Form 8-K BANC OF CALIFORNIA, INC. For: Oct 18

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 18, 2016

 

 

BANC OF CALIFORNIA, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Maryland		001-35522		04-3639825
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)
18500 Von Karman Avenue, Suite 1100, Irvine, California				92612
(Address of principal executive offices)				(Zip Code)

Registrant’s telephone number, including area code: (855) 361-2262

N/A

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02 Results of Operations and Financial Condition.

On October 19, 2016, Banc of California, Inc. (the “Company”) issued a press release announcing its 2016 third quarter financial results. The Company also announced that it has accelerated the date of its conference call to discuss these third quarter financial results to Wednesday, October 19, 2016 at 7:00 a.m. Pacific Time. Interested parties may attend the conference call by dialing 888-317-6003, and referencing event code 8186667. A live audio webcast will be available through the webcast link to be posted on the Company’s Investor Relations website at www.bancofcal.com/investor.

Copies of the press release and presentation materials are attached to this report as Exhibits 99.1 and 99.2 and are incorporated by reference herein.

Item 7.01 Regulation FD Disclosure.

On October 18, 2016, the Company issued a press release relating to an anonymous article posted on a financial blog announcing that the Boards of Directors of the Company, and its wholly-owned subsidiary, Banc of California, National Association, are aware of the allegations in the article posted on Seeking Alpha, Ltd.

By letter dated October 18, 2016, Winston & Strawn, LLP responded to the article in a letter to Seeking Alpha, Ltd. demanding removal and retraction of the article as constituting reckless and defamatory libel per se.

Copies of the press release and the letter from Winston & Strawn, LLP to Seeking Alpha, Ltd. are attached to this report as Exhibits 99.3 and 99.4 and are incorporated by reference herein.

In accordance with General Instruction B.2 of Form 8-K, the information included in this Item 7.01 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. Nor shall such information be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

Item 8.01 Other Events.

On October 18, 2016, the Company also announced that its Board of Directors has approved a share buyback program under Rule 10b-18 authorizing the Company to buy back, from time to time during the 12 months ending on October 18, 2017, an aggregate amount representing up to 10% of the Company’s currently outstanding common shares.

Forward-Looking Statements

This Current Report on Form 8-K includes forward-looking statements within the meaning of the “Safe-Harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are necessarily subject to risk and uncertainty and actual results could differ materially from those anticipated due to various factors, including those set forth from time to time in the documents filed or furnished by Banc of California, Inc. with the Securities and Exchange Commission. You should not place undue reliance on forward-looking statements and Banc of California, Inc. undertakes no obligation to update any such statements to reflect circumstances or events that occur after the date on which the forward-looking statement is made.

 

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Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

 

99.1		Banc of California, Inc. Press Release, dated October 19, 2016.
99.2		Banc of California, Inc. Earnings Conference Call Presentation materials, dated October 19, 2016.
99.3		Banc of California, Inc. Press Release, dated October 18, 2016.
99.4		Letter (without exhibit) from Winston & Strawn, LLP to Seeking Alpha, Ltd., dated October 18, 2016.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

						BANC OF CALIFORNIA, INC.
October 19, 2016						/s/ John C. Grosvenor
						John C. Grosvenor
						Executive Vice President, General Counsel and
						Corporate Secretary

 

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EXHIBIT INDEX

 

Number		Description
99.1		Banc of California, Inc. Press Release, dated October 19, 2016.
99.2		Banc of California, Inc. Earnings Conference Call Presentation materials, dated October 19, 2016.
99.3		Banc of California, Inc. Press Release, dated October 18, 2016.
99.4		Letter (without exhibit) from Winston & Strawn, LLP to Seeking Alpha, Ltd., dated October 18, 2016.

 

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Exhibit 99.1

 

Banc of California Reports Record

Third Quarter Earnings

IRVINE, Calif., (October 19, 2016) –Banc of California, Inc. (NYSE: BANC) today reported record quarterly net income of $35.9 million for the third quarter of 2016, resulting in earnings per share of $0.59 for the quarter, fully diluted. Third quarter net income increased 147% compared to the third quarter of 2015. Net income available to common shareholders for the third quarter was $30.8 million, an increase of 168% compared to the third quarter of 2015.

Highlights for the quarter included:

 

•

Record quarterly deposit growth of $1.1 billion, or 15%, and annual deposit growth of $3.7 billion, or 67%.

 

•

Quarterly loan production of $2.6 billion, driven by quarterly commercial banking segment loan and lease originations of $1.1 billion, an increase of 44% from a year ago.

 

•

Held for investment loan growth of $333 million for the third quarter, an increase of $1.8 billion, or 39% from a year ago.

 

•

The Company’s return on average assets for the quarter was 1.3% and its return on average tangible common equity for the quarter was 19.5%.

The Company finished the quarter with consolidated assets totaling $11.2 billion, an increase of $1.1 billion, or 10%, compared to the prior quarter, and an increase of $4.0 billion, or 55%, compared to a year ago.

“Our third quarter financial performance showcases the strong credit discipline and growing earnings power of our franchise,” said Steven Sugarman, Chairman and Chief Executive Officer of Banc of California. “We remain focused on ensuring that as we grow, we maintain the controls, culture and values that are making Banc of California great. We continue to see meaningful opportunities to capture market share by empowering California through its diverse businesses, entrepreneurs and communities.”

During the quarter, Banc of California grew its recurring net interest income by $5.9 million, or 7% from the prior quarter, grew total deposits by $1.1 billion, increased held for investment loans by $333 million, or 5% from the prior quarter and reduced FHLB borrowings by $160 million or 17% from the prior quarter.

“We continue to see growth in assets, deposits and loans across our business units. Our consistent progress has now resulted in our franchise meeting or exceeding all of our stated financial targets for 2016, including return on tangible common equity over 15% and return on assets over 1%,” said Francisco Turner, Chief Strategy Officer of Banc of California.

“We have built and strengthened our balance sheet and liquidity position, supported by the strong deposit inflows we continued to experience in the third quarter,” said James McKinney, Chief Financial Officer of Banc of California. “We maintain a strong capital position and have implemented numerous sources of contingent capital including our increased holding company line of credit. As of the end of the third quarter, we now maintain over $7 billion of contingent liquidity to support Banc of California’s balance sheet and to adequately serve all of the diverse needs of our clients. I could not be prouder of the success we have made in ensuring a strong and durable balance sheet with the best possible liquidity to withstand diverse market conditions.”

The Company also announced that it has accelerated the date of its conference call to discuss third quarter financial results to Wednesday, October 19, 2016 at 7:00 a.m. Pacific Time (PT). Interested parties are welcome to attend the conference call by dialing 888-317-6003, and referencing event code 8186667. 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.

 

18500 Von Karman Ave. • Suite 1100 • Irvine, CA 92612 • (949) 236-5250 • www.bancofcal.com

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About Banc of California, Inc.

Banc of California, Inc. (NYSE: BANC) provides comprehensive banking services to California’s diverse businesses, entrepreneurs and communities. Banc of California operates over 100 offices in California and the West.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the “Safe-Harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are necessarily subject to risk and uncertainty and actual results could differ materially from those anticipated due to various factors, including those set forth from time to time in the documents filed or furnished by Banc of California, Inc. with the Securities and Exchange Commission. You should not place undue reliance on forward-looking statements and Banc of California, Inc. undertakes no obligation to update any such statements to reflect circumstances or events that occur after the date on which the forward-looking statement is made.

Source: Banc of California, Inc.

 

INVESTOR RELATIONS INQUIRIES:		MEDIA INQUIRIES:
Banc of California, Inc.		Vectis Strategies
Timothy Sedabres, (855) 361-2262		David Herbst, (213) 973-4113 x101

 

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Banc of California, Inc.

Consolidated Statements of Financial Condition

(Dollars in thousands)

(Unaudited)

 

		September 30,				June 30,				March 31,				December 31,				September 30,
		2016				2016				2016				2015				2015
ASSETS
Cash and cash equivalents		$	372,603			$	271,732			$	215,012			$	156,124			$	378,963
Time deposits in financial institutions			1,500				1,500				1,500				1,500				1,900
Securities available for sale			1,941,588				1,302,785				1,663,711				833,596				693,219
Securities held to maturity			962,315				962,282				962,262				962,203				529,532
Loans held for sale			846,844				893,782				863,944				668,841				596,565
Loans and leases receivable			6,568,791				6,236,115				5,463,068				5,184,394				4,730,077
Allowance for loan and lease losses			(40,233	)			(37,483	)			(35,845	)			(35,533	)			(34,774	)
Federal Home Loan Bank and other bank stock			69,190				81,115				61,146				59,069				40,643
Servicing rights, net			63,843				53,650				49,406				50,727				41,646
Other real estate owned, net			275				429				325				1,097				34
Premises and equipment, net			133,228				120,755				114,668				111,539				34,689
Goodwill			39,244				39,244				39,244				39,244				39,244
Other intangible assets, net			15,335				16,514				17,836				19,158				20,504
Deferred income tax			408				7,270				7,441				11,341				13,388
Income tax receivable			12,487				5,904				—				604				2,649
Bank-owned life insurance investment			101,909				101,314				100,734				100,171				99,570
Other assets			127,077				100,754				92,520				71,480				68,961
Total assets		$	11,216,404			$	10,157,662			$	9,616,972			$	8,235,555			$	7,256,810
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Noninterest-bearing deposits		$	1,267,363			$	1,093,686			$	1,398,728			$	1,121,124			$	1,011,169
Interest-bearing deposits			7,810,956				6,835,270				5,438,873				5,181,961				4,410,821
Total deposits			9,078,319				7,928,956				6,837,601				6,303,085				5,421,990
Advances from Federal Home Loan Bank			770,000				930,000				1,195,000				930,000				830,000
Securities sold under repurchase agreements			—				—				257,100				—				—
Other borrowings			49,903				—				—				—				—
Notes payable, net			176,579				177,743				260,896				261,876				262,779
Reserve for loss on repurchased loans			11,369				10,438				9,781				9,700				9,098
Income taxes payable			908				—				12,303				1,241				5,939
Accrued expenses and other liabilities			157,902				170,641				176,761				77,248				83,470
Total liabilities			10,244,980				9,217,778				8,749,442				7,583,150				6,613,276
Commitments and contingent liabilities
Preferred stock, Series A, non-cumulative perpetual			—				—				31,934				31,934				31,934
Preferred stock, Series B, non-cumulative perpetual			—				—				10,000				10,000				10,000
Preferred stock, Series C, 8.00% non-cumulative perpetual			37,943				37,943				37,943				37,943				37,943
Preferred stock, Series D, 7.375% non-cumulative perpetual			110,873				110,873				110,873				110,873				110,873
Preferred stock, Series E, 7.00% non-cumulative perpetual			120,255				120,255				120,258				—				—
Common stock			536				510				454				395				393
Common stock, class B non-voting non-convertible			2				2				1				1				—
Additional paid-in capital			611,069				608,303				509,123				429,790				427,599
Retained earnings			112,751				88,385				73,179				63,534				52,277
Treasury stock			(29,070	)			(29,070	)			(29,070	)			(29,070	)			(29,070	)
Accumulated other comprehensive income/(loss), net			7,065				2,683				2,835				(2,995	)			1,585
Total stockholders’ equity			971,424				939,884				867,530				652,405				643,534
Total liabilities and stockholders’ equity		$	11,216,404			$	10,157,662			$	9,616,972			$	8,235,555			$	7,256,810

 

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Banc of California, Inc.

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

(Unaudited)

 

		Three Months Ended																				Nine Months Ended
		September 30,				June 30,				March 31,				December 31,				September 30,				September 30,				September 30,
		2016				2016				2016				2015				2015				2016				2015
Interest and dividend income
Loans, including fees		$	80,370			$	73,743			$	67,144			$	62,248			$	60,454			$	221,257			$	179,308
Securities			19,934				19,393				16,047				11,163				5,054				55,374				9,100
Dividends and other interest-earning assets			1,931				1,504				1,049				788				1,007				4,484				3,731
Total interest and dividend income			102,235				94,640				84,240				74,199				66,515				281,115				192,139
Interest expense
Deposits			11,224				8,385				8,107				6,862				6,395				27,716				18,921
Federal Home Loan Bank advances			1,413				1,966				1,262				890				587				4,641				1,230
Securities sold under repurchase agreements			48				389				160				15				3				597				3
Notes payable and other interest-bearing liabilities			2,589				2,863				4,294				4,366				3,980				9,746				10,334
Total interest expense			15,274				13,603				13,823				12,133				10,965				42,700				30,488
Net interest income			86,961				81,037				70,417				62,066				55,550				238,415				161,651
Provision for loan and lease losses			2,592				1,769				321				1,260				735				4,682				6,209
Net interest income after provision for loan and lease losses			84,369				79,268				70,096				60,806				54,815				233,733				155,442
Noninterest income
Customer service fees			1,566				1,173				848				957				1,118				3,587				3,100
Loan servicing (loss) income			2,096				(3,347	)			(5,288	)			3,663				(2,254	)			(6,539	)			(689	)
Net gain on sale of securities available for sale			487				12,824				16,789				1,510				1,750				30,100				1,748
Net gain on sale of loans			11,063				2,147				2,195				15,164				9,737				15,405				22,047
Mortgage banking income			50,159				43,795				33,684				30,334				37,015				127,638				114,351
Advisory service fees			—				510				997				1,942				2,294				1,507				7,926
Loan brokerage income			1,384				759				874				678				660				3,017				2,462
Gain on sale of building			—				—				—				—				—				—				9,919
All other income			7,875				7,743				1,860				2,571				407				17,478				2,536
Total noninterest income			74,630				65,604				51,959				56,819				50,727				192,193				163,400
Noninterest expense
Salaries and employee benefits			68,033				61,022				57,183				54,008				53,215				186,238				159,106
Occupancy and equipment			12,728				11,943				11,740				11,200				10,109				36,411				30,205
Professional fees			6,732				6,763				6,212				4,808				5,261				19,707				15,385
Data processing			2,837				2,838				2,194				2,104				2,170				7,869				6,080
Loss on investments in alternative energy partnerships, net			17,660				—				—				—				—				17,660				—
Amortization of intangible assets			1,179				1,322				1,322				1,346				1,401				3,823				4,490
All other expenses			15,093				16,187				10,449				13,193				9,587				41,729				30,276
Total noninterest expense			124,262				100,075				89,100				86,659				81,743				313,437				245,542
Income before income taxes			34,737				44,797				32,955				30,966				23,799				112,489				73,300
Income tax (benefit) expense			(1,200	)			18,269				13,268				11,928				9,263				30,337				30,266
Net income			35,937				26,528				19,687				19,038				14,536				82,152				43,034
Preferred stock dividends			5,112				5,114				4,575				3,030				3,040				14,801				6,793
Net income available to common stockholders		$	30,825			$	21,414			$	15,112			$	16,008			$	11,496			$	67,351			$	36,241
Basic earnings per total common share		$	0.60			$	0.44			$	0.36			$	0.40			$	0.29			$	1.42			$	0.95
Diluted earnings per total common share		$	0.59			$	0.43			$	0.36			$	0.39			$	0.29			$	1.40			$	0.93

 

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Banc of California, Inc.

Selected Financial Data

(Dollars in thousands)

(Unaudited)

 

		Three Months Ended																				Nine Months Ended
		September 30,				June 30,				March 31,				December 31,				September 30,				September 30,				September 30,
		2016				2016				2016				2015				2015				2016				2015
Average balances
Total assets		$	10,860,257			$	10,061,237			$	8,833,176			$	7,590,781			$	6,681,590			$	9,921,657			$	6,291,536
Total gross loans and leases			7,245,472				6,663,340				5,995,436				5,531,539				5,271,293				6,636,978				5,222,290
Investment Securities			2,776,304				2,696,524				2,128,882				1,506,626				828,326				2,534,788				530,124
Total interest earning assets			10,432,247				9,619,937				8,344,167				7,264,341				6,449,862				9,468,979				6,046,305
Total interest-bearing deposits			7,164,061				5,696,893				5,332,032				4,685,145				4,314,330				6,068,343				4,160,352
Total borrowings			1,297,382				2,067,234				1,309,710				1,141,554				745,959				1,557,157				655,726
Total interest bearing liabilities			8,461,443				7,764,127				6,641,742				5,826,699				5,060,289				7,625,500				4,816,078
Total stockholders’ equity			968,684				898,164				762,923				654,106				645,713				876,922				598,335
Profitability and other ratios
Return on average assets (1)			1.32	%			1.06	%			0.90	%			1.00	%			0.86	%			1.11	%			0.91	%
Return on average equity (1)			14.76	%			11.88	%			10.38	%			11.55	%			8.93	%			12.51	%			9.62	%
Return on average tangible common equity (2)			19.51	%			15.65	%			14.46	%			16.57	%			12.25	%			16.84	%			13.40	%
Dividend payout ratio (3)			20.00	%			27.27	%			33.33	%			30.00	%			41.38	%			25.35	%			37.89	%
Net interest spread			3.18	%			3.26	%			3.22	%			3.22	%			3.23	%			3.22	%			3.40	%
Net interest margin (1)			3.32	%			3.39	%			3.39	%			3.39	%			3.42	%			3.36	%			3.57	%
Noninterest income to total revenue (4)			46.18	%			44.74	%			42.46	%			47.79	%			47.73	%			44.63	%			50.27	%
Noninterest income to average total assets (1)			2.73	%			2.62	%			2.37	%			2.97	%			3.01	%			2.59	%			3.47	%
Noninterest expense to average total assets (1)			4.55	%			4.00	%			4.06	%			4.53	%			4.85	%			4.22	%			5.22	%
Efficiency ratio (5)			76.90	%			68.24	%			72.81	%			72.89	%			76.92	%			72.79	%			75.54	%
Adjusted efficiency ratio for including the pre-tax effect of investments in alternative energy partnerships (2) , (5)			62.38	%			68.24	%			72.81	%			72.89	%			76.92	%			67.23	%			75.54	%
Average held for investment loans and leases to average deposits			75.92	%			82.88	%			79.76	%			86.88	%			86.03	%			79.27	%			82.63	%
Average investment securities to average total assets			25.56	%			26.80	%			24.10	%			19.85	%			12.40	%			25.55	%			8.43	%
Average stockholders’ equity to average total assets			8.92	%			8.93	%			8.64	%			8.62	%			9.66	%			8.84	%			9.51	%
Allowance for loan and lease losses (ALLL)
Balance at beginning of period		$	37,483			$	35,845			$	35,533			$	34,774			$	34,787			$	35,533			$	29,480
Loans and leases charged off			(393	)			(772	)			(102	)			(718	)			(788	)			(1,267	)			(1,224	)
Recoveries			551				641				93				217				40				1,285				309
Provision for loan and lease losses			2,592				1,769				321				1,260				735				4,682				6,209
Balance at end of period		$	40,233			$	37,483			$	35,845			$	35,533			$	34,774			$	40,233			$	34,774
Annualized net loan charge-offs to average total gross loans held for investment			-0.01	%			0.01	%			0.00	%			0.04	%			0.07	%			-0.01	%			0.03	%
Reserve for loss on repurchased loans
Balance at beginning of period		$	10,438			$	9,781			$	9,700			$	9,098			$	9,411			$	9,700			$	8,303
Provision for loan repurchases			1,241				851				379				735				716				2,471				3,617
Change in estimates			—				—				—				846				—				—				—
Utilization of reserve for loan repurchases			(310	)			(194	)			(298	)			(979	)			(1,029	)			(802	)			(2,822	)
Balance at end of period		$	11,369			$	10,438			$	9,781			$	9,700			$	9,098			$	11,369			$	9,098

 

(1)	Ratios are presented on an annualized basis.

(2)	Non-GAAP measure. See Non-GAAP measures section for reconciliation of the calculation.

(3)	Dividends declared per common share divided by basic earnings per share.

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

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

 

3

---

Banc of California, Inc.

Selected Financial Data, Continued

(Dollars in thousands)

(Unaudited)

 

		September 30,				June 30,				March 31,				December 31,				September 30,
		2016				2016				2016				2015				2015
Asset quality information and ratios
30 to 89 days delinquent, excluding PCI loans		$	39,054			$	50,494			$	36,022			$	39,946			$	48,550
90+ days delinquent, excluding PCI loans			22,827				28,675				27,469				23,338				23,725
Total delinquent loans, excluding PCI loans			61,881				79,169				63,491				63,284				72,275
PCI loans, 30 to 89 days delinquent			39,113				48,255				44,191				40,291				17,593
PCI loans, 90+ days delinquent			6,145				8,952				9,806				6,894				6,223
Total delinquent PCI loans			45,258				57,207				53,997				47,185				23,816
Total delinquent loans		$	107,139			$	136,376			$	117,488			$	110,469			$	96,091
Total delinquent non-PCI loans to total non-PCI loans			1.04	%			1.44	%			1.33	%			1.42	%			1.66	%
Total delinquent loans to gross loans			1.63	%			2.19	%			2.15	%			2.13	%			2.03	%
Non-performing loans, excluding PCI loans		$	35,223			$	45,012			$	44,216			$	45,129			$	45,188
90+ days delinquent and still accruing loans, excluding PCI loans			—				—				—				—				—
Other real estate owned			275				429				325				1,097				34
Non-performing assets		$	35,498			$	45,441			$	44,541			$	46,226			$	45,222
ALLL to non-performing loans			114.22	%			83.27	%			81.07	%			78.74	%			76.95	%
Non-performing loans to gross loans			0.54	%			0.72	%			0.81	%			0.87	%			0.96	%
Non-performing assets to total assets			0.32	%			0.45	%			0.46	%			0.56	%			0.62	%
Troubled Debt Restructings (TDRs)
Performing TDRs		$	11,160			$	14,450			$	15,128			$	7,842			$	9,378
Non-performing TDRs			520				2,864				2,545				1,970				2,017
Total TDRs		$	11,680			$	17,314			$	17,673			$	9,812			$	11,395

 

4

---

Banc of California, Inc.

Selected Financial Data, Continued

(Dollars in thousands)

(Unaudited)

 

		September 30,				June 30,				March 31,				December 31,				September 30,
		2016				2016				2016				2015				2015
Loan and lease breakdown by ALLL evaluation type
Originated loans and leases
Individually evaluated for impairment		$	22,306			$	25,661			$	26,565			$	30,654			$	31,008
Collectively evaluated for impairment			4,789,155				4,254,975				3,484,995				3,117,528				2,776,601
Acquired loans not impaired at acquisition
Individually evaluated for impairment			3,397				3,470				3,530				3,629				1,704
Collectively evaluated for impairment			958,135				1,022,696				1,079,711				1,124,874				1,174,573
Seasoned SFR mortgage loan pools - non-impaired
Individually evaluated for impairment			6,581				9,717				9,287				—				—
Collectively evaluated for impairment			146,850				168,352				175,004				194,978				373,634
Acquired with deteriorated credit quality			642,367				751,244				683,976				712,731				372,557
Total loans		$	6,568,791			$	6,236,115			$	5,463,068			$	5,184,394			$	4,730,077
ALLL breakdown
Originated loans and leases
Individually evaluated for impairment		$	137			$	215			$	365			$	369			$	512
Collectively evaluated for impairment			37,858				34,575				32,202				32,713				31,419
Acquired loans not impaired at acquisition
Individually evaluated for impairment			—				—				—				—				—
Collectively evaluated for impairment			1,606				1,458				2,061				2,245				2,637
Seasoned SFR mortgage loan pools - non-impaired
Individually evaluated for impairment			528				1,131				1,011				—				—
Collectively evaluated for impairment			—				—				—				—				—
Acquired with deteriorated credit quality			104				104				206				206				206
Total ALLL		$	40,233			$	37,483			$	35,845			$	35,533			$	34,774
Discount on Purchased/Acquired Loans
Acquired loans not impaired at acquisition		$	18,400			$	20,136			$	20,781			$	21,366			$	21,759
Seasoned SFR mortgage loan pools - non-impaired			9,789				11,304				11,862				12,545				27,699
Acquired with deteriorated credit quality			57,780				76,505				66,573				68,372				41,280
Total Discount		$	85,969			$	107,945			$	99,216			$	102,283			$	90,738
Ratios
To originated loans and leases:
Individually evaluated for impairment			0.61	%			0.84	%			1.37	%			1.20	%			1.65	%
Collectively evaluated for impairment			0.79	%			0.81	%			0.92	%			1.05	%			1.13	%
Total ALLL			0.79	%			0.81	%			0.93	%			1.05	%			1.14	%
To originated loans and leases and acquired loans not impaired at acquisition:
Individually evaluated for impairment			0.53	%			0.74	%			1.21	%			1.08	%			1.57	%
Collectively evaluated for impairment			0.69	%			0.68	%			0.75	%			0.82	%			0.86	%
Total ALLL			0.69	%			0.68	%			0.75	%			0.83	%			0.87	%
Total ALLL and discount (1)			1.00	%			1.06	%			1.21	%			1.33	%			1.41	%
To total loans and leases:
Individually evaluated for impairment			2.06	%			3.46	%			3.49	%			1.08	%			1.57	%
Collectively evaluated for impairment			0.67	%			0.66	%			0.72	%			0.79	%			0.79	%
Total ALLL			0.61	%			0.60	%			0.66	%			0.69	%			0.74	%
Total ALLL and discount (1)			1.92	%			2.33	%			2.47	%			2.66	%			2.65	%

 

(1)	The ratios were calculated by dividing a sum of ALLL and discounts by carrying value of loans.

 

5

---

Banc of California, Inc.

Selected Financial Data, Continued

(Dollars in thousands)

(Unaudited)

 

		September 30,				June 30,				March 31,				December 31,				September 30,
		2016				2016				2016				2015				2015
Composition of held for investment loans and leases
Commercial real estate		$	721,838			$	725,107			$	713,693			$	727,707			$	690,862
Multi-family			1,199,207				1,147,597				1,021,097				904,300				823,415
Construction			99,086				86,852				68,241				55,289				39,475
Commercial and industrial			1,531,041				1,306,866				983,961				876,999				822,690
SBA			67,737				65,477				71,640				57,706				52,985
Lease financing			234,540				228,663				212,836				192,424				162,504
Total commercial loans			3,853,449				3,560,562				3,071,468				2,814,425				2,591,931
Single family residential mortgage			2,601,375				2,555,344				2,282,445				2,255,584				2,013,450
Other consumer			113,967				120,209				109,155				114,385				124,696
Total consumer loans			2,715,342				2,675,553				2,391,600				2,369,969				2,138,146
Total gross loans and leases		$	6,568,791			$	6,236,115			$	5,463,068			$	5,184,394			$	4,730,077
Composition percentage of held for investment loans and leases
Commercial real estate			11.0	%			11.6	%			13.1	%			14.0	%			14.6	%
Multi-family			18.3	%			18.4	%			18.7	%			17.4	%			17.4	%
Construction			1.5	%			1.4	%			1.2	%			1.1	%			0.8	%
Commercial and industrial			23.3	%			21.0	%			18.0	%			16.9	%			17.4	%
SBA			1.0	%			1.0	%			1.3	%			1.1	%			1.1	%
Lease financing			3.6	%			3.7	%			3.9	%			3.7	%			3.4	%
Total commercial loans			58.7	%			57.1	%			56.2	%			54.2	%			54.7	%
Single family residential mortgage			39.6	%			41.0	%			41.8	%			43.6	%			42.7	%
Other consumer			1.7	%			1.9	%			2.0	%			2.2	%			2.6	%
Total consumer loans			41.3	%			42.9	%			43.8	%			45.8	%			45.3	%
Total gross loans and leases			100.0	%			100.0	%			100.0	%			100.0	%			100.0	%
Composition of deposits
Noninterest-bearing checking		$	1,267,363			$	1,093,686			$	1,398,728			$	1,121,124			$	1,011,169
Interest-bearing checking			2,369,332				2,053,656				2,052,507				1,697,055				1,458,208
Money market			2,900,248				2,343,561				1,534,492				1,479,931				1,238,180
Savings			880,712				909,242				844,177				823,618				814,230
Certificates of deposit			1,660,664				1,528,811				1,007,697				1,181,357				900,203
Total deposits		$	9,078,319			$	7,928,956			$	6,837,601			$	6,303,085			$	5,421,990
Composition percentage of deposits
Noninterest-bearing checking			14.0	%			13.8	%			20.5	%			17.8	%			18.6	%
Interest-bearing checking			26.1	%			25.9	%			30.0	%			26.8	%			26.9	%
Money market			31.9	%			29.5	%			22.4	%			23.5	%			22.8	%
Savings			9.7	%			11.5	%			12.3	%			13.1	%			15.0	%
Certificates of deposit			18.3	%			19.3	%			14.8	%			18.8	%			16.7	%
Total deposits			100.0	%			100.0	%			100.0	%			100.0	%			100.0	%

 

6

---

Banc of California, Inc.

Average Balance, Average Yield Earned, and Average Cost Paid

(Dollars in thousands)

(Unaudited)

 

		Three Months Ended
		September 30, 2016												June 30, 2016												March 31, 2016
		Average								Yield				Average								Yield				Average								Yield
		Balance				Interest				/ Cost				Balance				Interest				/ Cost				Balance				Interest				/ Cost
Interest earning assets
Loans held for sale and SFR mortgage		$	2,618,879			$	24,365				3.70	%		$	2,428,168			$	22,488				3.72	%		$	2,144,834			$	19,808				3.71	%
Seasoned SFR mortgage loan pools			907,387				11,924				5.23	%			878,068				12,404				5.68	%			876,142				12,710				5.83	%
Commercial real estate, multi-family, and construction			2,033,718				23,097				4.52	%			1,907,649				21,049				4.44	%			1,760,646				19,816				4.53	%
Commercial and industrial, SBA, and lease financing			1,576,379				19,734				4.98	%			1,343,961				16,642				4.98	%			1,105,971				13,665				4.97	%
Other consumer			109,109				1,250				4.56	%			105,494				1,160				4.42	%			107,843				1,145				4.27	%
Gross loans and leases			7,245,472				80,370				4.41	%			6,663,340				73,743				4.45	%			5,995,436				67,144				4.50	%
Securities			2,776,304				19,934				2.86	%			2,696,524				19,393				2.89	%			2,128,882				16,047				3.03	%
Other interest-earning assets			410,471				1,931				1.87	%			260,073				1,504				2.33	%			219,849				1,049				1.92	%
Total interest-earning assets			10,432,247				102,235				3.90	%			9,619,937				94,640				3.96	%			8,344,167				84,240				4.06	%
Allowance for loan and lease losses			(38,258	)											(37,637	)											(35,575	)
BOLI and non-interest earning assets			466,268												478,937												524,584
Total assets		$	10,860,257											$	10,061,237											$	8,833,176
Interest-bearing liabilities
Savings		$	887,973			$	1,704				0.76	%		$	866,051			$	1,603				0.74	%		$	834,965			$	1,572				0.76	%
Interest-bearing checking			2,300,128				3,972				0.69	%			1,981,702				3,135				0.64	%			1,900,834				3,244				0.69	%
Money market			2,427,356				3,226				0.53	%			1,672,662				1,962				0.47	%			1,437,332				1,679				0.47	%
Certificates of deposit			1,548,604				2,322				0.60	%			1,176,478				1,685				0.58	%			1,158,901				1,612				0.56	%
Total interest-bearing deposits			7,164,061				11,224				0.62	%			5,696,893				8,385				0.59	%			5,332,032				8,107				0.61	%
FHLB advances			1,104,663				1,413				0.51	%			1,663,791				1,966				0.48	%			955,659				1,262				0.53	%
Securities sold under repurchase agreements			12,539				48				1.52	%			210,299				389				0.74	%			90,395				160				0.71	%
Long-term debt and other interest-bearing liabilities			180,180				2,589				5.72	%			193,144				2,863				5.96	%			263,656				4,294				6.55	%
Total interest-bearing liabilities			8,461,443				15,274				0.72	%			7,764,127				13,603				0.70	%			6,641,742				13,823				0.84	%
Noninterest-bearing deposits			1,178,849												1,205,987												1,230,991
Non-interest-bearing liabilities			251,281												192,959												197,520
Total liabilities			9,891,573												9,163,073												8,070,253
Total stockholders’ equity			968,684												898,164												762,923
Total liabilities and stockholders’ equity		$	10,860,257											$	10,061,237											$	8,833,176
Net interest income/spread						$	86,961				3.18	%						$	81,037				3.26	%						$	70,417				3.22	%
Net interest margin											3.32	%											3.39	%											3.39	%
Ratio of interest-earning assets to interest-bearing liabilities			123.29	%											123.90	%											125.63	%
Total deposits		$	8,342,910			$	11,224				0.54	%		$	6,902,880			$	8,385				0.49	%		$	6,563,023			$	8,107				0.50	%
Total funding (1)		$	9,640,292			$	15,274				0.63	%		$	8,970,114			$	13,603				0.61	%		$	7,872,733			$	13,823				0.71	%

 

(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.

 

7

---

Banc of California, Inc.

Average Balance, Average Yield Earned, and Average Cost Paid, Continued

(Dollars in thousands)

(Unaudited)

 

		Three Months Ended
		December 31, 2015												September 30, 2015
		Average								Yield				Average								Yield
		Balance				Interest				/ Cost				Balance				Interest				/ Cost
Interest earning assets
Loans held for sale and SFR mortgage		$	1,903,331			$	17,584				3.67	%		$	1,966,373			$	18,123				3.66	%
Seasoned SFR mortgage loan pools			858,601				12,098				5.59	%			689,666				10,901				6.27	%
Commercial real estate, multi-family, and construction			1,638,329				19,006				4.60	%			1,568,975				17,643				4.46	%
Commercial and industrial, SBA, and lease financing			1,020,306				12,754				4.96	%			914,811				12,125				5.26	%
Other consumer			110,972				806				2.88	%			131,468				1,662				5.02	%
Gross loans and leases			5,531,539				62,248				4.46	%			5,271,293				60,454				4.55	%
Securities			1,506,626				11,163				2.94	%			828,326				5,054				2.42	%
Other interest-earning assets			226,176				788				1.38	%			350,243				1,007				1.14	%
Total interest-earning assets			7,264,341				74,199				4.05	%			6,449,862				66,515				4.09	%
Allowance for loan and lease losses			(35,894	)											(34,810	)
BOLI and non-interest earning assets			362,334												266,538
Total assets		$	7,590,781											$	6,681,590
Interest-bearing liabilities
Savings		$	805,445			$	1,538				0.76	%		$	832,006			$	1,575				0.75	%
Interest-bearing checking			1,475,461				2,663				0.72	%			1,282,066				2,273				0.70	%
Money market			1,343,683				1,267				0.37	%			1,294,554				1,337				0.41	%
Certificates of deposit			1,060,556				1,394				0.52	%			905,704				1,210				0.53	%
Total interest-bearing deposits			4,685,145				6,862				0.58	%			4,314,330				6,395				0.59	%
FHLB advances			869,457				890				0.41	%			476,848				587				0.49	%
Securities sold under repurchase agreements			7,010				15				0.85	%			2,681				3				0.44	%
Long-term debt and other interest-bearing liabilities			265,087				4,366				6.53	%			266,430				3,980				5.93	%
Total interest-bearing liabilities			5,826,699				12,133				0.83	%			5,060,289				10,965				0.86	%
Noninterest-bearing deposits			1,037,966												916,670
Non-interest-bearing liabilities			72,010												58,918
Total liabilities			6,936,675												6,035,877
Total stockholders’ equity			654,106												645,713
Total liabilities and stockholders’ equity		$	7,590,781											$	6,681,590
Net interest income/spread						$	62,066				3.22	%						$	55,550				3.23	%
Net interest margin											3.39	%											3.42	%
Ratio of interest-earning assets to interest-bearing liabilities			124.67	%											127.46	%
Total deposits		$	5,723,111			$	6,862				0.48	%		$	5,231,000			$	6,395				0.49	%
Total funding (1)		$	6,864,665			$	12,133				0.70	%		$	5,976,959			$	10,965				0.73	%

 

(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.

 

8

---

Banc of California, Inc.

Average Balance, Average Yield Earned, and Average Cost Paid, Continued

(Dollars in thousands)

(Unaudited)

 

		Nine Months Ended
		September 30, 2016												September 30, 2015
		Average								Yield				Average								Yield
		Balance				Interest				/ Cost				Balance				Interest				/ Cost
Interest earning assets
Loans held for sale and SFR mortgage		$	2,398,101			$	66,661				3.71	%		$	1,931,759			$	54,584				3.78	%
Seasoned SFR mortgage loan pools			887,273				37,037				5.58	%			624,642				30,004				6.42	%
Commercial real estate, multi-family, and construction			1,901,157				63,962				4.49	%			1,790,108				61,703				4.61	%
Commercial and industrial, SBA, and lease financing			1,342,959				50,041				4.98	%			729,529				28,234				5.17	%
Other consumer			107,488				3,556				4.42	%			146,252				4,783				4.37	%
Gross loans and leases			6,636,978				221,257				4.45	%			5,222,290				179,308				4.59	%
Securities			2,534,788				55,374				2.92	%			530,124				9,100				2.30	%
Other interest-earning assets			297,213				4,484				2.02	%			293,891				3,731				1.70	%
Total interest-earning assets			9,468,979				281,115				3.97	%			6,046,305				192,139				4.25	%
Allowance for loan and lease losses			(37,161	)											(31,312	)
BOLI and non-interest earning assets			489,839												276,543
Total assets		$	9,921,657											$	6,291,536
Interest-bearing liabilities
Savings		$	863,088			$	4,878				0.75	%		$	881,273			$	4,929				0.75	%
Interest-bearing checking			2,061,761				10,352				0.67	%			1,113,267				6,309				0.76	%
Money market			1,847,906				6,867				0.50	%			1,177,538				3,324				0.38	%
Certificates of deposit			1,295,588				5,619				0.58	%			988,274				4,359				0.59	%
Total interest-bearing deposits			6,068,343				27,716				0.61	%			4,160,352				18,921				0.61	%
FHLB advances			1,240,872				4,641				0.50	%			446,571				1,230				0.37	%
Securities sold under repurchase agreements			104,076				597				0.77	%			903				3				0.44	%
Long-term debt and other interest-bearing liabilities			212,209				9,746				6.13	%			208,252				10,334				6.63	%
Total interest-bearing liabilities			7,625,500				42,700				0.75	%			4,816,078				30,488				0.85	%
Noninterest-bearing deposits			1,205,179												820,385
Non-interest-bearing liabilities			214,056												56,738
Total liabilities			9,044,735												5,693,201
Total stockholders’ equity			876,922												598,335
Total liabilities and stockholders’ equity		$	9,921,657											$	6,291,536
Net interest income/spread						$	238,415				3.22	%						$	161,651				3.40	%
Net interest margin											3.36	%											3.57	%
Ratio of interest-earning assets to interest-bearing liabilities			124.18	%											125.54	%
Total deposits		$	7,273,522			$	27,716				0.51	%		$	4,980,737			$	18,921				0.51	%
Total funding (1)		$	8,830,679			$	42,700				0.65	%		$	5,636,463			$	30,488				0.72	%

 

(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.

 

9

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Banc of California, Inc.

Capital Ratios

(Unaudited)

 

		September 30,				June 30,				March 31,				December 31,				September 30,
		2016				2016				2016				2015				2015
Capital Ratios
Banc of California, Inc.
Total risk-based capital ratio			12.79	%			13.45	%			13.59	%			11.18	%			12.56	%
Tier 1 risk-based capital ratio			12.54	%			13.14	%			13.17	%			10.71	%			12.06	%
Common equity tier 1 capital ratio			8.85	%			9.16	%			8.14	%			7.36	%			8.19	%
Tier 1 leverage ratio			8.47	%			8.87	%			9.27	%			8.07	%			8.97	%
Banc of California, NA
Total risk-based capital ratio			14.38	%			14.96	%			14.03	%			13.45	%			14.93	%
Tier 1 risk-based capital ratio			13.83	%			14.38	%			13.42	%			12.79	%			14.19	%
Common equity tier 1 capital ratio			13.83	%			14.38	%			13.42	%			12.79	%			14.19	%
Tier 1 leverage ratio			9.31	%			9.70	%			9.44	%			9.64	%			10.53	%

 

10

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Banc of California, Inc.

Non-GAAP Measures

(Dollars in thousands, except per share data)

(Unaudited)

Non-GAAP performance measure:

Tangible equity to tangible assets, tangible common equity to tangible assets ratios, return on average tangible common equity, and adjusted efficiency ratio are supplemental financial information determined by a method other than in accordance with U.S. generally accepted accounting principles (GAAP). These non-GAAP measures are used by management in the analysis of Banc of California, Inc.’s capital strength and performance of businesses. Tangible equity is calculated by subtracting goodwill and other intangible assets from total stockholders’ equity and tangible common equity is calculated by subtracting preferred stock from tangible equity. Banking and financial institution regulators also exclude goodwill and other intangible assets from total stockholders’ equity when assessing the capital adequacy of a financial institution. Adjusted efficiency ratio is calucated by subtracting loss on investments in alternative energy partnerships from noninterest expense and adding total pretax return, which includes the loss on investments in alternative energy partnerships, from investments in alternative energy partnerships to noninterest income. Management believes the presentation of these financial measures excluding the impact of these items provides useful supplemental information that is essential to a proper understanding of the capital and financial strength of Banc of California, Inc. This disclosure should not be viewed as a substitution 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 reconcile this non-GAAP performance measures to the GAAP performance measures for the periods indicated:

 

		September 30,				June 30,				March 31,				December 31,				September 30,
		2016				2016				2016				2015				2015
Tangible common equity to tangible assets ratio
Total assets		$	11,216,404			$	10,157,662			$	9,616,972			$	8,235,555			$	7,256,810
Less goodwill			(39,244	)			(39,244	)			(39,244	)			(39,244	)			(39,244	)
Less other intangible assets			(15,335	)			(16,514	)			(17,836	)			(19,158	)			(20,504	)
Tangible assets		$	11,161,825			$	10,101,904			$	9,559,892			$	8,177,153			$	7,197,062
Total stockholders’ equity		$	971,424			$	939,884			$	867,530			$	652,405			$	643,534
Less goodwill			(39,244	)			(39,244	)			(39,244	)			(39,244	)			(39,244	)
Less other intangible assets			(15,335	)			(16,514	)			(17,836	)			(19,158	)			(20,504	)
Tangible equity			916,845				884,126				810,450				594,003				583,786
Less preferred stock			(269,071	)			(269,071	)			(311,008	)			(190,750	)			(190,750	)
Tangible common equity		$	647,774			$	615,055			$	499,442			$	403,253			$	393,036
Total stockholders’ equity to total assets			8.66	%			9.25	%			9.02	%			7.92	%			8.87	%
Tangible equity to tangible assets			8.21	%			8.75	%			8.48	%			7.26	%			8.11	%
Tangible common equity to tangible assets			5.80	%			6.09	%			5.22	%			4.93	%			5.46	%
Common stock outstanding			49,531,321				49,478,348				43,907,587				38,002,267				37,751,445
Class B non-voting non-convertible common stock outstanding			201,922				161,841				91,066				37,355				—
Total common stock outstanding			49,733,243				49,640,189				43,998,653				38,039,622				37,751,445
Minimum number of shares issuable under purchase contracts (1)			188,742				218,928				253,155				601,299				828,246
Total common stock outstanding and shares issuable under purchase contracts			49,921,985				49,859,117				44,251,808				38,640,921				38,579,691
(1)    Purchase contracts relating to the tangible equity units
Tangible common equity per common stock		$	13.02			$	12.39			$	11.35			$	10.60			$	10.41
Book value per common stock		$	14.12			$	13.51			$	12.65			$	12.14			$	11.99
Tangible common equity per common stock and shares issuable under purchase contracts		$	12.98			$	12.34			$	11.29			$	10.44			$	10.19
Book value per common stock and shares issuable under purchase contracts		$	14.07			$	13.45			$	12.58			$	11.95			$	11.74

 

11

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Banc of California, Inc.

Non-GAAP Measures, Continued

(Dollars in thousands, except per share data)

(Unaudited)

 

		Three Months Ended																				Nine Months Ended
		September 30,				June 30,				March 31,				December 31,				September 30,				September 30,				September 30,
		2016				2016				2016				2015				2015				2016				2015
Return on tangible common equity
Average total stockholders’ equity		$	968,684			$	898,164			$	762,923			$	654,106			$	645,713			$	876,922			$	598,335
Less average preferred stock			(269,071	)			(269,073	)			(260,959	)			(190,750	)			(190,750	)			(266,377	)			(151,360	)
Less average goodwill			(39,244	)			(39,244	)			(39,244	)			(39,244	)			(31,674	)			(39,244	)			(31,619	)
Less average other intangible assets			(16,039	)			(17,299	)			(18,601	)			(19,877	)			(21,320	)			(17,308	)			(23,012	)
Average tangible common equity		$	644,330			$	572,548			$	444,119			$	404,235			$	401,969			$	553,993			$	392,344
Net income		$	35,937			$	26,528			$	19,687			$	19,038			$	14,536			$	82,152			$	43,034
Less preferred stock dividends			(5,112	)			(5,114	)			(4,575	)			(3,030	)			(3,040	)			(14,801	)			(6,793	)
Add amortization of intangible assets			1,179				1,322				1,322				1,346				1,401				3,823				4,490
Add impairment on intangible assets			—				—				—				—				—				—				258
Less tax effect on amortization and impairment of intangible assets (1)			(413	)			(463	)			(463	)			(471	)			(490	)			(1,338	)			(1,661	)
Net income available to common stockholders		$	31,591			$	22,273			$	15,971			$	16,883			$	12,407			$	69,836			$	39,328
Return on average equity			14.76	%			11.88	%			10.38	%			11.55	%			8.93	%			12.51	%			9.62	%
Return on average tangible common equity			19.51	%			15.65	%			14.46	%			16.57	%			12.25	%			16.84	%			13.40	%
(1)    Utilized a 35% effective tax rate
		Three Months Ended																				Nine Months Ended
		September 30,				June 30,				March 31,				December 31,				September 30,				September 30,				September 30,
		2016				2016				2016				2015				2015				2016				2015
Adjusted efficiency ratio for including the pre-tax effect of investments in alternative energy partnerships
Noninterest expense		$	124,262			$	100,075			$	89,100			$	86,659			$	81,743			$	313,437			$	245,542
Loss on investments in alternative energy partnerships, net			(17,660	)			—				—				—				—				(17,660	)			—
Adjusted noninterest expense		$	106,602			$	100,075			$	89,100			$	86,659			$	81,743			$	295,777			$	245,542
Net interest income		$	86,961			$	81,037			$	70,417			$	62,066			$	55,550			$	238,415			$	161,651
Noninterest income			74,630				65,604				51,959				56,819				50,727				192,193				163,400
Total revenue			161,591				146,641				122,376				118,885				106,277				430,608				325,051
Tax credit from investments in alternative energy partnerships			19,357				—				—				—				—				19,357				—
Deferred tax expense on investments in alternative energy partnerships			(3,387	)			—				—				—				—				(3,387	)			—
Tax effect on tax credit and deferred tax expense (1)			11,002				—				—				—				—				11,002				—
Loss on investments in alternative energy partnerships, net			(17,660	)			—				—				—				—				(17,660	)			—
Total pre-tax adjustemnts for investments in alternative energy partnerships			9,312				—				—				—				—				9,312				—
Total adjusted revenue		$	170,903			$	146,641			$	122,376			$	118,885			$	106,277			$	439,920			$	325,051
Efficiency ratio			76.90	%			68.24	%			72.81	%			72.89	%			76.92	%			72.79	%			75.54	%
Adjusted efficiency ratio for excluding the effect of investments in alternative energy partnerships			62.38	%			68.24	%			72.81	%			72.89	%			76.92	%			67.23	%			75.54	%
(1)    Utilized a 40.79% effective tax rate

October 19, 2016 2016 Third Quarter Earnings Investor Presentation Exhibit 99.2

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Forward-looking Statements When used in this presentation and in documents filed with or furnished to the Securities and Exchange Commission (the “SEC”), or other public shareholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases “believe,” “will,” “should,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “plans,” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made. These statements may relate to future financial performance, strategic plans or objectives, revenue, expense or earnings projections, or other financial items of Banc of California Inc. and its affiliates (“BANC,” the “Company,” “we,” “us” or “our”). By their nature, these statements are subject to numerous uncertainties that could cause actual results to differ materially from those anticipated in the statements.   Factors that could cause actual results to differ materially from the results anticipated or projected include, but are not limited to, the following: (i) risks that the Company’s acquisitions and dispositions, including the acquisitions of branches from Banco Popular, The Private Bank of California, and CS Financial, Inc., and the acquisition and disposition of The Palisades Group, may disrupt current plans and operations, the potential difficulties in customer and employee retention as a result of those transactions and the amount of the costs, fees, expenses and charges related to those transactions; (ii) the credit risks of lending activities, which may be affected by further deterioration in real estate markets and the financial condition of borrowers, may lead to increased loan and lease delinquencies, losses and nonperforming assets in our loan portfolio, and may result in our allowance for loan and lease losses not being adequate to cover actual losses and require us to materially increase our loan and lease loss reserves; (iii) the quality and composition of our securities and loan portfolios; (iv) changes in general economic conditions, either nationally or in our market areas; (v) continuation of the historically low short-term interest rate environment, changes in the levels of general interest rates, and the relative differences between short- and long-term interest rates, deposit interest rates, our net interest margin and funding sources; (vi) fluctuations in the demand for loans and leases, the number of unsold homes and other properties and fluctuations in commercial and residential real estate values in our market area; (vii) results of examinations of us by regulatory authorities and the possibility that any such regulatory authority may, among other things, require us to increase our allowance for loan and lease losses, write-down asset values, increase our capital levels, or affect our ability to borrow funds or maintain or increase deposits, which could adversely affect our liquidity and earnings; (viii) legislative or regulatory changes that adversely affect our business, including changes in regulatory capital or other rules; (ix) our ability to control operating costs and expenses; (x) staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our work force and potential associated charges; (xi) errors in our estimates in determining fair value of certain of our assets, which may result in significant declines in valuation; (xii) the network and computer systems on which we depend could fail or experience a security breach; (xiii) our ability to attract and retain key members of our senior management team; (xiv) costs and effects of litigation, including settlements and judgments; (xv) increased competitive pressures among financial services companies; (xvi) changes in consumer spending, borrowing and saving habits; (xvii) adverse changes in the securities markets; (xviii) earthquake, fire or other natural disasters affecting the condition of real estate collateral; (xix) the availability of resources to address changes in laws, rules or regulations or to respond to regulatory actions; (xx) inability of key third-party providers to perform their obligations to us; (xxi) changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies or the Financial Accounting Standards Board or their application to our business or final audit adjustments, including additional guidance and interpretation on accounting issues and details of the implementation of new accounting methods; (xxii) war or terrorist activities; and (xxiii) other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services and the other risks described in this report and from time to time in other documents that we file with or furnish to the SEC. You should not place undue reliance on forward-looking statements, and we undertake 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.

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$11.2 billion in Assets $1.1 billion deposit growth in 3Q >25% QoQ reduction in nonperforming and delinquent loan ratios Dollars in billions 2 Dollars in millions 3 Adjusted efficiency ratio for 3Q16 including the pre-tax effect of investments in alternative energy partnerships 1.3% ROAA in 3Q 20% ROATCE in 3Q 62% Efficiency Ratio3 in 3Q Net Income2 Total Assets1 Earnings Growth Rate Exceeding Pace of Asset Growth by Nearly 3x +55% +147% Compelling Third Quarter Financial Results Winning Market Share By Reflecting California’s Needs and Values

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Diluted 2 Dollars in million 3 Return on Assets and Return on Tangible Common Equity based on average assets and average tangible common equity, respectively, over stated time periods Track-Record of Consistently Improving Financial Results Business Model Proving to be Highly Scalable and Profitable with Growth Net Income2 Earnings per Share1 Return on Tangible Common Equity3 Return on Assets3

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+57% Accelerating Profitability in Core Businesses Consistent Growth in Net Interest Income Complemented by Strong Mortgage Banking Performance Dollars in millions 2 Business Segment Pretax Income inclusive of intra-company allocations; excludes unallocated Corporate / Other interest expense. Financial Advisory Segment eliminated as of 3Q16. Total Business Segment Pretax Income excludes Loss on investments in alternative energy partnerships, net High quality earnings resulting in low earnings volatility Pretax Income by Business Segment2 Net Interest Income1

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Scale Resulting in Increased Efficiencies and Productivity Continue to Target 40% Marginal Efficiency Ratio1 ($ in millions) Assets / FTE Business Segment Noninterest Expense / Total Assets 4.9% 4.5% 4.0% 4.0% 3.8% Adjusted efficiency ratio for 3Q16 including the pre-tax effect of investments in alternative energy partnerships Marketing expense includes Advertising, Marketing, CRA and Contributions Efficiency Ratio1 -27% Marketing Expense / Assets2 (Monthly Average, in bps) Target 1 bp

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Strategic Actions During Quarter Enhance Franchise Value Reduction of Risk and Volatility Enable More Scalable Growth Sale of Non-Performing, Delinquent and TDR Loans to meaningfully improve credit quality and reduce credit risk. Pruning of businesses and portfolios with higher credit risk including seasoned residential loan pool sales, equipment finance loan sales, and elevated LTV loan sales. Initiated tax planning strategies during Q3 including a CRA-eligible solar investment partnership focused on affordable housing initiatives in LMI communities Total remaining requirement under the program is $58 million with a duration of ~1 year; anticipate future average balance outstanding will be less than $50 million at any given time No credit exposure to solar company with strong principal protection and guarantees with principal returned primarily through tax benefits $5.5 million net benefit to earnings realized in Q3 through tax benefits; reduction of projected tax rate from ~40% to under 25% for foreseeable future Improved liquidity by reducing FHLB borrowings from 11% of total assets a year ago to 7%, increasing securities portfolio, and increasing and testing credit facilities. Reduction of volatility from Mortgage Servicing Rights by entering into new flow agreement on agency originations.

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+67% Total Deposits ($ in billions) Record 3Q Deposit Growth Helped to Reduce Borrowings Strong Liquidity Position Key to Continued Long Term Growth Record quarterly deposit growth of $1.1 billion $700 million of commercial banking segment deposit growth during Q3 FHLB borrowings reduced by $160 million from the prior quarter and now stand at 7% of total assets; down from 11% a year ago $3.7 billion of deposit growth over the prior four quarters

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Loan Production by Business Segment Loan Production Continues to be Robust On Track to Exceed 2016 Production Target of $8 Billion ($ in millions) +44% Total 3Q loan production of $2.6 billion, including $1.1 billion of commercial banking segment production Commercial banking loan production up 51% year over year Mortgage banking loan production up 39% year over year

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Loan Growth Driven by Commercial Lending Continuing to Add Talented Commercial Banking Teams Held for investment loan balances; totals may not equal 100% as Consumer loans represented (2%) C&I Loans include C&I, SBA and Lease loans Total commercial loans now represent 59% of held for investment loan balances $1.1 billion in total 3Q16 commercial banking segment production $323 million 3Q16 C&I production Record $319 million 3Q16 CRE & Multifamily production 100% = $333 million 3Q16 Net Loan Growth1

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Portfolio Management Strengthening Asset Quality Proactively Reducing Risk During Period of Strong Credit Performance and Tight Credit Spreads Change QoQ B / (W) Change YoY B / (W) NPAs / Assets 29% 48% Total Delinquent Loans / Gross Loans 26% 20% Non-Accrual TDRs 82% 74% ALLL / NPLs 37% 48% Selectively pruned the portfolio during Q3 Transacted 2 loan sales which comprised exclusively NPLs Additional loan sale completed from seasoned residential mortgage loan pools which included some higher reported delinquency loans Total delinquencies reduced by $29 million from prior quarter 10

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Asset Quality Remains Strong and Stable Nonperforming Assets to Total Asset Ratio Improved Significantly and at Lowest Level in Over 5 Years 3Q 2015 4Q 2015 1Q 2016 2Q 2016 3Q 2016 % Change YoY NPAs / Assets 0.62% 0.56% 0.46% 0.45% 0.32% (48%) NPAs / Equity 7.0% 7.1% 5.1% 4.8% 3.7% (47%) ALLL / NPLs 77% 79% 81% 83% 114% 48% ALLL / Total Loans 0.74% 0.69% 0.66% 0.60% 0.61% (18%) ALLL and Discount / Total Loans 2.65% 2.66% 2.47% 2.33% 1.92% (28%)

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Strong Capital Ratios and Liquidity Total Liquidity Increased by $4 Billion Year over Year BANC Liquidity1 BANC Capital Ratios Dollars in millions

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Dollars in billions 2 Dollars in millions 3 Diluted 4 Normalized to assume full 40% tax rate Deposits1 Earnings per Share3 Net Income2 Assets1 4 YTD 2016 Annualized Annualized CAGR +66% CAGR +68% CAGR +121% CAGR +48% Banc of California’s Business Model is Winning Market Leading Earnings and Asset Growth Rates

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Metric FY 2016 Guidance YTD 2016 Actual On Target ROATCE 15% 16.8% ü ROAA 1%+ 1.1% ü Efficiency Ratio1 65% – 70% 67% ü Earnings Per Share2 $1.85+ $1.40 ($1.87 annualized) ü “Given our strong year to date results, we are updating our 2016 earnings per share guidance to at least $1.85 per share, an increase of $0.25 or 15% from existing guidance of $1.60." – Steven Sugarman (Chairman, President, and CEO) Adjusted efficiency ratio for 3Q16 including the pre-tax effect of investments in alternative energy partnerships Excluding costs associated with capital transactions and M&A activity On Pace to Exceed 2016 Earnings Guidance Increasing Management’s Guidance for 2016 EPS by 15% to $1.85+ 14

Exhibit 99.3

 

Banc of California Update

IRVINE, Calif., (October 18, 2016) – Banc of California, Inc. (NYSE: BANC) today announced it is aware of allegations posted in a financial blog. The Company’s Board of Directors has been aware of matters relating to Jason Galanis including certain claims he had made suggesting an affiliation with members of the Company, its Board, and/or its Executive team. The Board, acting through its Disinterested Directors, immediately initiated a thorough independent investigation led by Winston & Strawn, and has received regular reports including related to regulatory and governmental communications over the past year.

The complaint filed by the Department of Justice against Mr. Galanis and others dated May 9, 2016, which is found here, clearly states that Mr. Galanis’ claims to be affiliated with COR Capital were fraudulent. See paragraphs 40 and 41 of the Sworn Statement of the Special Agent of the Federal Bureau of Investigation which states:

“40. Based on my conversation with a representative of COR Capital, I have learned that, contrary to the representations made in the June 3, 2014 email sent by JASON GALANIS, the defendant, to MICHELE MORTON, the defendant, (referenced in paragraph 39c above), Burnham, CORFA and Wealth-Assurance AG were not affiliates of COR Capital.

41. Based on my review of documents, I have learned that on June 3, 2014, JASON GALANIS, the defendant, sent an email to BEVAN COONEY, the defendant, which forwarded the email JASON GALANIS sent to MICHELLE MORTON, the defendant, earlier that same day, attaching the description of COR Capital which fraudulently asserted that certain entities were affiliates of COR Capital. In JASON GALANIS’s email to COONEY, JASON GALANIS wrote “whoring it out shamelessly[.] thank you [first name of COR Capital representative.]”

Banc of California and its Disinterested Directors will make further facts publicly available as appropriate.    

About Banc of California, Inc.

Banc of California, Inc. (NYSE: BANC) provides comprehensive banking services to California’s diverse businesses, entrepreneurs and communities. Banc of California operates over 100 offices in California and the West.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the “Safe-Harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are necessarily subject to risk and uncertainty and actual results could differ materially from those anticipated due to various factors, including those set forth from time to time in the documents filed or furnished by Banc of California, Inc. with the Securities and Exchange Commission. You should not place undue reliance on forward-looking statements and Banc of California, Inc. undertakes no obligation to update any such statements to reflect circumstances or events that occur after the date on which the forward-looking statement is made.

Source: Banc of California, Inc.

 

INVESTOR RELATIONS INQUIRIES:		MEDIA INQUIRIES:
Banc of California, Inc.		Vectis Strategies
Timothy Sedabres, (855) 361-2262		David Herbst, (213) 973-4113 x101

 

18500 Von Karman Ave. ● Suite 1100 ● Irvine, CA 92612 ● (949) 236-5250 ● www.bancofcal.com

Exhibit 99.4

 

		North America    Europe    Asia		333 S. Grand Avenue, 38th Floor Los Angeles, CA 90071 T +1 213 615 1700 F +1 213 615 1750

 

				DAVID L. ARONOFF Partner (213) 615-1866 [email protected]

October 18, 2016

VIA EMAIL

Seeking Alpha

[email protected]

 

Re:	Demand for Retraction of Defamatory Blog Post Regarding Banc of California

Dear Sirs:

We represent Banc of California, Inc. and Banc of California, N.A and have extensive familiarity with many of the claims, circumstances, and accusations which have surfaced recently involving Banc of California. We write in response to the inaccurate, malicious and libelous article published October 18, 2016 by Seeking Alpha titled “BANC: Extensive Ties To Notorious Fraudster Jason Galanis Make Shares Un-Investible.” Your decision to publish this article, prepared by a “contributor,” was reckless, defamatory, and constitutes libel per se. This letter is not intended to be an exhaustive rebuttal of each and every inaccuracy in the article; however, we want to point out those falsehoods that are unquestionably egregious and malicious and which undermine the entire premise of the article.

It is clear from the face of the article that the author did not perform a good faith investigation into the facts presented. Instead, the author goes to great lengths in his malicious attempt to conjure support for his faulty conclusion, and, in so doing, ignores certain essential facts that undermine his conclusions, distorts public records to fit his false narrative, and tells many outright lies.

In one particularly clear example, the author relies upon an out of context and out of date affidavit to imply an improper link between COR Capital and Steven Sugarman, on the one hand, and Galanis, on the other hand, but fails to mention that in a later sworn statement in the public record the government revealed that Mr. Galanis’s claim of such a relationship was in fact fraudulent. Importantly, the author improperly implies that a SEC affidavit that simply attached emails and documents in which Galanis purported to act on behalf of COR Capital amounted to an endorsement by the SEC that Galanis’s statements were truthful. Mr. Galanis has pled guilty to fraud. Meanwhile, the FBI’s own Special Agent has stated under oath that these very statements were “fraudulently” made.

Indeed, as the government’s investigation progressed, it became clear that Galanis’s purported connections to COR Capital, as set forth in the documents attached to the SEC affidavit and relied upon by the author of the Seeking Alpha article, were entirely false.

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		October 18, 2016 Page 2

 

The government’s investigation revealed that Galanis had fabricated the connections. The criminal complaint that the government filed against Galanis and others several months after the filing of the SEC action, attached hereto as Exhibit A, clarifies that Galanis had in fact lied about his connection to COR Capital, and that no such entanglements actually existed. This was part of a pattern of fraudulent behavior by Galanis to fraudulently claim affiliation with entities to which he had no relationship. In particular, the criminal complaint contains the sworn statement, under oath, of an FBI Special Agent, as follows:

40. Based on my conversations with a representative of COR Capital, I have learned that, contrary to the representations made in the June 3, 2014 email sent by JASON GALANIS, the defendant, to MICHELLE MORTON, the defendant, (referenced in paragraph 39c above), Burnham, CORFA and Wealth-Assurance AG were not affiliates of COR Capital.

41. Based on my review of documents, I have learned that on June 3, 2014, JASON GALANIS, the defendant, sent an email to BEVAN COONEY, the defendant, which forwarded the email JASON GALANIS sent to MICHELLE MORTON, the defendant, earlier that same day, attaching the description of COR Capital which fraudulently asserted that certain entities were affiliates of COR Capital. In JASON GALANIS’S email to COONEY, JASON GALANIS wrote “whoring it out shamelessly[.] thank you [first name of COR Capital representative.]”

The criminal complaint was unsealed on May 11, 2016 and has been in the public domain since that time. The author of the article had access to it and cited it at one point in the article but deliberately omitted any mention of paragraphs 40 and 41. Instead, and in contravention of the sworn testimony of the investigating FBI agent, the author chose to falsely present Galanis’s alleged connection with COR Capital as fact (even though the SEC affidavit upon which the author relies did not present the purported connection as fact and the unsealed complaint established otherwise).

The failure of the author to even mention the true facts which demonstrate that COR Capital had no involvement with the allegations surrounding Jason Galanis is evidence of the author’s actual malice and determination to go to whatever means necessary to link Steven Sugarman and COR Capital to Jason Galanis’s criminal activities, even where the government’s investigation has not found a link.

The author of a defamatory Internet article or blog post, as well as the website that publishes it, is liable in defamation for statements made on the Internet to the same extent as statements published elsewhere. See, e.g. Sandals Resorts Intern., ltd. v. Google, Inc., 86 A.D.3d 32 (N.Y. App. Div. 2011). This is even true where, as here, the author of the post is anonymous. Cohen v. Google, Inc., 887 N.Y.S.2d 424 (N.Y. Sup. Ct. 2009) (permitting pre-action discovery to determine identity of anonymous blogger who published defamatory statements).

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		October 18, 2016 Page 3

 

The above example is but one of numerous false statements, lies and fabrications that a quick read of the blog has uncovered. For instance, our review of Banc of California has confirmed that the bank has no business relationship with Jason Galanis, and has refused to do business with Mr. Galanis when requested. In fact, we have confirmed that the bank has shared information with regulatory and law enforcement personnel relating to Mr. Galanis over the past year.

We hereby demand that you immediately cease further publication of the article, remove it from your website and issue a full and immediate written retraction. Failure to do so will leave Banc of California no option but to pursue all available actions and remedies against you. We further ask that you provide us with the following documents and information by Friday, October 21, 2016 so that we may assess any claims that we have against you or the author:

 

1)

The identity of the author;

 

2)

All communications between or among Seeking Alpha and the author; and

 

3)

All documents and communications reflecting any investigation, due diligence, or fact-checking that Seeking Alpha performed regarding the article and/or its author.