Banc of California Reports Fourth Quarter 2020 Financial Results

SANTA ANA, Calif.--()--Banc of California, Inc. (NYSE: BANC) today reported net income of $21.7 million and net income available to common stockholders for the fourth quarter of 2020 of $17.7 million, or diluted earnings per common share of $0.35.

Highlights for the fourth quarter included:

  • Return on average assets of 1.11%
  • Net interest margin of 3.38%, a 29 basis points increase from the prior quarter
  • Average cost of total deposits of 0.36%, a 15 basis points decrease from the prior quarter, and period-end cost of deposits at 0.29%
  • Noninterest-bearing deposit balances increased $108.5 million during the quarter and represented 26% of total deposits at December 31, 2020, up from 20% a year earlier
  • Allowance for credit losses remained strong at 1.43% of total loans and 230% of non-performing assets
  • Non-performing loans decreased 45% to $36.6 million or 0.62% of total loans
  • Total deferrals/forbearances declined to $201.5 million at December 31, 2020 from $282.5 million at September 30, 2020
  • Common Equity Tier 1 capital at 11.19%

Jared Wolff, President & CEO of Banc of California, commented, “We ended 2020 with a strong quarter that demonstrates the potential of our franchise. We continued to execute on our key initiatives, lowering deposit costs and controlling noninterest expense, while increasing our level of quality earning assets. As a result, we saw significant growth in pre-tax pre-provision income, net income and earnings per share, while generating a return on average assets of more than 1.0% for the fourth quarter.”

“While the operating environment remains uncertain as we begin 2021, we are confident in our ability to continue to execute well on the strategies that are driving earnings growth and franchise value. We believe that we can continue to generate balance sheet growth while protecting our net interest margin and managing expenses, improving operating leverage over the course of 2021,” said Mr. Wolff.

Lynn Hopkins, Chief Financial Officer of Banc of California, said, “In addition to the strong operating results we generated in the fourth quarter, noninterest income benefited from recoveries on a number of legacy legal matters that we strategically decided to pursue, impacting net income by approximately $2.8 million, or $0.05 per share. We continue to pursue additional recovery opportunities that could positively impact earnings and tangible book value per share in future quarters.”

“Our focus on reducing deposit costs, shifting excess liquidity into higher yielding earning assets, and increasing production of quality loans at attractive risk-adjusted yields resulted in our net interest margin expanding 29 basis points to 3.38% during the fourth quarter. We also continued to see positive trends in asset quality, with two of our largest non-performing assets being resolved during the quarter with no additional provision required, and total loan deferrals continuing to decline. We also successfully raised $85 million in subordinated debt during the fourth quarter. Although the additional subordinated debt temporarily weighs on our cost of funds, it will position the Company to move forward on capital actions during 2021, subject to regulatory approval, that are expected to be accretive to earnings,” said Ms. Hopkins.

Income Statement Highlights

 

Three Months Ended

 

Year Ended

 

December 31,
2020

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

 

December 31,
2020

 

December 31,
2019

 

($ in thousands)

Total interest and dividend income

$

73,530

 

 

$

69,666

 

 

$

72,697

 

 

$

74,714

 

 

$

83,702

 

 

$

290,607

 

 

$

391,111

 

Total interest expense

11,967

 

 

13,811

 

 

17,382

 

 

22,853

 

 

27,042

 

 

66,013

 

 

142,948

 

Net interest income

61,563

 

 

55,855

 

 

55,315

 

 

51,861

 

 

56,660

 

 

224,594

 

 

248,163

 

Total noninterest income

6,975

 

 

3,954

 

 

5,528

 

 

2,061

 

 

4,930

 

 

18,518

 

 

12,116

 

Total revenue

68,538

 

 

59,809

 

 

60,843

 

 

53,922

 

 

61,590

 

 

243,112

 

 

260,279

 

Total noninterest expense

38,950

 

 

40,394

 

 

72,770

 

 

46,919

 

 

47,483

 

 

199,033

 

 

196,472

 

Pre-tax / pre-provision income (loss)

29,588

 

 

19,415

 

 

(11,927)

 

 

7,003

 

 

14,107

 

 

44,079

 

 

63,807

 

Provision for (reversal of) credit losses

991

 

 

1,141

 

 

11,826

 

 

15,761

 

 

(2,976)

 

 

29,719

 

 

35,829

 

Income tax expense (benefit)

6,894

 

 

2,361

 

 

(5,304)

 

 

(2,165)

 

 

2,811

 

 

1,786

 

 

4,219

 

Net income (loss)

$

21,703

 

 

$

15,913

 

 

$

(18,449)

 

 

$

(6,593)

 

 

$

14,272

 

 

$

12,574

 

 

$

23,759

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

$

17,706

 

 

$

12,084

 

 

$

(21,936)

 

 

$

(9,694)

 

 

$

10,415

 

 

$

(1,103)

 

 

$

2,624

 

 

(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 for additional detail on these amounts.

Net interest income

Q4-2020 vs Q3-2020

Net interest income increased $5.7 million to $61.6 million for the fourth quarter due to both lower funding costs, higher yields on interest-earning assets and higher average interest-earning assets. Compared to the prior quarter, average interest-earning assets increased by $64.7 million to $7.25 billion, including higher average loans of $211.3 million and higher average securities of $48.5 million, offset by lower other interest-earning assets of $195.2 million. During the fourth quarter, average deposits increased $66.4 million, consisting of higher average noninterest-bearing deposits of $91.0 million, offset by lower average interest-bearing deposits of $24.6 million. Average FHLB advances decreased $73.9 million primarily due to maturities of $105.0 million in advances during the quarter. Average long-term debt and other interest-bearing liabilities increased $64.4 million due to the issuance of $85.0 million in subordinated notes in October 2020.

The net interest margin increased 29 basis points to 3.38% for the fourth quarter from 3.09% for the third quarter as the average earning-assets yield increased 18 basis points and the average cost of funds decreased 12 basis points. The yield on average interest-earning assets increased to 4.04% for the fourth quarter from 3.86% for the third quarter due to an overall higher loan yield and improved mix of interest-earning assets. The average yield on loans increased 12 basis points to 4.58% during the fourth quarter due to higher average commercial and industrial loans and higher prepayment penalty fees from refinancing activity and accelerated accretion from PPP loan forgiveness. The average yield on securities decreased 13 basis points to 2.13% due mostly to a 22 basis point decrease in average yield on collateralized loan obligations (CLOs) to 1.94% for the fourth quarter from 2.16% for the third quarter as these securities reprice quarterly.

The average cost of funds decreased 12 basis points to 0.70% for the fourth quarter from 0.82% for the third quarter. This decrease was driven by the lower average cost of interest-bearing liabilities and improved funding mix, including higher average noninterest-bearing deposits during the fourth quarter. We continue to reduce our reliance on high cost transaction accounts, non-brokered certificates of deposits, and wholesale funds as we execute on our relationship-focused business banking strategy. The average cost of interest-bearing liabilities decreased 13 basis points to 0.89% for the fourth quarter from 1.02% for the third quarter due to actively managing down the cost of interest-bearing deposits into the current rate environment. The average cost of interest-bearing deposits declined 19 basis points to 0.47% for the fourth quarter from 0.66% for the prior quarter. Additionally, average noninterest-bearing deposits increased by $91.0 million and represented 24.1% of total average deposits in the fourth quarter compared to 22.9% of total average deposits for the third quarter. Our total cost of average deposits decreased 15 basis points to 0.36% for the fourth quarter. The spot rate of total deposits at the end of the fourth quarter of 2020 was 0.29%.

YTD 2020 vs YTD 2019

Net interest income for the year ended December 31, 2020 decreased $23.6 million to $224.6 million from $248.2 million for 2019. Net interest income was impacted by lower average interest-earning assets, as a result of targeted sales of securities and loans during 2019, in line with our strategy of remixing the loan portfolio towards relationship-based lending, offset by improved funding costs. For the year ended December 31, 2020, average interest-earning assets declined $1.44 billion to $7.16 billion, and the net interest margin increased 24 basis points to 3.13% for the year ended December 31, 2020 compared to 2.89% for the same 2019 period.

The net interest margin expanded due to a 78 basis point decrease in the average cost of funds, outpacing a 49 basis point decline in the average interest-earning asset yield. The average yield on interest-earning assets decreased to 4.06% for the year ended December 31, 2020, from 4.55% for 2019 due mostly to the impact of lower market interest rates on loan and securities yields over this time period. The average yield on loans was 4.52% for the year ended December 31, 2020, compared to 4.76% for the same 2019 period and the average yield on securities decreased 125 basis points due mostly to CLOs repricing into the lower rate environment.

The average cost of funds decreased to 0.99% for the year ended December 31, 2020, from 1.77% for the same 2019 period. This decrease was driven by the lower average cost of interest-bearing liabilities and the improved funding mix, including higher average noninterest-bearing deposits. The average cost of interest-bearing liabilities decreased 81 basis points to 1.23% for the year ended December 31, 2020 from 2.04% for 2019 due to the combination of actively managing deposit pricing down into the lower interest rate environment and the lower average cost of FHLB term advances resulting from maturities and refinancing certain term advances during 2020. Compared to the prior year, the average cost of interest-bearing deposits declined 96 basis points to 0.85% and the average cost of total deposits decreased 86 basis points to 0.66%. Additionally, average noninterest-bearing deposits increased by $269.5 million when compared to the same 2019 period.

Provision for credit losses

Q4-2020 vs Q3-2020

The provision for credit losses totaled $1.0 million for the fourth quarter, compared to $1.1 million for the third quarter. The fourth quarter provision for credit losses was comprised of $684 thousand in general reserves and $306 thousand related to specific reserves, offset by provision release of $23 thousand related to unfunded commitments. The general provision is due to changes in key macro-economic forecast variables, such as unemployment and gross domestic product, improved credit quality metrics, and higher period end loan balances of $220.4 million.

YTD 2020 vs YTD 2019

During the year ended December 31, 2020, the provision for credit losses totaled $29.7 million under the CECL model, compared to $35.8 million under the incurred loss model during 2019. The lower provision for credit losses was primarily the result of lower net charge-offs and lower period end loan balances of $53.5 million, offset by increases from using the new CECL model, the estimated future impact of the health crisis, and higher specific reserves.

Noninterest income

Q4-2020 vs Q3-2020

Noninterest income increased $3.0 million, to $7.0 million for the fourth quarter due mostly to higher legacy legal settlements for the benefit of the Company of $2.4 million. In addition, customer service fees increased $455 thousand and processing fees for credit facilities increased $292 thousand, offset by lower gains on sale of loans of $297 thousand. There were no sales of loans during the fourth quarter of 2020.

YTD 2020 vs YTD 2019

Noninterest income for the year ended December 31, 2020 increased $6.4 million to $18.5 million compared to the prior year. Noninterest income in 2019 included a $4.5 million loss on the multifamily loans securitization, which was offset by a reduction in the provision for credit losses of $5.1 million. There was no similar securitization activity in 2020. Excluding the impact of the 2019 multifamily loans securitization, noninterest income increased $1.9 million as a result of (i) higher net gain on sale of investment securities of $6.9 million, (ii) lower impairment losses on investment securities of $731 thousand and (iii) higher other income of $2.5 million related to legacy legal settlements for the benefit of the Company. These increases were offset by (iv) lower other net gains on sales of loans of $3.0 million, (v) lower earn-out income related to the sale of our mortgage banking division of $1.4 million, (vi) lower other income of $2.0 million due in part to lower rental income and (vii) a $1.6 million loss due to decreases in the fair value of loans held for sale in 2020.

Noninterest expense

Q4-2020 vs Q3-2020

Noninterest expense decreased $1.4 million to $39.0 million for the fourth quarter compared to the prior quarter. The decrease was primarily due to lower professional fees of $5.1 million due to higher recoveries of indemnified legal costs which totaled $4.2 million in the fourth quarter compared to $1.3 million during the third quarter, offset by higher salaries and benefits expense of $2.6 million due mostly to higher incentive compensation accruals and lower gains in alternative energy partnership investments of $757 thousand. Total operating costs, defined as noninterest expense adjusted for certain non-core items (refer to section Non-GAAP Measures), increased $3.4 million to $44.0 million for the fourth quarter compared to $40.7 million for the prior quarter primarily due to higher incentive compensation.

YTD 2020 vs YTD 2019

Noninterest expense for the year ended December 31, 2020 increased $2.6 million to $199.0 million compared to the prior year. The increase was primarily due to: (i) the $26.8 million one-time charge related to the termination of our LAFC naming rights agreements, (ii) a $2.5 million debt extinguishment fee associated with the early repayment of certain FHLB term advances, and (iii) higher professional fees of $3.5 million, due to overall reductions in recoveries of $18.2 million related to indemnified legal fees for resolved legal proceedings and various other litigations. These increases were partially offset by: (i) lower losses in alternative energy partnership investments of $2.1 million, (ii) lower salaries and benefits expense of $9.1 million resulting from lower headcount, (iii) lower advertising costs of $5.1 million due to the termination of our LAFC naming rights agreements and reductions in overall events and media spending, (iv) lower regulatory assessments of $5.0 million due to changes in our asset size and an FDIC assessment credit, (v) lower restructuring costs of $4.3 million and (vi) lower occupancy, equipment and other expenses of $4.7 million due to gaining other efficiencies.

Income taxes

Q4-2020 vs Q3-2020

Income tax expense totaled $6.9 million for the fourth quarter resulting in an effective tax rate of 24.1% compared to a $2.4 million expense for the third quarter resulting in an effective tax rate of 12.9%. The increase in effective tax rate between quarters was based on the increase in pre-tax income.

YTD 2020 vs YTD 2019

Income tax expense totaled $1.8 million for the year ended December 31, 2020, representing an effective tax rate of 12.4%, compared to income tax expense of $4.2 million and an effective tax rate of 15.1% for year ended December 31, 2019. The effective tax rate for the year ended December 31, 2020 differs from the 21% federal statutory rate due to the impact of state taxes as well as various permanent tax differences.

Balance Sheet

At December 31, 2020, total assets were $7.88 billion, which represented a linked-quarter increase of $139.2 million. The following table shows selected balance sheet line items as of the dates indicated.

 

 

 

Amount Change

 

December 31,
2020

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

 

Q4-20 vs. Q3-20

 

Q4-20 vs. Q4-19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

Securities available-for-sale

$

1,231,431

 

 

$

1,245,867

 

 

$

1,176,029

 

 

$

969,427

 

 

$

912,580

 

 

$

(14,436)

 

 

$

318,851

 

Loans held-for-investment

$

5,898,405

 

 

$

5,678,002

 

 

$

5,627,696

 

 

$

5,667,464

 

 

$

5,951,885

 

 

$

220,403

 

 

$

(53,480)

 

Loans held-for-sale

$

1,413

 

 

$

1,849

 

 

$

19,768

 

 

$

20,234

 

 

$

22,642

 

 

$

(436)

 

 

$

(21,229)

 

Total assets

$

7,877,334

 

 

$

7,738,106

 

 

$

7,770,138

 

 

$

7,662,607

 

 

$

7,828,410

 

 

$

139,228

 

 

$

48,924

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

$

1,559,248

 

 

$

1,450,744

 

 

$

1,391,504

 

 

$

1,256,081

 

 

$

1,088,516

 

 

$

108,504

 

 

$

470,732

 

Total deposits

$

6,085,800

 

 

$

6,032,266

 

 

$

6,037,465

 

 

$

5,562,838

 

 

$

5,427,167

 

 

$

53,534

 

 

$

658,633

 

Borrowings (1)

$

796,110

 

 

$

733,105

 

 

$

790,707

 

 

$

1,151,479

 

 

$

1,368,421

 

 

$

63,005

 

 

$

(572,311)

 

Total liabilities

$

6,980,127

 

 

$

6,863,852

 

 

$

6,923,179

 

 

$

6,827,605

 

 

$

6,921,165

 

 

$

116,275

 

 

$

58,962

 

Total equity

$

897,207

 

 

$

874,254

 

 

$

846,959

 

 

$

835,002

 

 

$

907,245

 

 

$

22,953

 

 

$

(10,038)

 

 

(1) Represents Advances from Federal Home Loan Bank and Notes payable, net

Investments

Securities available-for-sale decreased $14.4 million during the fourth quarter to $1.23 billion at December 31, 2020 primarily due to the call of $16.1 million in CLOs and principal payments of $7.1 million, partially offset by higher unrealized net gains of $9.2 million. The increase in the unrealized net gain was due mostly to credit spreads tightening during the quarter resulting in a positive change on the pricing of the CLOs and corporate debt securities. There were no sales of securities during the fourth quarter. As of December 31, 2020, our securities portfolio included $677.8 million of CLOs, $318.2 million of agency securities, $68.6 million of municipal securities, $149.3 million of corporate debt securities, and $17.4 million of SBA pool securities. The CLO portfolio, which is comprised only of AA and AAA rated securities, represented 55.1% of the total securities portfolio and the carrying value included an unrealized net loss of $9.7 million at December 31, 2020 compared to an unrealized net loss of $17.7 million at September 30, 2020.

Loans

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

 

December 31,
2020

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

 

($ in thousands)

Composition of held-for-investment loans

 

 

 

 

 

 

 

 

 

Commercial real estate

$

807,195

 

 

$

826,683

 

 

$

822,694

 

 

$

810,024

 

 

$

818,817

 

Multifamily

1,289,820

 

 

1,476,803

 

 

1,434,071

 

 

1,466,083

 

 

1,494,528

 

Construction

176,016

 

 

197,629

 

 

212,979

 

 

227,947

 

 

231,350

 

Commercial and industrial

2,088,308

 

 

1,586,824

 

 

1,436,990

 

 

1,578,223

 

 

1,691,270

 

SBA

273,444

 

 

320,573

 

 

310,784

 

 

70,583

 

 

70,981

 

Total commercial loans

4,634,783

 

 

4,408,512

 

 

4,217,518

 

 

4,152,860

 

 

4,306,946

 

Single-family residential mortgage

1,230,236

 

 

1,234,479

 

 

1,370,785

 

 

1,467,375

 

 

1,590,774

 

Other consumer

33,386

 

 

35,011

 

 

39,393

 

 

47,229

 

 

54,165

 

Total consumer loans

1,263,622

 

 

1,269,490

 

 

1,410,178

 

 

1,514,604

 

 

1,644,939

 

Total gross loans

$

5,898,405

 

 

$

5,678,002

 

 

$

5,627,696

 

 

$

5,667,464

 

 

$

5,951,885

 

Composition percentage of held-for-investment loans

 

 

 

 

 

 

 

 

 

Commercial real estate

13.7

%

 

14.6

%

 

14.6

%

 

14.3

%

 

13.8

%

Multifamily

21.9

%

 

26.0

%

 

25.5

%

 

25.9

%

 

25.1

%

Construction

3.0

%

 

3.5

%

 

3.8

%

 

4.0

%

 

3.9

%

Commercial and industrial

35.3

%

 

28.0

%

 

25.5

%

 

27.9

%

 

28.4

%

SBA

4.6

%

 

5.6

%

 

5.5

%

 

1.2

%

 

1.2

%

Total commercial loans

78.5

%

 

77.7

%

 

74.9

%

 

73.3

%

 

72.4

%

Single-family residential mortgage

20.9

%

 

21.7

%

 

24.4

%

 

25.9

%

 

26.7

%

Other consumer

0.6

%

 

0.6

%

 

0.7

%

 

0.8

%

 

0.9

%

Total consumer loans

21.5

%

 

22.3

%

 

25.1

%

 

26.7

%

 

27.6

%

Total gross loans

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

Held-for-investment loans increased $220.4 million to $5.90 billion from the prior quarter, resulting from higher commercial and industrial (C&I) loans of $501.5 million due, in part, to increased utilization of credit facilities. The increases were partially offset by decreases in commercial real estate loans of $19.5 million, multifamily loans of $187.0 million, construction loans of $21.6 million due to prepayment activity. SBA loans decreased $47.1 million due to the SBA's processing of forgiveness requests for 268 PPP loans totaling $45.0 million during the quarter. At December 31, 2020, SBA loans included $210.0 million of PPP loans, net of fees.

We continue to focus the real estate loan portfolio toward relationship-based multifamily, bridge, light infill construction, and commercial real estate loans. Currently, loans secured by residential real estate (single-family, multifamily, single-family construction, and credit facilities) represent approximately 68% of our total loans outstanding.

The C&I portfolio has limited exposure to certain business sectors undergoing severe stress. The C&I industry concentrations in dollars and as a percentage of total outstanding C&I loan balances are summarized below:

 

December 31, 2020

 

Amount

 

% of Portfolio

 

($ in thousands)

C&I Portfolio by Industry

 

 

 

Finance and insurance (includes Warehouse lending)

$

1,397,278

 

 

67

%

Real Estate & Rental Leasing

245,748

 

 

12

%

Gas Stations

69,743

 

 

3

%

Healthcare

69,381

 

 

3

%

Wholesale Trade

38,700

 

 

2

%

Television / Motion Pictures

38,416

 

 

2

%

Manufacturing

34,276

 

 

2

%

Food Services

30,280

 

 

1

%

Other Retail Trade

20,759

 

 

1

%

Professional Services

16,572

 

 

1

%

Transportation

5,286

 

 

%

Accommodations

1,452

 

 

%

All other

120,417

 

 

6

%

Total

$

2,088,308

 

 

100

%

Deposits

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

 

December 31,
2020

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

 

($ in thousands)

Composition of deposits

 

 

 

 

 

 

 

 

 

Noninterest-bearing checking

$

1,559,248

 

 

$

1,450,744

 

 

$

1,391,504

 

 

$

1,256,081

 

 

$

1,088,516

 

Interest-bearing checking

2,107,942

 

 

2,045,115

 

 

1,846,698

 

 

1,572,389

 

 

1,533,882

 

Money market

714,297

 

 

689,769

 

 

765,854

 

 

575,820

 

 

715,479

 

Savings

932,363

 

 

946,293

 

 

939,018

 

 

877,947

 

 

885,246

 

Non-brokered certificates of deposit

755,727

 

 

820,531

 

 

924,630

 

 

1,071,936

 

 

1,204,044

 

Brokered certificates of deposit

16,223

 

 

79,814

 

 

169,761

 

 

208,665

 

 

 

Total deposits

$

6,085,800

 

 

$

6,032,266

 

 

$

6,037,465

 

 

$

5,562,838

 

 

$

5,427,167

 

Composition percentage of deposits

 

 

 

 

 

 

 

 

 

Noninterest-bearing checking

25.6

%

 

24.1

%

 

23.0

%

 

22.6

%

 

20.1

%

Interest-bearing checking

34.6

%

 

33.9

%

 

30.6

%

 

28.3

%

 

28.2

%

Money market

11.7

%

 

11.4

%

 

12.7

%

 

10.3

%

 

13.2

%

Savings

15.3

%

 

15.7

%

 

15.6

%

 

15.8

%

 

16.3

%

Non-brokered certificates of deposit

12.4

%

 

13.6

%

 

15.3

%

 

19.3

%

 

22.2

%

Brokered certificates of deposit

0.4

%

 

1.3

%

 

2.8

%

 

3.7

%

 

%

Total deposits

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

Total deposits increased $53.5 million during the fourth quarter of 2020 to $6.09 billion due to higher noninterest-bearing checking balances of $108.5 million, interest-bearing checking of $62.8 million, and money market balances of $24.5 million, offset by lower savings balances of $13.9 million, brokered certificates of deposit of $63.6 million and non-brokered certificates of deposit of $64.8 million. We continue to focus on growing relationship-based deposits, strategically augmented by wholesale funding, as we actively managed down deposit costs in response to the interest rate cuts by the Federal Reserve in March of 2020. Noninterest-bearing deposits totaled $1.56 billion and represented 25.6% of total deposits at December 31, 2020 compared to $1.45 billion, or 24.1% of total deposits, at September 30, 2020 and $1.09 billion, or 20.1% of total deposits at December 31, 2019.

Debt

Advances from the FHLB decreased $19.7 million, or 4%, to $539.8 million, as of December 31, 2020, due to maturities of $105.0 million in term advances, offset by overnight advances. At the end of the fourth quarter, FHLB advances included $85.0 million in overnight borrowings, $45.0 million in term advances maturing within three months, and $416.0 million maturing beyond three months with a weighted average life of 4.9 years and weighted average interest rate of 2.5%.

During the fourth quarter of 2020, we completed the issuance and sale of $85.0 million aggregate principal amount of 4.375% fixed-to-floating rate subordinated notes due October 30, 2030. Net proceeds after debt issuance costs were approximately $82.6 million.

Equity

At December 31, 2020, total stockholders’ equity increased by $23.0 million to $897.2 million and tangible common equity increased by $23.3 million to $672.6 million on a linked-quarter basis. The increase in total stockholders’ equity for the fourth quarter, was a result of net income of $21.7 million, higher net accumulated other comprehensive income of $6.5 million and share-based compensation of $1.4 million, offset by dividends to common and preferred stockholders of $6.5 million. Tangible book value per share increased to $13.39 as of December 31, 2020 from $12.92 at September 30, 2020.

Capital ratios remain strong with total risk-based capital at 17.01% and a tier 1 leverage ratio of 10.90%. The following table sets forth our regulatory capital ratios at December 31, 2020 and the previous four quarters. The interim capital relief related to the adoption of CECL increased the Bank's leverage ratio approximately 10 basis points at December 31, 2020.

 

December 31,
2020

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

Capital Ratios(1)

 

 

 

 

 

 

 

 

 

Banc of California, Inc.

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

17.01

%

 

16.19

%

 

16.35

%

 

16.16

%

 

15.90

%

Tier 1 risk-based capital ratio

14.35

%

 

14.94

%

 

15.10

%

 

14.91

%

 

14.83

%

Common equity tier 1 capital ratio

11.19

%

 

11.59

%

 

11.68

%

 

11.58

%

 

11.56

%

Tier 1 leverage ratio

10.90

%

 

10.79

%

 

10.56

%

 

11.20

%

 

10.89

%

Banc of California, NA

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

17.27

%

 

18.14

%

 

18.17

%

 

18.21

%

 

17.46

%

Tier 1 risk-based capital ratio

16.02

%

 

16.89

%

 

16.92

%

 

16.96

%

 

16.39

%

Common equity tier 1 capital ratio

16.02

%

 

16.89

%

 

16.92

%

 

16.96

%

 

16.39

%

Tier 1 leverage ratio

12.19

%

 

12.21

%

 

11.84

%

 

12.67

%

 

12.02

%

 

(1) December 31, 2020 capital ratios are preliminary.

Credit Quality

 

December 31,
2020

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

Asset quality information and ratios

($ in thousands)

Delinquent loans held-for-investment

 

 

 

 

 

 

 

 

 

30 to 89 days delinquent

$

13,981

 

 

$

51,229

 

 

$

49,810

 

 

$

56,338

 

 

$

32,873

 

90+ days delinquent

17,636

 

 

31,809

 

 

45,384

 

 

28,632

 

 

24,734

 

Total delinquent loans

$

31,617

 

 

$

83,038

 

 

$

95,194

 

 

$

84,970

 

 

$

57,607

 

Total delinquent loans to total loans

0.54

%

 

1.46

%

 

1.69

%

 

1.50

%

 

0.97

%

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

 

 

 

 

 

 

 

 

 

Non-performing loans

$

35,900

 

 

$

66,337

 

 

$

72,703

 

 

$

56,471

 

 

$

43,354

 

90+ days delinquent and still accruing loans

728

 

 

547

 

 

 

 

 

 

 

Other real estate owned

 

 

 

 

 

 

 

 

 

Non-performing assets

$

36,628

 

 

$

66,884

 

 

$

72,703

 

 

$

56,471

 

 

$

43,354

 

ALL to non-performing loans

221.22

%

 

135.95

%

 

124.30

%

 

138.55

%

 

132.97

%

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

0.62

%

 

1.18

%

 

1.29

%

 

1.00

%

 

0.73

%

Non-performing assets to total assets

0.46

%

 

0.86

%

 

0.94

%

 

0.74

%

 

0.55

%

Troubled debt restructurings (TDRs)

 

 

 

 

 

 

 

 

 

Performing TDRs

$

4,733

 

 

$

5,408

 

 

$

5,597

 

 

$

6,100

 

 

$

6,620

 

Non-performing TDRs

4,264

 

 

20,002

 

 

20,275

 

 

20,852

 

 

21,837

 

Total TDRs

$

8,997

 

 

$

25,410

 

 

$

25,872

 

 

$

26,952

 

 

$

28,457

 

Total delinquent loans decreased $51.4 million in the fourth quarter to $31.6 million at December 31, 2020, due to $58.8 million returning to current status and $0.1 million of principal payments or payoffs, offset by $7.5 million of additions. Delinquent loans included primarily legacy single-family residential loans of $22.9 million, or 73% of the total balance at quarter end, and represented $48.1 million of the quarter over quarter decrease. Excluding delinquent single-family residential loans, delinquent loans totaled $8.7 million, or 0.19% of total loans at December 31, 2020.

Non-performing loans decreased $30.3 million to $36.6 million as of December 31, 2020, of which $17.7 million, or 48% relates to loans in a current payment status. The fourth quarter decrease was due primarily to $35.8 million in cured loans and payoffs, offset by $5.5 million of loans placed on non-accrual status. During the quarter, a previously disclosed $9.1 million single-family mortgage residential loan with a loan-to-value ratio of 58% returned to accrual status and a $16.1 million legacy shared national credit was resolved resulting in a charge-off of $10.7 million in previously established specific reserves.

At December 31, 2020, non-performing loans included (i) single-family residential loans totaling $13.5 million, or 37% of total non-performing loans, (ii) commercial loans of $15.6 million, or 43% of total non-performing loans, and (iii) a legacy relationship totaling $7.5 million, or 20% of total non-performing loans, that is well-secured by a combination of commercial real estate and single-family residential properties with an average loan-to-value ratio of 51%.

In light of the pandemic, we provided support to clients by granting loan deferments or forbearances. As of December 31, 2020 loans on deferment or forbearance status totaled $201.5 million as shown below:

 

December 31, 2020

 

September 30, 2020

 

Count

 

Amount(1)

 

% of Loans
in Category

 

Count

 

Amount

 

% of Loans
in Category

 

($ in thousands)

Single-family residential mortgage

80

 

 

$

88,343

 

 

7

%

 

123

 

 

$

137,510

 

 

11

%

All other loans

33

 

 

113,163

 

 

2

%

 

35

 

 

145,036

 

 

3

%

Total

113

 

 

$

201,506

 

 

3

%

 

158

 

 

$

282,546

 

 

5

%

 

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

Of the balances as of December 31, 2020, $61.7 million of all other loans are in their second or third deferment and 8 commercial loans totaling $38.8 million were under review and pending approval for a first or second deferral. We continue to actively monitor and manage all lending relationships in a manner that supports our clients and protects the Bank.

Allowance for Credit Losses

 

Three Months Ended

 

December 31,
2020

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

 

($ in thousands)

Allowance for loan losses (ALL)

 

 

 

 

 

 

 

 

 

Balance at beginning of period

$

90,927

 

 

$

90,370

 

 

$

78,243

 

 

$

57,649

 

 

$

62,927

 

Adoption of ASU 2016-13 (1)

 

 

 

 

 

 

7,609

 

 

 

Loans charged off

(11,520)

 

 

(1,821)

 

 

 

 

(2,076)

 

 

(2,706)

 

Recoveries

609

 

 

248

 

 

608

 

 

350

 

 

106

 

Net (charge-offs) recoveries

(10,911)

 

 

(1,573)

 

 

608

 

 

(1,726)

 

 

(2,600)

 

Provision for (reversal of) loan losses

1,014

 

 

2,130

 

 

11,519

 

 

14,711

 

 

(2,678)

 

Balance at end of period

$

81,030

 

 

$

90,927

 

 

$

90,370

 

 

$

78,243

 

 

$

57,649

 

Reserve for unfunded loan commitments

 

 

 

 

 

 

 

 

 

Balance at beginning of period

$

3,206

 

 

$

4,195

 

 

$

3,888

 

 

$

4,064

 

 

$

4,362

 

Adoption of ASU 2016-13 (1)

 

 

 

 

 

 

(1,226)

 

 

 

(Reversal of) provision for credit losses

(23)

 

 

(989)

 

 

307

 

 

1,050

 

 

(298)

 

Balance at end of period

3,183

 

 

3,206

 

 

4,195

 

 

3,888

 

 

4,064

 

Allowance for credit losses (ACL)

$

84,213

 

 

$

94,133

 

 

$

94,565

 

 

$

82,131

 

 

$

61,713

 

 

 

 

 

 

 

 

 

 

 

ALL to total loans

1.37

%

 

1.60

%

 

1.61

%

 

1.38

%

 

0.97

%

ACL to total loans

1.43

%

 

1.66

%

 

1.68

%

 

1.45

%

 

1.04

%

ACL to total loans, excluding PPP loans

1.48

%

 

1.74

%

 

1.76

%

 

1.45

%

 

1.04

%

ACL to NPLs

229.91

%

 

140.74

%

 

130.07

%

 

145.44

%

 

142.35

%

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

0.77

%

 

0.12

%

 

(0.04)

%

 

0.12

%

 

0.17

%

 

 

 

 

 

 

 

 

 

 

Reserve for loss on repurchased loans

 

 

 

 

 

 

 

 

 

Balance at beginning of period

$

5,487

 

 

$

5,567

 

 

$

5,601

 

 

$

6,201

 

 

$

6,561

 

Initial provision for loan repurchases

 

 

11

 

 

 

 

 

 

 

Provision for (reversal of) provision for loan repurchases

28

 

 

(91)

 

 

(34)

 

 

(600)

 

 

(360)

 

Balance at end of period

$

5,515

 

 

$

5,487

 

 

$

5,567

 

 

$

5,601

 

 

$

6,201

 

 

(1) Represents the impact of adopting ASU 2016-13, Financial Instruments - Credit Losses on January 1, 2020. As a result of adopting ASU 2016-13, our methodology to compute our allowance for credit losses is based on a current expected credit loss methodology, rather than the previously applied incurred loss methodology.

The allowance for expected credit losses ("ACL"), which includes the reserve for unfunded loan commitments, totaled $84.2 million, or 1.43% of total loans, at December 31, 2020, compared to $94.1 million, or 1.66% of total loans, at September 30, 2020. The $9.9 million decrease in the ACL was due to: (i) net charge-offs of $10.9 million, offset by increases in (ii) general reserves of $684 thousand due to the impact of higher loan balances, updated forecasts, and improved credit quality metrics, and (iii) specific reserves of $306 thousand. The ACL coverage of non-performing loans was 230% at December 31, 2020 compared to 141% at September 30, 2020 and 142% at December 31, 2019.

Our ACL methodology and resulting provision continues to be impacted by the current economic uncertainty and volatility caused by the COVID-19 pandemic. The ACL methodology uses a nationally recognized, third-party model that includes many assumptions based on historical and peer loss data, current loan portfolio risk profile including risk ratings, and economic forecasts including macroeconomic variables ("MEVs") released by our model provider during December 2020. In contrast to the September 2020 forecasts, these December forecasts reflect a more favorable view of the economy (i.e. higher GDP growth rates and lower unemployment rates). However, the Company-specific economic view recognizes that the foreseeable future continues to be uncertain with respect to the rollout of the approved vaccines for COVID-19; the lack of clarity regarding the impact of the most recent government stimulus; the continued unknown impact of the COVID-19 pandemic on the economy and certain industry segments; and the unknown benefit from Federal Reserve and other government actions. Accordingly, the ACL level and resulting provision reflect these uncertainties. The ACL also incorporated qualitative factors to account for certain loan portfolio characteristics that are not taken into consideration by the third-party model including underlying strengths and weaknesses in the loan portfolio. As is the case with all estimates, the ACL is expected to be impacted in future periods by economic volatility, changing economic forecasts, underlying model assumptions, and asset quality metrics, all of which may be better than or worse than current estimates.

The Company will host a conference call to discuss its fourth quarter 2020 financial results at 10:00 a.m. Pacific Time (PT) on Thursday, January 21, 2021. Interested parties are welcome to attend the conference call by dialing (888) 317-6003, and referencing event code 3636956. A live audio webcast will also be available and the webcast link will be posted on the Company’s Investor Relations website at www.bancofcal.com/investor. The slide presentation for the call will also be available on the Company's Investor Relations website prior to the call. A replay of the call will be made available approximately one hour after the call has ended on the Company’s Investor Relations website at www.bancofcal.com/investor or by dialing (877) 344-7529 and referencing event code 10145608.

About Banc of California, Inc.

Banc of California, Inc. (NYSE: BANC) is a bank holding company with approximately $7.9 billion in assets and one wholly-owned banking subsidiary, Banc of California, N.A. (the “Bank”). The Bank has 36 offices including 29 full-service branches located throughout Southern California. Through our dedicated professionals, we provide customized and innovative banking and lending solutions to businesses, entrepreneurs and individuals throughout California. We help to improve the communities where we live and work, by supporting organizations that provide financial literacy and job training, small business support and affordable housing. With a commitment to service and to building enduring relationships, we provide a higher standard of banking. We look forward to helping you achieve your goals. For more information, please visit us at www.bancofcal.com.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the “Safe-Harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are necessarily subject to risk and uncertainty and actual results could differ materially from those anticipated due to various factors, including those set forth from time to time in the documents filed or furnished by Banc of California, Inc. with the Securities and Exchange Commission. In addition to those, statements about the potential effects of the COVID-19 pandemic on the business, financial results and condition of Banc of California, Inc. and its subsidiaries may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond the control of Banc of California, Inc., including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on Banc of California Inc. and its subsidiaries, their customers and third parties. You should not place undue reliance on forward-looking statements and Banc of California, Inc. undertakes no obligation to update any such statements to reflect circumstances or events that occur after the date on which the forward-looking statement is made.

Banc of California, Inc.

Consolidated Statements of Financial Condition (Unaudited)

(Dollars in thousands)

 

 

December 31,
2020

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

ASSETS

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

220,819

 

 

$

292,490

 

 

$

420,640

 

 

$

435,992

 

 

$

373,472

 

Securities available-for-sale

1,231,431

 

 

1,245,867

 

 

1,176,029

 

 

969,427

 

 

912,580

 

Loans held-for-sale

1,413

 

 

1,849

 

 

19,768

 

 

20,234

 

 

22,642

 

Loans held-for-investment

5,898,405

 

 

5,678,002

 

 

5,627,696

 

 

5,667,464

 

 

5,951,885

 

Allowance for loan losses

(81,030)

 

 

(90,927)

 

 

(90,370)

 

 

(78,243)

 

 

(57,649)

 

Federal Home Loan Bank and other bank stock

44,506

 

 

44,809

 

 

46,585

 

 

57,237

 

 

59,420

 

Servicing rights, net

1,454

 

 

1,621

 

 

1,753

 

 

2,009

 

 

2,299

 

Premises and equipment, net

121,520

 

 

123,812

 

 

125,247

 

 

127,379

 

 

128,021

 

Alternative energy partnership investments, net

27,977

 

 

27,786

 

 

26,967

 

 

27,347

 

 

29,300

 

Goodwill

37,144

 

 

37,144

 

 

37,144

 

 

37,144

 

 

37,144

 

Other intangible assets, net

2,633

 

 

2,939

 

 

3,292

 

 

3,722

 

 

4,151

 

Deferred income tax, net

45,957

 

 

43,744

 

 

48,288

 

 

63,849

 

 

44,906

 

Income tax receivable

1,105

 

 

10,701

 

 

13,094

 

 

7,198

 

 

4,233

 

Bank owned life insurance investment

111,807

 

 

111,115

 

 

110,487

 

 

110,397

 

 

109,819

 

Right of use assets

19,633

 

 

18,909

 

 

19,408

 

 

20,882

 

 

22,540

 

Other assets

192,560

 

 

188,245

 

 

184,110

 

 

190,569

 

 

183,647

 

Total assets

$

7,877,334

 

 

$

7,738,106

 

 

$

7,770,138

 

 

$

7,662,607

 

 

$

7,828,410

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

$

1,559,248

 

 

$

1,450,744

 

 

$

1,391,504

 

 

$

1,256,081

 

 

$

1,088,516

 

Interest-bearing deposits

4,526,552

 

 

4,581,522

 

 

4,645,961

 

 

4,306,757

 

 

4,338,651

 

Total deposits

6,085,800

 

 

6,032,266

 

 

6,037,465

 

 

5,562,838

 

 

5,427,167

 

Advances from Federal Home Loan Bank

539,795

 

 

559,482

 

 

617,170

 

 

978,000

 

 

1,195,000

 

Notes payable, net

256,315

 

 

173,623

 

 

173,537

 

 

173,479

 

 

173,421

 

Reserve for loss on repurchased loans

5,515

 

 

5,487

 

 

5,567

 

 

5,601

 

 

6,201

 

Lease liabilities

20,647

 

 

19,938

 

 

20,531

 

 

22,075

 

 

23,692

 

Accrued expenses and other liabilities

72,055

 

 

73,056

 

 

68,909

 

 

85,612

 

 

95,684

 

Total liabilities

6,980,127

 

 

6,863,852

 

 

6,923,179

 

 

6,827,605

 

 

6,921,165

 

Commitments and contingent liabilities

 

 

 

 

 

 

 

 

 

Preferred stock

184,878

 

 

184,878

 

 

185,037

 

 

187,687

 

 

189,825

 

Common stock

522

 

 

522

 

 

522

 

 

520

 

 

520

 

Common stock, class B non-voting non-convertible

5

 

 

5

 

 

5

 

 

5

 

 

5

 

Additional paid-in capital

634,704

 

 

633,409

 

 

632,117

 

 

631,125

 

 

629,848

 

Retained earnings

110,179

 

 

95,001

 

 

85,670

 

 

110,640

 

 

127,733

 

Treasury stock

(40,827)

 

 

(40,827)

 

 

(40,827)

 

 

(40,827)

 

 

(28,786)

 

Accumulated other comprehensive income (loss), net

7,746

 

 

1,266

 

 

(15,565)

 

 

(54,148)

 

 

(11,900)

 

Total stockholders’ equity

897,207

 

 

874,254

 

 

846,959

 

 

835,002

 

 

907,245

 

Total liabilities and stockholders’ equity

$

7,877,334

 

 

$

7,738,106

 

 

$

7,770,138

 

 

$

7,662,607

 

 

$

7,828,410

 

Banc of California, Inc.

Consolidated Statements of Operations (Unaudited)

(Dollars in thousands, except per share data)

 

 

Three Months Ended

 

Year Ended

 

December 31,
2020

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

 

December 31,
2020

 

December 31,
2019

Interest and dividend income

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

$

66,105

 

 

$

62,019

 

 

$

63,642

 

 

$

65,534

 

 

$

73,930

 

 

$

257,300

 

 

$

333,934

 

Securities

6,636

 

 

6,766

 

 

7,816

 

 

7,820

 

 

7,812

 

 

29,038

 

 

48,134

 

Other interest-earning assets

789

 

 

881

 

 

1,239

 

 

1,360

 

 

1,960

 

 

4,269

 

 

9,043

 

Total interest and dividend income

73,530

 

 

69,666

 

 

72,697

 

 

74,714

 

 

83,702

 

 

290,607

 

 

391,111

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

5,436

 

 

7,564

 

 

10,205

 

 

14,611

 

 

18,247

 

 

37,816

 

 

101,099

 

Federal Home Loan Bank advances

3,479

 

 

3,860

 

 

4,818

 

 

5,883

 

 

6,396

 

 

18,040

 

 

32,285

 

Notes payable and other interest-bearing liabilities

3,052

 

 

2,387

 

 

2,359

 

 

2,359

 

 

2,399

 

 

10,157

 

 

9,564

 

Total interest expense

11,967

 

 

13,811

 

 

17,382

 

 

22,853

 

 

27,042

 

 

66,013

 

 

142,948

 

Net interest income

61,563

 

 

55,855

 

 

55,315

 

 

51,861

 

 

56,660

 

 

224,594

 

 

248,163

 

Provision for (reversal of) credit losses

991

 

 

1,141

 

 

11,826

 

 

15,761

 

 

(2,976)

 

 

29,719

 

 

35,829

 

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

60,572

 

 

54,714

 

 

43,489

 

 

36,100

 

 

59,636

 

 

194,875

 

 

212,334

 

Noninterest income

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer service fees

1,953

 

 

1,498

 

 

1,224

 

 

1,096

 

 

1,451

 

 

5,771

 

 

5,982

 

Loan servicing income

149

 

 

186

 

 

95

 

 

75

 

 

312

 

 

505

 

 

679

 

Income from bank owned life insurance

691

 

 

629

 

 

591

 

 

578

 

 

599

 

 

2,489

 

 

2,292

 

Impairment loss on investment securities

 

 

 

 

 

 

 

 

 

 

 

 

(731)

 

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

 

 

 

 

2,011

 

 

 

 

3

 

 

2,011

 

 

(4,852)

 

Fair value adjustment on loans held for sale

36

 

 

24

 

 

25

 

 

(1,586)

 

 

30

 

 

(1,501)

 

 

106

 

Net gain (loss) on sale of loans

 

 

272

 

 

 

 

(27)

 

 

(863)

 

 

245

 

 

7,766

 

All other income (loss)

4,146

 

 

1,345

 

 

1,582

 

 

1,925

 

 

3,398

 

 

8,998

 

 

874

 

Total noninterest income

6,975

 

 

3,954

 

 

5,528

 

 

2,061

 

 

4,930

 

 

18,518

 

 

12,116

 

Noninterest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

25,836

 

 

23,277

 

 

24,260

 

 

23,436

 

 

24,036

 

 

96,809

 

 

105,915

 

Naming rights termination

 

 

 

 

26,769

 

 

 

 

 

 

26,769

 

 

 

Occupancy and equipment

7,560

 

 

7,457

 

 

7,090

 

 

7,243

 

 

7,900

 

 

29,350

 

 

31,308

 

Professional fees

29

 

 

5,147

 

 

4,596

 

 

5,964

 

 

2,611

 

 

15,736

 

 

12,212

 

Data processing

1,608

 

 

1,657

 

 

1,536

 

 

1,773

 

 

1,684

 

 

6,574

 

 

6,420

 

Advertising

171

 

 

219

 

 

1,157

 

 

1,756

 

 

2,227

 

 

3,303

 

 

8,422

 

Regulatory assessments

748

 

 

784

 

 

725

 

 

484

 

 

1,854

 

 

2,741

 

 

7,711

 

Reversal of loan repurchase reserves

28

 

 

(91)

 

 

(34)

 

 

(600)

 

 

(360)

 

 

(697)

 

 

(660)

 

Amortization of intangible assets

306

 

 

353

 

 

430

 

 

429

 

 

454

 

 

1,518

 

 

2,195

 

Restructuring expense

 

 

 

 

 

 

 

 

1,626

 

 

 

 

4,263

 

All other expenses

3,337

 

 

3,021

 

 

6,408

 

 

4,529

 

 

4,412

 

 

17,295

 

 

16,992

 

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

39,623

 

 

41,824

 

 

72,937

 

 

45,014

 

 

46,444

 

 

199,398

 

 

194,778

 

(Gain) loss in alternative energy partnership investments

(673)

 

 

(1,430)

 

 

(167)

 

 

1,905

 

 

1,039

 

 

(365)

 

 

1,694

 

Total noninterest expense

38,950

 

 

40,394

 

 

72,770

 

 

46,919

 

 

47,483

 

 

199,033

 

 

196,472

 

Income (loss) from operations before income taxes

28,597

 

 

18,274

 

 

(23,753)

 

 

(8,758)

 

 

17,083

 

 

14,360

 

 

27,978

 

Income tax expense (benefit)

6,894

 

 

2,361

 

 

(5,304)

 

 

(2,165)

 

 

2,811

 

 

1,786

 

 

4,219

 

Net income (loss)

21,703

 

 

15,913

 

 

(18,449)

 

 

(6,593)

 

 

14,272

 

 

12,574

 

 

23,759

 

Preferred stock dividends

3,447

 

 

3,447

 

 

3,442

 

 

3,533

 

 

3,540

 

 

13,869

 

 

15,559

 

Income allocated to participating securities

456

 

 

281

 

 

 

 

 

 

224

 

 

 

 

 

Participating securities dividends

94

 

 

94

 

 

94

 

 

94

 

 

93

 

 

376

 

 

483

 

Impact of preferred stock redemption

 

 

7

 

 

(49)

 

 

(526)

 

 

 

 

(568)

 

 

5,093

 

Net income (loss) available to common stockholders

$

17,706

 

 

$

12,084

 

 

$

(21,936)

 

 

$

(9,694)

 

 

$

10,415

 

 

$

(1,103)

 

 

$

2,624

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.35

 

 

$

0.24

 

 

$

(0.44)

 

 

$

(0.19)

 

 

$

0.21

 

 

$

(0.02)

 

 

$

0.05

 

Diluted

$

0.35

 

 

$

0.24

 

 

$

(0.44)

 

 

$

(0.19)

 

 

$

0.20

 

 

$

(0.02)

 

 

$

0.05

 

Weighted average number of common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

50,125,462

 

 

50,108,655

 

 

50,030,919

 

 

50,464,777

 

 

50,699,915

 

 

50,182,096

 

 

50,621,785

 

Diluted

50,335,271

 

 

50,190,933

 

 

50,030,919

 

 

50,464,777

 

 

50,927,978

 

 

50,182,096

 

 

50,724,951

 

Dividends declared per common share

$

0.06

 

 

$

0.06

 

 

$

0.06

 

 

$

0.06

 

 

$

0.06

 

 

$

0.24

 

 

$

0.31

 

Banc of California, Inc.

Selected Financial Data

(Unaudited)

 

 

Three Months Ended

 

December 31,
2020

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

Profitability and other ratios of consolidated operations

 

 

 

 

 

 

 

 

 

Return on average assets(1)

1.11

%

 

0.82

%

 

(0.96)

%

 

(0.35)

%

 

0.71

%

Return on average equity(1)

9.67

%

 

7.32

%

 

(8.69)

%

 

(2.89)

%

 

6.20

%

Return on average tangible common equity(2)

11.02

%

 

7.92

%

 

(13.77)

%

 

(5.44)

%

 

6.46

%

Pre-tax pre-provision income (loss) ROAA

1.52

%

 

1.00

%

 

(0.62)

%

 

0.37

%

 

0.70

%

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

1.25

%

 

0.98

%

 

0.83

%

 

0.65

%

 

0.66

%

Dividend payout ratio(3)

17.14

%

 

25.00

%

 

(13.64)

%

 

(31.58)

%

 

28.57

%

Average loan yield

4.58

%

 

4.46

%

 

4.48

%

 

4.56

%

 

4.71

%

Average cost of interest-bearing deposits

0.47

%

 

0.66

%

 

0.93

%

 

1.41

%

 

1.57

%

Average cost of total deposits

0.36

%

 

0.51

%

 

0.71

%

 

1.11

%

 

1.27

%

Net interest spread

3.15

%

 

2.84

%

 

2.77

%

 

2.56

%

 

2.65

%

Net interest margin(1)

3.38

%

 

3.09

%

 

3.09

%

 

2.97

%

 

3.04

%

Noninterest income to total revenue(4)

10.18

%

 

6.61

%

 

9.09

%

 

3.82

%

 

8.00

%

Noninterest income to average total assets(1)

0.36

%

 

0.20

%

 

0.29

%

 

0.11

%

 

0.25

%

Noninterest expense to average total assets(1)

2.00

%

 

2.09

%

 

3.78

%

 

2.50

%

 

2.37

%

Adjusted noninterest expense to average total assets(1)

2.26

%

 

2.10

%

 

2.22

%

 

2.30

%

 

2.41

%

Efficiency ratio(2)(5)

56.83

%

 

67.54

%

 

119.60

%

 

87.01

%

 

77.10

%

Adjusted efficiency ratio(2)(5)

64.26

%

 

68.31

%

 

72.74

%

 

78.07

%

 

78.59

%

Average loans held-for-investment to average deposits

95.65

%

 

92.86

%

 

98.51

%

 

108.54

%

 

108.50

%

Average securities available-for-sale to average total assets

15.96

%

 

15.49

%

 

13.75

%

 

12.60

%

 

10.48

%

Average stockholders’ equity to average total assets

11.49

%

 

11.26

%

 

11.04

%

 

12.11

%

 

11.47

%

 

(1) Ratios are presented on an annualized basis.

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

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

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

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

Banc of California, Inc.

Average Balance, Average Yield Earned, and Average Cost Paid

(Dollars in thousands)

(Unaudited)

 

 

Three Months Ended

 

December 31, 2020

 

September 30, 2020

 

June 30, 2020

 

Average

 

 

 

Yield

 

Average

 

 

 

Yield

 

Average

 

 

 

Yield

 

Balance

 

Interest

 

/ Cost

 

Balance

 

Interest

 

/ Cost

 

Balance

 

Interest

 

/ Cost

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held-for-sale

$

1,564

 

 

$

8

 

 

2.03

%

 

$

19,544

 

 

$

139

 

 

2.83

%

 

$

19,967

 

 

$

155

 

 

3.12

%

SFR mortgage

1,224,865

 

 

12,955

 

 

4.21

%

 

1,311,513

 

 

13,178

 

 

4.00

%

 

1,416,358

 

 

14,187

 

 

4.03

%

Commercial real estate, multifamily, and construction

2,507,950

 

 

30,371

 

 

4.82

%

 

2,493,408

 

 

29,666

 

 

4.73

%

 

2,524,477

 

 

29,459

 

 

4.69

%

Commercial and industrial, SBA, and lease financing

1,978,684

 

 

21,984

 

 

4.42

%

 

1,673,548

 

 

18,585

 

 

4.42

%

 

1,706,120

 

 

19,392

 

 

4.57

%

Other consumer

31,856

 

 

787

 

 

9.83

%

 

35,563

 

 

451

 

 

5.05

%

 

40,697

 

 

449

 

 

4.44

%

Gross loans and leases

5,744,919

 

 

66,105

 

 

4.58

%

 

5,533,576

 

 

62,019

 

 

4.46

%

 

5,707,619

 

 

63,642

 

 

4.48

%

Securities

1,239,295

 

 

6,636

 

 

2.13

%

 

1,190,765

 

 

6,766

 

 

2.26

%

 

1,063,941

 

 

7,816

 

 

2.95

%

Other interest-earning assets

262,363

 

 

789

 

 

1.20

%

 

457,558

 

 

881

 

 

0.77

%

 

424,776

 

 

1,239

 

 

1.17

%

Total interest-earning assets

7,246,577

 

 

73,530

 

 

4.04

%

 

7,181,899

 

 

69,666

 

 

3.86

%

 

7,196,336

 

 

72,697

 

 

4.06

%

Allowance for loan losses

(83,745)

 

 

 

 

 

 

(89,679)

 

 

 

 

 

 

(78,528)

 

 

 

 

 

BOLI and noninterest-earning assets

602,165

 

 

 

 

 

 

594,885

 

 

 

 

 

 

622,398

 

 

 

 

 

Total assets

$

7,764,997

 

 

 

 

 

 

$

7,687,105

 

 

 

 

 

 

$

7,740,206

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings

$

937,649

 

 

$

2,128

 

 

0.90

%

 

$

948,898

 

 

$

2,353

 

 

0.99

%

 

$

905,997

 

 

$

2,718

 

 

1.21

%

Interest-bearing checking

2,086,146

 

 

1,131

 

 

0.22

%

 

1,919,327

 

 

1,660

 

 

0.34

%

 

1,710,038

 

 

2,186

 

 

0.51

%

Money market

671,949

 

 

414

 

 

0.25

%

 

681,421

 

 

645

 

 

0.38

%

 

592,872

 

 

850

 

 

0.58

%

Certificates of deposit

860,131

 

 

1,763

 

 

0.82

%

 

1,030,829

 

 

2,906

 

 

1.12

%

 

1,214,939

 

 

4,451

 

 

1.47

%

Total interest-bearing deposits

4,555,875

 

 

5,436

 

 

0.47

%

 

4,580,475

 

 

7,564

 

 

0.66

%

 

4,423,846

 

 

10,205

 

 

0.93

%

FHLB advances

534,303

 

 

3,479

 

 

2.59

%

 

608,169

 

 

3,860

 

 

2.52

%

 

819,166

 

 

4,818

 

 

2.37

%

Securities sold under repurchase agreements

 

 

 

 

%

 

1,309

 

 

2

 

 

0.61

%

 

1,024

 

 

2

 

 

0.79

%

Long-term debt and other interest-bearing liabilities

238,265

 

 

3,052

 

 

5.10

%

 

173,911

 

 

2,385

 

 

5.46

%

 

173,977

 

 

2,357

 

 

5.45

%

Total interest-bearing liabilities

5,328,443

 

 

11,967

 

 

0.89

%

 

5,363,864

 

 

13,811

 

 

1.02

%

 

5,418,013

 

 

17,382

 

 

1.29

%

Noninterest-bearing deposits

1,448,422

 

 

 

 

 

 

1,357,411

 

 

 

 

 

 

1,349,735

 

 

 

 

 

Noninterest-bearing liabilities

95,567

 

 

 

 

 

 

100,424

 

 

 

 

 

 

118,208

 

 

 

 

 

Total liabilities

6,872,432

 

 

 

 

 

 

6,821,699

 

 

 

 

 

 

6,885,956

 

 

 

 

 

Total stockholders’ equity

892,565

 

 

 

 

 

 

865,406

 

 

 

 

 

 

854,250

 

 

 

 

 

Total liabilities and stockholders’ equity

$

7,764,997

 

 

 

 

 

 

$

7,687,105

 

 

 

 

 

 

$

7,740,206

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income/spread

 

 

$

61,563

 

 

3.15

%

 

 

 

$

55,855

 

 

2.84

%

 

 

 

$

55,315

 

 

2.77

%

Net interest margin

 

 

 

 

3.38

%

 

 

 

 

 

3.09

%

 

 

 

 

 

3.09

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of interest-earning assets to interest-bearing liabilities

136.00

%

 

 

 

 

 

133.89

%

 

 

 

 

 

132.82

%

 

 

 

 

Total deposits

$

6,004,297

 

 

$

5,436

 

 

0.36

%

 

$

5,937,886

 

 

$

7,564

 

 

0.51

%

 

$

5,773,581

 

 

$

10,205

 

 

0.71

%

Total funding (1)

$

6,776,865

 

 

$

11,967

 

 

0.70

%

 

$

6,721,275

 

 

$

13,811

 

 

0.82

%

 

$

6,767,748

 

 

$

17,382

 

 

1.03

%

 

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

 

Three Months Ended

 

March 31, 2020

 

December 31, 2019

 

Average

 

 

 

Yield

 

Average

 

 

 

Yield

 

Balance

 

Interest

 

/ Cost

 

Balance

 

Interest

 

/ Cost

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

Loans held-for-sale

$

22,273

 

 

$

220

 

 

3.97

%

 

$

23,527

 

 

$

221

 

 

3.73

%

SFR mortgage

1,532,967

 

 

15,295

 

 

4.01

%

 

1,689,228

 

 

16,788

 

 

3.94

%

Commercial real estate, multifamily, and construction

2,564,485

 

 

30,223

 

 

4.74

%

 

2,633,342

 

 

32,763

 

 

4.94

%

Commercial and industrial, SBA, and lease financing

1,613,324

 

 

19,157

 

 

4.78

%

 

1,821,064

 

 

23,381

 

 

5.09

%

Other consumer

47,761

 

 

639

 

 

5.38

%

 

54,088

 

 

777

 

 

5.70

%

Gross loans and leases

5,780,810

 

 

65,534

 

 

4.56

%

 

6,221,249

 

 

73,930

 

 

4.71

%

Securities

952,966

 

 

7,820

 

 

3.30

%

 

833,726

 

 

7,812

 

 

3.72

%

Other interest-earning assets

297,444

 

 

1,360

 

 

1.84

%

 

330,950

 

 

1,960

 

 

2.35

%

Total interest-earning assets

7,031,220

 

 

74,714

 

 

4.27

%

 

7,385,925

 

 

83,702

 

 

4.50

%

Allowance for loan losses

(60,470)

 

 

 

 

 

 

(61,642)

 

 

 

 

 

BOLI and noninterest-earning assets

592,192

 

 

 

 

 

 

630,308

 

 

 

 

 

Total assets

$

7,562,942

 

 

 

 

 

 

$

7,954,591

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

Savings

890,830

 

 

3,296

 

 

1.49

%

 

981,346

 

 

3,889

 

 

1.57

%

Interest-bearing checking

1,520,922

 

 

3,728

 

 

0.99

%

 

1,546,322

 

 

4,234

 

 

1.09

%

Money market

608,926

 

 

1,760

 

 

1.16

%

 

743,695

 

 

2,593

 

 

1.38

%

Certificates of deposit

1,151,518

 

 

5,827

 

 

2.04

%

 

1,332,911

 

 

7,531

 

 

2.24

%

Total interest-bearing deposits

4,172,196

 

 

14,611

 

 

1.41

%

 

4,604,274

 

 

18,247

 

 

1.57

%

FHLB advances

1,039,055

 

 

5,883

 

 

2.28

%

 

1,020,478

 

 

6,396

 

 

2.49

%

Securities sold under repurchase agreements

 

 

 

 

%

 

2,223

 

 

15

 

 

2.68

%

Long-term debt and other interest-bearing liabilities

174,056

 

 

2,359

 

 

5.45

%

 

174,092

 

 

2,384

 

 

5.43

%

Total interest-bearing liabilities

5,385,307

 

 

22,853

 

 

1.71

%

 

5,801,067

 

 

27,042

 

 

1.85

%

Noninterest-bearing deposits

1,133,306

 

 

 

 

 

 

1,108,077

 

 

 

 

 

Noninterest-bearing liabilities

128,282

 

 

 

 

 

 

132,698

 

 

 

 

 

Total liabilities

6,646,895

 

 

 

 

 

 

7,041,842

 

 

 

 

 

Total stockholders’ equity

916,047

 

 

 

 

 

 

912,749

 

 

 

 

 

Total liabilities and stockholders’ equity

$

7,562,942

 

 

 

 

 

 

$

7,954,591

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income/spread

 

 

$

51,861

 

 

2.56

%

 

 

 

$

56,660

 

 

2.65

%

Net interest margin

 

 

 

 

2.97

%

 

 

 

 

 

3.04

%

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of interest-earning assets to interest-bearing liabilities

130.56

%

 

 

 

 

 

127.32

%

 

 

 

 

Total deposits

$

5,305,502

 

 

$

14,611

 

 

1.11

%

 

$

5,712,351

 

 

$

18,247

 

 

1.27

%

Total funding (1)

$

6,518,613

 

 

$

22,853

 

 

1.41

%

 

$

6,909,144

 

 

$

27,042

 

 

1.55

%

 

(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.

 

Year Ended

 

December 31, 2020

 

December 31, 2019

 

Average

 

 

 

Yield

 

Average

 

 

 

Yield

 

Balance

 

Interest

 

/ Cost

 

Balance

 

Interest

 

/ Cost

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

Loans held-for-sale

$

15,808

 

 

$

522

 

 

3.30

%

 

$

80,074

 

 

$

2,609

 

 

3.26

%

SFR mortgage

1,370,862

 

 

55,614

 

 

4.06

%

 

1,979,957

 

 

81,419

 

 

4.11

%

Commercial real estate, multifamily, and construction

2,522,459

 

 

119,720

 

 

4.75

%

 

3,033,392

 

 

143,882

 

 

4.74

%

Commercial and industrial, SBA, and lease financing

1,743,374

 

 

79,119

 

 

4.54

%

 

1,863,108

 

 

102,526

 

 

5.50

%

Other consumer

38,941

 

 

2,325

 

 

5.97

%

 

58,752

 

 

3,498

 

 

5.95

%

Gross loans and leases

5,691,444

 

 

257,300

 

 

4.52

%

 

7,015,283

 

 

333,934

 

 

4.76

%

Securities

1,112,306

 

 

29,038

 

 

2.61

%

 

1,245,995

 

 

48,134

 

 

3.86

%

Other interest-earning assets

360,532

 

 

4,269

 

 

1.18

%

 

339,661

 

 

9,043

 

 

2.66

%

Total interest-earning assets

7,164,282

 

 

290,607

 

 

4.06

%

 

8,600,939

 

 

391,111

 

 

4.55

%

Allowance for credit losses

(78,152)

 

 

 

 

 

 

(60,633)

 

 

 

 

 

BOLI and noninterest-earning assets

602,886

 

 

 

 

 

 

592,674

 

 

 

 

 

Total assets

$

7,689,016

 

 

 

 

 

 

$

9,132,980

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

Savings

920,966

 

 

10,495

 

 

1.14

%

 

1,079,778

 

 

19,040

 

 

1.76

%

Interest-bearing checking

1,810,152

 

 

8,705

 

 

0.48

%

 

1,548,067

 

 

17,797

 

 

1.15

%

Money market

638,992

 

 

3,669

 

 

0.57

%

 

809,295

 

 

13,717

 

 

1.69

%

Certificates of deposit

1,063,705

 

 

14,947

 

 

1.41

%

 

2,145,363

 

 

50,545

 

 

2.36

%

Total interest-bearing deposits

4,433,815

 

 

37,816

 

 

0.85

%

 

5,582,503

 

 

101,099

 

 

1.81

%

FHLB advances

749,195

 

 

18,040

 

 

2.41

%

 

1,264,945

 

 

32,285

 

 

2.55

%

Securities sold under repurchase agreements

584

 

 

4

 

 

0.68

%

 

2,166

 

 

62

 

 

2.86

%

Long-term debt and other interest-bearing liabilities

190,140

 

 

10,153

 

 

5.34

%

 

174,148

 

 

9,502

 

 

5.46

%

Total interest-bearing liabilities

5,373,734

 

 

66,013

 

 

1.23

%

 

7,023,762

 

 

142,948

 

 

2.04

%

Noninterest-bearing deposits

1,322,681

 

 

 

 

 

 

1,053,193

 

 

 

 

 

Noninterest-bearing liabilities

110,551

 

 

 

 

 

 

107,579

 

 

 

 

 

Total liabilities

6,806,966

 

 

 

 

 

 

8,184,534

 

 

 

 

 

Total stockholders’ equity

882,050

 

 

 

 

 

 

948,446

 

 

 

 

 

Total liabilities and stockholders’ equity

$

7,689,016

 

 

 

 

 

 

$

9,132,980

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income/spread

 

 

$

224,594

 

 

2.83

%

 

 

 

$

248,163

 

 

2.51

%

Net interest margin

 

 

 

 

3.13

%

 

 

 

 

 

2.89

%

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of interest-earning assets to interest-bearing liabilities

133.32

%

 

 

 

 

 

122.45

%

 

 

 

 

Total deposits

$

5,756,496

 

 

$

37,816

 

 

0.66

%

 

$

6,635,696

 

 

$

101,099

 

 

1.52

%

Total funding (1)

$

6,696,415

 

 

$

66,013

 

 

0.99

%

 

$

8,076,955

 

 

$

142,948

 

 

1.77

%

 

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

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

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

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

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

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

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

Banc of California, Inc.

Consolidated Operations

Non-GAAP Measures, Continued

(Dollars in thousands, except per share data)

(Unaudited)

 

 

December 31,
2020

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

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

 

 

 

 

 

 

 

 

 

Total assets

$

7,877,334

 

 

$

7,738,106

 

 

$

7,770,138

 

 

$

7,662,607

 

 

$

7,828,410

 

Less goodwill

(37,144)

 

 

(37,144)

 

 

(37,144)

 

 

(37,144)

 

 

(37,144)

 

Less other intangible assets

(2,633)

 

 

(2,939)

 

 

(3,292)

 

 

(3,722)

 

 

(4,151)

 

Tangible assets(1)

$

7,837,557

 

 

$

7,698,023

 

 

$

7,729,702

 

 

$

7,621,741

 

 

$

7,787,115

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity

$

897,207

 

 

$

874,254

 

 

$

846,959

 

 

$

835,002

 

 

$

907,245

 

Less goodwill

(37,144)

 

 

(37,144)

 

 

(37,144)

 

 

(37,144)

 

 

(37,144)

 

Less other intangible assets

(2,633)

 

 

(2,939)

 

 

(3,292)

 

 

(3,722)

 

 

(4,151)

 

Tangible equity(1)

857,430

 

 

834,171

 

 

806,523

 

 

794,136

 

 

865,950

 

Less preferred stock

(184,878)

 

 

(184,878)

 

 

(185,037)

 

 

(187,687)

 

 

(189,825)

 

Tangible common equity(1)

$

672,552

 

 

$

649,293

 

 

$

621,486

 

 

$

606,449

 

 

$

676,125

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity to total assets

11.39

%

 

11.30

%

 

10.90

%

 

10.90

%

 

11.59

%

Tangible equity to tangible assets(1)

10.94

%

 

10.84

%

 

10.43

%

 

10.42

%

 

11.12

%

Tangible common equity to tangible assets(1)

8.58

%

 

8.43

%

 

8.04

%

 

7.96

%

 

8.68

%

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

49,767,489

 

 

49,760,543

 

 

49,750,958

 

 

49,593,077

 

 

50,413,681

 

Class B non-voting non-convertible common shares outstanding

477,321

 

 

477,321

 

 

477,321

 

 

477,321

 

 

477,321

 

Total common shares outstanding

50,244,810

 

 

50,237,864

 

 

50,228,279

 

 

50,070,398

 

 

50,891,002

 

 

 

 

 

 

 

 

 

 

 

Tangible common equity per common share(1)

$

13.39

 

 

$

12.92

 

 

$

12.37

 

 

$

12.11

 

 

$

13.29

 

Book value per common share

$

14.18

 

 

$

13.72

 

 

$

13.18

 

 

$

12.93

 

 

$

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,
2020

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

Return on tangible common equity

 

 

 

 

 

 

 

 

 

Average total stockholders' equity

$

892,565

 

 

$

865,406

 

 

$

854,250

 

 

$

916,047

 

 

$

912,749

 

Less average preferred stock

(184,878)

 

 

(184,910)

 

 

(185,471)

 

 

(189,607)

 

 

(189,824)

 

Less average goodwill

(37,144)

 

 

(37,144)

 

 

(37,144)

 

 

(37,144)

 

 

(37,144)

 

Less average other intangible assets

(2,826)

 

 

(3,172)

 

 

(3,574)

 

 

(4,003)

 

 

(4,441)

 

Average tangible common equity(1)

$

667,717

 

 

$

640,180

 

 

$

628,061

 

 

$

685,293

 

 

$

681,340

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

21,703

 

 

$

15,913

 

 

$

(18,449)

 

 

$

(6,593)

 

 

$

14,272

 

Less preferred stock dividends and impact of preferred stock redemption

(3,447)

 

 

(3,454)

 

 

(3,393)

 

 

(3,007)

 

 

(3,540)

 

Add amortization of intangible assets

306

 

 

353

 

 

430

 

 

429

 

 

454

 

Less tax effect on amortization and impairment of intangible assets

(64)

 

 

(74)

 

 

(90)

 

 

(90)

 

 

(95)

 

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

$

18,498

 

 

$

12,738

 

 

$

(21,502)

 

 

$

(9,261)

 

 

$

11,091

 

 

 

 

 

 

 

 

 

 

 

Return on average equity

9.67

%

 

7.32

%

 

(8.69)

%

 

(2.89)

%

 

6.20

%

Return on average tangible common equity(1)

11.02

%

 

7.92

%

 

(13.77)

%

 

(5.44)

%

 

6.46

%

 

 

 

 

 

 

 

 

 

 

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

21.00

%

 

21.00

%

 

21.00

%

 

21.00

%

 

21.00

%

 

(1) Non-GAAP measure.

Banc of California, Inc.

Consolidated Operations

Non-GAAP Measures, Continued

(Dollars in thousands, except per share data)

(Unaudited)

 

 

Three Months Ended

 

December 31,
2020

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

Adjusted noninterest income and expense

 

 

 

 

 

 

 

 

 

Total noninterest income

$

6,975

 

 

$

3,954

 

 

$

5,528

 

 

$

2,061

 

 

$

4,930

 

Noninterest income adjustments:

 

 

 

 

 

 

 

 

 

Net (gain) loss on securities available for sale

 

 

 

 

(2,011)

 

 

 

 

(3)

 

Net (gain) loss on sale of legacy SFR loans held for sale

 

 

(272)

 

 

 

 

 

 

 

Fair value adjustment on legacy SFR loans held for sale

(36)

 

 

(24)

 

 

(25)

 

 

1,586

 

 

(30)

 

Total noninterest income adjustments

(36)

 

 

(296)

 

 

(2,036)

 

 

1,586

 

 

(33)

 

Adjusted noninterest income(1)

$

6,939

 

 

$

3,658

 

 

$

3,492

 

 

$

3,647

 

 

$

4,897

 

 

 

 

 

 

 

 

 

 

 

Total noninterest expense

$

38,950

 

 

$

40,394

 

 

$

72,770

 

 

$

46,919

 

 

$

47,483

 

Noninterest expense adjustments:

 

 

 

 

 

 

 

 

 

Naming rights termination

 

 

 

 

(26,769)

 

 

 

 

 

Extinguishment of debt

 

 

 

 

(2,515)

 

 

 

 

 

Professional (fees) recoveries

4,398

 

 

(1,172)

 

 

(875)

 

 

(1,678)

 

 

3,557

 

Restructuring expense

 

 

 

 

 

 

 

 

(1,626)

 

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

4,398

 

 

(1,172)

 

 

(30,159)

 

 

(1,678)

 

 

1,931

 

Gain (loss) in alternative energy partnership investments

673

 

 

1,430

 

 

167

 

 

(1,905)

 

 

(1,039)

 

Total noninterest expense adjustments

5,071

 

 

258

 

 

(29,992)

 

 

(3,583)

 

 

892

 

Adjusted noninterest expense(1)

$

44,021

 

 

$

40,652

 

 

$

42,778

 

 

$

43,336

 

 

$

48,375

 

 

(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,
2020

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

Adjusted pre-tax pre-provision income

 

 

 

 

 

 

 

 

 

Net interest income

$

61,563

 

 

$

55,855

 

 

$

55,315

 

 

$

51,861

 

 

$

56,660

 

Noninterest income

6,975

 

 

3,954

 

 

5,528

 

 

2,061

 

 

4,930

 

Total revenue

68,538

 

 

59,809

 

 

60,843

 

 

53,922

 

 

61,590

 

Noninterest expense

38,950

 

 

40,394

 

 

72,770

 

 

46,919

 

 

47,483

 

Pre-tax pre-provision income (loss)(1)

$

29,588

 

 

$

19,415

 

 

$

(11,927)

 

 

$

7,003

 

 

$

14,107

 

 

 

 

 

 

 

 

 

 

 

Total revenue

$

68,538

 

 

$

59,809

 

 

$

60,843

 

 

$

53,922

 

 

$

61,590

 

Total noninterest income adjustments

(36)

 

 

(296)

 

 

(2,036)

 

 

1,586

 

 

(33)

 

Adjusted total revenue

68,502

 

 

59,513

 

 

58,807

 

 

55,508

 

 

61,557

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense

38,950

 

 

40,394

 

 

72,770

 

 

46,919

 

 

47,483

 

Total noninterest expense adjustments

5,071

 

 

258

 

 

(29,992)

 

 

(3,583)

 

 

892

 

Adjusted noninterest expense(1)

44,021

 

 

40,652

 

 

42,778

 

 

43,336

 

 

48,375

 

Adjusted pre-tax pre-provision income(1)

$

24,481

 

 

$

18,861

 

 

$

16,029

 

 

$

12,172

 

 

$

13,182

 

 

 

 

 

 

 

 

 

 

 

Average assets

$

7,764,997

 

 

$

7,687,105

 

 

$

7,740,206

 

 

$

7,562,942

 

 

$

7,954,591

 

Pre-tax pre-provision income (loss) ROAA

1.52

%

 

1.00

%

 

(0.62)

%

 

0.37

%

 

0.70

%

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

1.25

%

 

0.98

%

 

0.83

%

 

0.65

%

 

0.66

%

Efficiency ratio

56.83

%

 

67.54

%

 

119.60

%

 

87.01

%

 

77.10

%

Adjusted efficiency ratio

64.26

%

 

68.31

%

 

72.74

%

 

78.07

%

 

78.59

%

 

(1) Non-GAAP measure.

 

Contacts

Investor Relations Inquiries:
Banc of California, Inc.
(855) 361-2262
Jared Wolff, (949) 385-8700
Lynn Hopkins, (949) 265-6599

Contacts

Investor Relations Inquiries:
Banc of California, Inc.
(855) 361-2262
Jared Wolff, (949) 385-8700
Lynn Hopkins, (949) 265-6599