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Banc of California Reports Record Net Income in 2022

Banc of California, Inc. (NYSE: BANC) today reported net income of $21.5 million, or $0.36 per diluted common share, for the fourth quarter of 2022. This compares to net income of $24.2 million, or $0.40 per diluted common share for the third quarter of 2022. The fourth quarter included a pre-tax loss on sale of securities of $7.7 million. On an adjusted basis, net income was $26.8 million for the quarter, or $0.45 per diluted common share. This compares to adjusted net income of $26.7 million, or $0.44 per diluted common share, for the third quarter of 2022. For the full year 2022, the Company reported record net income available to common shareholders of $115.8 million, or $1.89 per diluted common share. This compares to net income available to common shareholders of $50.6 million, or $0.95 per diluted common share in 2021. On an adjusted basis, net income available to common shareholders was $128.4 million, or $2.10 per diluted common share. Net income and adjusted net income available to common shareholders for 2022 included a pre-tax $31.3 million recovery from the settlement of a previously charged-off loan.(1)

Fourth quarter highlights(1):

  • Diluted EPS of $0.36 and adjusted diluted EPS of $0.45
  • Noninterest-bearing deposits represented 41% of average deposits, up from 38%
  • Period-end noninterest bearing deposits at 39%, stable with prior quarter
  • Net interest margin of 3.69%, an increase of 11 basis points
  • Return on average assets of 0.92% and adjusted return on average assets of 1.15%
  • Total ACL coverage ratio of 1.28%
  • Book value per share of $16.26, up from $15.83
  • Tangible common equity per share of $14.19, up from $13.79
  • Repurchased $18.9 million of common stock representing 2% of the shares outstanding at the end of the third quarter

Full year highlights(1):

  • Diluted EPS of $1.89 and adjusted diluted EPS of $2.10
  • Noninterest-bearing deposits represented 39% of average deposits compared to 30% in the prior year
  • Net interest margin of 3.59%, an increase of 33 basis points
  • Return on average assets of 1.29% and adjusted return on average assets of 1.39%
  • Book value per share of $16.26, up from $15.48
  • Tangible common equity per share of $14.19, up from $13.88
  • Completed $75.0 million in common stock repurchases representing 7% of the shares outstanding at the end of the prior year
  • $31.3 million pre-tax recovery from the settlement of a previously charged-off loan
  • Redeemed all Series E Preferred Stock for total consideration of $98.7 million with annual savings of $6.9 million
  • Completed the acquisition of Deepstack Technologies on September 15, 2022

Jared Wolff, President & CEO of Banc of California, commented, "During the fourth quarter, we capitalized on our strong, stable deposit base and slightly asset sensitive balance sheet to continue generating solid core earnings while being selective in our new loan production given the macroeconomic uncertainty. As a result, while we had a slightly smaller average balance sheet in the fourth quarter, our core earnings were consistent with the prior quarter and we generated a significant increase in our tangible book value per share."

Mr. Wolff continued, “With the strong deposit base we have built, conservatively underwritten loan portfolio, and high capital ratios, we are well positioned to continue generating strong financial results for our shareholders and effectively managing through the economic uncertainty. While maintaining disciplined expense management, we continue to take a long-term approach and opportunistically invest in areas that will strengthen our franchise. We believe these investments, along with the high performing team and culture that we have built, will allow us to continue to gain market share and enhance franchise value.”

Lynn Hopkins, Chief Financial Officer of Banc of California, said, “With noninterest-bearing deposits averaging 41% of total deposits in the fourth quarter, combined with the balance sheet management actions we took earlier in the year to manage our funding costs, our net interest margin increased 11 basis points from the prior quarter and contributed to our strong financial performance. Our healthy capital ratios enabled us to take advantage of higher interest rates and reposition a portion of our securities portfolio. During the fourth quarter, we sold approximately $119 million of lower-yielding securities for a loss of $7.7 million and reinvested the proceeds into securities with a higher average yield of over 230 basis points, which will contribute to our future earnings growth. Our adjusted diluted earnings per share were $0.45 for the fourth quarter when adjusting for the loss on sale of securities, net indemnified legal costs, and net losses on investments in alternative energy partnerships.”

(1)

Adjusted financial metrics represent non-GAAP measures; refer to section 'Non-GAAP Measures'

Income Statement Highlights

 

Three Months Ended

 

Year Ended

 

December 31,

2022

 

September 30,

2022

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

December 31,

2022

 

December 31,

2021

 

($ in thousands)

Total interest and dividend income

$

104,112

 

 

$

95,973

 

$

88,418

 

$

84,269

 

 

$

81,573

 

$

372,772

 

 

$

291,659

Total interest expense

 

23,895

 

 

 

16,565

 

 

10,119

 

 

7,828

 

 

 

8,534

 

 

58,407

 

 

 

37,881

Net interest income

 

80,217

 

 

 

79,408

 

 

78,299

 

 

76,441

 

 

 

73,039

 

 

314,365

 

 

 

253,778

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

 

(7,708

)

 

 

 

 

 

 

16

 

 

 

 

 

(7,692

)

 

 

Other noninterest income

 

6,281

 

 

 

5,681

 

 

7,186

 

 

5,894

 

 

 

5,605

 

 

25,042

 

 

 

19,376

Total noninterest income

 

(1,427

)

 

 

5,681

 

 

7,186

 

 

5,910

 

 

 

5,605

 

 

17,350

 

 

 

19,376

Total revenue

 

78,790

 

 

 

85,089

 

 

85,485

 

 

82,351

 

 

 

78,644

 

 

331,715

 

 

 

273,154

Total noninterest expense

 

48,203

 

 

 

50,962

 

 

48,612

 

 

46,596

 

 

 

58,872

 

 

194,373

 

 

 

183,678

Pre-tax / pre-provision income(1)

 

30,587

 

 

 

34,127

 

 

36,873

 

 

35,755

 

 

 

19,772

 

 

137,342

 

 

 

89,476

Provision for (reversal of) credit losses

 

 

 

 

 

 

 

 

(31,542

)

 

 

11,262

 

 

(31,542

)

 

 

6,854

Income tax expense

 

9,068

 

 

 

9,931

 

 

10,161

 

 

18,785

 

 

 

2,759

 

 

47,945

 

 

 

20,276

Net income

$

21,519

 

 

$

24,196

 

$

26,712

 

$

48,512

 

 

$

5,751

 

$

120,939

 

 

$

62,346

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders(2)

$

21,519

 

 

$

24,196

 

$

26,712

 

$

43,345

 

 

$

4,024

 

$

115,772

 

 

$

50,563

(1) Non-GAAP Measure

(2)

Balance represents the net income 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. Refer to the Statements of Operations for additional detail on these amounts.

Net interest income

Q4-2022 vs Q3-2022

Net interest income increased $809 thousand to $80.2 million for the fourth quarter due to a higher yield on interest-earning assets and lower average interest-bearing liabilities balances, offset by lower average interest-earning assets and a higher cost on interest-bearing liabilities.

The net interest margin increased 11 basis points to 3.69% for the fourth quarter as the average interest-earning assets yield increased 46 basis points and the cost of average total funding increased 38 basis points. The yield on average interest-earning assets increased to 4.79% for the fourth quarter from 4.33% for the third quarter mainly due to higher yields on loans, securities and other interest-earning assets. The overall loan yield increased 38 basis points to 4.92% during the fourth quarter as a result of the impact of higher market interest rates and changes in portfolio mix. The loan yields include the impact of prepayment penalty fees, the net reversal or recapture of nonaccrual loan interest and accelerated discount accretion on the early payoff of purchased loans; these items increased the overall loan yield by 6 basis points in both the fourth quarter and prior quarter. The yield on securities increased 81 basis points to 4.19%% due mostly to CLO yields resetting higher in the current rate environment and the impact of securities sales and purchases.

The average cost of funds increased 38 basis points to 1.17% for the fourth quarter from 0.79% for the third quarter. This increase was driven by the higher cost of average interest-bearing liabilities, which increased 61 basis points to 1.81% for the fourth quarter from 1.20% for the third quarter. The cost of average interest-bearing deposits increased 57 basis points to 1.34% for the fourth quarter from 0.77% for the third quarter while the cost of average Federal Home Loan Bank (FHLB) advances increased 29 basis points to 3.21% for the fourth quarter from 2.92% for the third quarter. The increase in the cost of these funding sources was due to the impact of higher market interest rates as the average effective Federal Funds rate increased 147 basis points from 2.18% in the third quarter to 3.65% in the fourth quarter.

Average noninterest-bearing deposits were $42.5 million higher in the fourth quarter compared to the third quarter while average deposits were $375.8 million lower for the linked quarter. Average noninterest-bearing deposits represented 41% of average total deposits for the fourth quarter, compared to 38% for the third quarter. The cost of average total deposits increased 32 basis points to 0.79% for the fourth quarter.

The spot rate of total deposits was 1.07% at the end of the fourth quarter, compared to 0.56% in the prior quarter. Average FHLB advances and other borrowings were $172.0 million higher in the fourth quarter compared to the third quarter as wholesale funding sources were strategically utilized to further improve liquidity and manage funding costs.

YTD 2022 vs YTD 2021

Net interest income increased $60.6 million, or 23.9%, to $314.4 million for the year ended December 31, 2022 due to higher average balances and yield on interest-earning assets, partially offset by higher average balances and costs of interest-bearing liabilities. Interest income increased $81.1 million and interest expense increased $20.5 million as average earning assets increased $961.9 million and average total funding sources increased $953.3 million due largely to the impact of the acquisition of Pacific Mercantile Bancorp (PMB) in the fourth quarter of 2021.

The net interest margin increased 33 basis points to 3.59% as the average earning-assets yield increased 52 basis points and the average cost of total funding increased 19 basis points between periods. The yield on average interest-earning assets increased to 4.26% for the year ended December 31, 2022, from 3.74% for the same period in 2021 due mostly to higher market interest rates and changes in the mix of interest-earning assets. Average loans represented 83% of average earnings assets in 2022 compared to 79% for the full year in 2021. Average loans increased by $1.11 billion from organic loan growth and the impact of the PMB acquisition. The yield on average loans increased 28 basis points to 4.52% for the year ended December 31, 2022 compared to the full year of 2021. The yield on average investment securities and other interest-earning assets increased 100 basis points and 149 basis points, respectively, for the year ended December 31, 2022, compared to the full year of 2021.

The average cost of funds increased 19 basis points to 0.71% for the year ended December 31, 2022 from 0.52% for 2021. This increase was driven by the higher cost of average interest-bearing liabilities, partially offset by the overall improved funding mix, including higher average noninterest-bearing deposits as a result of growth from business development efforts and the impact of the acquisition of PMB. The cost of average interest-bearing liabilities increased 36 basis points to 1.08% for the year ended December 31, 2022 compared to 0.72% for the same period in 2021 and included a 35 basis point increase in the cost of average interest-bearing deposits to 0.62%. Average noninterest-bearing deposits were $842.2 million higher for the year ended December 31, 2022 compared to 2021 while average total deposits were $795.2 million higher. Average noninterest-bearing deposits represented 39% of total average deposits for the year ended December 31, 2022 compared to 30% for 2021. The average cost of total deposits increased 19 basis points to 0.38% for the year ended December 31, 2022 compared to the full year of 2021.

Provision for credit losses

Q4-2022 vs Q3-2022

There was no provision for credit losses for the fourth quarter and the third quarter as benefits related to overall stable credit quality metrics within the loan portfolio combined with changes in the portfolio mix and a decrease in total loan balances were offset by the impact of the deterioration in the macroeconomic outlook, which includes the impact of higher market interest rates and the anticipated ongoing actions of the Federal Reserve to lower inflation.

YTD 2022 vs YTD 2021

During the year ended December 31, 2022, the provision for credit losses was a reversal of $31.5 million, compared to a provision for credit losses of $6.9 million during 2021. The reversal of credit losses for the year ended December 31, 2022 was due to a $31.3 million recovery from the settlement of a loan previously charged-off in 2019. The provision for credit losses in 2021 included a $11.3 million charge related to establishing the initial allowance for credit losses for non-purchased credit-deteriorated (non-PCD) loans acquired in the PMB acquisition. This charge was offset by benefits from improvements in key macroeconomic forecast variables.

Noninterest income

Q4-2022 vs Q3-2022

Noninterest income decreased $7.1 million to a loss of $1.4 million for the fourth quarter due mainly to a $7.7 million loss on the sale of investment securities offset by higher other income of $1.0 million. Other income included higher gains from equity investments of $724 thousand. Gains or losses from equity investments are recorded based on the most recent information available from the investee and fluctuates based on their underlying performance.

YTD 2022 vs YTD 2021

Noninterest income for the year ended December 31, 2022 decreased $2.0 million to $17.4 million compared to 2021. The decrease was mainly due to the aforementioned loss on sale of securities, offset by higher customer service fees, loan servicing income, income from bank-owned life insurance, and all other income. Many of these increases are a result of including PMB's operations for the full year in 2022 compared to 2021. Customer services fees increased $1.9 million due mostly to higher deposit activity fees of $2.6 million attributed to higher average deposit balances, partially offset by lower loan fees of $755 thousand. Loan servicing income increased $923 thousand due mostly to the acquisition of mortgage servicing rights at the end of the second quarter of 2022. Income from bank-owned life insurance increased $531 thousand due to higher average balances and all other income increased $2.4 million due mostly to higher gains from equity investments.

Noninterest expense

Q4-2022 vs Q3-2022

Noninterest expense decreased $2.8 million to $48.2 million for the fourth quarter compared to the third quarter. The decrease was due mostly to (i) lower acquisition, integration and transaction costs of $2.1 million, (ii) lower professional fees of $1.0 million, due to a $1.9 million decrease in indemnified legal fees (net of recoveries) and a $859 thousand increase in other professional fees, and (iii) lower occupancy and equipment expense of $218 thousand as the prior quarter included an early lease termination charge of $285 thousand, partially offset by (iv) higher all other expenses of $454 thousand. Professional fees included net indemnified legal recoveries of $869 thousand in the fourth quarter compared to net indemnified legal expenses of $1.0 million in the third quarter.

Adjusted noninterest expense, which represents total operating costs (a non-GAAP measure; refer to section Non-GAAP Measures), increased $1.1 million to $48.5 million for the fourth quarter compared to $47.4 million for the prior quarter. This increase was due mostly to higher professional fees of $859 thousand and all other expenses of $454 thousand, partially offset by lower occupancy and equipment expense of $218 thousand.

YTD 2022 vs YTD 2021

Noninterest expense for the year ended December 31, 2022 increased $10.7 million to $194.4 million compared to 2021. The increase was primarily due to: (i) higher salaries and employee benefits of $9.7 million and occupancy and equipment expense of $3.4 million due mainly to the increases in personnel and facilities from the acquisition of PMB, (ii) higher professional fees of $4.4 million, due mostly to a $2.6 million increase in indemnified legal fees (net of insurance recoveries) and a $1.8 million increase in other professional fees, (iii) higher all other expenses of $3.7 million due to including the operations of PMB since the date of acquisition, (iv) higher loss in alternative energy partnership investments of $2.5 million, and (v) higher amortization of intangible assets of $429 thousand due to the acquisitions of PMB in 2021 and Deepstack during 2022. These increases were partially offset by lower acquisition, integration and transaction costs of $13.8 million.

Income taxes

Q4-2022 vs Q3-2022

Income tax expense totaled $9.1 million for the fourth quarter resulting in an effective tax rate of 29.6% compared to $9.9 million for the third quarter and an effective tax rate of 29.1%.

YTD 2022 vs YTD 2021

Income tax expense totaled $47.9 million for the year ended December 31, 2022, representing an effective tax rate of 28.4%, compared to $20.3 million and an effective tax rate of 24.5% for 2021. The effective tax rate for the year ended December 31, 2022 was higher than the prior year due mostly to 2021 including a net tax benefit of $2.1 million resulting from the exercise of all previously issued outstanding stock appreciation rights.

Balance Sheet

At December 31, 2022, total assets were $9.2 billion, which represented a linked-quarter decrease of $171.6 million. The following table shows selected balance sheet line items as of the dates indicated:

 

 

 

Amount Change

 

December 31,

2022

 

September 30,

2022

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

Q4-22 vs. Q3-22

 

Q4-22 vs. Q4-21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

Securities held-to-maturity

$

328,641

 

$

328,757

 

$

329,272

 

$

329,381

 

$

 

$

(116

)

 

$

328,641

 

Securities available-for-sale

$

868,297

 

$

847,565

 

$

865,435

 

$

898,775

 

$

1,315,703

 

$

20,732

 

 

$

(447,406

)

Loans held-for-investment

$

7,115,038

 

$

7,289,320

 

$

7,451,264

 

$

7,451,573

 

$

7,251,480

 

$

(174,282

)

 

$

(136,442

)

Total assets

$

9,197,016

 

$

9,368,578

 

$

9,502,113

 

$

9,583,540

 

$

9,393,743

 

$

(171,562

)

 

$

(196,727

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

$

2,809,328

 

$

2,943,585

 

$

2,826,599

 

$

2,958,632

 

$

2,788,196

 

$

(134,257

)

 

$

21,132

 

Total deposits

$

7,120,921

 

$

7,280,385

 

$

7,558,683

 

$

7,479,701

 

$

7,439,435

 

$

(159,464

)

 

$

(318,514

)

Borrowings (1)

$

1,002,254

 

$

1,011,767

 

$

884,282

 

$

1,020,842

 

$

775,445

 

$

(9,513

)

 

$

226,809

 

Total liabilities

$

8,237,398

 

$

8,416,588

 

$

8,552,983

 

$

8,604,531

 

$

8,328,453

 

$

(179,190

)

 

$

(91,055

)

Total equity

$

959,618

 

$

951,990

 

$

949,130

 

$

979,009

 

$

1,065,290

 

$

7,628

 

 

$

(105,672

)

(1)

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

Investments

Securities held-to-maturity totaled $328.6 million at December 31, 2022 and included $214.4 million in agency securities and $114.2 million in municipal securities.

Securities available-for-sale increased $20.7 million during the fourth quarter to $868.3 million at December 31, 2022, due mostly to purchases of $135.0 million and unrealized net gains of $2.6 million, offset by sales of securities of $118.9 million for $111.2 million resulting in a loss of $7.7 million and principal payments of $5.8 million. The securities sold during the quarter had an average yield of 3.5% and the securities purchased had an estimated yield of 5.8% at the time of purchase. The lower unrealized net losses of $9.5 million were due mostly to the realization of losses on sale of securities, the impact of decreases in certain longer-term market interest rates, and the tightening of credit spreads on the value of each class of securities.

As of December 31, 2022, the securities available-for-sale portfolio included $476.6 million of CLOs, $166.6 million of corporate debt securities, $133.4 million of agency securities, $80.5 million of residential collateralized mortgage obligations, and $11.2 million of SBA securities. The CLO portfolio, which is comprised of AAA and AA-rated securities, represented 40% of the total securities portfolio and the carrying value included an unrealized net loss of $15.6 million at December 31, 2022, compared to 40% of the total securities portfolio and an unrealized net loss of $20.1 million at September 30, 2022.

Loans

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

 

December 31,

2022

 

September 30,

2022

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

($ in thousands)

Composition of loans

 

 

 

 

 

 

 

 

 

Commercial real estate

$

1,259,651

 

 

$

1,240,927

 

 

$

1,204,414

 

 

$

1,163,381

 

 

$

1,311,105

 

Multifamily

 

1,689,943

 

 

 

1,698,455

 

 

 

1,572,308

 

 

 

1,397,761

 

 

 

1,361,054

 

Construction

 

243,553

 

 

 

236,495

 

 

 

228,341

 

 

 

225,153

 

 

 

181,841

 

Commercial and industrial

 

1,243,452

 

 

 

1,227,054

 

 

 

1,273,307

 

 

 

1,224,908

 

 

 

1,066,497

 

Commercial and industrial - warehouse lending

 

602,508

 

 

 

766,362

 

 

 

1,160,157

 

 

 

1,574,549

 

 

 

1,602,487

 

SBA

 

68,137

 

 

 

85,674

 

 

 

92,235

 

 

 

133,116

 

 

 

205,548

 

Total commercial loans

 

5,107,244

 

 

 

5,254,967

 

 

 

5,530,762

 

 

 

5,718,868

 

 

 

5,728,532

 

Single-family residential mortgage

 

1,920,806

 

 

 

1,947,652

 

 

 

1,832,279

 

 

 

1,637,307

 

 

 

1,420,023

 

Other consumer

 

86,988

 

 

 

86,701

 

 

 

88,223

 

 

 

95,398

 

 

 

102,925

 

Total consumer loans

 

2,007,794

 

 

 

2,034,353

 

 

 

1,920,502

 

 

 

1,732,705

 

 

 

1,522,948

 

Total gross loans

$

7,115,038

 

 

$

7,289,320

 

 

$

7,451,264

 

 

$

7,451,573

 

 

$

7,251,480

 

Composition percentage of loans

 

 

 

 

 

 

 

 

 

Commercial real estate

 

17.7

%

 

 

17.0

%

 

 

16.2

%

 

 

15.6

%

 

 

18.1

%

Multifamily

 

23.8

%

 

 

23.3

%

 

 

21.1

%

 

 

18.8

%

 

 

18.8

%

Construction

 

3.4

%

 

 

3.2

%

 

 

3.1

%

 

 

3.0

%

 

 

2.5

%

Commercial and industrial

 

17.5

%

 

 

16.8

%

 

 

17.1

%

 

 

16.4

%

 

 

14.7

%

Commercial and industrial - warehouse lending

 

8.4

%

 

 

10.6

%

 

 

15.5

%

 

 

21.1

%

 

 

22.1

%

SBA

 

1.0

%

 

 

1.2

%

 

 

1.2

%

 

 

1.8

%

 

 

2.8

%

Total commercial loans

 

71.8

%

 

 

72.1

%

 

 

74.2

%

 

 

76.7

%

 

 

79.0

%

Single-family residential mortgage

 

27.0

%

 

 

26.7

%

 

 

24.6

%

 

 

22.0

%

 

 

19.6

%

Other consumer

 

1.2

%

 

 

1.2

%

 

 

1.2

%

 

 

1.3

%

 

 

1.4

%

Total consumer loans

 

28.2

%

 

 

27.9

%

 

 

25.8

%

 

 

23.3

%

 

 

21.0

%

Total gross loans

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

Total loans ended the fourth quarter of 2022 at $7.12 billion, down $174.3 million from $7.29 billion at September 30, 2022, due mostly to a $163.9 million decrease in warehouse lending balances, a $26.8 million decrease in single-family residential (SFR) loans, and a $17.5 million decrease in SBA loans due mostly to PPP forgiveness, offset by a $18.7 million increase in commercial real estate loans and $14.9 million increase in other commercial loans. Loan fundings of $495.6 million in the fourth quarter were offset by net warehouse paydowns of $165.9 million and other loan paydowns and payoffs of $496.0 million.

Deposits

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

 

December 31,

2022

 

September 30,

2022

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

($ in thousands)

Composition of deposits

 

 

 

 

 

 

 

 

 

Noninterest-bearing checking

$

2,809,328

 

 

$

2,943,585

 

 

$

2,826,599

 

 

$

2,958,632

 

 

$

2,788,196

 

Interest-bearing checking

 

1,947,247

 

 

 

1,921,816

 

 

 

2,359,857

 

 

 

2,395,329

 

 

 

2,393,386

 

Savings and money market

 

1,174,925

 

 

 

1,478,045

 

 

 

1,622,922

 

 

 

1,605,088

 

 

 

1,751,135

 

Non-brokered certificates of deposit

 

584,476

 

 

 

614,569

 

 

 

615,719

 

 

 

520,652

 

 

 

506,718

 

Brokered certificates of deposit

 

604,945

 

 

 

322,370

 

 

 

133,586

 

 

 

 

 

 

 

Total deposits

$

7,120,921

 

 

$

7,280,385

 

 

$

7,558,683

 

 

$

7,479,701

 

 

$

7,439,435

 

Composition percentage of deposits

 

 

 

 

 

 

 

 

 

Noninterest-bearing checking

 

39.5

%

 

 

40.4

%

 

 

37.4

%

 

 

39.6

%

 

 

37.5

%

Interest-bearing checking

 

27.3

%

 

 

26.4

%

 

 

31.2

%

 

 

32.0

%

 

 

32.2

%

Savings and money market

 

16.5

%

 

 

20.4

%

 

 

21.5

%

 

 

21.4

%

 

 

23.5

%

Non-brokered certificates of deposit

 

8.2

%

 

 

8.4

%

 

 

8.1

%

 

 

7.0

%

 

 

6.8

%

Brokered certificates of deposit

 

8.5

%

 

 

4.4

%

 

 

1.8

%

 

 

%

 

 

%

Total deposits

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

Total deposits decreased $159.5 million during the fourth quarter of 2022 to $7.12 billion at December 31, 2022, due mostly to lower savings and money market balances of $303.1 million and lower noninterest-bearing checking balances of $134.3 million, offset by higher certificate of deposit balances of $252.5 million and interest-bearing checking balances of $25.4 million. Noninterest-bearing checking totaled $2.81 billion and represented 39% of total deposits at December 31, 2022, compared to $2.94 billion, or 40% of total deposits, at September 30, 2022.

Debt

Advances from the FHLB increased $327 thousand during the fourth quarter to $727.3 million at December 31, 2022, due to the addition of a $100.0 million term advance, offset by lower overnight advances of $100.0 million. At December 31, 2022, FHLB advances included $20.0 million of overnight borrowings and $711.0 million in term advances with a weighted average life of 3.0 years and weighted average interest rate of 2.97%.

Equity

During the fourth quarter, total stockholders’ equity increased by $7.6 million to $959.6 million and tangible common equity (a non-GAAP measure; refer to section Non-GAAP Measures) increased by $8.2 million to $837.8 million at December 31, 2022. The increase in total stockholders’ equity for the fourth quarter resulted from net income of $21.5 million, lower accumulated other comprehensive net loss of $7.0 million and share-based award compensation of $1.7 million, partially offset by the repurchase of common stock of $18.9 million and dividends to common stockholders of $3.6 million. Book value per common share increased $0.43 during the fourth quarter to $16.26 as of December 31, 2022. Tangible common equity per share (a non-GAAP measures; refer to section Non-GAAP Measures) increased $0.40 during the fourth quarter to $14.19 as of December 31, 2022 due mostly to net income and lower accumulated other comprehensive loss, offset by the impact of share repurchases.

During the fourth quarter of 2022, the Company completed its authorized common stock repurchase program. Fourth quarter common stock repurchases totaled $18.9 million, or 1,143,824 shares at a weighted average price of $16.53 per share, and the full year common stock repurchases totaled $75.0 million, or 4,212,882 shares at a weighted average price of $17.80 per share. The repurchased shares represent approximately 7% of the shares outstanding at the time this program was authorized.

Capital ratios remain strong with total risk-based capital at 14.30% and a tier 1 leverage ratio of 9.71% at December 31, 2022. 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 9 basis points at December 31, 2022. The following table sets forth our regulatory capital ratios as of the dates indicated:

 

December 31,

2022

 

September 30,

2022

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

Capital Ratios(1)

 

 

 

 

 

 

 

 

 

Banc of California, Inc.

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

14.30

%

 

13.86

%

 

13.69

%

 

13.79

%

 

14.98

%

Tier 1 risk-based capital ratio

11.88

%

 

11.43

%

 

11.29

%

 

11.40

%

 

12.55

%

Common equity tier 1 capital ratio

11.88

%

 

11.43

%

 

11.29

%

 

11.40

%

 

11.31

%

Tier 1 leverage ratio

9.71

%

 

9.52

%

 

9.58

%

 

9.72

%

 

10.37

%

Banc of California, NA

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

16.06

%

 

15.70

%

 

15.54

%

 

15.66

%

 

15.71

%

Tier 1 risk-based capital ratio

14.98

%

 

14.56

%

 

14.41

%

 

14.54

%

 

14.60

%

Common equity tier 1 capital ratio

14.98

%

 

14.56

%

 

14.41

%

 

14.54

%

 

14.60

%

Tier 1 leverage ratio

12.25

%

 

12.12

%

 

12.27

%

 

12.38

%

 

12.06

%

(1)

December 31, 2022 capital ratios are preliminary.

Credit Quality

 

December 31,

2022

 

September 30,

2022

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

Asset quality information and ratios

($ in thousands)

Delinquent loans held-for-investment

 

 

 

 

 

 

 

 

 

30 to 89 days delinquent

$

46,666

 

 

$

38,694

 

 

$

38,285

 

 

$

27,067

 

 

$

40,142

 

90+ days delinquent

 

44,554

 

 

 

18,843

 

 

 

23,905

 

 

 

33,930

 

 

 

32,609

 

Total delinquent loans

$

91,220

 

 

$

57,537

 

 

$

62,190

 

 

$

60,997

 

 

$

72,751

 

Total delinquent loans to total loans

 

1.28

%

 

 

0.79

%

 

 

0.83

%

 

 

0.82

%

 

 

1.00

%

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

 

 

 

 

 

 

 

 

 

Non-accrual loans

$

55,251

 

 

$

42,674

 

 

$

44,443

 

 

$

54,529

 

 

$

52,558

 

90+ days delinquent and still accruing loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing loans

 

55,251

 

 

 

42,674

 

 

 

44,443

 

 

 

54,529

 

 

 

52,558

 

Other real estate owned

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing assets

$

55,251

 

 

$

42,674

 

 

$

44,443

 

 

$

54,529

 

 

$

52,558

 

ALL to non-performing loans

 

155.58

%

 

 

216.63

%

 

 

211.04

%

 

 

170.97

%

 

 

176.16

%

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

 

0.78

%

 

 

0.59

%

 

 

0.60

%

 

 

0.73

%

 

 

0.72

%

Non-performing assets to total assets

 

0.60

%

 

 

0.46

%

 

 

0.47

%

 

 

0.57

%

 

 

0.56

%

Troubled debt restructurings (TDRs)

 

 

 

 

 

 

 

 

 

Performing TDRs

$

2,739

 

 

$

11,252

 

 

$

10,946

 

 

$

14,850

 

 

$

12,538

 

Non-performing TDRs

 

13,406

 

 

 

19,538

 

 

 

14,989

 

 

 

15,059

 

 

 

4,146

 

Total TDRs

$

16,145

 

 

$

30,790

 

 

$

25,935

 

 

$

29,909

 

 

$

16,684

 

At December 31, 2022, total delinquent loans were $91.2 million, and included SFR mortgages of $60.8 million, or 66.7% of total delinquent loans. During the fourth quarter, delinquent loans increased $33.7 million due mostly to total additions of $46.3 million, offset by cures of $11.8 million and amortization and other removals of $0.9 million. Additions to delinquent loans included $33.5 million of SFR mortgages, $12.1 million of commercial and industrial loans, and $718 thousand of other loans.

At December 31, 2022, non-performing loans were $55.3 million, and included (i) SFR mortgages of $21.1 million, (ii) $8.9 million of commercial loans in a current payment status, however are on nonaccrual based on other criteria, and (iii) other commercial loans of $25.3 million. Excluding SFR mortgages, which are well secured with low loan-to-value ratios, non-performing loans decreased $529 thousand from the prior quarter. During the fourth quarter, a $7.4 million partial charge-off was recognized on a purchased credit-deteriorated commercial and industrial loan, which has a remaining carrying value of $4.0 million at quarter-end.

Allowance for Credit Losses

 

Three Months Ended

 

December 31,

2022

 

September 30,

2022

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

($ in thousands)

Allowance for loan losses (ALL)

 

 

 

 

 

 

 

 

 

Balance at beginning of period

$

92,444

 

 

$

93,793

 

 

$

93,226

 

 

$

92,584

 

 

$

73,524

 

Initial reserve for purchased credit-deteriorated loans(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

13,650

 

Loans charged off

 

(7,641

)

 

 

(912

)

 

 

(494

)

 

 

(231

)

 

 

(8,108

)

Recoveries

 

57

 

 

 

63

 

 

 

1,561

 

 

 

32,215

 

 

 

2,628

 

Net (charge-offs) recoveries

 

(7,584

)

 

 

(849

)

 

 

1,067

 

 

 

31,984

 

 

 

(5,480

)

Provision for (reversal of) loan losses

 

1,100

 

 

 

(500

)

 

 

(500

)

 

 

(31,342

)

 

 

10,890

 

Balance at end of period

$

85,960

 

 

$

92,444

 

 

$

93,793

 

 

$

93,226

 

 

$

92,584

 

Reserve for unfunded loan commitments (RUC)

 

 

 

 

 

 

 

 

 

Balance at beginning of period

$

6,405

 

 

$

5,905

 

 

$

5,405

 

 

$

5,605

 

 

$

5,233

 

(Reversal of) provision for credit losses

 

(1,100

)

 

 

500

 

 

 

500

 

 

 

(200

)

 

 

372

 

Balance at end of period

 

5,305

 

 

 

6,405

 

 

 

5,905

 

 

 

5,405

 

 

 

5,605

 

Allowance for credit losses (ACL)

$

91,265

 

 

$

98,849

 

 

$

99,698

 

 

$

98,631

 

 

$

98,189

 

 

 

 

 

 

 

 

 

 

 

ALL to total loans

 

1.21

%

 

 

1.27

%

 

 

1.26

%

 

 

1.25

%

 

 

1.28

%

ACL to total loans

 

1.28

%

 

 

1.36

%

 

 

1.34

%

 

 

1.32

%

 

 

1.35

%

ACL to total loans, excluding PPP loans

 

1.28

%

 

 

1.36

%

 

 

1.34

%

 

 

1.33

%

 

 

1.38

%

ACL to NPLs

 

165.18

%

 

 

231.64

%

 

 

224.33

%

 

 

180.88

%

 

 

186.82

%

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

 

0.42

%

 

 

0.05

%

 

 

(0.06

)%

 

 

(1.76

)%

 

 

0.32

%

 

 

 

 

 

 

 

 

 

 

Reserve for loss on repurchased loans

 

 

 

 

 

 

 

 

 

Balance at beginning of period

$

3,006

 

 

$

3,222

 

 

$

3,877

 

 

$

4,348

 

 

$

5,023

 

(Reversal of) provision for loan repurchases

 

(17

)

 

 

(26

)

 

 

(490

)

 

 

(471

)

 

 

(675

)

Utilization of reserve for loan repurchases

 

 

 

 

(190

)

 

 

(165

)

 

 

 

 

 

 

Balance at end of period

$

2,989

 

 

$

3,006

 

 

$

3,222

 

 

$

3,877

 

 

$

4,348

 

(1)

Represents the amounts, at acquisition date, of expected credit losses on PCD loans and expected recoveries of PCD loans charged-off prior to acquisition date that we have a contractual right to receive.

The allowance for credit losses (ACL), which includes the reserve for unfunded loan commitments, totaled $91.3 million, or 1.28% of total loans, at December 31, 2022, compared to $98.8 million, or 1.36% of total loans, at September 30, 2022. The $7.6 million decrease in the ACL was due to: (i) net charge offs of $7.6 million, of which $7.1 million related to specific reserves for a purchased credit-deteriorated loan and (ii) $1.1 million lower RUC from lower volume of unfunded commitments, offset by (iii) new specific reserves totaling $1.0 million and (iv) higher general reserves of $0.2 million due to changes in portfolio mix. The ACL coverage of non-performing loans was 165% at December 31, 2022 compared to 232% at September 30, 2022.

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 released by the model provider during December 2022. The published forecasts consider the Federal Reserve's monetary policy, labor market constraints, inflation levels, higher oil prices and the military conflict between Russia and Ukraine, among other factors.

Conference Call

The Company will host a conference call to discuss its fourth quarter 2022 financial results at 10:00 a.m. Pacific Time (PT) on Thursday, January 19, 2023. Interested parties are welcome to attend the conference call by dialing (888) 317-6003, and referencing event code 2741581. 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 5929784.

About Banc of California, Inc.

Banc of California, Inc. (NYSE: BANC) is a bank holding company with $9.2 billion in assets at December 31, 2022 and one wholly-owned banking subsidiary, Banc of California, N.A. (the Bank). The Bank has 34 offices including 28 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, and full stack payment processing solution through our subsidiary Deepstack Technologies. 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. 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,

2022

 

September 30,

2022

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

ASSETS

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

228,896

 

 

$

256,058

 

 

$

243,064

 

 

$

254,241

 

 

$

228,123

 

Securities held-to-maturity

 

328,641

 

 

 

328,757

 

 

 

329,272

 

 

 

329,381

 

 

 

 

Securities available-for-sale

 

868,297

 

 

 

847,565

 

 

 

865,435

 

 

 

898,775

 

 

 

1,315,703

 

Loans

 

7,115,038

 

 

 

7,289,320

 

 

 

7,451,264

 

 

 

7,451,573

 

 

 

7,251,480

 

Allowance for loan losses

 

(85,960

)

 

 

(92,444

)

 

 

(93,793

)

 

 

(93,226

)

 

 

(92,584

)

Federal Home Loan Bank and other bank stock

 

57,092

 

 

 

54,428

 

 

 

51,489

 

 

 

51,456

 

 

 

44,632

 

Premises and equipment, net

 

107,345

 

 

 

107,728

 

 

 

108,523

 

 

 

109,593

 

 

 

112,868

 

Goodwill

 

114,312

 

 

 

114,312

 

 

 

95,127

 

 

 

95,127

 

 

 

94,301

 

Other intangible assets, net

 

7,526

 

 

 

8,081

 

 

 

4,677

 

 

 

4,990

 

 

 

6,411

 

Deferred income tax, net

 

50,518

 

 

 

56,376

 

 

 

54,455

 

 

 

51,516

 

 

 

50,774

 

Bank owned life insurance investment

 

127,122

 

 

 

126,199

 

 

 

125,326

 

 

 

124,516

 

 

 

123,720

 

Other assets

 

278,189

 

 

 

272,198

 

 

 

267,274

 

 

 

305,598

 

 

 

258,315

 

Total assets

$

9,197,016

 

 

$

9,368,578

 

 

$

9,502,113

 

 

$

9,583,540

 

 

$

9,393,743

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

$

2,809,328

 

 

$

2,943,585

 

 

$

2,826,599

 

 

$

2,958,632

 

 

$

2,788,196

 

Interest-bearing deposits

 

4,311,593

 

 

 

4,336,800

 

 

 

4,732,084

 

 

 

4,521,069

 

 

 

4,651,239

 

Total deposits

 

7,120,921

 

 

 

7,280,385

 

 

 

7,558,683

 

 

 

7,479,701

 

 

 

7,439,435

 

Advances from Federal Home Loan Bank

 

727,348

 

 

 

727,021

 

 

 

511,695

 

 

 

556,374

 

 

 

476,059

 

Other borrowings

 

 

 

 

10,000

 

 

 

98,000

 

 

 

190,000

 

 

 

25,000

 

Long-term debt, net

 

274,906

 

 

 

274,746

 

 

 

274,587

 

 

 

274,468

 

 

 

274,386

 

Accrued expenses and other liabilities

 

114,223

 

 

 

124,436

 

 

 

110,018

 

 

 

103,988

 

 

 

113,573

 

Total liabilities

 

8,237,398

 

 

 

8,416,588

 

 

 

8,552,983

 

 

 

8,604,531

 

 

 

8,328,453

 

Commitments and contingent liabilities

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

94,956

 

Common stock

 

651

 

 

 

652

 

 

 

647

 

 

 

646

 

 

 

646

 

Common stock, class B non-voting non-convertible

 

5

 

 

 

5

 

 

 

5

 

 

 

5

 

 

 

5

 

Additional paid-in capital

 

866,478

 

 

 

864,806

 

 

 

856,079

 

 

 

855,198

 

 

 

854,873

 

Retained earnings

 

248,988

 

 

 

231,084

 

 

 

210,471

 

 

 

187,457

 

 

 

147,894

 

Treasury stock

 

(115,907

)

 

 

(96,978

)

 

 

(84,013

)

 

 

(45,125

)

 

 

(40,827

)

Accumulated other comprehensive (loss) income, net

 

(40,597

)

 

 

(47,579

)

 

 

(34,059

)

 

 

(19,172

)

 

 

7,743

 

Total stockholders’ equity

 

959,618

 

 

 

951,990

 

 

 

949,130

 

 

 

979,009

 

 

 

1,065,290

 

Total liabilities and stockholders’ equity

$

9,197,016

 

 

$

9,368,578

 

 

$

9,502,113

 

 

$

9,583,540

 

 

$

9,393,743

 

Banc of California, Inc.

Consolidated Statements of Operations (Unaudited)

(Dollars in thousands, except per share data)

 

 

Three Months Ended

 

Year Ended

 

December 31,

2022

 

September 30,

2022

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

December 31,

2022

 

December 31,

2021

Interest and dividend income

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

$

88,717

 

 

$

83,699

 

 

$

78,895

 

 

$

76,234

 

 

$

73,605

 

 

$

327,545

 

 

$

260,687

 

Securities

 

12,905

 

 

 

10,189

 

 

 

8,124

 

 

 

7,309

 

 

 

6,934

 

 

 

38,527

 

 

 

27,588

 

Other interest-earning assets

 

2,490

 

 

 

2,085

 

 

 

1,399

 

 

 

726

 

 

 

1,034

 

 

 

6,700

 

 

 

3,384

 

Total interest and dividend income

 

104,112

 

 

 

95,973

 

 

 

88,418

 

 

 

84,269

 

 

 

81,573

 

 

 

372,772

 

 

 

291,659

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

14,278

 

 

 

8,987

 

 

 

3,180

 

 

 

1,388

 

 

 

2,072

 

 

 

27,833

 

 

 

12,313

 

Federal Home Loan Bank advances

 

5,528

 

 

 

3,558

 

 

 

3,114

 

 

 

2,953

 

 

 

2,977

 

 

 

15,153

 

 

 

12,023

 

Other interest-bearing liabilities

 

4,089

 

 

 

4,020

 

 

 

3,825

 

 

 

3,487

 

 

 

3,485

 

 

 

15,421

 

 

 

13,545

 

Total interest expense

 

23,895

 

 

 

16,565

 

 

 

10,119

 

 

 

7,828

 

 

 

8,534

 

 

 

58,407

 

 

 

37,881

 

Net interest income

 

80,217

 

 

 

79,408

 

 

 

78,299

 

 

 

76,441

 

 

 

73,039

 

 

 

314,365

 

 

 

253,778

 

Provision for (reversal of) credit losses

 

 

 

 

 

 

 

 

 

 

(31,542

)

 

 

11,262

 

 

 

(31,542

)

 

 

6,854

 

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

 

80,217

 

 

 

79,408

 

 

 

78,299

 

 

 

107,983

 

 

 

61,777

 

 

 

345,907

 

 

 

246,924

 

Noninterest income

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer service fees

 

2,066

 

 

 

2,462

 

 

 

2,578

 

 

 

2,434

 

 

 

2,037

 

 

 

9,540

 

 

 

7,685

 

Loan servicing income

 

561

 

 

 

636

 

 

 

109

 

 

 

212

 

 

 

119

 

 

 

1,518

 

 

 

595

 

Income from bank owned life insurance

 

923

 

 

 

873

 

 

 

810

 

 

 

796

 

 

 

794

 

 

 

3,402

 

 

 

2,871

 

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

 

(7,708

)

 

 

 

 

 

 

 

 

16

 

 

 

 

 

 

(7,692

)

 

 

 

All other income

 

2,731

 

 

 

1,710

 

 

 

3,689

 

 

 

2,452

 

 

 

2,655

 

 

 

10,582

 

 

 

8,225

 

Total noninterest income

 

(1,427

)

 

 

5,681

 

 

 

7,186

 

 

 

5,910

 

 

 

5,605

 

 

 

17,350

 

 

 

19,376

 

Noninterest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

27,812

 

 

 

27,997

 

 

 

28,264

 

 

 

28,987

 

 

 

27,811

 

 

 

113,060

 

 

 

103,358

 

Occupancy and equipment

 

8,431

 

 

 

8,649

 

 

 

7,876

 

 

 

7,855

 

 

 

7,855

 

 

 

32,811

 

 

 

29,452

 

Professional fees

 

3,480

 

 

 

4,507

 

 

 

4,107

 

 

 

2,907

 

 

 

3,921

 

 

 

15,001

 

 

 

10,584

 

Data processing

 

1,744

 

 

 

1,699

 

 

 

1,782

 

 

 

1,828

 

 

 

1,939

 

 

 

7,053

 

 

 

6,861

 

Regulatory assessments

 

905

 

 

 

925

 

 

 

1,021

 

 

 

775

 

 

 

1,040

 

 

 

3,626

 

 

 

3,395

 

Reversal of loan repurchase reserves

 

(17

)

 

 

(26

)

 

 

(490

)

 

 

(471

)

 

 

(675

)

 

 

(1,004

)

 

 

(948

)

Amortization of intangible assets

 

555

 

 

 

396

 

 

 

313

 

 

 

441

 

 

 

430

 

 

 

1,705

 

 

 

1,276

 

Acquisition, integration and transaction costs

 

 

 

 

2,080

 

 

 

 

 

 

 

 

 

13,469

 

 

 

2,080

 

 

 

15,869

 

All other expense

 

4,685

 

 

 

4,231

 

 

 

4,696

 

 

 

4,116

 

 

 

4,302

 

 

 

17,728

 

 

 

14,035

 

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

 

47,595

 

 

 

50,458

 

 

 

47,569

 

 

 

46,438

 

 

 

60,092

 

 

 

192,060

 

 

 

183,882

 

Loss (gain) in alternative energy partnership investments

 

608

 

 

 

504

 

 

 

1,043

 

 

 

158

 

 

 

(1,220

)

 

 

2,313

 

 

 

(204

)

Total noninterest expense

 

48,203

 

 

 

50,962

 

 

 

48,612

 

 

 

46,596

 

 

 

58,872

 

 

 

194,373

 

 

 

183,678

 

Income before income taxes

 

30,587

 

 

 

34,127

 

 

 

36,873

 

 

 

67,297

 

 

 

8,510

 

 

 

168,884

 

 

 

82,622

 

Income tax expense

 

9,068

 

 

 

9,931

 

 

 

10,161

 

 

 

18,785

 

 

 

2,759

 

 

 

47,945

 

 

 

20,276

 

Net income

 

21,519

 

 

 

24,196

 

 

 

26,712

 

 

 

48,512

 

 

 

5,751

 

 

 

120,939

 

 

 

62,346

 

Preferred stock dividends

 

 

 

 

 

 

 

 

 

 

1,420

 

 

 

1,727

 

 

 

1,420

 

 

 

8,322

 

Income allocated to participating securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

114

 

Impact of preferred stock redemption

 

 

 

 

 

 

 

 

 

 

3,747

 

 

 

 

 

 

3,747

 

 

 

3,347

 

Net income available to common stockholders

$

21,519

 

 

$

24,196

 

 

$

26,712

 

 

$

43,345

 

 

$

4,024

 

 

$

115,772

 

 

$

50,563

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.36

 

 

$

0.40

 

 

$

0.44

 

 

$

0.69

 

 

$

0.07

 

 

$

1.90

 

 

$

0.95

 

Diluted

$

0.36

 

 

$

0.40

 

 

$

0.43

 

 

$

0.69

 

 

$

0.07

 

 

$

1.89

 

 

$

0.95

 

Weighted average number of common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

59,252,995

 

 

 

60,044,403

 

 

 

61,350,802

 

 

 

62,606,450

 

 

 

60,401,366

 

 

 

60,802,082

 

 

 

53,050,980

 

Diluted

 

59,725,283

 

 

 

60,492,460

 

 

 

61,600,615

 

 

 

62,906,003

 

 

 

60,690,046

 

 

 

61,175,108

 

 

 

53,302,926

 

Dividends declared per common share

$

0.06

 

 

$

0.06

 

 

$

0.06

 

 

$

0.06

 

 

$

0.06

 

 

$

0.24

 

 

$

0.24

 

Banc of California, Inc.

Selected Financial Data

(Unaudited)

 

 

Three Months Ended

 

Year Ended

 

December 31,

2022

 

September 30,

2022

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

December 31,

2022

 

December 31,

2021

Profitability and other ratios of consolidated operations

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (ROAA)(1)

0.92

%

 

1.02

%

 

1.15

%

 

2.09

%

 

0.24

%

 

1.29

%

 

0.75

%

Adjusted ROAA(1)(2)

1.15

%

 

1.13

%

 

1.19

%

 

2.10

%

 

0.63

%

 

1.39

%

 

0.84

%

Return on average equity(1)

8.63

%

 

9.99

%

 

11.05

%

 

18.74

%

 

2.20

%

 

12.19

%

 

6.95

%

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

10.02

%

 

11.33

%

 

12.42

%

 

20.27

%

 

2.02

%

 

13.49

%

 

7.03

%

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

1.31

%

 

1.44

%

 

1.58

%

 

1.54

%

 

0.84

%

 

1.47

%

 

1.08

%

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

1.63

%

 

1.59

%

 

1.65

%

 

1.55

%

 

1.39

%

 

1.60

%

 

1.24

%

Dividend payout ratio(3)

16.67

%

 

15.00

%

 

13.64

%

 

8.70

%

 

85.71

%

 

12.63

%

 

25.26

%

Average loan yield

4.92

%

 

4.54

%

 

4.35

%

 

4.26

%

 

4.20

%

 

4.52

%

 

4.24

%

Average cost of interest-bearing deposits

1.34

%

 

0.77

%

 

0.28

%

 

0.12

%

 

0.17

%

 

0.62

%

 

0.27

%

Average cost of total deposits

0.79

%

 

0.47

%

 

0.17

%

 

0.08

%

 

0.11

%

 

0.38

%

 

0.19

%

Net interest spread

2.98

%

 

3.13

%

 

3.30

%

 

3.29

%

 

3.05

%

 

3.18

%

 

3.02

%

Net interest margin(1)

3.69

%

 

3.58

%

 

3.58

%

 

3.51

%

 

3.28

%

 

3.59

%

 

3.26

%

Noninterest income to total revenue(4)

(1.81

) %

 

6.68

%

 

8.41

%

 

7.18

%

 

7.13

%

 

5.23

%

 

7.09

%

Adjusted noninterest income to adjusted total revenue(2)(4)

7.26

%

 

6.68

%

 

8.41

%

 

7.16

%

 

7.13

%

 

7.38

%

 

7.09

%

Noninterest expense to average total assets(1)

2.07

%

 

2.15

%

 

2.09

%

 

2.01

%

 

2.50

%

 

2.08

%

 

2.21

%

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

2.08

%

 

2.00

%

 

2.02

%

 

2.01

%

 

1.95

%

 

2.03

%

 

2.05

%

Efficiency ratio(2)(5)

61.18

%

 

59.89

%

 

56.87

%

 

56.58

%

 

74.86

%

 

58.60

%

 

67.24

%

Adjusted efficiency ratio(2)(6)

56.03

%

 

55.66

%

 

55.11

%

 

56.53

%

 

58.47

%

 

55.83

%

 

62.27

%

Average loans to average deposits

100.25

%

 

97.34

%

 

98.21

%

 

98.28

%

 

92.99

%

 

98.50

%

 

93.59

%

Average securities to average total assets

13.19

%

 

12.70

%

 

13.02

%

 

13.76

%

 

13.83

%

 

13.16

%

 

15.62

%

Average stockholders’ equity to average total assets

10.69

%

 

10.21

%

 

10.38

%

 

11.18

%

 

11.10

%

 

10.61

%

 

10.81

%

(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 (reversal of) credit losses and noninterest income.

(6)

Ratio calculated by dividing adjusted noninterest expense by the sum of net interest income before provision for (reversal of) 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

 

December 31, 2022

 

September 30, 2022

 

June 30, 2022

 

Average

 

 

 

Yield

 

Average

 

 

 

Yield

 

Average

 

 

 

Yield

 

Balance

 

Interest

 

/ Cost

 

Balance

 

Interest

 

/ Cost

 

Balance

 

Interest

 

/ Cost

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate, multifamily, and construction

$

3,223,614

 

 

$

36,214

 

4.46

%

 

$

3,142,772

 

 

$

34,269

 

4.33

%

 

$

2,889,652

 

 

$

31,290

 

4.34

%

Commercial and industrial and SBA

 

1,909,144

 

 

 

31,492

 

6.54

%

 

 

2,151,511

 

 

 

29,296

 

5.40

%

 

 

2,527,506

 

 

 

29,334

 

4.66

%

SFR mortgage

 

1,932,397

 

 

 

19,661

 

4.04

%

 

 

1,927,694

 

 

 

18,699

 

3.85

%

 

 

1,755,719

 

 

 

16,795

 

3.84

%

Other consumer

 

86,273

 

 

 

1,335

 

6.14

%

 

 

87,335

 

 

 

1,331

 

6.05

%

 

 

93,160

 

 

 

1,450

 

6.24

%

Loans held-for-sale

 

4,352

 

 

 

15

 

1.37

%

 

 

4,207

 

 

 

104

 

9.81

%

 

 

3,618

 

 

 

26

 

2.88

%

Gross loans and leases

 

7,155,780

 

 

 

88,717

 

4.92

%

 

 

7,313,519

 

 

 

83,699

 

4.54

%

 

 

7,269,655

 

 

 

78,895

 

4.35

%

Securities

 

1,221,147

 

 

 

12,905

 

4.19

%

 

 

1,194,942

 

 

 

10,189

 

3.38

%

 

 

1,216,612

 

 

 

8,124

 

2.68

%

Other interest-earning assets

 

239,336

 

 

 

2,490

 

4.13

%

 

 

292,819

 

 

 

2,085

 

2.82

%

 

 

295,715

 

 

 

1,399

 

1.90

%

Total interest-earning assets

 

8,616,263

 

 

 

104,112

 

4.79

%

 

 

8,801,280

 

 

 

95,973

 

4.33

%

 

 

8,781,982

 

 

 

88,418

 

4.04

%

Allowance for loan losses

 

(91,606

)

 

 

 

 

 

 

(93,517

)

 

 

 

 

 

 

(94,217

)

 

 

 

 

BOLI and noninterest-earning assets

 

732,654

 

 

 

 

 

 

 

700,977

 

 

 

 

 

 

 

654,931

 

 

 

 

 

Total assets

$

9,257,311

 

 

 

 

 

 

$

9,408,740

 

 

 

 

 

 

$

9,342,696

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing checking

$

1,854,333

 

 

$

4,998

 

1.07

%

 

$

2,285,071

 

 

$

3,880

 

0.67

%

 

$

2,363,233

 

 

$

1,457

 

0.25

%

Savings and money market

 

1,308,383

 

 

 

2,379

 

0.72

%

 

 

1,536,438

 

 

 

2,236

 

0.58

%

 

 

1,598,663

 

 

 

860

 

0.22

%

Certificates of deposit

 

1,072,953

 

 

 

6,901

 

2.55

%

 

 

832,506

 

 

 

2,871

 

1.37

%

 

 

631,415

 

 

 

863

 

0.55

%

Total interest-bearing deposits

 

4,235,669

 

 

 

14,278

 

1.34

%

 

 

4,654,015

 

 

 

8,987

 

0.77

%

 

 

4,593,311

 

 

 

3,180

 

0.28

%

FHLB advances

 

684,177

 

 

 

5,528

 

3.21

%

 

 

482,842

 

 

 

3,558

 

2.92

%

 

 

485,629

 

 

 

3,114

 

2.57

%

Other borrowings

 

41,075

 

 

 

414

 

4.00

%

 

 

70,431

 

 

 

412

 

2.32

%

 

 

117,688

 

 

 

325

 

1.11

%

Long-term debt

 

274,812

 

 

 

3,675

 

5.31

%

 

 

274,665

 

 

 

3,608

 

5.21

%

 

 

274,515

 

 

 

3,500

 

5.11

%

Total interest-bearing liabilities

 

5,235,733

 

 

 

23,895

 

1.81

%

 

 

5,481,953

 

 

 

16,565

 

1.20

%

 

 

5,471,143

 

 

 

10,119

 

0.74

%

Noninterest-bearing deposits

 

2,897,755

 

 

 

 

 

 

 

2,855,220

 

 

 

 

 

 

 

2,804,877

 

 

 

 

 

Noninterest-bearing liabilities

 

134,409

 

 

 

 

 

 

 

110,761

 

 

 

 

 

 

 

96,791

 

 

 

 

 

Total liabilities

 

8,267,897

 

 

 

 

 

 

 

8,447,934

 

 

 

 

 

 

 

8,372,811

 

 

 

 

 

Total stockholders’ equity

 

989,414

 

 

 

 

 

 

 

960,806

 

 

 

 

 

 

 

969,885

 

 

 

 

 

Total liabilities and stockholders’ equity

$

9,257,311

 

 

 

 

 

 

$

9,408,740

 

 

 

 

 

 

$

9,342,696

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income/spread

 

 

$

80,217

 

2.98

%

 

 

 

$

79,408

 

3.13

%

 

 

 

$

78,299

 

3.30

%

Net interest margin

 

 

 

 

3.69

%

 

 

 

 

 

3.58

%

 

 

 

 

 

3.58

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of interest-earning assets to interest-bearing liabilities

 

165

%

 

 

 

 

 

 

161

%

 

 

 

 

 

 

161

%

 

 

 

 

Total deposits

$

7,133,424

 

 

$

14,278

 

0.79

%

 

$

7,509,235

 

 

$

8,987

 

0.47

%

 

$

7,398,188

 

 

$

3,180

 

0.17

%

Total funding (1)

$

8,133,488

 

 

$

23,895

 

1.17

%

 

$

8,337,173

 

 

$

16,565

 

0.79

%

 

$

8,276,020

 

 

$

10,119

 

0.49

%

(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, 2022

 

December 31, 2021

 

Average

 

 

 

Yield

 

Average

 

 

 

Yield

 

Balance

 

Interest

 

/ Cost

 

Balance

 

Interest

 

/ Cost

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate, multifamily, and construction

$

2,850,811

 

 

$

31,367

 

4.46

%

 

$

2,809,181

 

 

$

32,184

 

4.55

%

Commercial and industrial and SBA

 

2,748,541

 

 

 

30,043

 

4.43

%

 

 

2,631,596

 

 

 

28,028

 

4.23

%

SFR mortgage

 

1,562,478

 

 

 

13,273

 

3.45

%

 

 

1,418,057

 

 

 

11,884

 

3.32

%

Other consumer

 

97,516

 

 

 

1,523

 

6.33

%

 

 

85,193

 

 

 

1,483

 

6.91

%

Loans held-for-sale

 

3,428

 

 

 

28

 

3.31

%

 

 

3,309

 

 

 

26

 

3.12

%

Gross loans and leases

 

7,262,774

 

 

 

76,234

 

4.26

%

 

 

6,947,336

 

 

 

73,605

 

4.20

%

Securities

 

1,292,079

 

 

 

7,309

 

2.29

%

 

 

1,290,664

 

 

 

6,934

 

2.13

%

Other interest-earning assets

 

265,339

 

 

 

726

 

1.11

%

 

 

593,739

 

 

 

1,034

 

0.69

%

Total interest-earning assets

 

8,820,192

 

 

 

84,269

 

3.87

%

 

 

8,831,739

 

 

 

81,573

 

3.66

%

Allowance for loan losses

 

(92,618

)

 

 

 

 

 

 

(92,367

)

 

 

 

 

BOLI and noninterest-earning assets

 

664,731

 

 

 

 

 

 

 

592,583

 

 

 

 

 

Total assets

$

9,392,305

 

 

 

 

 

 

$

9,331,955

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing checking

$

2,409,262

 

 

$

641

 

0.11

%

 

$

2,461,397

 

 

$

693

 

0.11

%

Savings and money market

 

1,673,244

 

 

 

510

 

0.12

%

 

 

1,780,483

 

 

 

1,078

 

0.24

%

Certificates of deposit

 

508,244

 

 

 

237

 

0.19

%

 

 

610,766

 

 

 

301

 

0.20

%

Total interest-bearing deposits

 

4,590,750

 

 

 

1,388

 

0.12

%

 

 

4,852,646

 

 

 

2,072

 

0.17

%

FHLB advances

 

459,749

 

 

 

2,953

 

2.60

%

 

 

407,122

 

 

 

2,977

 

2.90

%

Other borrowings

 

116,495

 

 

 

55

 

0.19

%

 

 

27,300

 

 

 

7

 

0.10

%

Long-term debt

 

274,417

 

 

 

3,432

 

5.07

%

 

 

270,879

 

 

 

3,478

 

5.09

%

Total interest-bearing liabilities

 

5,441,411

 

 

 

7,828

 

0.58

%

 

 

5,557,947

 

 

 

8,534

 

0.61

%

Noninterest-bearing deposits

 

2,795,633

 

 

 

 

 

 

 

2,614,712

 

 

 

 

 

Noninterest-bearing liabilities

 

105,349

 

 

 

 

 

 

 

123,514

 

 

 

 

 

Total liabilities

 

8,342,393

 

 

 

 

 

 

 

8,296,173

 

 

 

 

 

Total stockholders’ equity

 

1,049,912

 

 

 

 

 

 

 

1,035,782

 

 

 

 

 

Total liabilities and stockholders’ equity

$

9,392,305

 

 

 

 

 

 

$

9,331,955

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income/spread

 

 

$

76,441

 

3.29

%

 

 

 

$

73,039

 

3.05

%

Net interest margin

 

 

 

 

3.51

%

 

 

 

 

 

3.28

%

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of interest-earning assets to interest-bearing liabilities

 

162

%

 

 

 

 

 

 

159

%

 

 

 

 

Total deposits

$

7,386,383

 

 

$

1,388

 

0.08

%

 

$

7,467,358

 

 

$

2,072

 

0.11

%

Total funding (1)

$

8,237,044

 

 

$

7,828

 

0.39

%

 

$

8,172,659

 

 

$

8,534

 

0.41

%

(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, 2022

 

December 31, 2021

 

Average

 

 

 

Yield

 

Average

 

 

 

Yield

 

Balance

 

Interest

 

/ Cost

 

Balance

 

Interest

 

/ Cost

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate, multifamily, and construction

$

3,028,052

 

 

$

133,140

 

4.40

%

 

$

2,457,408

 

 

$

112,335

 

4.57

%

Commercial and industrial and SBA

 

2,331,375

 

 

 

120,164

 

5.15

%

 

 

2,333,589

 

 

 

99,262

 

4.25

%

SFR mortgage

 

1,795,951

 

 

 

68,428

 

3.81

%

 

 

1,310,029

 

 

 

46,723

 

3.57

%

Other consumer

 

91,030

 

 

 

5,640

 

6.20

%

 

 

40,046

 

 

 

2,290

 

5.72

%

Loans held-for-sale

 

3,904

 

 

 

173

 

4.43

%

 

 

2,423

 

 

 

77

 

3.18

%

Gross loans and leases

 

7,250,312

 

 

 

327,545

 

4.52

%

 

 

6,143,495

 

 

 

260,687

 

4.24

%

Securities

 

1,230,901

 

 

 

38,527

 

3.13

%

 

 

1,295,879

 

 

 

27,588

 

2.13

%

Other interest-earning assets

 

273,284

 

 

 

6,700

 

2.45

%

 

 

353,190

 

 

 

3,383

 

0.96

%

Total interest-earning assets

 

8,754,497

 

 

 

372,772

 

4.26

%

 

 

7,792,564

 

 

 

291,658

 

3.74

%

Allowance for credit losses

 

(92,988

)

 

 

 

 

 

 

(82,166

)

 

 

 

 

BOLI and noninterest-earning assets

 

688,545

 

 

 

 

 

 

 

583,606

 

 

 

 

 

Total assets

$

9,350,054

 

 

 

 

 

 

$

8,294,004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing checking

$

2,226,611

 

 

$

10,976

 

0.49

%

 

$

2,267,059

 

 

$

2,906

 

0.13

%

Savings and money market

 

1,528,202

 

 

 

5,985

 

0.39

%

 

 

1,664,350

 

 

 

7,063

 

0.42

%

Certificates of deposit

 

763,022

 

 

 

10,872

 

1.42

%

 

 

633,497

 

 

 

2,344

 

0.37

%

Total interest-bearing deposits

 

4,517,835

 

 

 

27,833

 

0.62

%

 

 

4,564,906

 

 

 

12,313

 

0.27

%

FHLB advances

 

528,590

 

 

 

15,153

 

2.87

%

 

 

426,875

 

 

 

12,023

 

2.82

%

Other borrowings

 

86,172

 

 

 

1,206

 

1.40

%

 

 

44,214

 

 

 

46

 

0.10

%

Long-term debt

 

274,604

 

 

 

14,215

 

5.18

%

 

 

260,122

 

 

 

13,498

 

5.19

%

Total interest-bearing liabilities

 

5,407,201

 

 

 

58,407

 

1.08

%

 

 

5,296,117

 

 

 

37,880

 

0.72

%

Noninterest-bearing deposits

 

2,838,697

 

 

 

 

 

 

 

1,996,449

 

 

 

 

 

Noninterest-bearing liabilities

 

111,904

 

 

 

 

 

 

 

104,450

 

 

 

 

 

Total liabilities

 

8,357,802

 

 

 

 

 

 

 

7,397,016

 

 

 

 

 

Total stockholders’ equity

 

992,252

 

 

 

 

 

 

 

896,988

 

 

 

 

 

Total liabilities and stockholders’ equity

$

9,350,054

 

 

 

 

 

 

$

8,294,004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income/spread

 

 

$

314,365

 

3.18

%

 

 

 

$

253,778

 

3.02

%

Net interest margin

 

 

 

 

3.59

%

 

 

 

 

 

3.26

%

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of interest-earning assets to interest-bearing liabilities

 

162

%

 

 

 

 

 

 

147

%

 

 

 

 

Total deposits

$

7,356,532

 

 

$

27,833

 

0.38

%

 

$

6,561,355

 

 

$

12,313

 

0.19

%

Total funding (1)

$

8,245,898

 

 

$

58,407

 

0.71

%

 

$

7,292,566

 

 

$

37,880

 

0.52

%

(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 share, return on average tangible common equity, adjusted noninterest income, adjusted noninterest expense, adjusted noninterest income to adjusted total revenue, adjusted noninterest expense to average total assets, pre-tax pre-provision (PTPP) income, adjusted PTPP income, PTPP income ROAA, adjusted PTPP income ROAA, efficiency ratio, adjusted efficiency ratio, 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 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 is calculated by adjusting net income for tax-effected noninterest income and noninterest expense adjustments and the tax impact from the exercise of stock appreciation rights for the periods indicated. Adjusted ROAA is computed by dividing annualized adjusted net income by average assets. Adjusted net income available to common stockholders is computed by removing the impact of preferred stock redemptions from adjusted net income. Adjusted diluted earnings per share is computed by dividing adjusted net income available to common stockholders by the weighted average diluted common shares outstanding.

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,

2022

 

September 30,

2022

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

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

 

 

 

 

 

 

 

 

 

Total assets

$

9,197,016

 

 

$

9,368,578

 

 

$

9,502,113

 

 

$

9,583,540

 

 

$

9,393,743

 

Less goodwill

 

(114,312

)

 

 

(114,312

)

 

 

(95,127

)

 

 

(95,127

)

 

 

(94,301

)

Less other intangible assets

 

(7,526

)

 

 

(8,081

)

 

 

(4,677

)

 

 

(4,990

)

 

 

(6,411

)

Tangible assets(1)

$

9,075,178

 

 

$

9,246,185

 

 

$

9,402,309

 

 

$

9,483,423

 

 

$

9,293,031

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity

$

959,618

 

 

$

951,990

 

 

$

949,130

 

 

$

979,009

 

 

$

1,065,290

 

Less preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

(94,956

)

Total common stockholders' equity

$

959,618

 

 

$

951,990

 

 

$

949,130

 

 

$

979,009

 

 

$

970,334

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity

$

959,618

 

 

$

951,990

 

 

$

949,130

 

 

$

979,009

 

 

$

1,065,290

 

Less goodwill

 

(114,312

)

 

 

(114,312

)

 

 

(95,127

)

 

 

(95,127

)

 

 

(94,301

)

Less other intangible assets

 

(7,526

)

 

 

(8,081

)

 

 

(4,677

)

 

 

(4,990

)

 

 

(6,411

)

Tangible equity(1)

 

837,780

 

 

 

829,597

 

 

 

849,326

 

 

 

878,892

 

 

 

964,578

 

Less preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

(94,956

)

Tangible common equity(1)

$

837,780

 

 

$

829,597

 

 

$

849,326

 

 

$

878,892

 

 

$

869,622

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity to total assets

 

10.43

%

 

 

10.16

%

 

 

9.99

%

 

 

10.22

%

 

 

11.34

%

Tangible equity to tangible assets(1)

 

9.23

%

 

 

8.97

%

 

 

9.03

%

 

 

9.27

%

 

 

10.38

%

Tangible common equity to tangible assets(1)

 

9.23

%

 

 

8.97

%

 

 

9.03

%

 

 

9.27

%

 

 

9.36

%

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

58,544,534

 

 

 

59,679,558

 

 

 

59,985,736

 

 

 

62,077,312

 

 

 

62,188,206

 

Class B non-voting non-convertible common shares outstanding

 

477,321

 

 

 

477,321

 

 

 

477,321

 

 

 

477,321

 

 

 

477,321

 

Total common shares outstanding

 

59,021,855

 

 

 

60,156,879

 

 

 

60,463,057

 

 

 

62,554,633

 

 

 

62,665,527

 

 

 

 

 

 

 

 

 

 

 

Book value per common share

$

16.26

 

 

$

15.83

 

 

$

15.70

 

 

$

15.65

 

 

$

15.48

 

Tangible common equity per share(1)

$

14.19

 

 

$

13.79

 

 

$

14.05

 

 

$

14.05

 

 

$

13.88

 

(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

 

Year Ended

 

December 31,

2022

 

September 30,

2022

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

December 31,

2022

 

December 31,

2021

Return on tangible common equity

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total stockholders' equity

$

989,414

 

 

$

960,806

 

 

$

969,885

 

 

$

1,049,912

 

 

$

1,035,782

 

 

$

992,252

 

 

$

896,988

 

Less average preferred stock

 

 

 

 

 

 

 

 

 

 

(75,965

)

 

 

(94,956

)

 

 

(18,731

)

 

 

(112,201

)

Average common stockholders' equity

 

989,414

 

 

 

960,806

 

 

 

969,885

 

 

 

973,947

 

 

 

940,826

 

 

 

973,521

 

 

 

784,787

 

Less average goodwill

 

(114,312

)

 

 

(98,916

)

 

 

(95,127

)

 

 

(94,307

)

 

 

(86,911

)

 

 

(100,715

)

 

 

(49,688

)

Less average other intangible assets

 

(7,869

)

 

 

(4,570

)

 

 

(4,869

)

 

 

(6,224

)

 

 

(4,994

)

 

 

(5,884

)

 

 

(2,924

)

Average tangible common equity(1)

$

867,233

 

 

$

857,320

 

 

$

869,889

 

 

$

873,416

 

 

$

848,921

 

 

$

866,922

 

 

$

732,175

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders

$

21,519

 

 

$

24,196

 

 

$

26,712

 

 

$

43,345

 

 

$

4,024

 

 

$

115,772

 

 

$

50,563

 

Add amortization of intangible assets

 

555

 

 

 

396

 

 

 

313

 

 

 

441

 

 

 

430

 

 

 

1,705

 

 

 

1,276

 

Less tax effect on amortization of intangible assets(2)

 

(164

)

 

 

(117

)

 

 

(93

)

 

 

(130

)

 

 

(127

)

 

 

(504

)

 

 

(377

)

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

$

21,910

 

 

$

24,475

 

 

$

26,932

 

 

$

43,656

 

 

$

4,327

 

 

$

116,973

 

 

$

51,462

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average equity

 

8.63

%

 

 

9.99

%

 

 

11.05

%

 

 

18.74

%

 

 

2.20

%

 

 

12.19

%

 

 

6.95

%

Return on average tangible common equity(1)

 

10.02

%

 

 

11.33

%

 

 

12.42

%

 

 

20.27

%

 

 

2.02

%

 

 

13.49

%

 

 

7.03

%

(1)

Non-GAAP measure.

(2)

Adjustments shown at a statutory tax rate of 29.6%.

Banc of California, Inc.

Consolidated Operations

Non-GAAP Measures, Continued

(Dollars in thousands, except per share data)

(Unaudited)