Banc of California Reports Third Quarter 2021 Financial Results

SANTA ANA, Calif.--()--Banc of California, Inc. (NYSE: BANC) today reported net income of $23.2 million and net income available to common stockholders for the third quarter of 2021 of $21.4 million, or diluted earnings per common share of $0.42.

Highlights for the third quarter included:

  • Return on average assets of 1.13%
  • Annualized loan growth, excluding PPP, of 16%
  • Period-end total cost of deposits of 0.08%, a 12 basis point decrease from the end of the second quarter
  • Average cost of total deposits of 0.15%, an 8 basis point decrease from the previous quarter
  • Net interest margin of 3.28%, a 1 basis point increase from the previous quarter
  • Noninterest-bearing deposit balances represented 32% of total deposits at September 30, 2021, up from 24% a year earlier
  • Allowance for credit losses at 1.26% of total loans and 173% of non-performing loans
  • Total deferrals/forbearances declined to $54.2 million at September 30, 2021 from $86.6 million at June 30, 2021
  • Common Equity Tier 1 capital at 10.89%

Jared Wolff, President & CEO of Banc of California, commented, “Our third quarter results demonstrate the greater earnings power and improved profitability we have generated over the past two years as we continue to accelerate our growth in earning assets and increase operating leverage. Our teams continue to bring in high quality relationships throughout California and we are seeing a significant increase in commercial & industrial loan production, which helped generate a 16% annualized increase in total loans, excluding Paycheck Protection Program loans. Our deposit engine also continues to be highly productive in attracting new clients and expanding relationships with existing clients, which resulted in a 17% increase in noninterest-bearing deposits from the end of the prior quarter.”

Mr. Wolff continued, “Our loan and deposit pipelines remain strong and we expect to see a continuation of the positive trends that have led to our improved profitability. The system conversion for Pacific Mercantile is planned for November and we expect to have most of the cost savings in place by the end of the year. This will put us on track to fully realize the accretive benefits of this transaction starting in 2022. Combined with the strong organic growth that we are generating, we are well-positioned to continue delivering a higher level of earnings and returns.”

Lynn Hopkins, Chief Financial Officer of Banc of California, said, “We continue to execute well on our strategic initiatives, which is resulting in positive trends across most of our key metrics. Our cost of deposits continues to decline, our net interest margin is increasing, our efficiency ratio is improving, and our non-performing loans are declining. We continue to have a high level of liquidity, capital and reserves, which positions us well to continue supporting the profitable growth of our franchise. Along with our continued organic growth and the synergies to be realized from the Pacific Mercantile Bancorp acquisition, we also have additional opportunities to reduce our deposit costs as we continue to improve our mix of deposits and, subject to regulatory approval, redeem preferred stock that will further accelerate earnings growth.”

Merger with Pacific Mercantile Bancorp

On October 18, 2021, the Company completed the acquisition of Pacific Mercantile Bancorp (“PMBC”), pursuant to which PMBC merged (the “Merger”) with and into the Company, with the Company as the surviving corporation.

Under the terms and conditions of the Merger Agreement, each outstanding share of PMBC common stock was converted into the right to receive 0.5 of a share of the Company's common stock. This resulted in the issuance of 11,856,713 shares of BOC common stock with an estimated fair value of $222.2 million based upon the $18.74 closing price of BANC’s common stock on October 18, 2021. In addition, at the effective time of the Merger, the Company paid cash for all outstanding PMBC share-based awards, including stock options and outstanding shares subject to unvested restricted stock awards for a total paid in cash at closing of $3.2 million based upon the volume weighted average common stock price of BANC on each of the last 20 trading days ending on the fifth trading day prior to the closing of the Merger. The aggregate purchase price totaled $225.4 million.

At September 30, 2021, PMBC had total gross loans of $982.4 million and total assets of $1.49 billion. Total deposits were $1.29 billion at September 30, 2021.

Income Statement Highlights

 

Three Months Ended

 

Nine Months Ended

 

September 30,
2021

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

 

September 30,
2020

 

September 30,
2021

 

September 30,
2020

 

($ in thousands)

Total interest and dividend income

$

71,791

 

$

69,677

 

$

68,618

 

$

73,530

$

69,666

$

210,086

 

$

217,077

 

Total interest expense

8,815

 

9,830

 

10,702

 

11,967

13,811

29,347

 

54,046

 

Net interest income

62,976

 

59,847

 

57,916

 

61,563

55,855

180,739

 

163,031

 

Total noninterest income

5,519

 

4,170

 

4,381

 

6,975

3,954

14,070

 

11,543

 

Total revenue

68,495

 

64,017

 

62,297

 

68,538

59,809

194,809

 

174,574

 

Total noninterest expense

37,811

 

40,559

 

46,735

 

38,950

40,394

125,105

 

160,083

 

Pre-tax / pre-provision income

30,684

 

23,458

 

15,562

 

29,588

19,415

69,704

 

14,491

 

(Reversal of) provision for credit losses

(1,147

)

(2,154

)

(1,107

)

991

1,141

(4,408

)

28,728

 

Income tax expense (benefit)

8,661

 

6,562

 

2,294

 

6,894

2,361

17,517

 

(5,108

)

Net income (loss)

$

23,170

 

$

19,050

 

$

14,375

 

$

21,703

$

15,913

$

56,595

 

$

(9,129

)

 

 

 

 

 

 

 

 

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

$

21,443

 

$

17,323

 

$

7,825

 

$

17,706

$

12,084

$

46,493

 

$

(19,265

)

(1)

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

 

Net interest income

Q3-2021 vs Q2-2021

Net interest income increased $3.1 million to $63.0 million for the third quarter due to higher average interest-earning assets, lower cost of interest-bearing liabilities, and the impact of one additional day in the current quarter.

The net interest margin increased 1 basis point to 3.28% for the third quarter as the average earning-assets yield decreased 8 basis points and the average cost of total funding decreased 8 basis points. The yield on average interest-earning assets decreased to 3.73% for the third quarter from 3.81% for the second quarter due mostly to a reduction of prepayment penalties, offset by a higher level of accelerated PPP fees and an improved mix of earning assets. Average loans increased by $287.9 million while average securities and other interest-earning assets decreased $2.4 million. The average yield on loans decreased 12 basis points to 4.18% during the third quarter. The loan yield includes the impact of prepayment penalty fees, the net reversal or recapture of nonaccrual loan interest, accelerated discount accretion on the early payoff of purchased loans, and accelerated fees from PPP loan forgiveness; these items increased the loan yield by 11 basis points in the third quarter and 18 basis points in the second quarter. The average yield on securities decreased 3 basis point to 2.11% between quarters, including a 5 basis points decrease in the average yield on collateralized loan obligations (CLOs) to 1.82% for the third quarter due mostly to an increase in fair value of such investments.

The average cost of funds decreased 8 basis points to 0.49% for the third quarter from 0.57% for the second quarter. This decrease was driven by the lower average cost of interest-bearing liabilities and an improved funding mix, including higher average noninterest-bearing deposits. Average noninterest-bearing deposits represented 30% of total average deposits for the third quarter compared to 28% of total average deposits for the second quarter. Average noninterest-bearing deposits were $172.2 million higher in the third quarter compared to the second quarter while average deposits were $154.6 million higher for the linked quarters. Average Federal Home Loan Bank (FHLB) advances and other borrowings increased $126.3 million due to higher average overnight balances from loan portfolio growth during the third quarter. The average cost of interest-bearing liabilities decreased 10 basis points to 0.67% for the third quarter from 0.77% for the second quarter due to our continuing efforts to actively manage down the cost of interest-bearing deposits. The average cost of interest-bearing deposits declined 10 basis points to 0.22% for the third quarter from 0.32% for the second quarter. The average cost of total deposits decreased 8 basis points to 0.15% for the third quarter. The spot rate of total deposits was 0.08% at the end of the third quarter.

YTD 2021 vs YTD 2020

Net interest income for the nine months ended September 30, 2021 increased $17.7 million to $180.7 million from $163.0 million for the same 2020 period. Net interest income was positively impacted by higher average interest-earning assets, lower average interest-bearing liabilities and improved funding costs, offset by lower yields on average interest-earning assets. For the nine months ended September 30, 2021, average interest-earning assets increased $305.7 million to $7.44 billion, and the net interest margin increased 20 basis points to 3.25% compared to 3.05% for the same 2020 period.

The net interest margin expanded due to a 52 basis point decrease in the average cost of funds outpacing a 29 basis point decline in the average interest-earning assets yield. The average yield on interest-earning assets decreased to 3.77% for the nine months ended September 30, 2021, from 4.06% for the same 2020 period due mostly to the impact of lower market interest rates on loan and securities yields over this time period. The average fed funds rate for the nine months ended September 30, 2021 was 0.08% compared to 0.47% for the same 2020 period. The average yield on loans was 4.26% for the nine months ended September 30, 2021, compared to 4.50% for the same 2020 period and the average yield on securities decreased 67 basis points to 2.13% due mostly to CLOs repricing into the lower rate environment.

The average cost of funds decreased to 0.56% for the nine months ended September 30, 2021, from 1.08% for the same 2020 period. This decrease was driven by the lower average cost of interest-bearing liabilities and the improved funding mix, including higher average noninterest-bearing deposits. The average cost of interest-bearing liabilities decreased 59 basis points to 0.75% for the nine months ended September 30, 2021 from 1.34% for the same 2020 period due to the combination of actively managing deposit pricing down into the lower interest rate environment and the overall reduced usage of FHLB advances to fund loan growth. Compared to the same 2020 period, the average cost of interest-bearing deposits declined 67 basis points to 0.31% and the average cost of total deposits decreased 54 basis points to 0.22%. Additionally, average noninterest-bearing deposits increased by $507.6 million or 39.6% for the nine months ended September 30, 2021 when compared to the same 2020 period.

Provision for credit losses

Q3-2021 vs Q2-2021

There was a reversal of provision for credit losses of $1.1 million for the third quarter, compared to a reversal of $2.2 million for the second quarter. The third quarter reversal was due primarily to improvements in key macro-economic forecast variables, such as unemployment and gross domestic product, and consideration of credit quality metrics, offset partially by higher period end loan balances of $243.1 million.

YTD 2021 vs YTD 2020

During the nine months ended September 30, 2021, the provision for credit losses was a reversal of $4.4 million, compared to a provision of $28.7 million during the same 2020 period. The lower provision for credit losses was due primarily to improvements in key macro-economic forecast variables, such as unemployment and gross domestic product, lower specific reserves and consideration of credit quality metrics, offset partially by higher period end loan balances of $550.6 million.

Noninterest income

Q3-2021 vs Q2-2021

Noninterest income increased $1.3 million to $5.5 million for the third quarter due mostly to an increase in all other income. The $1.1 million increase in all other income was due mostly to an $841 thousand gain related to a sale-leaseback transaction of one branch location.

YTD 2021 vs YTD 2020

Noninterest income for the nine months ended September 30, 2021 increased $2.5 million to $14.1 million compared to the same 2020 period. The increase in noninterest income was mainly due to higher customer service fees, lower fair value adjustment for loans held for sale and higher all other income, offset by lower net gain on sale of securities and loans. The $1.8 million increase in customer services fees was due to higher loan fees of $351 thousand and higher deposit activity fees of $1.5 million. The increase in deposit activity fees is attributed to higher average deposit balances and our initiative to bring our service fee schedules more in line with market. Fair value adjustment for loans held for sale improved $1.7 million as the comparable period included valuation losses on loans held for sale due to the impact of the decreases in market interest rates. There were no gains from sale of securities for the nine months ended September 30, 2021, compared to $2.0 million in net gains in the same 2020 period from the sale of $20.7 million in securities, primarily consisting of corporate securities. The $837 thousand increase in all other income is due mostly to the aforementioned gain related to the sale-leaseback transaction, higher rental income, interest rate swap income and processing fees, offset by lower legal settlement income and lower earnout income which ended in 2020.

Noninterest expense

Q3-2021 vs Q2-2021

Noninterest expense decreased $2.7 million to $37.8 million for the third quarter compared to the prior quarter. The decrease was due mostly to lower professional fees of $857 thousand, lower all other expense of $995 thousand and higher net gain in alternative energy partnership investments of $956 thousand, offset by higher merger-related costs of $300 thousand. Professional fees included net recoveries of indemnified legal expenses of $2.2 million in the third quarter compared to net recoveries of $1.3 million during the second quarter. The $995 thousand decrease in all other expense was due mostly to the third quarter including a gain on sale of other real estate owned of $365 thousand compared to $0 in the prior quarter, and higher equity investment income as the prior quarter included net losses of $727 thousand compared to $0 in the third quarter. Equity investments without readily determinable fair values include investments in privately held companies and limited partnerships and income or loss from these investments fluctuates based on their underlying performance. Total merger-related costs increased $300 thousand to $1.0 million for the third quarter compared to the prior quarter.

Total operating costs, defined as noninterest expense adjusted for certain expense items (refer to section Non-GAAP Measures), decreased $1.2 million to $40.7 million for the third quarter compared to $42.0 million for the prior quarter primarily due to the lower salaries and benefits, higher gain on sale of other real estate owned and lower losses on equity investments.

YTD 2021 vs YTD 2020

Noninterest expense for the nine months ended September 30, 2021 decreased $35.0 million to $125.1 million compared to the prior year. The decrease was primarily due to: (i) the same 2020 period including a $26.8 million one-time charge related to the termination of our LAFC naming rights agreements, (ii) lower professional fees of $9.0 million, due mostly to a $7.6 million decrease in legal fees, net of insurance recoveries, (iii) lower advertising fees of $2.8 million due to the termination of the LAFC agreements in May 2020, and (iv) lower all other expense of $4.2 million resulting from the previous year including a $2.5 million debt extinguishment fee for the early repayment of certain FHLB term advances and a $1.2 million charge for two legacy legal settlements combined with overall expense reduction efforts. These decreases were partially offset by higher (i) salaries and employee benefits of $4.6 million due to higher commissions and incentive-based compensation due to higher production and financial performance levels, (ii) merger-related costs of $2.4 million associated with the approved merger with PMB, and (iii) net losses in alternative energy partnership investments of $708 thousand.

Income taxes

Q3-2021 vs Q2-2021

Income tax expense totaled $8.7 million for the third quarter resulting in an effective tax rate of 27.2% compared to $6.6 million for the second quarter and an effective tax rate of 25.6%.

YTD 2021 vs YTD 2020

Income tax expense totaled $17.5 million for the nine months ended September 30, 2021, representing an effective tax rate of 23.6%, compared to an income tax benefit of $5.1 million and an effective tax rate of 35.9% for the same 2020 period. The effective tax rate for the nine months ended September 30, 2021 differs from the 29.5% combined federal and state statutory rate due primarily to the net tax benefit of $2.5 million resulting from the exercise of all previously issued outstanding stock appreciation rights in the first quarter of 2021 and other discrete tax items that impact our effective tax rate.

Balance Sheet

At September 30, 2021, total assets were $8.28 billion, which represented a linked-quarter increase of $251.3 million. The following table shows selected balance sheet line items as of the dates indicated:

 

 

 

Amount Change

 

September 30,
2021

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

 

September 30,
2020

 

Q3-21 vs. Q2-21

 

Q3-21 vs. Q3-20

 

 

 

 

 

 

 

 

 

($ in thousands)

Securities available-for-sale

$

1,303,368

$

1,353,154

$

1,270,830

$

1,231,431

$

1,245,867

$

(49,786

)

$

57,501

 

Loans held-for-investment

$

6,228,575

$

5,985,477

$

5,764,401

$

5,898,405

$

5,678,002

$

243,098

 

$

550,573

 

Loans held-for-sale

$

3,422

$

2,853

$

1,408

$

1,413

$

1,849

$

569

 

$

1,573

 

Total assets

$

8,278,741

$

8,027,413

$

7,933,459

$

7,877,334

$

7,738,106

$

251,328

 

$

540,635

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

$

2,107,709

$

1,808,918

$

1,700,343

$

1,559,248

$

1,450,744

$

298,791

 

$

656,965

 

Total deposits

$

6,543,225

$

6,206,544

$

6,142,042

$

6,085,800

$

6,032,266

$

336,681

 

$

510,959

 

Borrowings (1)

$

762,444

$

871,973

$

891,546

$

796,110

$

733,105

$

(109,529

)

$

29,339

 

Total liabilities

$

7,433,938

$

7,198,051

$

7,128,766

$

6,980,127

$

6,863,852

$

235,887

 

$

570,086

 

Total equity

$

844,803

$

829,362

$

804,693

$

897,207

$

874,254

$

15,441

 

$

(29,451

)

(1)

Represents Advances from Federal Home Loan Bank, Other Borrowing and Long Term Debt, net.

 

Investments

Securities available-for-sale decreased $49.8 million during the third quarter to $1.30 billion at September 30, 2021 primarily due to payoffs of $35.5 million from CLO resets, principal payments of $8.5 million, and lower unrealized net gains of $5.4 million. The decrease in unrealized net gains was due mostly to decreases in the value of mortgage-backed securities as a result of increases in longer term interest rates during the third quarter, offset by improved pricing of CLOs and corporate debt securities. As of September 30, 2021, the securities portfolio included $549.3 million of CLOs, $448.6 million of agency securities, $120.4 million of municipal securities, $169.5 million of corporate debt securities, and $15.4 million of SBA pool securities. The CLO portfolio, which is comprised only of AA and AAA rated securities, represented 42% of the total securities portfolio and the carrying value included an unrealized net loss of $2.5 million at September 30, 2021 compared to an unrealized net loss of $3.0 million at June 30, 2021.

Loans

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

 

September 30,
2021

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

 

September 30,
2020

 

($ in thousands)

Composition of held-for-investment loans

 

 

 

 

 

Commercial real estate

$

907,224

 

$

871,790

 

$

839,965

 

$

807,195

 

$

826,683

 

Multifamily

1,295,613

 

1,325,770

 

1,258,278

 

1,289,820

 

1,476,803

 

Construction

130,536

 

150,557

 

169,122

 

176,016

 

197,629

 

Commercial and industrial

773,681

 

725,596

 

760,150

 

748,299

 

710,667

 

Commercial and industrial - warehouse lending

1,522,945

 

1,345,314

 

1,118,175

 

1,340,009

 

876,157

 

SBA

181,582

 

253,924

 

338,903

 

273,444

 

320,573

 

Total commercial loans

4,811,581

 

4,672,951

 

4,484,593

 

4,634,783

 

4,408,512

 

Single-family residential mortgage

1,393,696

 

1,288,176

 

1,253,251

 

1,230,236

 

1,234,479

 

Other consumer

23,298

 

24,350

 

26,557

 

33,386

 

35,011

 

Total consumer loans

1,416,994

 

1,312,526

 

1,279,808

 

1,263,622

 

1,269,490

 

Total gross loans

$

6,228,575

 

$

5,985,477

 

$

5,764,401

 

$

5,898,405

 

$

5,678,002

 

Composition percentage of held-for-investment loans

 

 

 

 

 

Commercial real estate

14.6

%

14.6

%

14.6

%

13.7

%

14.6

%

Multifamily

20.7

%

22.2

%

21.8

%

21.9

%

26.0

%

Construction

2.1

%

2.5

%

2.9

%

3.0

%

3.5

%

Commercial and industrial

12.4

%

12.1

%

13.2

%

12.7

%

12.5

%

Commercial and industrial - warehouse lending

24.5

%

22.5

%

19.4

%

22.6

%

15.5

%

SBA

2.9

%

4.2

%

5.9

%

4.6

%

5.6

%

Total commercial loans

77.2

%

78.1

%

77.8

%

78.5

%

77.7

%

Single-family residential mortgage

22.4

%

21.5

%

21.7

%

20.9

%

21.7

%

Other consumer

0.4

%

0.4

%

0.5

%

0.6

%

0.6

%

Total consumer loans

22.8

%

21.9

%

22.2

%

21.5

%

22.3

%

Total gross loans

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

Held-for-investment loans increased $243.1 million to $6.23 billion from the prior quarter, resulting from higher commercial and industrial (C&I) loans related to warehouse credit facilities of $177.6 million, other C&I loans of $48.1 million and commercial real estate loans of $35.4 million. In addition, single-family residential loans increased by $105.5 million as a result of purchases of $249.4 million during the quarter offset by repayment activity within this portfolio. These increases were partially offset by decreases in multifamily loans of $30.2 million, construction loans of $20.0 million, and SBA loans of $72.3 million due mostly to the forgiveness of $79.2 million in PPP loans during the quarter. At September 30, 2021, SBA loans included $116.5 million of PPP loans, net of fees.

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

 

September 30, 2021

 

Amount

 

% of Portfolio

 

($ in thousands)

C&I Portfolio by Industry

 

 

 

Finance and Insurance - Warehouse Lending

$

1,522,945

 

 

66

%

Real Estate & Rental Leasing

221,541

 

 

10

%

Finance and Insurance - Other

84,569

 

 

4

%

Gas Stations

73,926

 

 

3

%

Healthcare

72,252

 

 

3

%

Television / Motion Pictures

51,097

 

 

2

%

Manufacturing

47,421

 

 

2

%

Wholesale Trade

38,770

 

 

2

%

Other Retail Trade

29,950

 

 

1

%

Food Services

29,034

 

 

1

%

Professional Services

15,339

 

 

1

%

Transportation

4,685

 

 

%

Accommodations

2,135

 

 

%

All Other

102,962

 

 

4

%

Total

$

2,296,626

 

 

100

%

 

Deposits

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

 

September 30,
2021

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

 

September 30,
2020

 

($ in thousands)

Composition of deposits

 

 

 

 

 

 

 

 

 

Noninterest-bearing checking

$

2,107,709

 

 

$

1,808,918

 

 

$

1,700,343

 

 

$

1,559,248

 

 

$

1,450,744

 

Interest-bearing checking

2,214,678

 

 

2,217,306

 

 

2,088,528

 

 

2,107,942

 

 

2,045,115

 

Savings and money market

1,661,013

 

 

1,593,724

 

 

1,684,703

 

 

1,646,660

 

 

1,636,062

 

Non-brokered certificates of deposit

559,825

 

 

586,596

 

 

668,468

 

 

755,727

 

 

820,531

 

Brokered certificates of deposit

 

 

 

 

 

 

16,223

 

 

79,814

 

Total deposits

$

6,543,225

 

 

$

6,206,544

 

 

$

6,142,042

 

 

$

6,085,800

 

 

$

6,032,266

 

Composition percentage of deposits

 

 

 

 

 

 

 

 

 

Noninterest-bearing checking

32.2

%

 

29.1

%

 

27.7

%

 

25.6

%

 

24.1

%

Interest-bearing checking

33.8

%

 

35.7

%

 

34.0

%

 

34.6

%

 

33.9

%

Savings and money market

25.4

%

 

25.7

%

 

27.4

%

 

27.0

%

 

27.1

%

Non-brokered certificates of deposit

8.6

%

 

9.5

%

 

10.9

%

 

12.4

%

 

13.6

%

Brokered certificates of deposit

%

 

%

 

%

 

0.4

%

 

1.3

%

Total deposits

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

Total deposits increased $336.7 million during the third quarter of 2021 to $6.54 billion due to higher noninterest-bearing checking balances of $298.8 million and higher savings and money market balances of $67.3 million, offset by lower interest-bearing checking of $2.6 million, and non-brokered certificates of deposit of $26.8 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 current interest rate environment. Noninterest-bearing deposits totaled $2.11 billion and represented 32% of total deposits at September 30, 2021 compared to $1.81 billion, or 29% of total deposits, at June 30, 2021.

Debt

Advances from the FHLB decreased $84.7 million during the third quarter to $405.7 million as of September 30, 2021, due to lower overnight advances. At September 30, 2021, FHLB advances included no overnight borrowings and $411.0 million in term advances with a weighted average life of 4.2 years and weighted average interest rate of 2.53%. Other borrowings totaled $100.0 million at September 30, 2021 and related to unsecured overnight borrowing from various financial institutions through the American Financial Exchange platform.

Equity

At September 30, 2021, total stockholders’ equity increased by $15.4 million to $844.8 million and tangible common equity increased by $15.7 million to $710.9 million on a linked-quarter basis. The increase in total stockholders’ equity for the third quarter included net income of $23.2 million and share-based award compensation of $1.1 million, offset by lower net accumulated other comprehensive income of $3.8 million, dividends to common and preferred stockholders of $4.8 million and the impact of vested and exercised share-based awards of $0.3 million. Book value per share increased to $14.76 as of September 30, 2021 from $14.46 at June 30, 2021. Tangible book value per share increased to $13.99 as of September 30, 2021 from $13.69 at June 30, 2021.

Capital ratios remain strong with total risk-based capital at 14.76% and a tier 1 leverage ratio of 9.80% at September 30, 2021. The interim capital relief related to the adoption of the current expected credit losses (CECL) accounting standard increased the Bank's leverage ratio by approximately 8 basis points at September 30, 2021. The following table sets forth our regulatory capital ratios as of the dates indicated:

 

September 30,
2021

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

 

September 30,
2020

Capital Ratios(1)

 

 

 

 

 

 

 

 

 

Banc of California, Inc.

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

14.76

%

 

15.33

%

 

15.87

%

 

17.01

%

 

16.19

%

Tier 1 risk-based capital ratio

12.38

%

 

12.71

%

 

13.17

%

 

14.35

%

 

14.94

%

Common equity tier 1 capital ratio

10.89

%

 

11.14

%

 

11.50

%

 

11.19

%

 

11.59

%

Tier 1 leverage ratio

9.80

%

 

9.89

%

 

9.62

%

 

10.90

%

 

10.79

%

Banc of California, NA

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

16.35

%

 

17.25

%

 

17.82

%

 

17.27

%

 

18.14

%

Tier 1 risk-based capital ratio

15.26

%

 

16.09

%

 

16.57

%

 

16.02

%

 

16.89

%

Common equity tier 1 capital ratio

15.26

%

 

16.09

%

 

16.57

%

 

16.02

%

 

16.89

%

Tier 1 leverage ratio

12.08

%

 

12.52

%

 

12.13

%

 

12.19

%

 

12.21

%

(1)

September 30, 2021 capital ratios are preliminary.

 

Credit Quality

 

September 30,
2021

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

 

September 30,
2020

Asset quality information and ratios

($ in thousands)

Delinquent loans held-for-investment

 

 

 

 

 

 

 

 

 

30 to 89 days delinquent

$

23,144

 

 

$

16,983

 

 

$

31,005

 

 

$

13,981

 

 

$

51,229

 

90+ days delinquent

21,979

 

 

17,998

 

 

30,292

 

 

17,636

 

 

31,809

 

Total delinquent loans

$

45,123

 

 

$

34,981

 

 

$

61,297

 

 

$

31,617

 

 

$

83,038

 

Total delinquent loans to total loans

0.72

%

 

0.58

%

 

1.06

%

 

0.54

%

 

1.46

%

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

 

 

 

 

 

 

 

 

 

Non-accrual loans

$

45,621

 

 

$

51,299

 

 

$

55,920

 

 

$

35,900

 

 

$

66,337

 

90+ days delinquent and still accruing loans

 

 

 

 

 

 

728

 

 

547

 

Non-performing loans

45,621

 

 

51,299

 

 

55,920

 

 

36,628

 

 

66,884

 

Other real estate owned

 

 

3,253

 

 

 

 

 

 

 

Non-performing assets

$

45,621

 

 

$

54,552

 

 

$

55,920

 

 

$

36,628

 

 

$

66,884

 

ALL to non-performing loans

161.16

%

 

147.93

%

 

141.90

%

 

221.22

%

 

135.95

%

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

0.73

%

 

0.86

%

 

0.97

%

 

0.62

%

 

1.18

%

Non-performing assets to total assets

0.55

%

 

0.68

%

 

0.70

%

 

0.46

%

 

0.86

%

Troubled debt restructurings (TDRs)

 

 

 

 

 

 

 

 

 

Performing TDRs

$

5,835

 

 

$

6,029

 

 

$

6,347

 

 

$

4,733

 

 

$

5,408

 

Non-performing TDRs

2,366

 

 

3,120

 

 

4,130

 

 

4,264

 

 

20,002

 

Total TDRs

$

8,201

 

 

$

9,149

 

 

$

10,477

 

 

$

8,997

 

 

$

25,410

 

Total delinquent loans increased $10.1 million in the third quarter to $45.1 million at September 30, 2021, due mostly to additions of $24.9 million, offset by $12.4 million returning to current status and $2.3 million in other reductions including paydowns. The additions included single-family residential (SFR) loans of $9.8 million, a C&I relationship of $6.6 million, and SBA loans of $7.6 million, including $5.0 million in guaranteed SBA loans that were repurchased and are pending resolution. Delinquent loans included SFR loans of $19.1 million, SBA loans of $14.9 million, of which $10.6 million is guaranteed, and other loans of $11.1 million.

Non-performing loans decreased $5.7 million to $45.6 million as of September 30, 2021, of which $22.7 million, or 50%, relates to loans in a current payment status. The third quarter decrease was due mostly to $4.6 million in loans returning to accrual status and $3.3 million in payoffs, paydowns and a note sale, offset by one $2.6 million guaranteed SBA loan that was repurchased and is pending resolution. At September 30, 2021, non-performing loans included (i) a legacy relationship totaling $7.0 million that is well-secured by a combination of commercial real estate and SFR properties with an average loan-to-value ratio of 50%, (ii) SFR loans totaling $16.5 million, (iii) SBA loans totaling $12.8 million, of which $8.7 million is guaranteed, and (iv) other commercial loans of $9.2 million.

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

 

September 30, 2021

 

June 30, 2021

 

Count

 

Amount(1)

 

% of Loans
in Category

 

Count

 

Amount

 

% of Loans
in Category

 

($ in thousands)

Single-family residential mortgage

40

 

 

$

49,501

 

 

4

%

 

46

 

 

$

52,384

 

 

4

%

All other loans

5

 

 

4,691

 

 

%

 

10

 

 

34,174

 

 

1

%

Total

45

 

 

$

54,192

 

 

1

%

 

56

 

 

$

86,558

 

 

1

%

(1)

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

 

Allowance for Credit Losses

 

Three Months Ended

 

September 30,
2021

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

 

September 30,
2020

 

($ in thousands)

Allowance for loan losses (ALL)

 

 

 

 

 

Balance at beginning of period

$

75,885

 

$

79,353

 

$

81,030

 

$

90,927

 

$

90,370

 

Loans charged off

(327

)

(886

)

(565

)

(11,520

)

(1,821

)

Recoveries

532

 

26

 

172

 

609

 

248

 

Net recoveries (charge-offs)

205

 

(860

)

(393

)

(10,911

)

(1,573

)

(Reversal of) provision for loan losses

(2,566

)

(2,608

)

(1,284

)

1,014

 

2,130

 

Balance at end of period

$

73,524

 

$

75,885

 

$

79,353

 

$

81,030

 

$

90,927

 

Reserve for unfunded loan commitments

 

 

 

 

 

Balance at beginning of period

$

3,814

 

$

3,360

 

$

3,183

 

$

3,206

 

$

4,195

 

Provision for (reversal of) credit losses

1,419

 

454

 

177

 

(23

)

(989

)

Balance at end of period

5,233

 

3,814

 

3,360

 

3,183

 

3,206

 

Allowance for credit losses (ACL)

$

78,757

 

$

79,699

 

$

82,713

 

$

84,213

 

$

94,133

 

 

 

 

 

 

 

ALL to total loans

1.18

%

1.27

%

1.38

%

1.37

%

1.60

%

ACL to total loans

1.26

%

1.33

%

1.43

%

1.43

%

1.66

%

ACL to total loans, excluding PPP loans

1.29

%

1.38

%

1.51

%

1.48

%

1.74

%

ACL to NPLs

172.63

%

155.36

%

147.91

%

229.91

%

140.74

%

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

(0.01

)%

0.06

%

0.03

%

0.77

%

0.12

%

 

 

 

 

 

 

Reserve for loss on repurchased loans

 

 

 

 

 

Balance at beginning of period

$

5,095

 

$

5,383

 

$

5,515

 

$

5,487

 

$

5,567

 

Initial provision for loan repurchases

 

 

 

 

11

 

(Reversal of) provision for loan repurchases

(42

)

(99

)

(132

)

28

 

(91

)

Utilization of reserve for loan repurchases

(30

)

(189

)

 

 

 

Balance at end of period

$

5,023

 

$

5,095

 

$

5,383

 

$

5,515

 

$

5,487

 

The allowance for expected credit losses (ACL), which includes the reserve for unfunded loan commitments, totaled $78.8 million, or 1.26% of total loans, at September 30, 2021, compared to $79.7 million, or 1.33% of total loans, at June 30, 2021. The $942 thousand decrease in the ACL was due to: (i) lower general reserves of $1.9 million due to improved economic assumptions and asset quality trends, offset by higher period end portfolio balances, (ii) net recoveries of $205 thousand, and (iii) higher specific reserves of $828 thousand. The ACL coverage of non-performing loans was 173% at September 30, 2021 compared to 155% at June 30, 2021.

Our ACL methodology uses a nationally recognized, third-party model that includes many assumptions based on historical and peer loss data, current loan portfolio risk profile including risk ratings, and economic forecasts including macroeconomic variables (MEVs) released by our model provider during September 2021. The September 2021 forecasts reflect a more favorable view of the economy (i.e. higher GDP growth rates, higher CRE price indices and lower unemployment rates) compared to the June 2021 forecasts. While the current forecasts generally reflect an improving economy with the availability of the vaccine and other factors, there continues to be uncertainty regarding the impact of inflation (lasting or transitory), COVID-19 variants, further government stimulus, supply chain issues, and the ultimate pace of economic recovery. Accordingly, our economic assumptions, the resulting ACL level and provision reversal consider both the positive assumptions and potential uncertainties.

The Company will host a conference call to discuss its third quarter 2021 financial results at 10:00 a.m. Pacific Time (PT) on Thursday, October 21, 2021. Interested parties are welcome to attend the conference call by dialing (888) 317-6003, and referencing event code 9764771. A live audio webcast will also be available and the webcast link will be posted on the Company’s Investor Relations website at www.bancofcal.com/investor. The slide presentation for the call will also be available on the Company's Investor Relations website prior to the call. A replay of the call will be made available approximately one hour after the call has ended on the Company’s Investor Relations website at www.bancofcal.com/investor or by dialing (877) 344-7529 and referencing event code 10157715.

About Banc of California, Inc.

Banc of California, Inc. (NYSE: BANC) is a bank holding company with $8.3 billion in assets at September 30, 2021 and one wholly-owned banking subsidiary, Banc of California, N.A. (the Bank). With the acquisition of PMBC completed on October 18, 2021, assets total $9.8 billion on a combined proforma basis at September 30, 2021. The Bank has 39 offices including 33 full-service branches located throughout Southern California. Through our dedicated professionals, we provide customized and innovative banking and lending solutions to businesses, entrepreneurs and individuals throughout California. We help to improve the communities where we live and work, by supporting organizations that provide financial literacy and job training, small business support and affordable housing. With a commitment to service and to building enduring relationships, we provide a higher standard of banking. We look forward to helping you achieve your goals. For more information, please visit us at www.bancofcal.com.

Forward-Looking Statements

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

 

Banc of California, Inc.

Consolidated Statements of Financial Condition (Unaudited)

(Dollars in thousands)

 

 

September 30,
2021

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

 

September 30,
2020

ASSETS

 

 

 

 

 

Cash and cash equivalents

$

185,840

 

$

163,332

 

$

379,509

 

$

220,819

 

$

292,490

 

Securities available-for-sale

1,303,368

 

1,353,154

 

1,270,830

 

1,231,431

 

1,245,867

 

Loans held-for-sale

3,422

 

2,853

 

1,408

 

1,413

 

1,849

 

Loans held-for-investment

6,228,575

 

5,985,477

 

5,764,401

 

5,898,405

 

5,678,002

 

Allowance for loan losses

(73,524

)

(75,885

)

(79,353

)

(81,030

)

(90,927

)

Federal Home Loan Bank and other bank stock

44,604

 

44,569

 

44,964

 

44,506

 

44,809

 

Servicing rights, net

1,022

 

1,162

 

1,407

 

1,454

 

1,621

 

Other real estate owned, net

 

3,253

 

 

 

 

Premises and equipment, net

114,011

 

118,649

 

120,071

 

121,520

 

123,812

 

Alternative energy partnership investments, net

25,196

 

24,068

 

23,809

 

27,977

 

27,786

 

Goodwill

37,144

 

37,144

 

37,144

 

37,144

 

37,144

 

Other intangible assets, net

1,787

 

2,069

 

2,351

 

2,633

 

2,939

 

Deferred income tax, net

40,659

 

41,628

 

47,877

 

45,957

 

43,744

 

Income tax receivable

2,107

 

4,084

 

210

 

1,105

 

10,701

 

Bank owned life insurance investment

113,884

 

113,168

 

112,479

 

111,807

 

111,115

 

Right of use assets

29,054

 

20,364

 

22,069

 

19,633

 

18,909

 

Other assets

221,592

 

188,324

 

184,283

 

192,560

 

188,245

 

Total assets

$

8,278,741

 

$

8,027,413

 

$

7,933,459

 

$

7,877,334

 

$

7,738,106

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Noninterest-bearing deposits

$

2,107,709

 

$

1,808,918

 

$

1,700,343

 

$

1,559,248

 

$

1,450,744

 

Interest-bearing deposits

4,435,516

 

4,397,626

 

4,441,699

 

4,526,552

 

4,581,522

 

Total deposits

6,543,225

 

6,206,544

 

6,142,042

 

6,085,800

 

6,032,266

 

Advances from Federal Home Loan Bank

405,738

 

490,419

 

635,105

 

539,795

 

559,482

 

Other borrowings

100,000

 

125,000

 

 

 

 

Long-term debt, net

256,706

 

256,554

 

256,441

 

256,315

 

173,623

 

Reserve for loss on repurchased loans

5,023

 

5,095

 

5,383

 

5,515

 

5,487

 

Lease liabilities

30,390

 

21,588

 

23,173

 

20,647

 

19,938

 

Accrued expenses and other liabilities

92,856

 

92,851

 

66,622

 

72,055

 

73,056

 

Total liabilities

7,433,938

 

7,198,051

 

7,128,766

 

6,980,127

 

6,863,852

 

Commitments and contingent liabilities

 

 

 

 

 

Preferred stock

94,956

 

94,956

 

94,956

 

184,878

 

184,878

 

Common stock

527

 

527

 

526

 

522

 

522

 

Common stock, class B non-voting non-convertible

5

 

5

 

5

 

5

 

5

 

Additional paid-in capital

631,512

 

630,654

 

629,844

 

634,704

 

633,409

 

Retained earnings

147,682

 

129,307

 

115,004

 

110,179

 

95,001

 

Treasury stock

(40,827

)

(40,827

)

(40,827

)

(40,827

)

(40,827

)

Accumulated other comprehensive income, net

10,948

 

14,740

 

5,185

 

7,746

 

1,266

 

Total stockholders’ equity

844,803

 

829,362

 

804,693

 

897,207

 

874,254

 

Total liabilities and stockholders’ equity

$

8,278,741

 

$

8,027,413

 

$

7,933,459

 

$

7,877,334

 

$

7,738,106

 

 

Banc of California, Inc.

Consolidated Statements of Operations (Unaudited)

(Dollars in thousands, except per share data)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,
2021

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

 

September 30,
2020

 

September 30,
2021

 

September 30,
2020

Interest and dividend income

 

 

 

 

 

 

 

Loans, including fees

$

63,837

 

$

61,900

 

$

61,345

 

$

66,105

 

$

62,019

 

$

187,082

 

$

191,195

 

Securities

7,167

 

6,986

 

6,501

 

6,636

 

6,766

 

20,654

 

22,402

 

Other interest-earning assets

787

 

791

 

772

 

789

 

881

 

2,350

 

3,480

 

Total interest and dividend income

71,791

 

69,677

 

68,618

 

73,530

 

69,666

 

210,086

 

217,077

 

Interest expense

 

 

 

 

 

 

 

Deposits

2,412

 

3,543

 

4,286

 

5,436

 

7,564

 

10,241

 

32,380

 

Federal Home Loan Bank advances

2,990

 

2,944

 

3,112

 

3,479

 

3,860

 

9,046

 

14,561

 

Other interest-bearing liabilities

3,413

 

3,343

 

3,304

 

3,052

 

2,387

 

10,060

 

7,105

 

Total interest expense

8,815

 

9,830

 

10,702

 

11,967

 

13,811

 

29,347

 

54,046

 

Net interest income

62,976

 

59,847

 

57,916

 

61,563

 

55,855

 

180,739

 

163,031

 

(Reversal of) provision for credit losses

(1,147

)

(2,154

)

(1,107

)

991

 

1,141

 

(4,408

)

28,728

 

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

64,123

 

62,001

 

59,023

 

60,572

 

54,714

 

185,147

 

134,303

 

Noninterest income

 

 

 

 

 

 

 

Customer service fees

1,900

 

1,990

 

1,758

 

1,953

 

1,498

 

5,648

 

3,818

 

Loan servicing income

170

 

38

 

268

 

149

 

186

 

476

 

356

 

Income from bank owned life insurance

715

 

690

 

672

 

691

 

629

 

2,077

 

1,798

 

Net gain on sale of securities available for sale

 

 

 

 

 

 

2,011

 

Fair value adjustment on loans held for sale

160

 

20

 

 

36

 

24

 

180

 

(1,537

)

Net gain on sale of loans

 

 

 

 

272

 

 

245

 

All other income

2,574

 

1,432

 

1,683

 

4,146

 

1,345

 

5,689

 

4,852

 

Total noninterest income

5,519

 

4,170

 

4,381

 

6,975

 

3,954

 

14,070

 

11,543

 

Noninterest expense

 

 

 

 

 

 

 

Salaries and employee benefits

24,786

 

25,042

 

25,719

 

25,836

 

23,277

 

75,547

 

70,973

 

Naming rights termination

 

 

 

 

 

 

26,769

 

Occupancy and equipment

7,124

 

7,277

 

7,196

 

7,560

 

7,457

 

21,597

 

21,790

 

Professional fees

892

 

1,749

 

4,022

 

29

 

5,147

 

6,663

 

15,707

 

Data processing

1,646

 

1,621

 

1,655

 

1,608

 

1,657

 

4,922

 

4,966

 

Advertising

122

 

78

 

118

 

171

 

219

 

318

 

3,132

 

Regulatory assessments

812

 

769

 

774

 

748

 

784

 

2,355

 

1,993

 

(Reversal of) provision for loan repurchase reserves

(42

)

(99

)

(132

)

28

 

(91

)

(273

)

(725

)

Amortization of intangible assets

282

 

282

 

282

 

306

 

353

 

846

 

1,212

 

Merger-related costs

1,000

 

700

 

700

 

 

 

2,400

 

 

All other expense

2,974

 

3,969

 

2,771

 

3,337

 

3,021

 

9,714

 

13,958

 

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

39,596

 

41,388

 

43,105

 

39,623

 

41,824

 

124,089

 

159,775

 

(Gain) loss in alternative energy partnership investments

(1,785

)

(829

)

3,630

 

(673

)

(1,430

)

1,016

 

308

 

Total noninterest expense

37,811

 

40,559

 

46,735

 

38,950

 

40,394

 

125,105

 

160,083

 

Income (loss) before income taxes

31,831

 

25,612

 

16,669

 

28,597

 

18,274

 

74,112

 

(14,237

)

Income tax expense (benefit)

8,661

 

6,562

 

2,294

 

6,894

 

2,361

 

17,517

 

(5,108

)

Net income (loss)

23,170

 

19,050

 

14,375

 

21,703

 

15,913

 

56,595

 

(9,129

)

Preferred stock dividends

1,727

 

1,727

 

3,141

 

3,447

 

3,447

 

6,595

 

10,422

 

Income allocated to participating securities

 

 

62

 

456

 

281

 

160

 

 

Participating securities dividends

 

 

 

94

 

94

 

 

282

 

Impact of preferred stock redemption

 

 

3,347

 

 

7

 

3,347

 

(568

)

Net income (loss) available to common stockholders

$

21,443

 

$

17,323

 

$

7,825

 

$

17,706

 

$

12,084

 

$

46,493

 

$

(19,265

)

 

 

 

 

 

 

 

 

Earnings (loss) per common share:

 

 

 

 

 

 

 

Basic

$

0.42

 

$

0.34

 

$

0.16

 

$

0.35

 

$

0.24

 

$

0.92

 

$

(0.38

)

Diluted

$

0.42

 

$

0.34

 

$

0.15

 

$

0.35

 

$

0.24

 

$

0.91

 

$

(0.38

)

Weighted average number of common shares outstanding

 

 

 

 

 

 

 

Basic

50,716,680

 

50,650,186

 

50,350,897

 

50,125,462

 

50,108,655

 

50,573,928

 

50,201,112

 

Diluted

50,909,317

 

50,892,202

 

50,750,522

 

50,335,271

 

50,190,933

 

50,821,972

 

50,201,112

 

Dividends declared per common share

$

0.06

 

$

0.06

 

$

0.06

 

$

0.06

 

$

0.06

 

$

0.18

 

$

0.18

 

 

Banc of California, Inc.

Selected Financial Data

(Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,
2021

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

 

September 30,
2020

 

September 30,
2021

 

September 30,
2020

Profitability and other ratios of consolidated operations

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets(1)

1.13

%

 

0.98

%

 

0.74

%

 

1.11

%

 

0.82

%

 

0.95

%

 

(0.16

)%

Return on average equity(1)

10.84

%

 

9.38

%

 

6.56

%

 

9.67

%

 

7.32

%

 

8.90

%

 

(1.39

)%

Return on average tangible common equity(1)(2)

12.04

%

 

10.34

%

 

4.77

%

 

10.69

%

 

7.68

%

 

9.10

%

 

(3.76

)%

Pre-tax pre-provision income (loss) ROAA(1)(2)

1.50

%

 

1.20

%

 

0.80

%

 

1.52

%

 

1.00

%

 

1.17

%

 

0.25

%

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

1.34

%

 

1.13

%

 

1.06

%

 

1.25

%

 

0.98

%

 

1.18

%

 

0.82

%

Dividend payout ratio(3)

14.29

%

 

17.65

%

 

37.50

%

 

17.14

%

 

25.00

%

 

19.57

%

 

(47.37

)%

Average loan yield

4.18

%

 

4.30

%

 

4.30

%

 

4.58

%

 

4.46

%

 

4.26

%

 

4.50

%

Average cost of interest-bearing deposits

0.22

%

 

0.32

%

 

0.38

%

 

0.47

%

 

0.66

%

 

0.31

%

 

0.98

%

Average cost of total deposits

0.15

%

 

0.23

%

 

0.28

%

 

0.36

%

 

0.51

%

 

0.22

%

 

0.76

%

Net interest spread

3.06

%

 

3.04

%

 

2.95

%

 

3.15

%

 

2.84

%

 

3.02

%

 

2.72

%

Net interest margin(1)

3.28

%

 

3.27

%

 

3.19

%

 

3.38

%

 

3.09

%

 

3.25

%

 

3.05

%

Noninterest income to total revenue(4)

8.06

%

 

6.51

%

 

7.03

%

 

10.18

%

 

6.61

%

 

7.22

%

 

6.61

%

Noninterest income to average total assets(1)

0.27

%

 

0.21

%

 

0.23

%

 

0.36

%

 

0.20

%

 

0.24

%

 

0.20

%

Noninterest expense to average total assets(1)

1.84

%

 

2.08

%

 

2.41

%

 

2.00

%

 

2.09

%

 

2.11

%

 

2.79

%

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

1.99

%

 

2.15

%

 

2.15

%

 

2.26

%

 

2.10

%

 

2.09

%

 

2.21

%

Efficiency ratio(2)(5)

55.20

%

 

63.36

%

 

75.02

%

 

56.83

%

 

67.54

%

 

64.22

%

 

91.70

%

Adjusted efficiency ratio(2)(6)

59.63

%

 

65.58

%

 

66.91

%

 

64.26

%

 

68.31

%

 

63.92

%

 

72.93

%

Average loans held-for-investment to average deposits

94.99

%

 

92.74

%

 

93.74

%

 

95.65

%

 

92.86

%

 

93.84

%

 

99.64

%

Average securities available-for-sale to average total assets

16.55

%

 

16.71

%

 

15.73

%

 

15.96

%

 

15.49

%

 

16.33

%

 

13.96

%

Average stockholders’ equity to average total assets

10.41

%

 

10.41

%

 

11.30

%

 

11.49

%

 

11.26

%

 

10.70

%

 

11.46

%

(1)

Ratio presented on an annualized basis.

(2)

Ratio 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)

Ratio 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)

Ratio calculated by dividing noninterest expense by the sum of net interest income before provision for credit losses and noninterest income.

(6)

Ratio calculated by dividing adjusted noninterest expense by the sum of net interest income before provision for credit losses and adjusted noninterest income.

 

Banc of California, Inc.

Average Balance, Average Yield Earned, and Average Cost Paid

(Dollars in thousands)

(Unaudited)

 

 

Three Months Ended

 

September 30, 2021

June 30, 2021

March 31, 2021

 

Average

 

Yield

Average

 

Yield

Average

 

Yield

 

Balance

Interest

/ Cost

Balance

Interest

/ Cost

Balance

Interest

/ Cost

Interest-earning assets

 

 

 

 

 

 

 

 

 

Commercial real estate, multifamily, and construction

$

2,379,962

 

$

26,542

4.42

%

$

2,313,483

 

$

27,222

4.72

%

$

2,322,509

 

$

26,387

4.61

%

Commercial and industrial and SBA

2,322,372

 

25,345

4.33

%

2,154,512

 

22,978

4.28

%

2,221,494

 

22,910

4.18

%

SFR mortgage

1,331,876

 

11,683

3.48

%

1,277,552

 

11,410

3.58

%

1,210,105

 

11,747

3.94

%

Other consumer

22,164

 

238

4.26

%

23,881

 

275

4.62

%

28,520

 

294

4.18

%

Loans held-for-sale

2,956

 

29

3.89

%

1,987

 

15

3.03

%

1,413

 

7

2.01

%

Gross loans and leases

6,059,330

 

63,837

4.18

%

5,771,415

 

61,900

4.30

%

5,784,041

 

61,345

4.30

%

Securities

1,347,317

 

7,167

2.11

%

1,308,230

 

6,986

2.14

%

1,236,138

 

6,501

2.13

%

Other interest-earning assets

222,274

 

787

1.40

%

258,915

 

791

1.23

%

336,443

 

772

0.93

%

Total interest-earning assets

7,628,921

 

71,791

3.73

%

7,338,560

 

69,677

3.81

%

7,356,622

 

68,618

3.78

%

Allowance for loan losses

(76,028

)

 

 

(79,103

)

 

 

(81,111

)

 

 

BOLI and noninterest-earning assets

588,720

 

 

 

567,549

 

 

 

585,441

 

 

 

Total assets

$

8,141,613

 

 

 

$

7,827,006

 

 

 

$

7,860,952

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

Interest-bearing checking

$

2,280,429

 

$

632

0.11

%

$

2,182,419

 

$

679

0.12

%

$

2,140,314

 

$

901

0.17

%

Savings and money market

1,583,791

 

1,350

0.34

%

1,638,105

 

2,244

0.55

%

1,654,525

 

2,390

0.59

%

Certificates of deposit

571,822

 

430

0.30

%

633,101

 

620

0.39

%

720,180

 

995

0.56

%

Total interest-bearing deposits

4,436,042

 

2,412

0.22

%

4,453,625

 

3,543

0.32

%

4,515,019

 

4,286

0.38

%

FHLB advances

435,984

 

2,990

2.72

%

418,111

 

2,944

2.82

%

446,618

 

3,112

2.83

%

Other borrowings

126,352

 

34

0.11

%

17,920

 

4

0.09

%

4,127

 

2

0.20

%

Long-term debt

256,634

 

3,379

5.22

%

256,492

 

3,339

5.22

%

256,361

 

3,302

5.22

%

Total interest-bearing liabilities

5,255,012

 

8,815

0.67

%

5,146,148

 

9,830

0.77

%

5,222,125

 

10,702

0.83

%

Noninterest-bearing deposits

1,939,912

 

 

 

1,767,711

 

 

 

1,653,517

 

 

 

Noninterest-bearing liabilities

98,748

 

 

 

98,174

 

 

 

97,136

 

 

 

Total liabilities

7,293,672

 

 

 

7,012,033

 

 

 

6,972,778

 

 

 

Total stockholders’ equity

847,941

 

 

 

814,973

 

 

 

888,174

 

 

 

Total liabilities and stockholders’ equity

$

8,141,613

 

 

 

$

7,827,006

 

 

 

$

7,860,952

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income/spread

 

$

62,976

3.06

%

 

$

59,847

3.04

%

 

$

57,916

2.95

%

Net interest margin

 

 

3.28

%

 

 

3.27

%

 

 

3.19

%

 

 

 

 

 

 

 

 

 

 

Ratio of interest-earning assets to interest-bearing liabilities

145

%

 

 

143

%

 

 

141

%

 

 

Total deposits

$

6,375,954

 

$

2,412

0.15

%

$

6,221,336

 

$

3,543

0.23

%

$

6,168,536

 

$

4,286

0.28

%

Total funding (1)

$

7,194,924

 

$

8,815

0.49

%

$

6,913,859

 

$

9,830

0.57

%

$

6,875,642

 

$

10,702

0.63

%

(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

 

December 31, 2020

 

September 30, 2020

 

Average

 

 

 

Yield

 

Average

 

 

 

Yield

 

Balance

 

Interest

 

/ Cost

 

Balance

 

Interest

 

/ Cost

Interest-earning assets

 

 

 

 

 

 

Commercial real estate, multifamily, and construction

$

2,507,950

 

$

30,371

4.82

%

$

2,493,408

 

$

29,666

4.73

%

Commercial and industrial and SBA

1,978,684

 

21,984

4.42

%

1,673,548

 

18,585

4.42

%

SFR mortgage

1,224,865

 

12,955

4.21

%

1,311,513

 

13,178

4.00

%

Other consumer

31,856

 

787

9.83

%

35,563

 

451

5.05

%

Loans held-for-sale

1,564

 

8

2.03

%

19,544

 

139

2.83

%

Gross loans and leases

5,744,919

 

66,105

4.58

%

5,533,576

 

62,019

4.46

%

Securities

1,239,295

 

6,636

2.13

%

1,190,765

 

6,766

2.26

%

Other interest-earning assets

262,363

 

789

1.20

%

457,558

 

881

0.77

%

Total interest-earning assets

7,246,577

 

73,530

4.04

%

7,181,899

 

69,666

3.86

%

Allowance for loan losses

(83,745

)

 

 

(89,679

)

 

 

BOLI and noninterest-earning assets

602,165

 

 

 

594,885

 

 

 

Total assets

$

7,764,997

 

 

 

$

7,687,105

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

Interest-bearing checking

$

2,086,146

 

$

1,131

0.22

%

$

1,919,327

 

$

1,660

0.34

%

Savings and money market

1,609,598

 

2,542

0.63

%

1,630,319

 

2,998

0.73

%

Certificates of deposit

860,131

 

1,763

0.82

%

1,030,829

 

2,906

1.12

%

Total interest-bearing deposits

4,555,875

 

5,436

0.47

%

4,580,475

 

7,564

0.66

%

FHLB advances

534,303

 

3,479

2.59

%

608,169

 

3,860

2.52

%

Securities sold under repurchase agreements

 

%

1,309

 

2

0.61

%

Other borrowings

8,026

 

3

0.15

%

325

 

2

2.45

%

Long-term debt

230,239

 

3,049

5.27

%

173,586

 

2,383

5.46

%

Total interest-bearing liabilities

5,328,443

 

11,967

0.89

%

5,363,864

 

13,811

1.02

%

Noninterest-bearing deposits

1,448,422

 

 

 

1,357,411

 

 

 

Noninterest-bearing liabilities

95,567

 

 

 

100,424

 

 

 

Total liabilities

6,872,432

 

 

 

6,821,699

 

 

 

Total stockholders’ equity

892,565

 

 

 

865,406

 

 

 

Total liabilities and stockholders’ equity

$

7,764,997

 

 

 

$

7,687,105

 

 

 

 

 

 

 

 

 

 

Net interest income/spread

 

$

61,563

3.15

%

 

$

55,855

2.84

%

Net interest margin

 

 

3.38

%

 

 

3.09

%

 

 

 

 

 

 

 

Ratio of interest-earning assets to interest-bearing liabilities

136

%

 

 

134

%

 

 

Total deposits

$

6,004,297

 

$

5,436

0.36

%

$

5,937,886

 

$

7,564

0.51

%

Total funding (1)

$

6,776,865

 

$

11,967

0.70

%

$

6,721,275

 

$

13,811

0.82

%

(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.

 

Nine Months Ended

 

September 30, 2021

September 30, 2020

 

Average

 

Yield

Average

 

Yield

 

Balance

Interest

/ Cost

Balance

Interest

/ Cost

Interest-earning assets

 

 

 

 

 

 

Commercial real estate, multifamily, and construction

$

2,338,862

 

$

80,152

4.58

%

$

2,527,331

 

$

89,348

4.72

%

Commercial and industrial and SBA

2,233,162

 

71,233

4.26

%

1,664,365

 

57,134

4.59

%

SFR mortgage

1,273,624

 

34,839

3.66

%

1,419,882

 

42,660

4.01

%

Other consumer

24,832

 

807

4.35

%

41,319

 

1,538

4.97

%

Loans held-for-sale

2,124

 

51

3.21

%

20,591

 

515

3.34

%

Gross loans and leases

5,872,604

 

187,082

4.26

%

5,673,488

 

191,195

4.50

%

Securities

1,297,636

 

20,654

2.13

%

1,069,668

 

22,402

2.80

%

Other interest-earning assets

272,126

 

2,350

1.15

%

393,495

 

3,480

1.18

%

Total interest-earning assets

7,442,366

 

210,086

3.77

%

7,136,651

 

217,077

4.06

%

Allowance for credit losses

(78,729

)

 

 

(76,275

)

 

 

BOLI and noninterest-earning assets

580,581

 

 

 

603,128

 

 

 

Total assets

$

7,944,218

 

 

 

$

7,663,504

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

Interest-bearing checking

$

2,201,568

 

$

2,212

0.13

%

$

1,717,483

 

$

7,575

0.59

%

Savings and money market

1,625,214

 

5,985

0.49

%

1,543,291

 

11,621

1.01

%

Certificates of deposit

641,157

 

2,044

0.43

%

1,132,058

 

13,184

1.56

%

Total interest-bearing deposits

4,467,939

 

10,241

0.31

%

4,392,832

 

32,380

0.98

%

FHLB advances

433,532

 

9,046

2.79

%

821,349

 

14,561

2.37

%

Securities sold under repurchase agreements

 

%

779

 

4

0.69

%

Other borrowings

49,914

 

40

0.11

%

469

 

9

2.56

%

Long-term debt

256,497

 

10,020

5.22

%

173,512

 

7,092

5.46

%

Total interest-bearing liabilities

5,207,882

 

29,347

0.75

%

5,388,941

 

54,046

1.34

%

Noninterest-bearing deposits

1,788,096

 

 

 

1,280,461

 

 

 

Noninterest-bearing liabilities

98,025

 

 

 

115,582

 

 

 

Total liabilities

7,094,003

 

 

 

6,784,984

 

 

 

Total stockholders’ equity

850,215

 

 

 

878,520

 

 

 

Total liabilities and stockholders’ equity

$

7,944,218

 

 

 

$

7,663,504

 

 

 

 

 

 

 

 

 

 

Net interest income/spread

 

$

180,739

3.02

%

 

$

163,031

2.72

%

Net interest margin

 

 

3.25

%

 

 

3.05

%

 

 

 

 

 

 

 

Ratio of interest-earning assets to interest-bearing liabilities

143

%

 

 

132

%

 

 

Total deposits

$

6,256,035

 

$

10,241

0.22

%

$

5,673,293

 

$

32,380

0.76

%

Total funding (1)

$

6,995,978

 

$

29,347

0.56

%

$

6,669,402

 

$

54,046

1.08

%

(1)

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

 

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

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

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

Tangible assets and tangible equity are calculated by subtracting goodwill and other intangible assets from total assets and total equity. Tangible common equity is calculated by subtracting preferred stock from tangible equity. Return on average tangible common equity is computed by dividing net income (loss) available to common stockholders, after adjustment for amortization of intangible assets, by average tangible common equity. Banking regulators also exclude goodwill and other intangible assets from stockholders' equity when assessing the capital adequacy of a financial institution.

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

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

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

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

Banc of California, Inc.

Consolidated Operations

Non-GAAP Measures, Continued

(Dollars in thousands, except per share data)

(Unaudited)

 

 

September 30,
2021

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

 

September 30,
2020

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

 

 

 

 

 

Total assets

$

8,278,741

 

$

8,027,413

 

$

7,933,459

 

$

7,877,334

 

$

7,738,106

 

Less goodwill

(37,144

)

(37,144

)

(37,144

)

(37,144

)

(37,144

)

Less other intangible assets

(1,787

)

(2,069

)

(2,351

)

(2,633

)

(2,939

)

Tangible assets(1)

$

8,239,810

 

$

7,988,200

 

$

7,893,964

 

$

7,837,557

 

$

7,698,023

 

 

 

 

 

 

 

Total stockholders' equity

$

844,803

 

$

829,362

 

$

804,693

 

$

897,207

 

$

874,254

 

Less goodwill

(37,144

)

(37,144

)

(37,144

)

(37,144

)

(37,144

)

Less other intangible assets

(1,787

)

(2,069

)

(2,351

)

(2,633

)

(2,939

)

Tangible equity(1)

805,872

 

790,149

 

765,198

 

857,430

 

834,171

 

Less preferred stock

(94,956

)

(94,956

)

(94,956

)

(184,878

)

(184,878

)

Tangible common equity(1)

$

710,916

 

$

695,193

 

$

670,242

 

$

672,552

 

$

649,293

 

 

 

 

 

 

 

Total stockholders' equity to total assets

10.20

%

10.33

%

10.14

%

11.39

%

11.30

%

Tangible equity to tangible assets(1)

9.78

%

9.89

%

9.69

%

10.94

%

10.84

%

Tangible common equity to tangible assets(1)

8.63

%

8.70

%

8.49

%

8.58

%

8.43

%

 

 

 

 

 

 

Common shares outstanding

50,321,096

 

50,313,228

 

50,150,447

 

49,767,489

 

49,760,543

 

Class B non-voting non-convertible common shares outstanding

477,321

 

477,321

 

477,321

 

477,321

 

477,321

 

Total common shares outstanding

50,798,417

 

50,790,549

 

50,627,768

 

50,244,810

 

50,237,864

 

 

 

 

 

 

 

Tangible common equity per common share(1)

$

13.99

 

$

13.69

 

$

13.24

 

$

13.39

 

$

12.92

 

Book value per common share

$

14.76

 

$

14.46

 

$

14.02

 

$

14.18

 

$

13.72

 

(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

 

Nine Months Ended

 

September 30,
2021

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

 

September 30,
2020

 

September 30,
2021

 

September 30,
2020

Return on tangible common equity

 

 

 

 

 

 

 

Average total stockholders' equity

$

847,941

 

$

814,973

 

$

888,174

 

$

892,565

 

$

865,406

 

$

850,215

 

$

878,520

 

Less average preferred stock

(94,956

)

(94,956

)

(164,895

)

(184,878

)

(184,910

)

(118,013

)

(186,656

)

Less average goodwill

(37,144

)

(37,144

)

(37,144

)

(37,144

)

(37,144

)

(37,144

)

(37,144

)

Less average other intangible assets

(1,941

)

(2,224

)

(2,517

)

(2,826

)

(3,172

)

(2,226

)

(3,581

)

Average tangible common equity(1)

$

713,900

 

$

680,649

 

$

683,618

 

$

667,717

 

$

640,180

 

$

692,832

 

$

651,139

 

 

 

 

 

 

 

 

 

Net income (loss) available to common stockholders

$

21,443

 

$

17,323

 

$

7,825

 

$

17,706

 

$

12,084

 

$

46,493

 

$

(19,265

)

Add amortization of intangible assets

282

 

282

 

282

 

306

 

353

 

846

 

1,212

 

Less tax effect on amortization of intangible assets(2)

(59

)

(59

)

(59

)

(64

)

(74

)

(178

)

(255

)

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

$

21,666

 

$

17,546

 

$

8,048

 

$

17,948

 

$

12,363

 

$

47,161

 

$

(18,308

)

 

 

 

 

 

 

 

 

Return on average equity

10.84

%

9.38

%

6.56

%

9.67

%

7.32

%

8.90

%

(1.39

)%

Return on average tangible common equity(1)

12.04

%

10.34

%

4.77

%

10.69

%

7.68

%

9.10

%

(3.76

)%

(1)

Non-GAAP measure.

(2)

Adjustments shown net of a statutory Federal tax rate of 21%.

 

Banc of California, Inc.

Consolidated Operations

Non-GAAP Measures, Continued

(Dollars in thousands, except per share data)

(Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,
2021

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

 

September 30,
2020

 

September 30,
2021

 

September 30,
2020

Adjusted noninterest income and expense

 

 

 

 

 

 

 

Total noninterest income

$

5,519

 

$

4,170

 

$

4,381

 

$

6,975

 

$

3,954

 

$

14,070

 

$

11,543

 

Noninterest income adjustments:

 

 

 

 

 

 

 

Net gain on securities available for sale

 

 

 

 

 

 

(2,011

)

Net gain on sale of legacy SFR loans held for sale

 

 

 

 

(272

)

 

(272

)

Fair value adjustment on legacy SFR loans held for sale

(160

)

(20

)

 

(36

)

(24

)

(180

)

1,537

 

Total noninterest income adjustments

(160

)

(20

)

 

(36

)

(296

)

(180

)

(746

)

Adjusted noninterest income(1)

$

5,359

 

$

4,150

 

$

4,381

 

$

6,939

 

$

3,658

 

$

13,890

 

$

10,797

 

 

 

 

 

 

 

 

 

Total noninterest expense

$

37,811

 

$

40,559

 

$

46,735

 

$

38,950

 

$

40,394

 

$

125,105

 

$

160,083

 

Noninterest expense adjustments:

 

 

 

 

 

 

 

Naming rights termination

 

 

 

 

 

 

(26,769

)

Extinguishment of debt

 

 

 

 

 

 

(2,515

)

Professional recoveries (fees)

2,152

 

1,284

 

(721

)

4,398

 

(1,172

)

2,715

 

(3,725

)

Merger-related costs

(1,000

)

(700

)

(700

)

 

 

(2,400

)

 

Noninterest expense adjustments before gain (loss) in alternative energy partnership investments

1,152

 

584

 

(1,421

)

4,398

 

(1,172

)

315

 

(33,009

)

Gain (loss) in alternative energy partnership investments

1,785

 

829

 

(3,630

)

673

 

1,430

 

(1,016

)

(308

)

Total noninterest expense adjustments

2,937

 

1,413

 

(5,051

)

5,071

 

258

 

(701

)

(33,317

)

Adjusted noninterest expense(1)

$

40,748

 

$

41,972

 

$

41,684

 

$

44,021

 

$

40,652

 

$

124,404

 

$

126,766

 

 

 

 

 

 

 

 

 

Average assets

$

8,141,613

 

$

7,827,006

 

$

7,860,952

 

$

7,764,997

 

$

7,687,105

 

$

7,944,218

 

$

7,663,504

 

Noninterest expense to average total assets

1.84

%

2.08

%

2.41

%

2.00

%

2.09

%

2.11

%

2.79

%

Adjusted noninterest expense to average total assets(1)

1.99

%

2.15

%

2.15

%

2.26

%

2.10

%

2.09

%

2.21

%

(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

Nine Months Ended

 

September 30,
2021

June 30,
2021

March 31,
2021

December 31,
2020

September 30,
2020

September 30,
2021

September 30,
2020

Adjusted pre-tax pre-provision income

 

 

 

 

 

 

 

Net interest income

$

62,976

 

$

59,847

 

$

57,916

 

$

61,563

 

$

55,855

 

$

180,739

 

$

163,031

 

Noninterest income

5,519

 

4,170

 

4,381

 

6,975

 

3,954

 

14,070

 

11,543

 

Total revenue

68,495

 

64,017

 

62,297

 

68,538

 

59,809

 

194,809

 

174,574

 

Noninterest expense

37,811

 

40,559

 

46,735

 

38,950

 

40,394

 

125,105

 

160,083

 

Pre-tax pre-provision income(1)

$

30,684

 

$

23,458

 

$

15,562

 

$

29,588

 

$

19,415

 

$

69,704

 

$

14,491

 

 

 

 

 

 

 

 

 

Total revenue

$

68,495

 

$

64,017

 

$

62,297

 

$

68,538

 

$

59,809

 

$

194,809

 

$

174,574

 

Total noninterest income adjustments

(160

)

(20

)

 

(36

)

(296

)

(180

)

(746

)

Adjusted total revenue(1)

68,335

 

63,997

 

62,297

 

68,502

 

59,513

 

194,629

 

173,828

 

 

 

 

 

 

 

 

 

Noninterest expense

37,811

 

40,559

 

46,735

 

38,950

 

40,394

 

125,105

 

160,083

 

Total noninterest expense adjustments

2,937

 

1,413

 

(5,051

)

5,071

 

258

 

(701

)

(33,317

)

Adjusted noninterest expense(1)

40,748

 

41,972

 

41,684

 

44,021

 

40,652

 

124,404

 

126,766

 

Adjusted pre-tax pre-provision income(1)

$

27,587

 

$

22,025

 

$

20,613

 

$

24,481

 

$

18,861

 

$

70,225

 

$

47,062

 

 

 

 

 

 

 

 

 

Average assets

$

8,141,613

 

$

7,827,006

 

$

7,860,952

 

$

7,764,997

 

$

7,687,105

 

$

7,944,218

 

$

7,663,504

 

Pre-tax pre-provision income ROAA(1)

1.50

%

1.20

%

0.80

%

1.52

%

1.00

%

1.17

%

0.25

%

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

1.34

%

1.13

%

1.06

%

1.25

%

0.98

%

1.18

%

0.82

%

Efficiency ratio(1)

55.20

%

63.36

%

75.02

%

56.83

%

67.54

%

64.22

%

91.70

%

Adjusted efficiency ratio(1)

59.63

%

65.58

%

66.91

%

64.26

%

68.31

%

63.92

%

72.93

%

(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

Nine Months Ended

 

September 30,
2021

June 30,
2021

March 31,
2021

December 31,
2020

September 30,
2020

September 30,
2021

September 30,
2020

Adjusted net income (loss)

 

 

 

 

 

 

 

Net income (loss)

$

23,170

 

$

19,050

 

$

14,375

 

$

21,703

 

$

15,913

 

$

56,595

 

$

(9,129

)

Adjustments:

 

 

 

 

 

 

 

Noninterest income

160

 

20

 

 

36

 

296

 

180

 

746

 

Noninterest expense

(2,937

)

(1,413

)

5,051

 

(5,071

)

(258

)

701

 

33,317

 

Total adjustments

(2,777

)

(1,393

)

5,051

 

(5,035

)

38

 

881

 

34,063

 

Tax impact of adjustments above(1)

694

 

348

 

(1,263

)

1,259

 

(10

)

(220

)

(8,515

)

Tax impact from exercise of stock appreciation rights

 

 

(2,093

)

 

 

(2,093

)

 

Adjustments to net income

(2,083

)

(1,045

)

1,695

 

(3,776

)

28

 

(1,432

)

25,548

 

Adjusted net income(2)

$

21,087

 

$

18,005

 

$

16,070

 

$

17,927

 

$

15,941

 

$

55,163

 

$

16,419

 

 

 

 

 

 

 

 

 

Average assets

$

8,141,613

 

$

7,827,006

 

$

7,860,952

 

$

7,764,997

 

$

7,687,105

 

$

7,944,218

 

$

7,663,504

 

ROAA

1.13

%

0.98

%

0.74

%

1.11

%

0.82

%

0.95

%

(0.16

)%

Adjusted ROAA(2)

1.03

%

0.92

%

0.83

%

0.92

%

0.82

%

0.93

%

0.29

%

 

 

 

 

 

 

 

 

Adjusted net income available to common stockholders

 

 

 

 

 

 

 

Net income (loss) available to common stockholders

$

21,443

 

$

17,323

 

$

7,825

 

$

17,706

 

$

12,084

 

$

46,493

 

$

(19,265

)

Adjustments to net income (loss)

(2,083

)

(1,045

)

1,695

 

(3,776

)

28

 

(1,432

)

25,548

 

Adjustments for impact of preferred stock redemption

 

 

3,347

 

 

7

 

3,347

 

(568

)

Adjusted net income available to common stockholders(2)

$

19,360

 

$

16,278

 

$

12,867

 

$

13,930

 

$

12,119

 

$

48,408

 

$

5,715

 

 

 

 

 

 

 

 

 

Average diluted common shares

50,909,317

 

50,892,202

 

50,750,522

 

50,335,271

 

50,190,933

 

50,821,972

 

50,201,112

 

Diluted EPS

$

0.42

 

$

0.34

 

$

0.15

 

$

0.35

 

$

0.24

 

$

0.91

 

$

(0.38

)

Adjusted diluted EPS(2)(3)

$

0.38

 

$

0.32

 

$

0.25

 

$

0.28

 

$

0.24

 

$

0.95

 

$

0.11

 

(1)

Tax impact of adjustments shown at an effective tax rate of 25%.

(2)

Non-GAAP measure.

(3)

Represents adjusted net income available to common stockholders divided by average diluted common shares.

 

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