4%, with average yields of 4.94% and 5.09% for the fourth quarter of 2019.

Deposits

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

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

 

December 31,
2018

 

($ in thousands)

Composition of deposits

 

 

 

 

 

 

 

 

 

Noninterest-bearing checking

$

1,088,516

 

 

$

1,107,442

 

 

$

993,745

 

 

$

1,120,700

 

 

$

1,023,360

 

Interest-bearing checking

1,533,882

 

 

1,503,208

 

 

1,577,901

 

 

1,573,499

 

 

1,556,410

 

Money market

715,479

 

 

695,530

 

 

800,898

 

 

899,330

 

 

873,153

 

Savings

885,246

 

 

1,042,162

 

 

1,061,115

 

 

1,151,442

 

 

1,265,847

 

Non-brokered certificates of deposit

1,204,044

 

 

1,367,284

 

 

1,479,137

 

 

1,684,895

 

 

1,654,605

 

Brokered certificates of deposit

 

 

54,432

 

 

379,494

 

 

1,295,066

 

 

1,543,269

 

Total deposits

$

5,427,167

 

 

$

5,770,058

 

 

$

6,292,290

 

 

$

7,724,932

 

 

$

7,916,644

 

Composition percentage of deposits

 

 

 

 

 

 

 

 

 

Noninterest-bearing checking

20.1

%

 

19.2

%

 

15.8

%

 

14.5

%

 

12.9

%

Interest-bearing checking

28.2

%

 

26.1

%

 

25.1

%

 

20.4

%

 

19.7

%

Money market

13.2

%

 

12.0

%

 

12.7

%

 

11.6

%

 

11.0

%

Savings

16.3

%

 

18.1

%

 

16.9

%

 

14.9

%

 

16.0

%

Non-brokered certificates of deposit

22.2

%

 

23.7

%

 

23.5

%

 

21.8

%

 

20.9

%

Brokered certificates of deposit

%

 

0.9

%

 

6.0

%

 

16.8

%

 

19.5

%

Total deposits

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

 

Total deposits decreased $342.9 million during the fourth quarter of 2019 to $5.43 billion due to lower savings balances of $156.9 million, non-brokered certificates of deposit balances of $163.2 million, brokered certificates of deposit balances of $54.4 million, and noninterest-bearing checking of $18.9 million, offset by higher interest-bearing checking of $30.7 million and money market of $19.9 million. The decline in non-brokered certificates of deposit is attributed to a lower amount of renewals for maturing certificates as they reset to lower offer rates. The decline in savings is due to rate sensitive customers lowering balances as this product continues to be priced in to the current rate environment as we focus on building relationship-based deposits. In addition, we reduced our reliance on wholesale funding with no new brokered certificates of deposit acquired in the quarter. Noninterest-bearing deposits totaled $1.09 billion and represented 20.1% of total deposits at year end, which compares to $1.11 billion and 19.2% at September 30, 2019 and $1.02 billion and 12.9% at December 31, 2018.

Debt

Advances from the FHLB decreased $455 million on a linked-quarter basis, or 28%, to $1.20 billion as of December 31, 2019, primarily as a result of the maturity of $300 million in fixed rate-advances and a reduction in overnight advances of $205 million. At the end of the fourth quarter of 2019, the maturity dates of FHLB advances consisted of $465 million of overnight, $74 million maturing in three months or less, and $656 million maturing beyond three months. As of the end of the fourth quarter of 2019, the overnight advance interest rate was 1.66%.

Equity

At December 31, 2019, total stockholders’ equity increased by $6.3 million to $907.2 million on a linked-quarter basis, while tangible common equity increased by $6.7 million to $676.1 million. The increase in total stockholders’ equity related to net income of $14.3 million, partially offset by the dividends to common and preferred stockholders of $6.8 million and an increase in accumulated other comprehensive loss of $2.3 million as a result of reductions in the fair value of securities available-for-sale.

Capital ratios remain strong with total risk-based capital at 15.90% and a tier 1 leverage ratio of 10.89%. The following table sets forth our regulatory capital ratios at December 31, 2019 and the previous four quarters.

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

 

December 31,
2018

Capital Ratios(1)

 

 

 

 

 

 

 

 

 

Banc of California, Inc.

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

15.90

%

 

14.37

%

 

15.00

%

 

14.01

%

 

13.71

%

Tier 1 risk-based capital ratio

14.83

%

 

13.32

%

 

14.03

%

 

13.03

%

 

12.77

%

Common equity tier 1 capital ratio

11.56

%

 

10.34

%

 

10.50

%

 

9.72

%

 

9.53

%

Tier 1 leverage ratio

10.89

%

 

9.84

%

 

9.62

%

 

8.87

%

 

8.95

%

Banc of California, NA

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

17.46

%

 

15.65

%

 

16.70

%

 

15.79

%

 

15.71

%

Tier 1 risk-based capital ratio

16.39

%

 

14.60

%

 

15.73

%

 

14.81

%

 

14.77

%

Common equity tier 1 capital ratio

16.39

%

 

14.60

%

 

15.73

%

 

14.81

%

 

14.77

%

Tier 1 leverage ratio

12.02

%

 

10.75

%

 

10.80

%

 

10.07

%

 

10.36

%

 
  1. December 31, 2019 capital ratios are preliminary,

Credit Quality

 

 

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

 

December 31,
2018

Asset quality information and ratios

($ in thousands)

Delinquent loans held-for-investment

 

 

 

 

 

 

 

 

 

30 to 89 days delinquent

$

 

 

32,873

 

 

$

 

 

39,122

 

 

$

 

 

34,938

 

 

$

 

 

44,840

 

 

$

 

 

26,684

 

90+ days delinquent

 

24,734

 

 

 

17,220

 

 

 

17,272

 

 

 

14,623

 

 

 

13,846

 

Total delinquent loans

$

 

 

57,607

 

 

$

 

 

56,342

 

 

$

 

 

52,210

 

 

$

 

 

59,463

 

 

$

 

 

40,530

 

Total delinquent loans to total loans

 

0.97

%

 

 

0.88

%

 

 

0.78

%

 

 

0.79

%

 

 

0.53

%

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

 

 

 

 

 

 

 

 

 

Non-performing loans

$

 

 

43,354

 

 

$

 

 

45,169

 

 

$

 

 

28,499

 

 

$

 

 

27,739

 

 

$

 

 

21,585

 

90+ days delinquent and still accruing loans

 

 

 

 

 

275

 

 

 

731

 

 

 

470

 

Other real estate owned

 

 

 

 

 

276

 

 

 

316

 

 

 

672

 

Non-performing assets

$

 

 

43,354

 

 

$

 

 

45,169

 

 

$

 

 

29,050

 

 

$

 

 

28,786

 

 

$

 

 

22,727

 

ALLL to non-performing loans

 

132.97

%

 

 

139.31

%

 

 

206.86

%

 

 

224.40

%

 

 

281.99

%

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

 

0.73

%

 

 

0.71

%

 

 

0.43

%

 

 

0.38

%

 

 

0.29

%

Non-performing assets to total assets

 

0.55

%

 

 

0.52

%

 

 

0.31

%

 

 

0.29

%

 

 

0.21

%

Troubled debt restructurings (TDRs)

 

 

 

 

 

 

 

 

 

Performing TDRs

$

 

 

6,620

 

 

$

 

 

6,800

 

 

$

 

 

20,245

 

 

$

 

 

5,574

 

 

$

 

 

5,745

 

Non-performing TDRs

 

21,837

 

 

 

14,605

 

 

 

2,428

 

 

 

1,943

 

 

 

2,276

 

Total TDRs

$

 

 

28,457

 

 

$

 

 

21,405

 

 

$

 

 

22,673

 

 

$

 

 

7,517

 

 

$

 

 

8,021

 

Total delinquent loans increased $1.3 million in the fourth quarter to $57.6 million at December 31, 2019, due to $22.8 million of additions, offset by $7.8 million returning to current status and $13.7 million of principal payments or payoffs. The $22.8 million of additions includes a $9.0 million single family residential mortgage loan with a 38% loan-to-value ratio and a $5.0 million C&I loan in process of restructuring. Loans 90+ days delinquent includes single family residential mortgage loans, which account for 75% of the balance.

Non-performing loans decreased $1.8 million in the fourth quarter to $43.4 million as of December 31, 2019, due to the sale of $11.9 million of non-performing loans and $4.1 million of loans returning to performing status, offset by $14.3 million of performing loans being placed on nonaccrual status. The year end balance includes two large loans that comprise 54% of our total nonperforming loans, one is a $14.0 million shared national credit and the other is a $9.0 million single family mortgage residential loan, with a loan-to-value ratio of 38%. Aside from those two loans, nonperforming loans total $20 million, of which 48% relates to single family residential mortgage loans. Of the $43.4 million non-performing loans at December 31, 2019, $17.7 million relates to loans in a current payment status.

Allowance for Loan Losses

 

Three Months Ended

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

 

December 31,
2018

 

($ in thousands)

Allowance for loan losses (ALLL)

 

 

 

 

 

 

 

 

 

Balance at beginning of period

$

 

 

62,927

 

 

$

 

 

59,523

 

 

$

 

 

63,885

 

 

$

 

 

62,192

 

 

$

 

 

57,782

 

Loans and leases charged off

 

(2,706

)

 

 

(35,546

)

 

 

(2,451

)

 

 

(1,063

)

 

 

(2,522

)

Recoveries

 

106

 

 

 

410

 

 

 

76

 

 

 

244

 

 

 

279

 

Net charge-offs

 

(2,600

)

 

 

(35,136

)

 

 

(2,375

)

 

 

(819

)

 

 

(2,243

)

(Reversal of) provision for loan losses

 

(2,678

)

 

 

38,540

 

 

 

(1,987

)

 

 

2,512

 

 

 

6,653

 

Balance at end of period

$

 

 

57,649

 

 

$

 

 

62,927

 

 

$

 

 

59,523

 

 

$

 

 

63,885

 

 

$

 

 

62,192

 

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

 

0.17

%

 

 

2.19

%

 

 

0.13

%

 

 

0.04

%

 

 

0.12

%

Reserve for loss on repurchased loans

 

 

 

 

 

 

 

 

 

Balance at beginning of period

$

 

 

6,561

 

 

$

 

 

2,478

 

 

$

 

 

2,486

 

 

$

 

 

2,506

 

 

$

 

 

2,575

 

Initial provision for loan repurchases

 

 

 

4,415

 

 

 

53

 

 

 

96

 

 

 

53

 

Reversal of provision for loan repurchases

 

(360

)

 

 

(123

)

 

 

(61

)

 

 

(116

)

 

 

(122

)

Utilization of reserve for loan repurchases

 

 

 

(209

)

 

 

 

 

 

 

Balance at end of period

$

 

 

6,201

 

 

$

 

 

6,561

 

 

$

 

 

2,478

 

 

$

 

 

2,486

 

 

$

 

 

2,506

 

During the fourth quarter of 2019, the allowance for loan losses decreased by $5.3 million as a result of a $2.7 million provision release and net charge-offs of $2.6 million. The net charge-offs include $1.7 million related to the sale of $11.9 million of nonperforming loans. The provision release was driven primarily by $431 million in lower loan balances.

The reserve for loss on repurchased loans decreased by $360 thousand in the fourth quarter due to continued runoff of principal balances associated with the multifamily loan securitization and single-family residential mortgage loans previously sold. This runoff of the associated sold balances results in reduced anticipated losses from repurchases.

Subsequent Events

On January 22, 2020 the Company filed a Shelf Registration Statement on Form S-3 with the Securities and Exchange Commission to provide the Company with flexibility and enable it to access the public capital markets to respond to financing and business opportunities that may arise in the future. The Company’s prior Shelf Registration Statement expired in August 2019.

The Company will host a conference call to discuss its fourth quarter 2019 financial results at 10:00 a.m. Pacific Time (PT) on Thursday, January 23, 2020. Interested parties are welcome to attend the conference call by dialing 888-317-6003, and referencing event code 1520432. A live audio webcast will also be available and the webcast link will be posted on the Company’s Investor Relations website at www.bancofcal.com/investor. The slide presentation for the call will also be available on the Company's Investor Relations website prior to the call.

About Banc of California, Inc.

Banc of California, Inc. (NYSE: BANC) is a bank holding company with approximately $7.8 billion in assets and one wholly-owned banking subsidiary, Banc of California, N.A. (the “Bank”). The Bank has 43 offices including 32 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 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. 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.

Source: Banc of California, Inc.

Banc of California, Inc.
Consolidated Statements of Financial Condition
(Dollars in thousands)
(Unaudited)

 

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

 

December 31,
2018

ASSETS

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

 

373,472

 

 

$

 

526,874

 

 

$

 

313,850

 

 

$

 

304,705

 

 

$

 

391,592

 

Securities available-for-sale

 

912,580

 

 

 

775,662

 

 

 

1,167,687

 

 

 

1,471,303

 

 

 

1,992,500

 

Loans held-for-sale

 

22,642

 

 

 

23,936

 

 

 

597,720

 

 

 

25,191

 

 

 

8,116

 

Loans held-for-investment

 

5,951,885

 

 

 

6,383,259

 

 

 

6,719,570

 

 

 

7,557,200

 

 

 

7,700,873

 

Allowance for loan losses

 

(57,649

)

 

 

(62,927

)

 

 

(59,523

)

 

 

(63,885

)

 

 

(62,192

)

Federal Home Loan Bank and other bank stock

 

59,420

 

 

 

71,679

 

 

 

76,373

 

 

 

55,794

 

 

 

68,094

 

Servicing rights, net

 

2,299

 

 

 

2,407

 

 

 

2,715

 

 

 

3,053

 

 

 

3,428

 

Other real estate owned, net

 

 

 

 

 

276

 

 

 

316

 

 

 

672

 

Premises and equipment, net

 

128,021

 

 

 

128,979

 

 

 

129,227

 

 

 

130,417

 

 

 

129,394

 

Investments in alternative energy partnerships, net

 

29,300

 

 

 

27,039

 

 

 

26,633

 

 

 

26,578

 

 

 

28,988

 

Goodwill

 

37,144

 

 

 

37,144

 

 

 

37,144

 

 

 

37,144

 

 

 

37,144

 

Other intangible assets, net

 

4,151

 

 

 

4,605

 

 

 

5,105

 

 

 

5,726

 

 

 

6,346

 

Deferred income tax, net

 

44,906

 

 

 

45,950

 

 

 

42,798

 

 

 

45,111

 

 

 

49,404

 

Income tax receivable

 

4,233

 

 

 

4,459

 

 

 

2,547

 

 

 

4,787

 

 

 

2,695

 

Bank owned life insurance investment

 

109,819

 

 

 

108,720

 

 

 

108,132

 

 

 

107,552

 

 

 

107,027

 

Right of use assets

 

22,540

 

 

 

23,907

 

 

 

24,118

 

 

 

24,519

 

 

 

Due from unsettled securities sales

 

 

 

334,769

 

 

 

 

 

 

 

Other assets

 

183,647

 

 

 

188,875

 

 

 

165,559

 

 

 

151,014

 

 

 

146,496

 

Assets of discontinued operations

 

 

 

 

 

 

 

 

 

19,490

 

Total assets

$

 

7,828,410

 

 

$

 

8,625,337

 

 

$

 

9,359,931

 

 

$

 

9,886,525

 

 

$

 

10,630,067

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

$

 

1,088,516

 

 

$

 

1,107,442

 

 

$

 

993,745

 

 

$

 

1,120,700

 

 

$

 

1,023,360

 

Interest-bearing deposits

 

4,338,651

 

 

 

4,662,616

 

 

 

5,298,545

 

 

 

6,604,232

 

 

 

6,893,284

 

Total deposits

 

5,427,167

 

 

 

5,770,058

 

 

 

6,292,290

 

 

 

7,724,932

 

 

 

7,916,644

 

Advances from Federal Home Loan Bank

 

1,195,000

 

 

 

1,650,000

 

 

 

1,825,000

 

 

 

935,000

 

 

 

1,520,000

 

Notes payable, net

 

173,421

 

 

 

173,339

 

 

 

173,257

 

 

 

173,203

 

 

 

173,174

 

Reserve for loss on repurchased loans

 

6,201

 

 

 

6,561

 

 

 

2,478

 

 

 

2,486

 

 

 

2,506

 

Lease liabilities

 

23,692

 

 

 

25,210

 

 

 

25,457

 

 

 

25,893

 

 

 

Accrued expenses and other liabilities

 

95,684

 

 

 

99,181

 

 

 

77,905

 

 

 

76,686

 

 

 

72,209

 

Total liabilities

 

6,921,165

 

 

 

7,724,349

 

 

 

8,396,387

 

 

 

8,938,200

 

 

 

9,684,533

 

Commitments and contingent liabilities

 

 

 

 

 

 

 

 

 

Preferred stock

 

189,825

 

 

 

189,825

 

 

 

231,128

 

 

 

231,128

 

 

 

231,128

 

Common stock

 

520

 

 

 

520

 

 

 

520

 

 

 

518

 

 

 

518

 

Common stock, class B non-voting non-convertible

 

5

 

 

 

5

 

 

 

5

 

 

 

5

 

 

 

5

 

Additional paid-in capital

 

629,848

 

 

 

628,774

 

 

 

627,306

 

 

 

626,608

 

 

 

625,834

 

Retained earnings

 

127,733

 

 

 

120,221

 

 

 

146,039

 

 

 

136,943

 

 

 

140,952

 

Treasury stock

 

(28,786

)

 

 

(28,786

)

 

 

(28,786

)

 

 

(28,786

)

 

 

(28,786

)

Accumulated other comprehensive loss, net

 

(11,900

)

 

 

(9,571

)

 

 

(12,668

)

 

 

(18,091

)

 

 

(24,117

)

Total stockholders’ equity

 

907,245

 

 

 

900,988

 

 

 

963,544

 

 

 

948,325

 

 

 

945,534

 

Total liabilities and stockholders’ equity

$

 

7,828,410

 

 

$

 

8,625,337

 

 

$

 

9,359,931

 

 

$

 

9,886,525

 

 

$

 

10,630,067

 

Banc of California, Inc.
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited)

 

 

Three Months Ended

 

Year Ended

 

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

 

December 31,
2018

 

December 31,
2019

 

December 31,
2018

 

 

Interest and dividend income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

$

 

73,930

 

 

$

 

80,287

 

 

$

 

89,159

 

 

$

 

90,558

 

 

$

 

88,258

 

 

$

 

333,934

 

 

$

 

329,272

 

Securities

 

7,812

 

 

 

10,024

 

 

 

12,457

 

 

 

17,841

 

 

 

19,882

 

 

 

48,134

 

 

 

83,567

 

Other interest-earning assets

 

1,960

 

 

 

2,346

 

 

 

2,424

 

 

 

2,313

 

 

 

2,990

 

 

 

9,043

 

 

 

9,957

 

Total interest and dividend income

 

83,702

 

 

 

92,657

 

 

 

104,040

 

 

 

110,712

 

 

 

111,130

 

 

 

391,111

 

 

 

422,796

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

18,247

 

 

 

22,811

 

 

 

28,598

 

 

 

31,443

 

 

 

28,972

 

 

 

101,099

 

 

 

91,236

 

Federal Home Loan Bank advances

 

6,396

 

 

 

8,519

 

 

 

8,289

 

 

 

9,081

 

 

 

9,068

 

 

 

32,285

 

 

 

34,995

 

Securities sold under repurchase agreements

 

15

 

 

 

13

 

 

 

16

 

 

 

18

 

 

 

25

 

 

 

62

 

 

 

1,033

 

Notes payable and other interest-bearing liabilities

 

2,384

 

 

 

2,399

 

 

 

2,357

 

 

 

2,362

 

 

 

2,383

 

 

 

9,502

 

 

 

9,456

 

Total interest expense

 

27,042

 

 

 

33,742

 

 

 

39,260

 

 

 

42,904

 

 

 

40,448

 

 

 

142,948

 

 

 

136,720

 

Net interest income

 

56,660

 

 

 

58,915

 

 

 

64,780

 

 

 

67,808

 

 

 

70,682

 

 

 

248,163

 

 

 

286,076

 

(Reversal of) provision for loan losses

 

(2,678

)

 

 

38,540

 

 

 

(1,987

)

 

 

2,512

 

 

 

6,653

 

 

 

36,387

 

 

 

30,215

 

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

 

59,338

 

 

 

20,375

 

 

 

66,767

 

 

 

65,296

 

 

 

64,029

 

 

 

211,776

 

 

 

255,861

 

Noninterest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer service fees

 

1,451

 

 

 

1,582

 

 

 

1,434

 

 

 

1,515

 

 

 

1,786

 

 

 

5,982

 

 

 

6,315

 

Loan servicing income

 

312

 

 

 

128

 

 

 

121

 

 

 

118

 

 

 

22

 

 

 

679

 

 

 

3,720

 

Income from bank owned life insurance

 

599

 

 

 

588

 

 

 

580

 

 

 

525

 

 

 

559

 

 

 

2,292

 

 

 

2,176

 

Impairment loss on investment securities

 

 

 

(731

)

 

 

 

 

 

 

(3,252

)

 

 

(731

)

 

 

(3,252

)

Net gain (loss) on sale of securities available for sale

 

3

 

 

 

(5,063

)

 

 

 

 

208

 

 

 

 

 

(4,852

)

 

 

5,532

 

Net (loss) gain on sale of loans

 

(833

)

 

 

4,326

 

 

 

2,826

 

 

 

1,553

 

 

 

873

 

 

 

7,872

 

 

 

1,932

 

All other income (loss)

 

3,398

 

 

 

2,351

 

 

 

(7,251

)

 

 

2,376

 

 

 

2,460

 

 

 

874

 

 

 

7,492

 

Total noninterest income (loss)

 

4,930

 

 

 

3,181

 

 

 

(2,290

)

 

 

6,295

 

 

 

2,448

 

 

 

12,116

 

 

 

23,915

 

Noninterest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

24,036

 

 

 

25,934

 

 

 

27,506

 

 

 

28,439

 

 

 

24,587

 

 

 

105,915

 

 

 

109,974

 

Occupancy and equipment

 

7,900

 

 

 

7,767

 

 

 

7,955

 

 

 

7,686

 

 

 

8,064

 

 

 

31,308

 

 

 

31,847

 

Professional fees (reimbursement)

 

2,611

 

 

 

1,463

 

 

 

(2,903

)

 

 

11,041

 

 

 

6,206

 

 

 

12,212

 

 

 

33,652

 

Data processing

 

1,684

 

 

 

1,568

 

 

 

1,672

 

 

 

1,496

 

 

 

1,733

 

 

 

6,420

 

 

 

6,951

 

Advertising

 

2,227

 

 

 

2,090

 

 

 

2,048

 

 

 

2,057

 

 

 

3,371

 

 

 

8,422

 

 

 

12,664

 

Regulatory assessments

 

1,854

 

 

 

1,239

 

 

 

2,136

 

 

 

2,482

 

 

 

1,252

 

 

 

7,711

 

 

 

7,678

 

Reversal of loan repurchase reserves

 

(360

)

 

 

(123

)

 

 

(61

)

 

 

(116

)

 

 

(122

)

 

 

(660

)

 

 

(2,488

)

Amortization of intangible assets

 

454

 

 

 

500

 

 

 

621

 

 

 

620

 

 

 

644

 

 

 

2,195

 

 

 

3,007

 

Restructuring expense (reversal)

 

1,626

 

 

 

 

 

(158

)

 

 

2,795

 

 

 

(105

)

 

 

4,263

 

 

 

4,431

 

All other expenses

 

4,114

 

 

 

3,809

 

 

 

5,126

 

 

 

3,385

 

 

 

3,153

 

 

 

16,434

 

 

 

20,025

 

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

 

46,146

 

 

 

44,247

 

 

 

43,942

 

 

 

59,885

 

 

 

48,783

 

 

 

194,220

 

 

 

227,741

 

Loss (gain) on investments in alternative energy partnerships

 

1,039

 

 

 

(940

)

 

 

(355

)

 

 

1,950

 

 

 

786

 

 

 

1,694

 

 

 

5,044

 

Total noninterest expense

 

47,185

 

 

 

43,307

 

 

 

43,587

 

 

 

61,835

 

 

 

49,569

 

 

 

195,914

 

 

 

232,785

 

Income (loss) from continuing operations before income taxes

 

17,083

 

 

 

(19,751

)

 

 

20,890

 

 

 

9,756

 

 

 

16,908

 

 

 

27,978

 

 

 

46,991

 

Income tax expense (benefit)

 

2,811

 

 

 

(5,619

)

 

 

4,308

 

 

 

2,719

 

 

 

6,117

 

 

 

4,219

 

 

 

4,844

 

Income (loss) from continuing operations

 

14,272

 

 

 

(14,132

)

 

 

16,582

 

 

 

7,037

 

 

 

10,791

 

 

 

23,759

 

 

 

42,147

 

Income from discontinued operations before income taxes

 

 

 

 

 

 

 

 

 

347

 

 

 

 

 

4,596

 

Income tax expense

 

 

 

 

 

 

 

 

 

100

 

 

 

 

 

1,271

 

Income from discontinued operations

 

 

 

 

 

 

 

 

 

247

 

 

 

 

 

3,325

 

Net income (loss)

 

14,272

 

 

 

(14,132

)

 

 

16,582

 

 

 

7,037

 

 

 

11,038

 

 

 

23,759

 

 

 

45,472

 

Preferred stock dividends

 

3,540

 

 

 

3,403

 

 

 

4,308

 

 

 

4,308

 

 

 

4,308

 

 

 

15,559

 

 

 

19,504

 

Income allocated to participating securities

 

224

 

 

 

 

 

271

 

 

 

 

 

 

 

 

 

Participating securities dividends

 

93

 

 

 

94

 

 

 

94

 

 

 

202

 

 

 

203

 

 

 

483

 

 

 

811

 

Impact of preferred stock redemption

 

 

 

5,093

 

 

 

 

 

 

 

 

 

5,093

 

 

 

2,307

 

Net income (loss) available to common stockholders

$

 

10,415

 

 

$

 

(22,722

)

 

$

 

11,909

 

 

$

 

2,527

 

 

$

 

6,527

 

 

$

 

2,624

 

 

$

 

22,850

 

Basic earnings (loss) per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

$

 

0.21

 

 

$

 

(0.45

)

 

$

 

0.23

 

 

$

 

0.05

 

 

$

 

0.12

 

 

$

 

0.05

 

 

$

 

0.38

 

Income from discontinued operations

 

 

 

 

 

 

 

 

 

0.01

 

 

 

 

 

0.07

 

Net income (loss)

$

 

0.21

 

 

$

 

(0.45

)

 

$

 

0.23

 

 

$

 

0.05

 

 

$

 

0.13

 

 

$

 

0.05

 

 

$

 

0.45

 

Diluted earnings (loss) per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

$

 

0.20

 

 

$

 

(0.45

)

 

$

 

0.23

 

 

$

 

0.05

 

 

$

 

0.12

 

 

$

 

0.05

 

 

$

 

0.38

 

Income from discontinued operations

 

 

 

 

 

 

 

 

 

0.01

 

 

 

 

 

0.07

 

Net income (loss)

$

 

0.20

 

 

$

 

(0.45

)

 

$

 

0.23

 

 

$

 

0.05

 

 

$

 

0.13

 

 

$

 

0.05

 

 

$

 

0.45

 

Weighted average number of common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

50,699,915

 

 

 

50,882,227

 

 

 

50,857,137

 

 

 

50,676,722

 

 

 

50,651,805

 

 

 

50,621,785

 

 

 

50,623,222

 

Diluted

 

50,927,978

 

 

 

50,882,227

 

 

 

50,964,956

 

 

 

50,846,722

 

 

 

50,812,874

 

 

 

50,724,951

 

 

 

50,724,951

 

Dividends declared per common share

$

 

0.06

 

 

$

 

0.06

 

 

$

 

0.06

 

 

$

 

0.13

 

 

$

 

0.13

 

 

$

 

0.31

 

 

$

 

0.52

 

Banc of California, Inc.
Selected Financial Data
(Unaudited)

 

Three Months Ended

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

 

December 31,
2018

Profitability and other ratios of consolidated operations

 

 

 

 

 

 

 

 

 

Return on average assets(1)

0.71

%

 

(0.64

)%

 

0.69

%

 

0.28

%

 

0.43

%

Return on average equity(1)

6.20

%

 

(5.83

)%

 

6.91

%

 

2.98

%

 

4.56

%

Return on average tangible common equity(2)

6.46

%

 

(12.49

)%

 

7.43

%

 

1.91

%

 

4.19

%

Dividend payout ratio(3)

28.57

%

 

(13.33

)%

 

26.09

%

 

260.00

%

 

100.00

%

Net interest spread

2.65

%

 

2.47

%

 

2.50

%

 

2.47

%

 

2.56

%

Net interest margin(1)

3.04

%

 

2.86

%

 

2.86

%

 

2.81

%

 

2.88

%

Noninterest income (loss) to total revenue(4)

8.00

%

 

5.12

%

 

(3.66

)%

 

8.49

%

 

3.60

%

Noninterest income (loss) to average total assets(1)

0.25

%

 

0.15

%

 

(0.10

)%

 

0.25

%

 

0.10

%

Noninterest expense to average total assets(1)

2.35

%

 

1.98

%

 

1.82

%

 

2.43

%

 

1.92

%

Efficiency ratio(2)(5)

76.61

%

 

69.74

%

 

69.75

%

 

83.44

%

 

67.47

%

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

74.03

%

 

70.11

%

 

67.84

%

 

83.00

%

 

67.09

%

Average loans held-for-investment to average deposits

108.50

%

 

105.92

%

 

104.38

%

 

100.45

%

 

97.40

%

Average securities available-for-sale to average total assets

10.48

%

 

12.71

%

 

13.58

%

 

17.00

%

 

19.85

%

Average stockholders’ equity to average total assets

11.47

%

 

11.06

%

 

10.02

%

 

9.29

%

 

9.38

%

  1. Ratios are presented on an annualized basis.
  2. The ratios are determined by methods other than in accordance with U.S. generally accepted accounting principles (GAAP). See Non-GAAP measures section for reconciliation of the calculation.
  3. The ratio is calculated by dividing dividends declared per common share by basic earnings per common share.
  4. Total revenue is equal to the sum of net interest income before provision for loan losses and noninterest income (loss).
  5. The ratios are calculated by dividing noninterest expense by the sum of net interest income before provision for loan and lease losses and noninterest income (loss).

Banc of California, Inc.
Selected Financial Data, Continued
(Dollars in thousands)
(Unaudited)

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

 

December 31,
2018

Loans and ALLL by loan origination type

 

 

 

 

 

 

 

 

 

Loan breakdown by origination type

 

 

 

 

 

 

 

 

 

Originated loans

$

 

5,510,242

 

 

$

 

5,888,647

 

 

$

 

6,181,583

 

 

$

 

6,991,056

 

 

$

 

7,105,171

 

Acquired loans not impaired at acquisition

 

441,643

 

 

 

494,612

 

 

 

537,987

 

 

 

566,144

 

 

 

595,702

 

Total loans

$

 

5,951,885

 

 

$

 

6,383,259

 

 

$

 

6,719,570

 

 

$

 

7,557,200

 

 

$

 

7,700,873

 

ALLL breakdown by origination type

 

 

 

 

 

 

 

 

 

Originated loans

$

 

56,175

 

 

$

 

61,306

 

 

$

 

58,135

 

 

$

 

63,003

 

 

$

 

61,255

 

Acquired loans not impaired at acquisition

 

1,474

 

 

 

1,621

 

 

 

1,388

 

 

 

882

 

 

 

937

 

Total ALLL

$

 

57,649

 

 

$

 

62,927

 

 

$

 

59,523

 

 

$

 

63,885

 

 

$

 

62,192

 

Discount on acquired loans not impaired at acquisition

$

 

8,071

 

 

$

 

9,062

 

 

$

 

10,680

 

 

$

 

11,184

 

 

$

 

11,645

 

Percentage of ALLL to:

 

 

 

 

 

 

 

 

 

Originated loans

 

1.02

%

 

 

1.04

%

 

 

0.94

%

 

 

0.90

%

 

 

0.86

%

Total loans

 

0.97

%

 

 

0.99

%

 

 

0.89

%

 

 

0.85

%

 

 

0.81

%

Banc of California, Inc.
Average Balance, Average Yield Earned, and Average Cost Paid
(Dollars in thousands)
(Unaudited)

 

Three Months Ended

 

December 31, 2019

 

September 30, 2019

 

June 30, 2019

 

Average

 

 

 

Yield

 

Average

 

 

 

Yield

 

Average

 

 

 

Yield

 

Balance

 

Interest

 

/ Cost

 

Balance

 

Interest

 

/ Cost

 

Balance

 

Interest

 

/ Cost

Interest earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held-for-sale

$

23,527

 

 

$

221

 

 

3.73

%

 

$

216,746

 

 

$

1,894

 

 

3.47

%

 

$

47,233

 

 

$

265

 

 

2.25

%

SFR mortgage

1,689,228

 

 

16,788

 

 

3.94

%

 

1,866,103

 

 

19,179

 

 

4.08

%

 

2,059,704

 

 

21,390

 

 

4.17

%

Commercial real estate, multifamily, and construction

2,633,342

 

 

32,763

 

 

4.94

%

 

2,717,609

 

 

33,343

 

 

4.87

%

 

3,406,672

 

 

39,659

 

 

4.67

%

Commercial and industrial, SBA, and lease financing

1,821,064

 

 

23,381

 

 

5.09

%

 

1,840,202

 

 

24,970

 

 

5.38

%

 

1,872,289

 

 

26,940

 

 

5.77

%

Other consumer

54,088

 

 

777

 

 

5.70

%

 

58,652

 

 

901

 

 

6.09

%

 

59,806

 

 

905

 

 

6.07

%

Gross loans and leases

6,221,249

 

 

73,930

 

 

4.71

%

 

6,699,312

 

 

80,287

 

 

4.75

%

 

7,445,704

 

 

89,159

 

 

4.80

%

Securities

833,726

 

 

7,812

 

 

3.72

%

 

1,105,499

 

 

10,024

 

 

3.60

%

 

1,304,876

 

 

12,457

 

 

3.83

%

Other interest-earning assets

330,950

 

 

1,960

 

 

2.35

%

 

362,613

 

 

2,346

 

 

2.57

%

 

342,908

 

 

2,424

 

 

2.84

%

Total interest-earning assets

7,385,925

 

 

83,702

 

 

4.50

%

 

8,167,424

 

 

92,657

 

 

4.50

%

 

9,093,488

 

 

104,040

 

 

4.59

%

Allowance for loan losses

(61,642

)

 

 

 

 

 

(55,976

)

 

 

 

 

 

(63,046

)

 

 

 

 

BOLI and noninterest earning assets

630,308

 

 

 

 

 

 

584,190

 

 

 

 

 

 

580,133

 

 

 

 

 

Total assets

$

7,954,591

 

 

 

 

 

 

$

8,695,638

 

 

 

 

 

 

$

9,610,575

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings

$

981,346

 

 

$

3,889

 

 

1.57

%

 

$

1,055,086

 

 

$

4,722

 

 

1.78

%

 

$

1,083,571

 

 

$

4,950

 

 

1.83

%

Interest-bearing checking

1,546,322

 

 

4,234

 

 

1.09

%

 

1,511,432

 

 

4,483

 

 

1.18

%

 

1,580,165

 

 

4,554

 

 

1.16

%

Money market

743,695

 

 

2,593

 

 

1.38

%

 

755,114

 

 

3,093

 

 

1.63

%

 

853,007

 

 

3,902

 

 

1.83

%

Certificates of deposit

1,332,911

 

 

7,531

 

 

2.24

%

 

1,750,970

 

 

10,513

 

 

2.38

%

 

2,537,060

 

 

15,192

 

 

2.40

%

Total interest-bearing deposits

4,604,274

 

 

18,247

 

 

1.57

%

 

5,072,602

 

 

22,811

 

 

1.78

%

 

6,053,803

 

 

28,598

 

 

1.89

%

FHLB advances

1,020,478

 

 

6,396

 

 

2.49

%

 

1,333,739

 

 

8,519

 

 

2.53

%

 

1,287,121

 

 

8,289

 

 

2.58

%

Securities sold under repurchase agreements

2,223

 

 

15

 

 

2.68

%

 

1,922

 

 

13

 

 

2.68

%

 

2,173

 

 

16

 

 

2.95

%

Long-term debt and other interest-bearing liabilities

174,092

 

 

2,384

 

 

5.43

%

 

174,111

 

 

2,399

 

 

5.47

%

 

174,161

 

 

2,357

 

 

5.43

%

Total interest-bearing liabilities

5,801,067

 

 

27,042

 

 

1.85

%

 

6,582,374

 

 

33,742

 

 

2.03

%

 

7,517,258

 

 

39,260

 

 

2.09

%

Noninterest-bearing deposits

1,108,077

 

 

 

 

 

 

1,047,858

 

 

 

 

 

 

1,034,205

 

 

 

 

 

Noninterest-bearing liabilities

132,698

 

 

 

 

 

 

103,667

 

 

 

 

 

 

96,179

 

 

 

 

 

Total liabilities

7,041,842

 

 

 

 

 

 

7,733,899

 

 

 

 

 

 

8,647,642

 

 

 

 

 

Total stockholders’ equity

912,749

 

 

 

 

 

 

961,739

 

 

 

 

 

 

962,933

 

 

 

 

 

Total liabilities and stockholders’ equity

$

7,954,591

 

 

 

 

 

 

$

8,695,638

 

 

 

 

 

 

$

9,610,575

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income/spread

 

 

$

56,660

 

 

2.65

%

 

 

 

$

58,915

 

 

2.47

%

 

 

 

$

64,780

 

 

2.50

%

Net interest margin

 

 

 

 

3.04

%

 

 

 

 

 

2.86

%

 

 

 

 

 

2.86

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of interest-earning assets to interest-bearing liabilities

127.32

%

 

 

 

 

 

124.08

%

 

 

 

 

 

120.97

%

 

 

 

 

Total deposits

$

5,712,351

 

 

$

18,247

 

 

1.27

%

 

$

6,120,460

 

 

$

22,811

 

 

1.48

%

 

$

7,088,008

 

 

$

28,598

 

 

1.62

%

Total funding (1)

$

6,909,144

 

 

$

27,042

 

 

1.55

%

 

$

7,630,232

 

 

$

33,742

 

 

1.75

%

 

$

8,551,463

 

 

$

39,260

 

 

1.84

%

  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

 

March 31, 2019

 

December 31, 2018

 

Average

 

 

 

Yield

 

Average

 

 

 

Yield

 

Balance

 

Interest

 

/ Cost

 

Balance

 

Interest

 

/ Cost

Interest earning assets

 

 

 

 

 

 

 

 

 

 

 

Loans held-for-sale (1)

$

 

31,374

 

 

$

 

228

 

 

2.95

%

 

$

 

33,243

 

 

$

 

221

 

 

2.64

%

SFR mortgage

 

2,312,900

 

 

 

24,062

 

 

4.22

%

 

 

2,260,205

 

 

 

23,585

 

 

4.14

%

Commercial real estate, multifamily, and construction

 

3,387,698

 

 

 

38,117

 

 

4.56

%

 

 

3,246,860

 

 

 

37,403

 

 

4.57

%

Commercial and industrial, SBA, and lease financing

 

1,920,220

 

 

 

27,235

 

 

5.75

%

 

 

1,791,708

 

 

 

26,219

 

 

5.81

%

Other consumer

 

62,558

 

 

 

916

 

 

5.94

%

 

 

68,479

 

 

 

990

 

 

5.74

%

Gross loans and leases

 

7,714,750

 

 

 

90,558

 

 

4.76

%

 

 

7,400,495

 

 

 

88,418

 

 

4.74

%

Securities

 

1,751,509

 

 

 

17,841

 

 

4.13

%

 

 

2,032,632

 

 

 

19,882

 

 

3.88

%

Other interest-earning assets

 

321,823

 

 

 

2,313

 

 

2.91

%

 

 

318,419

 

 

 

2,990

 

 

3.73

%

Total interest-earning assets

 

9,788,082

 

 

 

110,712

 

 

4.59

%

 

 

9,751,546

 

 

 

111,290

 

 

4.53

%

Allowance for loan losses

 

(61,924

)

 

 

 

 

 

 

(58,099

)

 

 

 

 

BOLI and non-interest earning assets

 

575,559

 

 

 

 

 

 

 

544,302

 

 

 

 

 

Total assets

$

 

10,301,717

 

 

 

 

 

 

$

 

10,237,749

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

Savings

 

1,201,802

 

 

 

5,480

 

 

1.85

%

 

 

1,279,155

 

 

 

5,663

 

 

1.76

%

Interest-bearing checking

 

1,554,846

 

 

 

4,525

 

 

1.18

%

 

 

1,666,884

 

 

 

4,916

 

 

1.17

%

Money market

 

887,538

 

 

 

4,128

 

 

1.89

%

 

 

803,157

 

 

 

3,168

 

 

1.56

%

Certificates of deposit

 

2,982,980

 

 

 

17,310

 

 

2.35

%

 

 

2,759,665

 

 

 

15,225

 

 

2.19

%

Total interest-bearing deposits

 

6,627,166

 

 

 

31,443

 

 

1.92

%

 

 

6,508,861

 

 

 

28,972

 

 

1.77

%

FHLB advances

 

1,422,100

 

 

 

9,081

 

 

2.59

%

 

 

1,447,348

 

 

 

9,068

 

 

2.49

%

Securities sold under repurchase agreements

 

2,350

 

 

 

18

 

 

3.11

%

 

 

3,116

 

 

 

25

 

 

3.18

%

Long-term debt and other interest-bearing liabilities

 

174,230

 

 

 

2,362

 

 

5.50

%

 

 

174,281

 

 

 

2,383

 

 

5.42

%

Total interest-bearing liabilities

 

8,225,846

 

 

 

42,904

 

 

2.12

%

 

 

8,133,606

 

 

 

40,448

 

 

1.97

%

Noninterest-bearing deposits

 

1,021,741

 

 

 

 

 

 

 

1,054,790

 

 

 

 

 

Non-interest-bearing liabilities

 

97,430

 

 

 

 

 

 

 

89,111

 

 

 

 

 

Total liabilities

 

9,345,017

 

 

 

 

 

 

 

9,277,507

 

 

 

 

 

Total stockholders’ equity

 

956,700

 

 

 

 

 

 

 

960,242

 

 

 

 

 

Total liabilities and stockholders’ equity

$

 

10,301,717

 

 

 

 

 

 

$

 

10,237,749

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income/spread

 

 

$

 

67,808

 

 

2.47

%

 

 

 

$

 

70,842

 

 

2.56

%

Net interest margin

 

 

 

 

2.81

%

 

 

 

 

 

2.88

%

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of interest-earning assets to interest-bearing liabilities

 

118.99

%

 

 

 

 

 

 

119.89

%

 

 

 

 

Total deposits

$

 

7,648,907

 

 

$

 

31,443

 

 

1.67

%

 

$

 

7,563,651

 

 

$

 

28,972

 

 

1.52

%

Total funding (2)

$

 

9,247,587

 

 

$

 

42,904

 

 

1.88

%

 

$

 

9,188,396

 

 

$

 

40,448

 

 

1.75

%

  1. Includes loans held-for-sale of discontinued operations for the three months ended December 31, 2018.
  2. Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.

 

Year Ended

 

December 31, 2019

 

December 31, 2018

 

Average

 

 

 

Yield

 

Average

 

 

 

Yield

 

Balance

 

Interest

 

/ Cost

 

Balance

 

Interest

 

/ Cost

Interest earning assets

 

 

 

 

 

 

 

 

 

 

 

Loans held-for-sale (1)

$

 

80,074

 

 

$

 

2,609

 

 

3.26

%

 

$

 

56,757

 

 

$

 

1,109

 

 

1.95

%

SFR mortgage

 

1,979,957

 

 

 

81,419

 

 

4.11

%

 

 

2,207,689

 

 

 

91,188

 

 

4.13

%

Commercial real estate, multifamily, and construction

 

3,033,392

 

 

 

143,882

 

 

4.74

%

 

 

3,047,164

 

 

 

138,416

 

 

4.54

%

Commercial and industrial, SBA, and lease financing

 

1,863,108

 

 

 

102,526

 

 

5.50

%

 

 

1,716,631

 

 

 

95,115

 

 

5.54

%

Other consumer

 

58,752

 

 

 

3,498

 

 

5.95

%

 

 

80,359

 

 

 

4,109

 

 

5.11

%

Gross loans and leases

 

7,015,283

 

 

 

333,934

 

 

4.76

%

 

 

7,108,600

 

 

 

329,937

 

 

4.64

%

Securities

 

1,245,995

 

 

 

48,134

 

 

3.86

%

 

 

2,248,488

 

 

 

83,567

 

 

3.72

%

Other interest-earning assets

 

339,661

 

 

 

9,043

 

 

2.66

%

 

 

362,927

 

 

 

9,957

 

 

2.74

%

Total interest-earning assets

 

8,600,939

 

 

 

391,111

 

 

4.55

%

 

 

9,720,015

 

 

 

423,461

 

 

4.36

%

Allowance for loan losses

 

(60,633

)

 

 

 

 

 

 

(54,777

)

 

 

 

 

BOLI and non-interest earning assets

 

592,674

 

 

 

 

 

 

 

559,675

 

 

 

 

 

Total assets

$

 

9,132,980

 

 

 

 

 

 

$

 

10,224,913

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

Savings

 

1,079,778

 

 

 

19,040

 

 

1.76

%

 

 

1,156,292

 

 

 

17,971

 

 

1.55

%

Interest-bearing checking

 

1,548,067

 

 

 

17,797

 

 

1.15

%

 

 

1,812,980

 

 

 

18,261

 

 

1.01

%

Money market

 

809,295

 

 

 

13,717

 

 

1.69

%

 

 

994,103

 

 

 

13,146

 

 

1.32

%

Certificates of deposit

 

2,145,363

 

 

 

50,545

 

 

2.36

%

 

 

2,272,093

 

 

 

41,858

 

 

1.84

%

Total interest-bearing deposits

 

5,582,503

 

 

 

101,099

 

 

1.81

%

 

 

6,235,468

 

 

 

91,236

 

 

1.46

%

FHLB advances

 

1,264,945

 

 

 

32,285

 

 

2.55

%

 

 

1,627,608

 

 

 

34,995

 

 

2.15

%

Securities sold under repurchase agreements

 

2,166

 

 

 

62

 

 

2.86

%

 

 

39,336

 

 

 

1,033

 

 

2.63

%

Long-term debt and other interest-bearing liabilities

 

174,148

 

 

 

9,502

 

 

5.46

%

 

 

174,340

 

 

 

9,456

 

 

5.42

%

Total interest-bearing liabilities

 

7,023,762

 

 

 

142,948

 

 

2.04

%

 

 

8,076,752

 

 

 

136,720

 

 

1.69

%

Noninterest-bearing deposits

 

1,053,193

 

 

 

 

 

 

 

1,034,937

 

 

 

 

 

Non-interest-bearing liabilities

 

107,579

 

 

 

 

 

 

 

117,904

 

 

 

 

 

Total liabilities

 

8,184,534

 

 

 

 

 

 

 

9,229,593

 

 

 

 

 

Total stockholders’ equity

 

948,446

 

 

 

 

 

 

 

995,320

 

 

 

 

 

Total liabilities and stockholders’ equity

$

 

9,132,980

 

 

 

 

 

 

$

 

10,224,913

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income/spread

 

 

$

 

248,163

 

 

2.51

%

 

 

 

$

 

286,741

 

 

2.67

%

Net interest margin

 

 

 

 

2.89

%

 

 

 

 

 

2.95

%

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of interest-earning assets to interest-bearing liabilities

 

122.45

%

 

 

 

 

 

 

120.35

%

 

 

 

 

Total deposits

$

 

6,635,696

 

 

$

 

101,099

 

 

1.52

%

 

$

 

7,270,405

 

 

$

 

91,236

 

 

1.25

%

Total funding (2)

$

 

8,076,955

 

 

$

 

142,948

 

 

1.77

%

 

$

 

9,111,689

 

 

$

 

136,720

 

 

1.50

%

  1. Includes loans held-for-sale of discontinued operations for the year ended December 31, 2018.
  2. Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.

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

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

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

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

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

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

 

December 31,
2018

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

 

 

 

 

 

 

 

 

 

Total assets

$

 

 

7,828,410

 

 

$

 

 

8,625,337

 

 

$

 

 

9,359,931

 

 

$

 

 

9,886,525

 

 

$

 

 

10,630,067

 

Less goodwill

 

(37,144

)

 

 

(37,144

)

 

 

(37,144

)

 

 

(37,144

)

 

 

(37,144

)

Less other intangible assets

 

(4,151

)

 

 

(4,605

)

 

 

(5,105

)

 

 

(5,726

)

 

 

(6,346

)

Tangible assets(1)

$

 

 

7,787,115

 

 

$

 

 

8,583,588

 

 

$

 

 

9,317,682

 

 

$

 

 

9,843,655

 

 

$

 

 

10,586,577

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity

$

 

 

907,245

 

 

$

 

 

900,988

 

 

$

 

 

963,544

 

 

$

 

 

948,325

 

 

$

 

 

945,534

 

Less goodwill

 

(37,144

)

 

 

(37,144

)

 

 

(37,144

)

 

 

(37,144

)

 

 

(37,144

)

Less other intangible assets

 

(4,151

)

 

 

(4,605

)

 

 

(5,105

)

 

 

(5,726

)

 

 

(6,346

)

Tangible equity(1)

 

865,950

 

 

 

859,239

 

 

 

921,295

 

 

 

905,455

 

 

 

902,044

 

Less preferred stock

 

(189,825

)

 

 

(189,825

)

 

 

(231,128

)

 

 

(231,128

)

 

 

(231,128

)

Tangible common equity(1)

$

 

 

676,125

 

 

$

 

 

669,414

 

 

$

 

 

690,167

 

 

$

 

 

674,327

 

 

$

 

 

670,916

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity to total assets

 

11.59

%

 

 

10.45

%

 

 

10.29

%

 

 

9.59

%

 

 

8.89

%

Tangible equity to tangible assets(1)

 

11.12

%

 

 

10.01

%

 

 

9.89

%

 

 

9.20

%

 

 

8.52

%

Tangible common equity to tangible assets(1)

 

8.68

%

 

 

7.80

%

 

 

7.41

%

 

 

6.85

%

 

 

6.34

%

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

50,413,681

 

 

 

50,406,763

 

 

 

50,397,769

 

 

 

50,315,490

 

 

 

50,172,018

 

Class B non-voting non-convertible common shares outstanding

 

477,321

 

 

 

477,321

 

 

 

477,321

 

 

 

477,321

 

 

 

477,321

 

Total common shares outstanding

 

50,891,002

 

 

 

50,884,084

 

 

 

50,875,090

 

 

 

50,792,811

 

 

 

50,649,339

 

 

 

 

 

 

 

 

 

 

 

Tangible common equity per common share(1)

$

 

 

13.29

 

 

$

 

 

13.16

 

 

$

 

 

13.57

 

 

$

 

 

13.28

 

 

$

 

 

13.25

 

Book value per common share

$

 

 

14.10

 

 

$

 

 

13.98

 

 

$

 

 

14.40

 

 

$

 

 

14.12

 

 

$

 

 

14.10

 

  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

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

 

December 31,
2018

Return on tangible common equity

 

 

 

 

 

 

 

 

 

Average total stockholders' equity

$

 

912,749

 

 

$

 

961,739

 

 

$

 

962,933

 

 

$

 

956,700

 

 

$

 

960,242

 

Less average preferred stock

 

(189,824

)

 

 

(213,619

)

 

 

(231,128

)

 

 

(231,128

)

 

 

(231,128

)

Less average goodwill

 

(37,144

)

 

 

(37,144

)

 

 

(37,144

)

 

 

(37,144

)

 

 

(37,144

)

Less average other intangible assets

 

(4,441

)

 

 

(4,935

)

 

 

(5,503

)

 

 

(6,128

)

 

 

(6,731

)

Average tangible common equity(1)

$

 

681,340

 

 

$

 

706,041

 

 

$

 

689,158

 

 

$

 

682,300

 

 

$

 

685,239

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

 

14,272

 

 

$

 

(14,132

)

 

$

 

16,582

 

 

$

 

7,037

 

 

$

 

11,038

 

Less preferred stock dividends and impact of preferred stock redemption

 

(3,540

)

 

 

(8,496

)

 

 

(4,308

)

 

 

(4,308

)

 

 

(4,308

)

Add amortization of intangible assets

 

454

 

 

 

500

 

 

 

621

 

 

 

620

 

 

 

644

 

Less tax effect on amortization and impairment of intangible assets

 

(95

)

 

 

(105

)

 

 

(130

)

 

 

(130

)

 

 

(135

)

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

$

 

11,091

 

 

$

 

(22,233

)

 

$

 

12,765

 

 

$

 

3,219

 

 

$

 

7,239

 

 

 

 

 

 

 

 

 

 

 

Return on average equity

 

6.20

%

 

 

(5.83

)%

 

 

6.91

%

 

 

2.98

%

 

 

4.56

%

Return on average tangible common equity(1)

 

6.46

%

 

 

(12.49

)%

 

 

7.43

%

 

 

1.91

%

 

 

4.19

%

 

 

 

 

 

 

 

 

 

 

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

 

21.00

%

 

 

21.00

%

 

 

21.00

%

 

 

21.00

%

 

 

21.00

%

 

Three Months Ended

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

 

December 31,
2018

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

 

 

 

 

 

 

 

 

 

Noninterest expense

$

 

 

47,185

 

 

$

 

 

43,307

 

 

$

 

 

43,587

 

 

$

 

 

61,835

 

 

$

 

 

49,578

 

(Loss) gain on investments in alternative energy partnerships

 

(1,039

)

 

 

940

 

 

 

355

 

 

 

(1,950

)

 

 

(786

)

Adjusted noninterest expense(1)

$

 

 

46,146

 

 

$

 

 

44,247

 

 

$

 

 

43,942

 

 

$

 

 

59,885

 

 

$

 

 

48,792

 

 

 

 

 

 

 

 

 

 

 

Net interest income

$

 

 

56,660

 

 

$

 

 

58,915

 

 

$

 

 

64,780

 

 

$

 

 

67,808

 

 

$

 

 

70,842

 

Noninterest income

 

4,930

 

 

 

3,181

 

 

 

(2,290

)

 

 

6,295

 

 

 

2,644

 

Total revenue

 

61,590

 

 

 

62,096

 

 

 

62,490

 

 

 

74,103

 

 

 

73,486

 

Tax credit from investments in alternative energy partnerships

 

1,689

 

 

 

77

 

 

 

1,680

 

 

 

 

 

Deferred tax expense on investments in alternative energy partnerships

 

(177

)

 

 

(8

)

 

 

(176

)

 

 

 

 

Tax effect on tax credit and deferred tax expense

 

267

 

 

 

7

 

 

 

426

 

 

 

 

 

26

 

(Loss) gain on investments in alternative energy partnerships

 

(1,039

)

 

 

940

 

 

 

355

 

 

 

(1,950

)

 

 

(786

)

Total pre-tax adjustments for investments in alternative energy partnerships

 

740

 

 

 

1,016

 

 

 

2,285

 

 

 

(1,950

)

 

 

(760

)

Adjusted total revenue(1)