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Banc of California Reports First Quarter 2021 Financial Results

Banc of California, Inc. (NYSE: BANC) today reported net income of $14.4 million and net income available to common stockholders for the first quarter of 2021 of $7.8 million, or diluted earnings per common share of $0.15.

Highlights for the first quarter included:

  • Return on average assets of 0.74%
  • Average cost of total deposits of 0.28%, an 8 basis point decrease from the prior quarter, and period-end total cost of deposits of 0.24%
  • Noninterest-bearing deposit balances represented 28% of total deposits at March 31, 2021, up from 23% a year earlier
  • Allowance for credit losses at 1.43% of total loans and 148% of non-performing loans
  • Total deferrals/forbearances declined to $108.7 million at March 31, 2021 from $251.9 million at December 31, 2020
  • Common Equity Tier 1 capital at 11.50%
  • Entered into an agreement and plan of merger with Pacific Mercantile Bancorp, a commercial bank headquartered in Costa Mesa, California with total assets of $1.6 billion at December 31, 2020
  • Redemption of all Series D Preferred Stock for total consideration of $93.3 million

Jared Wolff, President & CEO of Banc of California, commented, “Our first quarter results reflected solid core operating performance and execution on the strategies that are enhancing the value of our franchise. We continued to grow average loans and earning assets, improve our deposit mix, reduce our cost of deposits, and maintain disciplined expense control. Certain non-core items in the quarter masked some of these results but, adjusted for these items, our quarterly results were very good.”

Mr. Wolff continued, “Strong loan production helped to offset runoff in certain legacy areas of our portfolio. Our loan pipeline is steadily building which should support continued loan and earning asset growth through the year, assuming economic trends continue. During the first quarter, we also announced that we entered into a definitive agreement to acquire Pacific Mercantile Bancorp. The transaction is currently on track to close during the third quarter of 2021 and both organizations are excited about the opportunities to leverage the collective strengths of the combined company, and to realize the earnings accretion and other benefits that will further accelerate profitability.”

Lynn Hopkins, Chief Financial Officer of Banc of California, said, “Given the high level of reserves we built during 2020 and improving economic forecasts, we had a small reserve release in the first quarter, and our allowance for credit losses to total loans ratio was unchanged from the prior quarter. We continued to see a significant decline in loan deferrals during the first quarter, although non-performing loans increased due to the downgrade of well-secured single family residential loans. We are pleased we were able to redeem our Series D Preferred Stock during the first quarter, which we expect to be accretive to our earnings per share going forward. With the improvement we are seeing in our financial performance and strong capital ratios, we remain well positioned to redeem our Series E Preferred Stock late in 2021 or in early 2022, which we expect will provide additional earnings accretion.”

Ms. Hopkins continued, “Our net income available to common stockholders and earnings per share in the first quarter included $3.6 million in pre-tax losses on alternative energy investment partnership investments, $1.4 million in pre-tax merger-related and indemnified professional fees, $3.4 million in Series D preferred stock redemption expense, and $2.1 million in tax benefits related to the exercise of all previously issued outstanding stock appreciation rights. Excluding these items, net of a more normalized effective tax rate of 25%, our adjusted net income available to common stockholders for the quarter would have been $12.9 million or $0.25 per diluted share.”

Income Statement Highlights

 

Three Months Ended

 

March 31,

2021

 

December 31,

2020

 

September 30,

2020

 

June 30,

2020

 

March 31,

2020

 

($ in thousands)

Total interest and dividend income

$

68,618

 

 

 

$

73,530

 

 

$

69,666

 

 

$

72,697

 

 

 

$

74,714

 

 

Total interest expense

10,702

 

 

 

11,967

 

 

13,811

 

 

17,382

 

 

 

22,853

 

 

Net interest income

57,916

 

 

 

61,563

 

 

55,855

 

 

55,315

 

 

 

51,861

 

 

Total noninterest income

4,381

 

 

 

6,975

 

 

3,954

 

 

5,528

 

 

 

2,061

 

 

Total revenue

62,297

 

 

 

68,538

 

 

59,809

 

 

60,843

 

 

 

53,922

 

 

Total noninterest expense

46,735

 

 

 

38,950

 

 

40,394

 

 

72,770

 

 

 

46,919

 

 

Pre-tax / pre-provision income (loss)

15,562

 

 

 

29,588

 

 

19,415

 

 

(11,927

)

 

 

7,003

 

 

(Reversal of) provision for credit losses

(1,107

)

 

 

991

 

 

1,141

 

 

11,826

 

 

 

15,761

 

 

Income tax expense (benefit)

2,294

 

 

 

6,894

 

 

2,361

 

 

(5,304

)

 

 

(2,165

)

 

Net income (loss)

$

14,375

 

 

 

$

21,703

 

 

$

15,913

 

 

$

(18,449

)

 

 

$

(6,593

)

 

 

 

 

 

 

 

 

 

 

 

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

$

7,825

 

 

 

$

17,706

 

 

$

12,084

 

 

$

(21,936

)

 

 

$

(9,694

)

 

(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

Q1-2021 vs Q4-2020

Net interest income decreased $3.6 million to $57.9 million for the first quarter due to lower prepayment fees, higher net nonaccrual interest reversal, lower amortized fee income from PPP loan forgiveness, and 2 less days in the current quarter, offset by higher average interest-earning assets and lower interest expense. Compared to the prior quarter, average interest-earning assets increased by $110.0 million to $7.36 billion, including higher average loans of $39.1 million and higher other interest-earning assets of $74.1 million.

The net interest margin decreased 19 basis points to 3.19% for the first quarter of 2021 from 3.38% for the fourth quarter of 2020 as the average earning-assets yield decreased 26 basis points and the average cost of total funding decreased 7 basis points. The yield on average interest-earning assets decreased to 3.78% for the first quarter from 4.04% for the fourth quarter due mostly to lower loan yields. The average yield on loans decreased 28 basis points to 4.30% during the first quarter due to impact of lower prepayment penalty fees, higher net reversal of nonaccrual loan interest, and lower amortized fees from PPP loan forgiveness; these items increased the first quarter loan yield by 13 basis points and the fourth quarter loan yield by 34 basis points. The average yield on securities remained flat at 2.13% between quarters. The average yield on our collateralized loan obligations (CLOs) decreased 3 basis points to 1.91% for the first quarter from 1.94% for the fourth quarter as these securities reprice quarterly.

The average cost of total funding decreased 7 basis points to 0.63% for the first quarter from 0.70% for the fourth quarter. This decrease was driven by the lower average cost of interest-bearing liabilities and improved funding mix, including higher average noninterest-bearing deposits during the first quarter. During the first quarter, average deposits increased $164.2 million, consisting of higher average noninterest-bearing deposits of $205.1 million and lower average interest-bearing deposits of $40.9 million. Average Federal Home Loan Bank (FHLB) advances decreased $87.7 million primarily due to maturities of $105.0 million in advances during the prior quarter. The average cost of interest-bearing liabilities decreased 6 basis points to 0.83% for the first quarter of 2021 from 0.89% for the fourth quarter of 2020 due to actively managing down the cost of interest-bearing deposits into the current rate environment. The average cost of interest-bearing deposits declined 9 basis points to 0.38% for the first quarter from 0.47% for the prior quarter. Additionally, average noninterest-bearing deposits represented 27% of total average deposits for the first quarter compared to 24% of total average deposits for the fourth quarter. The average cost of total deposits decreased 8 basis points to 0.28% for the first quarter. The spot rate of total deposits at the end of the first quarter of 2021 was 0.24%.

Provision for credit losses

Q1-2021 vs Q4-2020

The provision for credit losses was a reversal of $1.1 million for the first quarter, compared to a provision for credit losses of $1.0 million for the fourth quarter. The first quarter reversal of credit losses was due primarily to improvements in key macro-economic forecast variables, such as unemployment and gross domestic product, consideration of credit quality metrics, and lower period end loan balances of $134.0 million.

Noninterest income

Q1-2021 vs Q4-2020

Noninterest income decreased $2.6 million, to $4.4 million for the first quarter due mostly to lower other income from legacy legal settlements for the benefit of the Company which totaled $2.8 million during the fourth quarter of 2020. Customer service fees decreased by $195 thousand due to lower loan fees of $367 thousand, offset by higher deposit activity fees of $172 thousand. The increase in deposit activity fees is attributed to higher balances and our initiative to bring our service fee schedules more in line with market.

Noninterest expense

Q1-2021 vs Q4-2020

Noninterest expense increased $7.8 million to $46.7 million for the first quarter compared to the prior quarter. The increase was primarily due to higher professional fees of $4.0 million, higher merger-related costs of $700 thousand, and higher net losses in alternative energy partnership investments of $4.3 million. Professional fees included indemnified legal expenses, net of recoveries, of $721 thousand in the first quarter compared to net recoveries of $4.2 million during the fourth quarter. These increases were offset by lower occupancy and equipment of $364 thousand due mostly to lower rent and other facility-related expenses and a $566 thousand decrease in all other expense. The fourth quarter all other expenses included the write-off of capitalized software costs of $336 thousand; there were no similar charges in the first quarter. Total operating costs, defined as noninterest expense adjusted for certain non-core items (refer to section Non-GAAP Measures), decreased $2.3 million to $41.7 million for the first quarter compared to $44.0 million for the prior quarter primarily due to lower professional fees, occupancy and equipment, and other expenses.

Income taxes

Q1-2021 vs Q4-2020

Income tax expense totaled $2.3 million for the first quarter resulting in an effective tax rate of 13.8% compared to $6.9 million for the fourth quarter and an effective tax rate of 24.1%. The lower effective tax rate between quarters was due to a tax benefit resulting from the exercise of all previously issued outstanding stock appreciation rights, including a net benefit of $2.1 million in the first quarter. The effective tax rate is expected to be in the 25% to 27% range for the remaining quarters in 2021.

Balance Sheet

At March 31, 2021, total assets were $7.93 billion, which represented a linked-quarter increase of $56.1 million. The following table shows selected balance sheet line items as of the dates indicated.

 

 

 

Amount Change

 

March 31,

2021

 

December 31,

2020

 

September 30,

2020

 

June 30,

2020

 

March 31,

2020

 

Q1-21 vs.

Q4-20

 

Q1-21 vs.

Q1-20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

Securities available-for-sale

$

1,270,830

 

 

$

1,231,431

 

 

$

1,245,867

 

 

$

1,176,029

 

 

$

969,427

 

 

$

39,399

 

 

 

$

301,403

 

 

Loans held-for-investment

$

5,764,401

 

 

$

5,898,405

 

 

$

5,678,002

 

 

$

5,627,696

 

 

$

5,667,464

 

 

$

(134,004

)

 

 

$

96,937

 

 

Loans held-for-sale

$

1,408

 

 

$

1,413

 

 

$

1,849

 

 

$

19,768

 

 

$

20,234

 

 

$

(5

)

 

 

$

(18,826

)

 

Total assets

$

7,933,459

 

 

$

7,877,334

 

 

$

7,738,106

 

 

$

7,770,138

 

 

$

7,662,607

 

 

$

56,125

 

 

 

$

270,852

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

$

1,700,343

 

 

$

1,559,248

 

 

$

1,450,744

 

 

$

1,391,504

 

 

$

1,256,081

 

 

$

141,095

 

 

 

$

444,262

 

 

Total deposits

$

6,142,042

 

 

$

6,085,800

 

 

$

6,032,266

 

 

$

6,037,465

 

 

$

5,562,838

 

 

$

56,242

 

 

 

$

579,204

 

 

Borrowings(1)

$

891,546

 

 

$

796,110

 

 

$

733,105

 

 

$

790,707

 

 

$

1,151,479

 

 

$

95,436

 

 

 

$

(259,933

)

 

Total liabilities

$

7,128,766

 

 

$

6,980,127

 

 

$

6,863,852

 

 

$

6,923,179

 

 

$

6,827,605

 

 

$

148,639

 

 

 

$

301,161

 

 

Total equity

$

804,693

 

 

$

897,207

 

 

$

874,254

 

 

$

846,959

 

 

$

835,002

 

 

$

(92,514

)

 

 

$

(30,309

)

 

(1)

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

Investments

Securities available-for-sale increased $39.4 million during the first quarter to $1.27 billion at March 31, 2021 primarily due to purchases of $52.8 million, offset by principal payments of $9.4 million and lower unrealized net gains of $3.6 million. The decrease in the 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, offset by improved pricing of CLOs and corporate debt securities due to lower credit spreads. There were no sales of securities during the first quarter. As of March 31, 2021, our securities portfolio included $683.9 million of CLOs, $334.3 million of agency securities, $85.5 million of municipal securities, $150.3 million of corporate debt securities, and $16.7 million of SBA pool securities. The CLO portfolio, which is comprised only of AA and AAA rated securities, represented 53.8% of the total securities portfolio and the carrying value included an unrealized net loss of $3.6 million at March 31, 2021 compared to an unrealized net loss of $9.7 million at December 31, 2020.

Loans

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

 

March 31,

2021

 

December 31,

2020

 

September 30,

2020

 

June 30,

2020

 

March 31,

2020

 

($ in thousands)

Composition of held-for-investment loans

 

 

 

 

 

 

 

 

 

Commercial real estate

$

839,965

 

 

$

807,195

 

 

$

826,683

 

 

$

822,694

 

 

$

810,024

 

Multifamily

1,258,278

 

 

1,289,820

 

 

1,476,803

 

 

1,434,071

 

 

1,466,083

 

Construction

169,122

 

 

176,016

 

 

197,629

 

 

212,979

 

 

227,947

 

Commercial and industrial

1,878,325

 

 

2,088,308

 

 

1,586,824

 

 

1,436,990

 

 

1,578,223

 

SBA

338,903

 

 

273,444

 

 

320,573

 

 

310,784

 

 

70,583

 

Total commercial loans

4,484,593

 

 

4,634,783

 

 

4,408,512

 

 

4,217,518

 

 

4,152,860

 

Single-family residential mortgage

1,253,251

 

 

1,230,236

 

 

1,234,479

 

 

1,370,785

 

 

1,467,375

 

Other consumer

26,557

 

 

33,386

 

 

35,011

 

 

39,393

 

 

47,229

 

Total consumer loans

1,279,808

 

 

1,263,622

 

 

1,269,490

 

 

1,410,178

 

 

1,514,604

 

Total gross loans

$

5,764,401

 

 

$

5,898,405

 

 

$

5,678,002

 

 

$

5,627,696

 

 

$

5,667,464

 

Composition percentage of held-for-investment loans

 

 

 

 

 

 

 

 

 

Commercial real estate

14.6

%

 

13.7

%

 

14.6

%

 

14.6

%

 

14.3

%

Multifamily

21.8

%

 

21.9

%

 

26.0

%

 

25.5

%

 

25.9

%

Construction

2.9

%

 

3.0

%

 

3.5

%

 

3.8

%

 

4.0

%

Commercial and industrial

32.6

%

 

35.3

%

 

28.0

%

 

25.5

%

 

27.9

%

SBA

5.9

%

 

4.6

%

 

5.6

%

 

5.5

%

 

1.2

%

Total commercial loans

77.8

%

 

78.5

%

 

77.7

%

 

74.9

%

 

73.3

%

Single-family residential mortgage

21.7

%

 

20.9

%

 

21.7

%

 

24.4

%

 

25.9

%

Other consumer

0.5

%

 

0.6

%

 

0.6

%

 

0.7

%

 

0.8

%

Total consumer loans

22.2

%

 

21.5

%

 

22.3

%

 

25.1

%

 

26.7

%

Total gross loans

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

Held-for-investment loans decreased $134.0 million to $5.76 billion from the prior quarter, resulting from lower commercial and industrial (C&I) loans of $210.0 million due, in part, to decreased utilization of credit facilities and decreases in multifamily loans of $31.5 million, and construction loans of $6.9 million due to prepayment activity. The decreases were partially offset by increases in commercial real estate loans of $32.8 million and SBA loans of $65.5 million due mostly to $131.9 million in new PPP loans originated, offset by the SBA processing forgiveness requests of $62.5 million during the quarter. At March 31, 2021, SBA loans included $276.0 million of PPP loans, net of fees.

We continue to focus the real estate loan portfolio toward relationship-based multifamily, bridge, light infill construction, and commercial real estate loans. Currently, loans secured by residential real estate (single-family, multifamily, single-family construction, and credit facilities) represent approximately 66% of our total loans outstanding.

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

 

March 31, 2021

 

Amount

 

% of Portfolio

 

($ in thousands)

C&I Portfolio by Industry

 

 

 

Finance and insurance (includes Warehouse lending)

$

1,220,408

 

 

65

%

Real Estate & Rental Leasing

230,781

 

 

12

%

Gas Stations

68,672

 

 

4

%

Healthcare

68,964

 

 

4

%

Wholesale Trade

40,803

 

 

2

%

Television / Motion Pictures

34,067

 

 

2

%

Manufacturing

25,198

 

 

1

%

Food Services

31,366

 

 

2

%

Other Retail Trade

21,167

 

 

1

%

Professional Services

16,993

 

 

1

%

Transportation

4,773

 

 

%

Accommodations

2,427

 

 

%

All other

112,706

 

 

6

%

Total

$

1,878,325

 

 

100

%

Deposits

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

 

March 31,

2021

 

December 31,

2020

 

September 30,

2020

 

June 30,

2020

 

March 31,

2020

 

($ in thousands)

Composition of deposits

 

 

 

 

 

 

 

 

 

Noninterest-bearing checking

$

1,700,343

 

 

$

1,559,248

 

 

$

1,450,744

 

 

$

1,391,504

 

 

$

1,256,081

 

Interest-bearing checking

2,088,528

 

 

2,107,942

 

 

2,045,115

 

 

1,846,698

 

 

1,572,389

 

Money market

775,072

 

 

714,297

 

 

689,769

 

 

765,854

 

 

575,820

 

Savings

909,631

 

 

932,363

 

 

946,293

 

 

939,018

 

 

877,947

 

Non-brokered certificates of deposit

668,468

 

 

755,727

 

 

820,531

 

 

924,630

 

 

1,071,936

 

Brokered certificates of deposit

 

 

16,223

 

 

79,814

 

 

169,761

 

 

208,665

 

Total deposits

$

6,142,042

 

 

$

6,085,800

 

 

$

6,032,266

 

 

$

6,037,465

 

 

$

5,562,838

 

Composition percentage of deposits

 

 

 

 

 

 

 

 

 

Noninterest-bearing checking

27.7

%

 

25.6

%

 

24.1

%

 

23.0

%

 

22.6

%

Interest-bearing checking

34.0

%

 

34.6

%

 

33.9

%

 

30.6

%

 

28.3

%

Money market

12.6

%

 

11.7

%

 

11.4

%

 

12.7

%

 

10.3

%

Savings

14.8

%

 

15.3

%

 

15.7

%

 

15.6

%

 

15.8

%

Non-brokered certificates of deposit

10.9

%

 

12.4

%

 

13.6

%

 

15.3

%

 

19.3

%

Brokered certificates of deposit

%

 

0.4

%

 

1.3

%

 

2.8

%

 

3.7

%

Total deposits

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

Total deposits increased $56.2 million during the first quarter of 2021 to $6.14 billion due to higher noninterest-bearing checking balances of $141.1 million and money market balances of $60.8 million, offset by lower interest-bearing checking of $19.4 million, savings balances of $22.7 million, and non-brokered certificates of deposit of $87.3 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 $1.70 billion and represented 27.7% of total deposits at March 31, 2021 compared to $1.56 billion, or 25.6% of total deposits, at December 31, 2020.

Debt

Advances from the FHLB increased $95.3 million, or 18%, to $635.1 million, as of March 31, 2021, due to higher overnight advances, offset by maturities of $45.0 million in term advances. At the end of the first quarter, FHLB advances included $225.0 million in overnight borrowings, $5.0 million in term advances maturing within three months, and $411.0 million maturing beyond three months with a weighted average life of 4.7 years and weighted average interest rate of 2.53%.

Equity

At March 31, 2021, total stockholders’ equity decreased by $92.5 million to $804.7 million and tangible common equity decreased by $2.3 million to $670.2 million on a linked-quarter basis. The decrease in total stockholders’ equity for the first quarter, was a result of the redemption of all remaining Series D Preferred Stock for $93.3 million, lower net accumulated other comprehensive income of $2.6 million, dividends to common and preferred stockholders of $6.2 million and the impact of vested and exercised share-based awards of $6.4 million, offset by net income of $14.4 million and share-based award compensation of $1.5 million. Tangible book value per share decreased to $13.24 as of March 31, 2021 from $13.39 at December 31, 2020.

Capital ratios remain strong with total risk-based capital at 15.87% and a tier 1 leverage ratio of 9.62%. The following table sets forth our regulatory capital ratios at March 31, 2021 and the previous four quarters. 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 10 basis points at March 31, 2021.

 

March 31,

2021

 

December 31,

2020

 

September 30,

2020

 

June 30,

2020

 

March 31,

2020

Capital Ratios(1)

 

 

 

 

 

 

 

 

 

Banc of California, Inc.

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

15.87

%

 

17.01

%

 

16.19

%

 

16.35

%

 

16.16

%

Tier 1 risk-based capital ratio

13.17

%

 

14.35

%

 

14.94

%

 

15.10

%

 

14.91

%

Common equity tier 1 capital ratio

11.50

%

 

11.19

%

 

11.59

%

 

11.68

%

 

11.58

%

Tier 1 leverage ratio

9.62

%

 

10.90

%

 

10.79

%

 

10.56

%

 

11.20

%

Banc of California, NA

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

17.82

%

 

17.27

%

 

18.14

%

 

18.17

%

 

18.21

%

Tier 1 risk-based capital ratio

16.57

%

 

16.02

%

 

16.89

%

 

16.92

%

 

16.96

%

Common equity tier 1 capital ratio

16.57

%

 

16.02

%

 

16.89

%

 

16.92

%

 

16.96

%

Tier 1 leverage ratio

12.13

%

 

12.19

%

 

12.21

%

 

11.84

%

 

12.67

%

(1)

March 31, 2021 capital ratios are preliminary.

Credit Quality

 

March 31,

2021

 

December 31,

2020

 

September 30,

2020

 

June 30,

2020

 

March 31,

2020

Asset quality information and ratios

($ in thousands)

Delinquent loans held-for-investment

 

 

 

 

 

 

 

 

 

30 to 89 days delinquent

$

31,005

 

 

$

13,981

 

 

$

51,229

 

 

$

49,810

 

 

$

56,338

 

90+ days delinquent

30,292

 

 

17,636

 

 

31,809

 

 

45,384

 

 

28,632

 

Total delinquent loans

$

61,297

 

 

$

31,617

 

 

$

83,038

 

 

$

95,194

 

 

$

84,970

 

Total delinquent loans to total loans

1.06

%

 

0.54

%

 

1.46

%

 

1.69

%

 

1.50

%

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

 

 

 

 

 

 

 

 

 

Non-accrual loans

$

55,920

 

 

$

35,900

 

 

$

66,337

 

 

$

72,703

 

 

$

56,471

 

90+ days delinquent and still accruing loans

 

 

728

 

 

547

 

 

 

 

 

Non-performing loans

55,920

 

 

36,628

 

 

66,884

 

 

72,703

 

 

56,471

 

Other real estate owned

 

 

 

 

 

 

 

 

 

Non-performing assets

$

55,920

 

 

$

36,628

 

 

$

66,884

 

 

$

72,703

 

 

$

56,471

 

ALL to non-performing loans

141.90

%

 

221.22

%

 

135.95

%

 

124.30

%

 

138.55

%

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

0.97

%

 

0.62

%

 

1.18

%

 

1.29

%

 

1.00

%

Non-performing assets to total assets

0.70

%

 

0.46

%

 

0.86

%

 

0.94

%

 

0.74

%

Troubled debt restructurings (TDRs)

 

 

 

 

 

 

 

 

 

Performing TDRs

$

4,547

 

 

$

4,733

 

 

$

5,408

 

 

$

5,597

 

 

$

6,100

 

Non-performing TDRs

4,130

 

 

4,264

 

 

20,002

 

 

20,275

 

 

20,852

 

Total TDRs

$

8,677

 

 

$

8,997

 

 

$

25,410

 

 

$

25,872

 

 

$

26,952

 

Total delinquent loans increased $29.7 million in the first quarter to $61.3 million at March 31, 2021, due to $39.0 million of additions, offset by $9.2 million returning to current status and $0.2 million of principal payments or payoffs. Delinquent loans included single-family residential (SFR) loans of $47.8 million, or 78% of the total delinquent balance at quarter end, and represented $24.9 million of the quarter over quarter increase. Excluding delinquent SFR loans, the remaining delinquent loans totaled $13.5 million, or 0.30% of total loans at March 31, 2021.

Non-performing loans increased $19.3 million to $55.9 million as of March 31, 2021, of which $18.1 million, or 32%, relates to loans in a current payment status. The first quarter increase was due to $22.5 million of loans placed on non-accrual status, offset by $3.2 million in cured loans and payoffs. Of the $22.5 million of loans placed on non-accrual status, $20.0 million, or 88.7%, of such loans, related to SFR loans.

At March 31, 2021, non-performing loans included (i) a legacy relationship totaling $7.3 million, or 13% of total non-performing loans, that is well-secured by a combination of commercial real estate and SFR properties with an average loan-to-value ratio of 51%, (ii) SFR loans totaling $32.4 million, or 58% of total non-performing loans, and (iii) other commercial loans of $16.1 million, or 29% of total non-performing loans.

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:

 

March 31, 2021

 

December 31, 2020

 

Count

 

Amount(1)

 

% of Loans

in Category

 

Count

 

Amount

 

% of Loans

in Category

 

($ in thousands)

Single-family residential mortgage

47

 

 

$

48,831

 

 

4

%

 

123

 

 

$

138,771

 

 

11

%

All other loans

15

 

 

59,858

 

 

1

%

 

33

 

 

113,163

 

 

2

%

Total

62

 

 

$

108,689

 

 

2

%

 

156

 

 

$

251,934

 

 

4

%

(1)

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

Loans on deferment or forbearance status decreased $143.2 million, or 57%, during the first quarter of 2021. Of the balances as of March 31, 2021, all other loans include 8 commercial loans totaling $34.0 million under review and pending approval for deferral, of which 3 loans totaling $17.3 million were initial deferral requests. We continue to actively monitor and manage all lending relationships in a manner that supports our clients and protects the Bank.

Allowance for Credit Losses

 

Three Months Ended

 

March 31,

2021

 

December 31,

2020

 

September 30,

2020

 

June 30,

2020

 

March 31,

2020

 

($ in thousands)

Allowance for loan losses (ALL)

 

 

 

 

 

 

 

 

 

Balance at beginning of period

$

81,030

 

 

 

$

90,927

 

 

 

$

90,370

 

 

 

$

78,243

 

 

 

$

57,649

 

 

Adoption of ASU 2016-13(1)

 

 

 

 

 

 

 

 

 

 

 

 

7,609

 

 

Loans charged off

(565

)

 

 

(11,520

)

 

 

(1,821

)

 

 

 

 

 

(2,076

)

 

Recoveries

172

 

 

 

609

 

 

 

248

 

 

 

608

 

 

 

350

 

 

Net (charge-offs) recoveries

(393

)

 

 

(10,911

)

 

 

(1,573

)

 

 

608

 

 

 

(1,726

)

 

Provision for (reversal of) loan losses

(1,284

)

 

 

1,014

 

 

 

2,130

 

 

 

11,519

 

 

 

14,711

 

 

Balance at end of period

$

79,353

 

 

 

$

81,030

 

 

 

$

90,927

 

 

 

$

90,370

 

 

 

$

78,243

 

 

Reserve for unfunded loan commitments

 

 

 

 

 

 

 

 

 

Balance at beginning of period

$

3,183

 

 

 

$

3,206

 

 

 

$

4,195

 

 

 

$

3,888

 

 

 

$

4,064

 

 

Adoption of ASU 2016-13(1)

 

 

 

 

 

 

 

 

 

 

 

 

(1,226

)

 

Provision for (reversal of) credit losses

177

 

 

 

(23

)

 

 

(989

)

 

 

307

 

 

 

1,050

 

 

Balance at end of period

3,360

 

 

 

3,183

 

 

 

3,206

 

 

 

4,195

 

 

 

3,888

 

 

Allowance for credit losses (ACL)

$

82,713

 

 

 

$

84,213

 

 

 

$

94,133

 

 

 

$

94,565

 

 

 

$

82,131

 

 

 

 

 

 

 

 

 

 

 

 

ALL to total loans

1.38

 

%

 

1.37

 

%

 

1.60

 

%

 

1.61

 

%

 

1.38

 

%

ACL to total loans

1.43

 

%

 

1.43

 

%

 

1.66

 

%

 

1.68

 

%

 

1.45

 

%

ACL to total loans, excluding PPP loans

1.51

 

%

 

1.48

 

%

 

1.74

 

%

 

1.76

 

%

 

1.45

 

%

ACL to NPLs

147.91

 

%

 

229.91

 

%

 

140.74

 

%

 

130.07

 

%

 

145.44

 

%

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

0.03

 

%

 

0.77

 

%

 

0.12

 

%

 

(0.04

)

%

 

0.12

 

%

 

 

 

 

 

 

 

 

 

 

Reserve for loss on repurchased loans

 

 

 

 

 

 

 

 

 

Balance at beginning of period

$

5,515

 

 

 

$

5,487

 

 

 

$

5,567

 

 

 

$

5,601

 

 

 

$

6,201

 

 

Initial provision for loan repurchases

 

 

 

 

 

 

11

 

 

 

 

 

 

 

 

Provision for (reversal of) provision for loan repurchases

(132

)

 

 

28

 

 

 

(91

)

 

 

(34

)

 

 

(600

)

 

Balance at end of period

$

5,383

 

 

 

$

5,515

 

 

 

$

5,487

 

 

 

$

5,567

 

 

 

$

5,601

 

 

(1)

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

The allowance for expected credit losses (ACL), which includes the reserve for unfunded loan commitments, totaled $82.7 million, or 1.43% of total loans, at March 31, 2021, compared to $84.2 million, or 1.43% of total loans, at December 31, 2020. The $1.5 million decrease in the ACL was due to: (i) lower general reserves of $1.0 million from portfolio mix, (ii) net charge-offs of $393 thousand, and (iii) lower specific reserves of $58 thousand. The ACL coverage of non-performing loans was 148% at March 31, 2021 compared to 230% at December 31, 2020.

Our ACL methodology and resulting provision continues to be impacted by the current economic uncertainty and volatility caused by the COVID-19 pandemic. The ACL methodology uses a nationally recognized, third-party model that includes many assumptions based on historical and peer loss data, current loan portfolio risk profile including risk ratings, and economic forecasts including macroeconomic variables (MEVs) released by our model provider during March 2021. In contrast to the December 2020 forecasts, the March forecasts reflect a more favorable view of the economy (i.e. higher GDP growth rates and lower unemployment rates). While the forecasts are improving and the economy is showing signs of recovery with the rollout of the vaccine and additional government stimulus, there remains uncertainty regarding the ultimate impact of the pandemic and the pace of the recovery. Accordingly, our economic assumptions and the resulting ACL level and provision reflect these uncertainties. The ACL also incorporated qualitative factors to account for certain loan portfolio characteristics that are not taken into consideration by the third-party model including underlying strengths and weaknesses in the loan portfolio. As is the case with all estimates, the ACL is expected to be impacted in future periods by economic volatility, changing economic forecasts, underlying model assumptions, and asset quality metrics, all of which may be better than or worse than current estimates.

The Company will host a conference call to discuss its first quarter 2021 financial results at 10:00 a.m. Pacific Time (PT) on Thursday, April 22, 2021. Interested parties are welcome to attend the conference call by dialing (888) 317-6003, and referencing event code 3056351. A live audio webcast will also be available and the webcast link will be posted on the Company’s Investor Relations website at www.bancofcal.com/investor. The slide presentation for the call will also be available on the Company's Investor Relations website prior to the call. A replay of the call will be made available approximately one hour after the call has ended on the Company’s Investor Relations website at www.bancofcal.com/investor or by dialing (877) 344-7529 and referencing event code 10145608.

About Banc of California, Inc.

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

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the “Safe-Harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are necessarily subject to risk and uncertainty and actual results could differ materially from those anticipated due to various factors, including those set forth from time to time in the documents filed or furnished by Banc of California, Inc. with the Securities and Exchange Commission (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 proposed acquisition of Pacific Mercantile Bancorp 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 possibility that the merger does not close when expected or at all because required regulatory, shareholder or other approvals, financial tests or other conditions to closing are not received or satisfied on a timely basis or at all; (ii) changes in Banc of California Inc.’s or Pacific Mercantile Bancorp’s stock price before closing, including as a result of its financial performance prior to closing, or more generally due to broader stock market movements, and the performance of financial companies and peer group companies; (iii) 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; (iv) the ability to promptly and effectively integrate the businesses of Banc of California Inc. and Pacific Mercantile Bancorp; (v) the reaction to the transaction of the companies’ customers, employees and counterparties; (vi) diversion of management time on merger-related issues; (vii) lower than expected revenues, credit quality deterioration or a reduction in real estate values or a reduction in net earnings; and (viii) other risks that are described in Banc of California Inc.’s and Pacific Mercantile Bancorp’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.

Additional Information About the Merger and Where to Find It

Investors and security holders are urged to carefully review and consider each of Banc of California Inc.’s and Pacific Mercantile Bancorp’s public filings with the SEC, including but not limited to their Annual Reports on Form 10-K, their proxy statements, their Current Reports on Form 8-K and their Quarterly Reports on Form 10-Q. The documents filed by Banc of California Inc. with the SEC may be obtained free of charge at Banc of California Inc.’s website at www.bancofcal.com or at the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from Banc of California Inc. by requesting them in writing to Banc of California, Inc., 3 MacArthur Place, Santa Ana, CA 92707; Attention: Investor Relations, by submitting an email request to ir@bancofcal.com or by telephone at (855) 361-2262.

The documents filed by Pacific Mercantile Bancorp with the SEC may be obtained free of charge at Pacific Mercantile Bancorp’s website at www.pmbank.com or at the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from Pacific Mercantile Bancorp by requesting them in writing to Pacific Mercantile Bancorp, 949 South Coast Drive, Suite 300, Costa Mesa, CA 92626; Attention: Investor Relations, or by telephone at 714-438-2500.

Banc of California Inc. intends to file a registration statement with the SEC, which will include a joint proxy statement of Banc of California Inc. and Pacific Mercantile Bancorp and a prospectus of Banc of California Inc., and each party will file other documents regarding the proposed transaction with the SEC. Before making any voting or investment decision, investors and security holders of Banc of California Inc. and Pacific Mercantile Bancorp are urged to carefully read the entire registration statement and joint proxy statement/prospectus, when they become available, as well as any amendments or supplements to these documents, because they will contain important information about the proposed transaction. A definitive joint proxy statement/prospectus will be sent to the shareholders of Banc of California Inc. and Pacific Mercantile Bancorp seeking any required shareholder approvals. Investors and security holders will be able to obtain the registration statement and the joint proxy statement/prospectus free of charge from the SEC’s website or from Banc of California Inc. or Pacific Mercantile Bancorp by writing to the addresses provided for each company set forth in the paragraphs above.

Banc of California Inc., Pacific Mercantile Bancorp, their directors, executive officers and certain other persons may be deemed to be participants in the solicitation of proxies from Banc of California Inc. and Pacific Mercantile Bancorp shareholders in favor of the approval of the transaction. Information about the directors and executive officers of Banc of California Inc. and their ownership of Banc of California Inc. common stock is set forth in the proxy statement for Banc of California Inc.’s 2021 annual meeting of stockholders, as previously filed with the SEC. Information about the directors and executive officers of Pacific Mercantile Bancorp and their ownership of Pacific Mercantile Bancorp common stock is set forth in the proxy statement for PMB’s 2020 annual meeting of shareholders, as previously filed with the SEC. Shareholders may obtain additional information regarding the interests of such participants by reading the registration statement and the joint proxy statement/prospectus when they become available.

Banc of California, Inc.

Consolidated Statements of Financial Condition (Unaudited)

(Dollars in thousands)

 

 

March 31,

2021

 

December 31,

2020

 

September 30,

2020

 

June 30,

2020

 

March 31,

2020

ASSETS

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

379,509

 

 

 

$

220,819

 

 

 

$

292,490

 

 

 

$

420,640

 

 

 

$

435,992

 

 

Securities available-for-sale

1,270,830

 

 

 

1,231,431

 

 

 

1,245,867

 

 

 

1,176,029

 

 

 

969,427

 

 

Loans held-for-sale

1,408

 

 

 

1,413

 

 

 

1,849

 

 

 

19,768

 

 

 

20,234

 

 

Loans held-for-investment

5,764,401

 

 

 

5,898,405

 

 

 

5,678,002

 

 

 

5,627,696

 

 

 

5,667,464

 

 

Allowance for loan losses

(79,353

)

 

 

(81,030

)

 

 

(90,927

)

 

 

(90,370

)

 

 

(78,243

)

 

Federal Home Loan Bank and other bank stock

44,964

 

 

 

44,506

 

 

 

44,809

 

 

 

46,585

 

 

 

57,237

 

 

Servicing rights, net

1,407

 

 

 

1,454

 

 

 

1,621

 

 

 

1,753

 

 

 

2,009

 

 

Premises and equipment, net

120,071

 

 

 

121,520

 

 

 

123,812

 

 

 

125,247

 

 

 

127,379

 

 

Alternative energy partnership investments, net

23,809

 

 

 

27,977

 

 

 

27,786

 

 

 

26,967

 

 

 

27,347

 

 

Goodwill

37,144

 

 

 

37,144

 

 

 

37,144

 

 

 

37,144

 

 

 

37,144

 

 

Other intangible assets, net

2,351

 

 

 

2,633

 

 

 

2,939

 

 

 

3,292

 

 

 

3,722

 

 

Deferred income tax, net

47,877

 

 

 

45,957

 

 

 

43,744

 

 

 

48,288

 

 

 

63,849

 

 

Income tax receivable

210

 

 

 

1,105

 

 

 

10,701

 

 

 

13,094

 

 

 

7,198

 

 

Bank owned life insurance investment

112,479

 

 

 

111,807

 

 

 

111,115

 

 

 

110,487

 

 

 

110,397

 

 

Right of use assets

22,069

 

 

 

19,633

 

 

 

18,909

 

 

 

19,408

 

 

 

20,882

 

 

Other assets

184,283

 

 

 

192,560

 

 

 

188,245

 

 

 

184,110

 

 

 

190,569

 

 

Total assets

$

7,933,459

 

 

 

$

7,877,334

 

 

 

$

7,738,106

 

 

 

$

7,770,138

 

 

 

$

7,662,607

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

$

1,700,343

 

 

 

$

1,559,248

 

 

 

$

1,450,744

 

 

 

$

1,391,504

 

 

 

$

1,256,081

 

 

Interest-bearing deposits

4,441,699

 

 

 

4,526,552

 

 

 

4,581,522

 

 

 

4,645,961

 

 

 

4,306,757

 

 

Total deposits

6,142,042

 

 

 

6,085,800

 

 

 

6,032,266

 

 

 

6,037,465

 

 

 

5,562,838

 

 

Advances from Federal Home Loan Bank

635,105

 

 

 

539,795

 

 

 

559,482

 

 

 

617,170

 

 

 

978,000

 

 

Notes payable, net

256,441

 

 

 

256,315

 

 

 

173,623

 

 

 

173,537

 

 

 

173,479

 

 

Reserve for loss on repurchased loans

5,383

 

 

 

5,515

 

 

 

5,487

 

 

 

5,567

 

 

 

5,601

 

 

Lease liabilities

23,173

 

 

 

20,647

 

 

 

19,938

 

 

 

20,531

 

 

 

22,075

 

 

Accrued expenses and other liabilities

66,622

 

 

 

72,055

 

 

 

73,056

 

 

 

68,909

 

 

 

85,612

 

 

Total liabilities

7,128,766

 

 

 

6,980,127

 

 

 

6,863,852

 

 

 

6,923,179

 

 

 

6,827,605

 

 

Commitments and contingent liabilities

 

 

 

 

 

 

 

 

 

Preferred stock

94,956

 

 

 

184,878

 

 

 

184,878

 

 

 

185,037

 

 

 

187,687

 

 

Common stock

526

 

 

 

522

 

 

 

522

 

 

 

522

 

 

 

520

 

 

Common stock, class B non-voting non-convertible

5

 

 

 

5

 

 

 

5

 

 

 

5

 

 

 

5

 

 

Additional paid-in capital

629,844

 

 

 

634,704

 

 

 

633,409

 

 

 

632,117

 

 

 

631,125

 

 

Retained earnings

115,004

 

 

 

110,179

 

 

 

95,001

 

 

 

85,670

 

 

 

110,640

 

 

Treasury stock

(40,827

)

 

 

(40,827

)

 

 

(40,827

)

 

 

(40,827

)

 

 

(40,827

)

 

Accumulated other comprehensive income (loss), net

5,185

 

 

 

7,746

 

 

 

1,266

 

 

 

(15,565

)

 

 

(54,148

)

 

Total stockholders’ equity

804,693

 

 

 

897,207

 

 

 

874,254

 

 

 

846,959

 

 

 

835,002

 

 

Total liabilities and stockholders’ equity

$

7,933,459

 

 

 

$

7,877,334

 

 

 

$

7,738,106

 

 

 

$

7,770,138

 

 

 

$

7,662,607

 

 

 

Banc of California, Inc.

Consolidated Statements of Operations (Unaudited)

(Dollars in thousands, except per share data)

 

 

Three Months Ended

 

March 31,

2021

 

December 31,

2020

 

September 30,

2020

 

June 30,

2020

 

March 31,

2020

Interest and dividend income

 

 

 

 

 

 

 

 

 

Loans, including fees

$

61,345

 

 

 

$

66,105

 

 

 

$

62,019

 

 

 

$

63,642

 

 

 

$

65,534

 

 

Securities

6,501

 

 

 

6,636

 

 

 

6,766

 

 

 

7,816

 

 

 

7,820

 

 

Other interest-earning assets

772

 

 

 

789

 

 

 

881

 

 

 

1,239

 

 

 

1,360

 

 

Total interest and dividend income

68,618

 

 

 

73,530

 

 

 

69,666

 

 

 

72,697

 

 

 

74,714

 

 

Interest expense

 

 

 

 

 

 

 

 

 

Deposits

4,286

 

 

 

5,436

 

 

 

7,564

 

 

 

10,205

 

 

 

14,611

 

 

Federal Home Loan Bank advances

3,112

 

 

 

3,479

 

 

 

3,860

 

 

 

4,818

 

 

 

5,883

 

 

Notes payable and other interest-bearing liabilities

3,304

 

 

 

3,052

 

 

 

2,387

 

 

 

2,359

 

 

 

2,359

 

 

Total interest expense

10,702

 

 

 

11,967

 

 

 

13,811

 

 

 

17,382

 

 

 

22,853

 

 

Net interest income

57,916

 

 

 

61,563

 

 

 

55,855

 

 

 

55,315

 

 

 

51,861

 

 

(Reversal of) provision for credit losses

(1,107

)

 

 

991

 

 

 

1,141

 

 

 

11,826

 

 

 

15,761

 

 

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

59,023

 

 

 

60,572

 

 

 

54,714

 

 

 

43,489

 

 

 

36,100

 

 

Noninterest income

 

 

 

 

 

 

 

 

 

Customer service fees

1,758

 

 

 

1,953

 

 

 

1,498

 

 

 

1,224

 

 

 

1,096

 

 

Loan servicing income

268

 

 

 

149

 

 

 

186

 

 

 

95

 

 

 

75

 

 

Income from bank owned life insurance

672

 

 

 

691

 

 

 

629

 

 

 

591

 

 

 

578

 

 

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

 

 

 

 

 

 

 

 

 

2,011

 

 

 

 

 

Fair value adjustment on loans held for sale

 

 

 

36

 

 

 

24

 

 

 

25

 

 

 

(1,586

)

 

Net gain (loss) on sale of loans

 

 

 

 

 

 

272

 

 

 

 

 

 

(27

)

 

All other income

1,683

 

 

 

4,146

 

 

 

1,345

 

 

 

1,582

 

 

 

1,925

 

 

Total noninterest income

4,381

 

 

 

6,975

 

 

 

3,954

 

 

 

5,528

 

 

 

2,061

 

 

Noninterest expense

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

25,719

 

 

 

25,836

 

 

 

23,277

 

 

 

24,260

 

 

 

23,436

 

 

Naming rights termination

 

 

 

 

 

 

 

 

 

26,769

 

 

 

 

 

Occupancy and equipment

7,196

 

 

 

7,560

 

 

 

7,457

 

 

 

7,090

 

 

 

7,243

 

 

Professional fees

4,022

 

 

 

29

 

 

 

5,147

 

 

 

4,596

 

 

 

5,964

 

 

Data processing

1,655

 

 

 

1,608

 

 

 

1,657

 

 

 

1,536

 

 

 

1,773

 

 

Advertising

118

 

 

 

171

 

 

 

219

 

 

 

1,157

 

 

 

1,756

 

 

Regulatory assessments

774

 

 

 

748

 

 

 

784

 

 

 

725

 

 

 

484

 

 

Reversal of loan repurchase reserves

(132

)

 

 

28

 

 

 

(91

)

 

 

(34

)

 

 

(600

)

 

Amortization of intangible assets

282

 

 

 

306

 

 

 

353

 

 

 

430

 

 

 

429

 

 

Merger-related costs

700

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All other expense

2,771

 

 

 

3,337

 

 

 

3,021

 

 

 

6,408

 

 

 

4,529

 

 

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

43,105

 

 

 

39,623

 

 

 

41,824

 

 

 

72,937

 

 

 

45,014

 

 

Loss (gain) in alternative energy partnership investments

3,630

 

 

 

(673

)

 

 

(1,430

)

 

 

(167

)

 

 

1,905

 

 

Total noninterest expense

46,735

 

 

 

38,950

 

 

 

40,394

 

 

 

72,770

 

 

 

46,919

 

 

Income (loss) before income taxes

16,669

 

 

 

28,597

 

 

 

18,274

 

 

 

(23,753

)

 

 

(8,758

)

 

Income tax expense (benefit)

2,294

 

 

 

6,894

 

 

 

2,361

 

 

 

(5,304

)

 

 

(2,165

)

 

Net income (loss)

14,375

 

 

 

21,703

 

 

 

15,913

 

 

 

(18,449

)

 

 

(6,593

)

 

Preferred stock dividends

3,141

 

 

 

3,447

 

 

 

3,447

 

 

 

3,442

 

 

 

3,533

 

 

Income allocated to participating securities

62

 

 

 

456

 

 

 

281

 

 

 

 

 

 

 

 

Participating securities dividends

 

 

 

94

 

 

 

94

 

 

 

94

 

 

 

94

 

 

Impact of preferred stock redemption

3,347

 

 

 

 

 

 

7

 

 

 

(49

)

 

 

(526

)

 

Net income (loss) available to common stockholders

$

7,825

 

 

 

$

17,706

 

 

 

$

12,084

 

 

 

$

(21,936

)

 

 

$

(9,694

)

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per common share:

 

 

 

 

 

 

 

 

 

Basic

$

0.16

 

 

 

$

0.35

 

 

 

$

0.24

 

 

 

$

(0.44

)

 

 

$

(0.19

)

 

Diluted

$

0.15

 

 

 

$

0.35

 

 

 

$

0.24

 

 

 

$

(0.44

)

 

 

$

(0.19

)

 

Weighted average number of common shares outstanding

 

 

 

 

 

 

 

 

 

Basic

50,350,897

 

 

 

50,125,462

 

 

 

50,108,655

 

 

 

50,030,919

 

 

 

50,464,777

 

 

Diluted

50,750,522

 

 

 

50,335,271

 

 

 

50,190,933

 

 

 

50,030,919

 

 

 

50,464,777

 

 

Dividends declared per common share

$

0.06

 

 

 

$

0.06

 

 

 

$

0.06

 

 

 

$

0.06

 

 

 

$

0.06

 

 

 

Banc of California, Inc.

Selected Financial Data

(Unaudited)

 

 

Three Months Ended

 

March 31,

2021

 

December 31,

2020

 

September 30,

2020

 

June 30,

2020

 

March 31,

2020

Profitability and other ratios of consolidated operations

 

 

 

 

 

 

 

 

 

Return on average assets(1)

0.74

%

 

1.11

%

 

0.82

%

 

(0.96

)

%

 

(0.35

)

%

Return on average equity(1)

6.56

%

 

9.67

%

 

7.32

%

 

(8.69

)

%

 

(2.89

)

%

Return on average tangible common equity(2)

4.81

%

 

11.02

%

 

7.92

%

 

(13.77

)

%

 

(5.44

)

%

Pre-tax pre-provision income (loss) ROAA

0.80

%

 

1.52

%

 

1.00

%

 

(0.62

)

%

 

0.37

 

%

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

1.06

%

 

1.25

%

 

0.98

%

 

0.83

 

%

 

0.65

 

%

Dividend payout ratio(3)

37.50

%

 

17.14

%

 

25.00

%

 

(13.64

)

%

 

(31.58

)

%

Average loan yield

4.30

%

 

4.58

%

 

4.46

%

 

4.48

 

%

 

4.56

 

%

Average cost of interest-bearing deposits

0.38

%

 

0.47

%

 

0.66

%

 

0.93

 

%

 

1.41

 

%

Average cost of total deposits

0.28

%

 

0.36

%

 

0.51

%

 

0.71

 

%

 

1.11

 

%

Net interest spread

2.95

%

 

3.15

%

 

2.84

%

 

2.77

 

%

 

2.56

 

%

Net interest margin(1)

3.19

%

 

3.38

%

 

3.09

%

 

3.09

 

%

 

2.97

 

%

Noninterest income to total revenue(4)

7.03

%

 

10.18

%

 

6.61

%

 

9.09

 

%

 

3.82

 

%

Noninterest income to average total assets(1)

0.23

%

 

0.36

%

 

0.20

%

 

0.29

 

%

 

0.11

 

%

Noninterest expense to average total assets(1)

2.41

%

 

2.00

%

 

2.09

%

 

3.78

 

%

 

2.50

 

%

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

2.15

%

 

2.26

%

 

2.10

%

 

2.22

 

%

 

2.30

 

%

Efficiency ratio(2)(5)

75.02

%

 

56.83

%

 

67.54

%

 

119.60

 

%

 

87.01

 

%

Adjusted efficiency ratio(2)(5)

66.91

%

 

64.26

%

 

68.31

%

 

72.74

 

%

 

78.07

 

%

Average loans held-for-investment to average deposits

93.74

%

 

95.65

%

 

92.86

%

 

98.51

 

%

 

108.54

 

%

Average securities available-for-sale to average total assets

15.73

%

 

15.96

%

 

15.49

%

 

13.75

 

%

 

12.60

 

%

Average stockholders’ equity to average total assets

11.30

%

 

11.49

%

 

11.26

%

 

11.04

 

%

 

12.11

 

%

(1)

Ratios are presented on an annualized basis.

(2)

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

(3)

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

(4)

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

(5)

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

 

Banc of California, Inc.

Average Balance, Average Yield Earned, and Average Cost Paid

(Dollars in thousands)

(Unaudited)

 

 

Three Months Ended

 

March 31, 2021

 

December 31, 2020

 

September 30, 2020

 

Average

 

 

 

Yield

 

Average

 

 

 

Yield

 

Average

 

 

 

Yield

 

Balance

 

Interest

 

/ Cost

 

Balance

 

Interest

 

/ Cost

 

Balance

 

Interest

 

/ Cost

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held-for-sale

$

1,413

 

 

 

$

7

 

 

2.01

%

 

$

1,564

 

 

 

$

8

 

 

2.03

%

 

$

19,544

 

 

 

$

139

 

 

2.83

%

SFR mortgage

1,210,105

 

 

 

11,747

 

 

3.94

%

 

1,224,865

 

 

 

12,955

 

 

4.21

%

 

1,311,513

 

 

 

13,178

 

 

4.00

%

Commercial real estate, multifamily, and construction

2,322,509

 

 

 

26,387

 

 

4.61

%

 

2,507,950

 

 

 

30,371

 

 

4.82

%

 

2,493,408

 

 

 

29,666

 

 

4.73

%

Commercial and industrial, SBA, and lease financing

2,221,494

 

 

 

22,910

 

 

4.18

%

 

1,978,684

 

 

 

21,984

 

 

4.42

%

 

1,673,548

 

 

 

18,585

 

 

4.42

%

Other consumer

28,520

 

 

 

294

 

 

4.18

%

 

31,856

 

 

 

787

 

 

9.83

%

 

35,563

 

 

 

451

 

 

5.05

%

Gross loans and leases

5,784,041

 

 

 

61,345

 

 

4.30

%

 

5,744,919

 

 

 

66,105

 

 

4.58

%

 

5,533,576

 

 

 

62,019

 

 

4.46

%

Securities

1,236,138

 

 

 

6,501

 

 

2.13

%

 

1,239,295

 

 

 

6,636

 

 

2.13

%

 

1,190,765

 

 

 

6,766

 

 

2.26

%

Other interest-earning assets

336,443

 

 

 

772

 

 

0.93

%

 

262,363

 

 

 

789

 

 

1.20

%

 

457,558

 

 

 

881

 

 

0.77

%

Total interest-earning assets

7,356,622

 

 

 

68,618

 

 

3.78

%

 

7,246,577

 

 

 

73,530

 

 

4.04

%

 

7,181,899

 

 

 

69,666

 

 

3.86

%

Allowance for loan losses

(81,111

)

 

 

 

 

 

 

(83,745

)

 

 

 

 

 

 

(89,679

)

 

 

 

 

 

BOLI and noninterest-earning assets

585,441

 

 

 

 

 

 

 

602,165

 

 

 

 

 

 

 

594,885

 

 

 

 

 

 

Total assets

$

7,860,952

 

 

 

 

 

 

 

$

7,764,997

 

 

 

 

 

 

 

$

7,687,105

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings

$

928,446

 

 

 

$

2,013

 

 

0.88

%

 

$

937,649

 

 

 

$

2,128

 

 

0.90

%

 

$

948,898

 

 

 

$

2,353

 

 

0.99

%

Interest-bearing checking

2,140,314

 

 

 

901

 

 

0.17

%

 

2,086,146

 

 

 

1,131

 

 

0.22

%

 

1,919,327

 

 

 

1,660

 

 

0.34

%

Money market

726,079

 

 

 

377

 

 

0.21

%

 

671,949

 

 

 

414

 

 

0.25

%

 

681,421

 

 

 

645

 

 

0.38

%

Certificates of deposit

720,180

 

 

 

995

 

 

0.56

%

 

860,131

 

 

 

1,763

 

 

0.82

%

 

1,030,829

 

 

 

2,906

 

 

1.12

%

Total interest-bearing deposits

4,515,019

 

 

 

4,286

 

 

0.38

%

 

4,555,875

 

 

 

5,436

 

 

0.47

%

 

4,580,475

 

 

 

7,564

 

 

0.66

%

FHLB advances

446,618

 

 

 

3,112

 

 

2.83

%

 

534,303

 

 

 

3,479

 

 

2.59

%

 

608,169

 

 

 

3,860

 

 

2.52

%

Securities sold under repurchase agreements

 

 

 

 

 

%

 

 

 

 

 

 

%

 

1,309

 

 

 

2

 

 

0.61

%

Long-term debt and other interest-bearing liabilities

260,488

 

 

 

3,304

 

 

5.14

%

 

238,265

 

 

 

3,052

 

 

5.10

%

 

173,911

 

 

 

2,385

 

 

5.46

%

Total interest-bearing liabilities

5,222,125

 

 

 

10,702

 

 

0.83

%

 

5,328,443

 

 

 

11,967

 

 

0.89

%

 

5,363,864

 

 

 

13,811

 

 

1.02

%

Noninterest-bearing deposits

1,653,517

 

 

 

 

 

 

 

1,448,422

 

 

 

 

 

 

 

1,357,411

 

 

 

 

 

 

Noninterest-bearing liabilities

97,136

 

 

 

 

 

 

 

95,567

 

 

 

 

 

 

 

100,424

 

 

 

 

 

 

Total liabilities

6,972,778

 

 

 

 

 

 

 

6,872,432

 

 

 

 

 

 

 

6,821,699

 

 

 

 

 

 

Total stockholders’ equity

888,174

 

 

 

 

 

 

 

892,565

 

 

 

 

 

 

 

865,406

 

 

 

 

 

 

Total liabilities and stockholders’ equity

$

7,860,952

 

 

 

 

 

 

 

$

7,764,997

 

 

 

 

 

 

 

$

7,687,105

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income/spread

 

 

$

57,916

 

 

2.95

%

 

��

 

$

61,563

 

 

3.15

%

 

 

 

$

55,855

 

 

2.84

%

Net interest margin

 

 

 

 

3.19

%

 

 

 

 

 

3.38

%

 

 

 

 

 

3.09

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of interest-earning assets to interest-bearing liabilities

141

 

%

 

 

 

 

 

136

 

%

 

 

 

 

 

134

 

%

 

 

 

 

Total deposits

$

6,168,536

 

 

 

$

4,286

 

 

0.28

%

 

$

6,004,297

 

 

 

$

5,436

 

 

0.36

%

 

$

5,937,886

 

 

 

$

7,564

 

 

0.51

%

Total funding(1)

$

6,875,642

 

 

 

$

10,702

 

 

0.63

%

 

$

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.

 

 

Three Months Ended

 

June 30, 2020

 

March 31, 2020

 

Average

 

 

 

Yield

 

Average

 

 

 

Yield

 

Balance

 

Interest

 

/ Cost

 

Balance

 

Interest

 

/ Cost

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

Loans held-for-sale

$

19,967

 

 

 

$

155

 

 

3.12

%

 

$

22,273

 

 

 

$

220

 

 

3.97

%

SFR mortgage

1,416,358

 

 

 

14,187

 

 

4.03

%

 

1,532,967

 

 

 

15,295

 

 

4.01

%

Commercial real estate, multifamily, and construction

2,524,477

 

 

 

29,459

 

 

4.69

%

 

2,564,485

 

 

 

30,223

 

 

4.74

%

Commercial and industrial, SBA, and lease financing

1,706,120

 

 

 

19,392

 

 

4.57

%

 

1,613,324

 

 

 

19,157

 

 

4.78

%

Other consumer

40,697

 

 

 

449

 

 

4.44

%

 

47,761

 

 

 

639

 

 

5.38

%

Gross loans and leases

5,707,619

 

 

 

63,642

 

 

4.48

%

 

5,780,810

 

 

 

65,534

 

 

4.56

%

Securities

1,063,941

 

 

 

7,816

 

 

2.95

%

 

952,966

 

 

 

7,820

 

 

3.30

%

Other interest-earning assets

424,776

 

 

 

1,239

 

 

1.17

%

 

297,444

 

 

 

1,360

 

 

1.84

%

Total interest-earning assets

7,196,336

 

 

 

72,697

 

 

4.06

%

 

7,031,220

 

 

 

74,714

 

 

4.27

%

Allowance for loan losses

(78,528

)

 

 

 

 

 

 

(60,470

)

 

 

 

 

 

BOLI and noninterest-earning assets

622,398

 

 

 

 

 

 

 

592,192

 

 

 

 

 

 

Total assets

$

7,740,206

 

 

 

 

 

 

 

$

7,562,942

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

Savings

905,997

 

 

 

2,718

 

 

1.21

%

 

890,830

 

 

 

3,296

 

 

1.49

%

Interest-bearing checking

1,710,038

 

 

 

2,186

 

 

0.51

%

 

1,520,922

 

 

 

3,728

 

 

0.99

%

Money market

592,872

 

 

 

850

 

 

0.58

%

 

608,926

 

 

 

1,760

 

 

1.16

%

Certificates of deposit

1,214,939

 

 

 

4,451

 

 

1.47

%

 

1,151,518

 

 

 

5,827

 

 

2.04

%

Total interest-bearing deposits

4,423,846

 

 

 

10,205

 

 

0.93

%

 

4,172,196

 

 

 

14,611

 

 

1.41

%

FHLB advances

819,166

 

 

 

4,818

 

 

2.37

%

 

1,039,055

 

 

 

5,883

 

 

2.28

%

Securities sold under repurchase agreements

1,024

 

 

 

2

 

 

0.79

%

 

 

 

 

 

 

%

Long-term debt and other interest-bearing liabilities

173,977

 

 

 

2,357

 

 

5.45

%

 

174,056

 

 

 

2,359

 

 

5.45

%

Total interest-bearing liabilities

5,418,013

 

 

 

17,382

 

 

1.29

%

 

5,385,307

 

 

 

22,853

 

 

1.71

%

Noninterest-bearing deposits

1,349,735

 

 

 

 

 

 

 

1,133,306

 

 

 

 

 

 

Noninterest-bearing liabilities

118,208

 

 

 

 

 

 

 

128,282

 

 

 

 

 

 

Total liabilities

6,885,956

 

 

 

 

 

 

 

6,646,895

 

 

 

 

 

 

Total stockholders’ equity

854,250

 

 

 

 

 

 

 

916,047

 

 

 

 

 

 

Total liabilities and stockholders’ equity

$

7,740,206

 

 

 

 

 

 

 

$

7,562,942

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income/spread

 

 

$

55,315

 

 

2.77

%

 

 

 

$

51,861

 

 

2.56

%

Net interest margin

 

 

 

 

3.09

%

 

 

 

 

 

2.97

%

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of interest-earning assets to interest-bearing liabilities

133

 

%

 

 

 

 

 

131

 

%

 

 

 

 

Total deposits

$

5,773,581

 

 

 

$

10,205

 

 

0.71

%

 

$

5,305,502

 

 

 

$

14,611

 

 

1.11

%

Total funding(1)

$

6,767,748

 

 

 

$

17,382

 

 

1.03

%

 

$

6,518,613

 

 

 

$

22,853

 

 

1.41

%

(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.

 

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 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 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 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)

 

 

March 31,

2021

 

December 31,

2020

 

September 30,

2020

 

June 30,

2020

 

March 31,

2020

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

 

 

 

 

 

 

 

 

 

Total assets

$

7,933,459

 

 

 

$

7,877,334

 

 

 

$

7,738,106

 

 

 

$

7,770,138

 

 

 

$

7,662,607

 

 

Less goodwill

(37,144

)

 

 

(37,144

)

 

 

(37,144

)

 

 

(37,144

)

 

 

(37,144

)

 

Less other intangible assets

(2,351

)

 

 

(2,633

)

 

 

(2,939

)

 

 

(3,292

)

 

 

(3,722

)

 

Tangible assets(1)

$

7,893,964

 

 

 

$

7,837,557

 

 

 

$

7,698,023

 

 

 

$

7,729,702

 

 

 

$

7,621,741

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity

$

804,693

 

 

 

$

897,207

 

 

 

$

874,254

 

 

 

$

846,959

 

 

 

$

835,002

 

 

Less goodwill

(37,144

)

 

 

(37,144

)

 

 

(37,144

)

 

 

(37,144

)

 

 

(37,144

)

 

Less other intangible assets

(2,351

)

 

 

(2,633

)

 

 

(2,939

)

 

 

(3,292

)

 

 

(3,722

)

 

Tangible equity(1)

765,198

 

 

 

857,430

 

 

 

834,171

 

 

 

806,523

 

 

 

794,136

 

 

Less preferred stock

(94,956

)

 

 

(184,878

)

 

 

(184,878

)

 

 

(185,037

)

 

 

(187,687

)

 

Tangible common equity(1)

$

670,242

 

 

 

$

672,552

 

 

 

$

649,293

 

 

 

$

621,486

 

 

 

$

606,449

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity to total assets

10.14

 

%

 

11.39

 

%

 

11.30

 

%

 

10.90

 

%

 

10.90

 

%

Tangible equity to tangible assets(1)

9.69

 

%

 

10.94

 

%

 

10.84

 

%

 

10.43

 

%

 

10.42

 

%

Tangible common equity to tangible assets(1)

8.49

 

%

 

8.58

 

%

 

8.43

 

%

 

8.04

 

%

 

7.96

 

%

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

50,150,447

 

 

 

49,767,489

 

 

 

49,760,543

 

 

 

49,750,958

 

 

 

49,593,077

 

 

Class B non-voting non-convertible common shares outstanding

477,321

 

 

 

477,321

 

 

 

477,321

 

 

 

477,321

 

 

 

477,321

 

 

Total common shares outstanding

50,627,768

 

 

 

50,244,810

 

 

 

50,237,864

 

 

 

50,228,279

 

 

 

50,070,398

 

 

 

 

 

 

 

 

 

 

 

 

Tangible common equity per common share(1)

$

13.24

 

 

 

$

13.39

 

 

 

$

12.92

 

 

 

$

12.37

 

 

 

$

12.11

 

 

Book value per common share

$

14.02

 

 

 

$

14.18

 

 

 

$

13.72

 

 

 

$

13.18

 

 

 

$

12.93

 

 

(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

 

March 31,

2021

 

December 31,

2020

 

September 30,

2020

 

June 30,

2020

 

March 31,

2020

Return on tangible common equity

 

 

 

 

 

 

 

 

 

Average total stockholders' equity

$

888,174

 

 

 

$

892,565

 

 

 

$

865,406

 

 

 

$

854,250

 

 

 

$

916,047

 

 

Less average preferred stock

(164,895

)

 

 

(184,878

)

 

 

(184,910

)

 

 

(185,471

)

 

 

(189,607

)

 

Less average goodwill

(37,144

)

 

 

(37,144

)

 

 

(37,144

)

 

 

(37,144

)

 

 

(37,144

)

 

Less average other intangible assets

(2,517

)

 

 

(2,826

)

 

 

(3,172

)

 

 

(3,574

)

 

 

(4,003

)

 

Average tangible common equity(1)

$

683,618

 

 

 

$

667,717

 

 

 

$

640,180

 

 

 

$

628,061

 

 

 

$

685,293

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

14,375

 

 

 

$

21,703

 

 

 

$

15,913

 

 

 

$

(18,449

)

 

 

$

(6,593

)

 

Less preferred stock dividends and impact of preferred stock redemption

(6,488

)

 

 

(3,447

)

 

 

(3,454

)

 

 

(3,393

)

 

 

(3,007

)

 

Add amortization of intangible assets

282

 

 

 

306

 

 

 

353

 

 

 

430

 

 

 

429

 

 

Less tax effect on amortization of intangible assets

(59

)

 

 

(64

)

 

 

(74

)

 

 

(90

)

 

 

(90

)

 

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

$

8,110

 

 

 

$

18,498

 

 

 

$

12,738

 

 

 

$

(21,502

)

 

 

$

(9,261

)

 

 

 

 

 

 

 

 

 

 

 

Return on average equity

6.56

 

%

 

9.67

 

%

 

7.32

 

%

 

(8.69

)

%

 

(2.89

)

%

Return on average tangible common equity(1)

4.81

 

%

 

11.02

 

%

 

7.92

 

%

 

(13.77

)

%

 

(5.44

)

%

 

 

 

 

 

 

 

 

 

 

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

21.00

 

%

 

21.00

 

%

 

21.00

 

%

 

21.00

 

%

 

21.00

 

%

(1)

Non-GAAP measure.

 

Banc of California, Inc.

Consolidated Operations

Non-GAAP Measures, Continued

(Dollars in thousands, except per share data)

(Unaudited)

 

 

Three Months Ended

 

March 31,

2021

 

December 31,

2020

 

September 30,

2020

 

June 30,

2020

 

March 31,

2020

Adjusted noninterest income and expense

 

 

 

 

 

 

 

 

 

Total noninterest income

$

4,381

 

 

 

$

6,975

 

 

 

$

3,954

 

 

 

$

5,528

 

 

 

$

2,061

 

 

Noninterest income adjustments:

 

 

 

 

 

 

 

 

 

Net (gain) loss on securities available for sale

 

 

 

 

 

 

 

 

 

(2,011

)

 

 

 

 

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

 

 

 

 

 

 

(272

)

 

 

 

 

 

 

 

Fair value adjustment on legacy SFR loans held for sale

 

 

 

(36

)

 

 

(24

)

 

 

(25

)

 

 

1,586

 

 

Total noninterest income adjustments

 

 

 

(36

)

 

 

(296

)

 

 

(2,036

)

 

 

1,586

 

 

Adjusted noninterest income(1)

$

4,381

 

 

 

$

6,939

 

 

 

$

3,658

 

 

 

$

3,492

 

 

 

$

3,647

 

 

 

 

 

 

 

 

 

 

 

 

Total noninterest expense

$

46,735

 

 

 

$

38,950

 

 

 

$

40,394

 

 

 

$

72,770

 

 

 

$

46,919

 

 

Noninterest expense adjustments:

 

 

 

 

 

 

 

 

 

Naming rights termination

 

 

 

 

 

 

 

 

 

(26,769

)

 

 

 

 

Extinguishment of debt

 

 

 

 

 

 

 

 

 

(2,515

)

 

 

 

 

Professional (fees) recoveries

(721

)

 

 

4,398

 

 

 

(1,172

)

 

 

(875

)

 

 

(1,678

)

 

Merger-related costs

(700

)

 

 

 

 

 

 

 

 

 

 

 

 

 

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

(1,421

)

 

 

4,398

 

 

 

(1,172

)

 

 

(30,159

)

 

 

(1,678

)

 

Gain (loss) in alternative energy partnership investments

(3,630

)

 

 

673

 

 

 

1,430

 

 

 

167

 

 

 

(1,905

)

 

Total noninterest expense adjustments

(5,051

)

 

 

5,071

 

 

 

258

 

 

 

(29,992

)

 

 

(3,583

)

 

Adjusted noninterest expense(1)

$

41,684

 

 

 

$

44,021

 

 

 

$

40,652

 

 

 

$

42,778

 

 

 

$

43,336

 

 

 

 

 

 

 

 

 

 

 

 

Average assets

$

7,860,952

 

 

 

$

7,764,997

 

 

 

$

7,687,105

 

 

 

$

7,740,206

 

 

 

$

7,562,942

 

 

Noninterest expense to average total assets

2.41

 

%

 

2.00

 

%

 

2.09

 

%

 

3.78

 

%

 

2.50

 

%

Adjusted noninterest expense to average total assets(1)

2.15

 

%

 

2.26

 

%

 

2.10

 

%

 

2.22

 

%

 

2.30

 

%

(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

 

March 31,

2021

 

December 31,

2020

 

September 30,

2020

 

June 30,

2020

 

March 31,

2020

Adjusted pre-tax pre-provision income

 

 

 

 

 

 

 

 

 

Net interest income

$

57,916

 

 

 

$

61,563

 

 

 

$

55,855

 

 

 

$

55,315

 

 

 

$

51,861

 

 

Noninterest income

4,381

 

 

 

6,975

 

 

 

3,954

 

 

 

5,528

 

 

 

2,061

 

 

Total revenue

62,297

 

 

 

68,538

 

 

 

59,809

 

 

 

60,843

 

 

 

53,922

 

 

Noninterest expense

46,735

 

 

 

38,950

 

 

 

40,394

 

 

 

72,770

 

 

 

46,919

 

 

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

$

15,562

 

 

 

$

29,588

 

 

 

$

19,415

 

 

 

$

(11,927

)

 

 

$

7,003

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

$

62,297

 

 

 

$

68,538

 

 

 

$

59,809

 

 

 

$

60,843

 

 

 

$

53,922

 

 

Total noninterest income adjustments

 

 

 

(36

)

 

 

(296

)

 

 

(2,036

)

 

 

1,586

 

 

Adjusted total revenue(1)

62,297

 

 

 

68,502

 

 

 

59,513

 

 

 

58,807

 

 

 

55,508

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense

46,735

 

 

 

38,950

 

 

 

40,394

 

 

 

72,770

 

 

 

46,919

 

 

Total noninterest expense adjustments

(5,051

)

 

 

5,071

 

 

 

258

 

 

 

(29,992

)

 

 

(3,583

)

 

Adjusted noninterest expense(1)

41,684

 

 

 

44,021

 

 

 

40,652

 

 

 

42,778

 

 

 

43,336

 

 

Adjusted pre-tax pre-provision income(1)

$

20,613

 

 

 

$

24,481

 

 

 

$

18,861

 

 

 

$

16,029

 

 

 

$

12,172

 

 

 

 

 

 

 

 

 

 

 

 

Average assets

$

7,860,952

 

 

 

$

7,764,997

 

 

 

$

7,687,105

 

 

 

$

7,740,206

 

 

 

$

7,562,942

 

 

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

0.80

 

%

 

1.52

 

%

 

1.00

 

%

 

(0.62

)

%

 

0.37

 

%

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

1.06

 

%

 

1.25

 

%

 

0.98

 

%

 

0.83

 

%

 

0.65

 

%

Efficiency ratio(1)

75.02

 

%

 

56.83

 

%

 

67.54

 

%

 

119.60

 

%

 

87.01

 

%

Adjusted efficiency ratio(1)

66.91

 

%

 

64.26

 

%

 

68.31

 

%

 

72.74

 

%

 

78.07

 

%

(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

 

March 31,

2021

 

December 31,

2020

 

September 30,

2020

 

June 30,

2020

 

March 31,

2020

Adjusted net income (loss)

 

 

 

 

 

 

 

 

 

Net income (loss)

$

14,375

 

 

$

21,703

 

 

$

15,913

 

 

$

(18,449)

 

 

$

(6,593)

 

Adjustments, net:(1)

 

 

 

 

 

 

 

 

 

Noninterest income

 

 

27

 

 

222

 

 

1,527

 

 

(1,190)

 

Noninterest expense

3,788

 

 

(3,803)

 

 

(194)

 

 

22,494

 

 

2,687

 

Adjusted net income (loss) before tax adjustment

18,163

 

 

17,927

 

 

15,941

 

 

5,572

 

 

(5,096)

 

Tax adjustment: tax impact from exercise of stock appreciation rights

2,093

 

 

 

 

 

 

 

 

 

Adjusted net income (loss)(2)

$

16,070

 

 

$

17,927

 

 

$

15,941

 

 

$

5,572

 

 

$

(5,096)

 

 

 

 

 

 

 

 

 

 

 

Average assets

$

7,860,952

 

 

$

7,764,997

 

 

$

7,687,105

 

 

$

7,740,206

 

 

$

7,562,942

 

ROAA

0.74

%

 

1.11

%

 

0.82

%

 

(0.96)

%

 

(0.35)

%

Adjusted ROAA(2)

0.83

%

 

0.92

%

 

0.82

%

 

0.29

%

 

(0.27)

%

 

 

 

 

 

 

 

 

 

 

Adjusted net income (loss) available to common stockholders

 

 

 

 

 

 

 

 

 

Net income (loss) available to common stockholders

$

7,825

 

 

$

17,706

 

 

$

12,084

 

 

$

(21,936)

 

 

$

(9,694)

 

Adjustments to net income (loss)(3)

1,695

 

 

(3,776)

 

 

28

 

 

24,021

 

 

1,497

 

Adjustments for impact of preferred stock redemption

3,347

 

 

 

 

7

 

 

(49)

 

 

(526)

 

Adjusted net income (loss) available to common stockholders(2)

$

12,867

 

 

$

13,930

 

 

$

12,119

 

 

$

2,036

 

 

$

(8,723)

 

 

 

 

 

 

 

 

 

 

 

Average diluted common shares

50,750,522

 

 

50,335,271

 

 

50,190,933

 

 

50,030,919

 

 

50,464,777

 

Diluted EPS

$

0.15

 

 

$

0.35

 

 

$

0.24

 

 

$

(0.44)

 

 

$

(0.19)

 

Adjusted diluted EPS(2)

$

0.25

 

 

$

0.28