Form 8-K BANC OF CALIFORNIA, INC. For: Jul 21
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): July 21, 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 No.) |
(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. below):
| ¨ | 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)) |
Item 2.02 Results of Operations and Financial Condition.
On July 21, 2016, Banc of California, Inc. (the “Company”) issued a press release announcing 2016 second quarter financial results. The Company will host a conference call to discuss these second quarter financial results at 7:00 a.m. Pacific Time (PT) on Thursday, July 21, 2016. Interested parties may attend the conference call by dialing 888-317-6003, and referencing event code 6455872. 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, in addition to the slide presentation for investor review prior to the call.
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.
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.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| 99.1 | Banc of California, Inc. Press Release, dated July 21, 2016. | |
| 99.2 | Banc of California, Inc. Earnings Conference Call Presentation Materials, dated July 21, 2016. | |
2
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. | ||||||
| July 21, 2016 | /s/ James McKinney | |||||
| James McKinney | ||||||
| Executive Vice President and | ||||||
| Chief Financial Officer | ||||||
3
EXHIBIT INDEX
| Number |
Description | |
| 99.1 | Banc of California, Inc. Press Release, dated July 21, 2016. | |
| 99.2 | Banc of California, Inc. Earnings Conference Call Presentation Materials dated July 21, 2016. | |
4
Exhibit 99.1
Banc of California Reports Record
Second Quarter Earnings
IRVINE, Calif., (July 21, 2016) – Banc of California, Inc. (NYSE: BANC) today reported record quarterly net income of $26.5 million for the second quarter of 2016, resulting in earnings per share of $0.43 for the quarter, fully diluted. Excluding $2.7 million of debt extinguishment costs related to the redemption of senior notes during the quarter, earnings per share for the second quarter was $0.46.
Pre-tax income for the second quarter of 2016 was $44.8 million, an increase of 63% compared to second quarter of 2015. Net income available to common shareholders for the second quarter was $21.4 million, an increase of 64% compared to the second quarter of 2015.
Highlights for the quarter included:
| • | Record quarterly deposit growth of $1.1 billion, or 16%, resulting in a reduction in quarter over quarter total interest expense. |
| • | Record quarterly loan production of $2.6 billion, driven by record quarterly commercial banking segment loan and lease originations of $1.3 billion, an increase of 109% from a year ago. |
| • | The Company’s return on average assets for the quarter was 1.1% and its return on average tangible common equity for the quarter was 15.7%. |
The Company finished the quarter with consolidated assets totaling $10.2 billion, an increase of $0.5 billion, or 6%, compared to the prior quarter, and an increase of $3.7 billion, or 58%, compared to a year ago. The Company’s growth over this period has been organic as Banc of California’s last acquisition occurred in 2014. Banc of California joins Pacific Western Bank, East West Bank, Cathay Bank and Silicon Valley Bank as the only mid-sized banks headquartered in California.
“Our strong second quarter performance is the direct result of our differentiated value proposition as California’s Bank. Based on total shareholder return since the beginning of 2015, Banc of California is the #1 performing bank stock amongst Forbes’ Magazine’s list of America’s Top 100 Banks,” said Steven Sugarman, Chairman and Chief Executive Officer of Banc of California. “Banc of California’s scale as a $10 billion bank is enabling the achievement of our long-term financial targets. This includes a return on tangible common equity over 15% and a return on assets over 1%. We are proud of these accomplishments. The consistent and strong financial performance showcases our strategy, focus and execution quarter-over-quarter. We are winning market share and we are winning top talent. Banc of California is a business built for the long-term.”
During the second quarter, the Company raised $100 million in common stock, completed its redemption of $85 million of 7.50% Senior Notes and increased its line of credit to $75 million. The redemption of the senior notes directly resulted in non-core expenses related to capital transactions of $2.7 million during the quarter.
“Banc of California meaningfully deleveraged its balance sheet, increased its liquidity and strengthened its capital structure during the second quarter,” said James McKinney, Chief Financial Officer of Banc of California. “We expect these actions will not only make us a safer and stronger financial institution, but they will be accretive to the holders of our debt, preferred stock and common stock. These actions are part of our on-going strategy to strengthen, and increase the durability of, our balance-sheet and liquidity as we grow beyond $10 billion in assets. We continue to seek opportunities to strengthen our franchise for the benefit of all our clients and other stakeholders.”
18500 Von Karman Ave. • Suite 1100 • Irvine, CA 92612 • (949) 236-5250 • www.bancofcal.com
During the quarter, Banc of California grew its recurring net interest income by $10.6 million, or 15% from the prior quarter, increased its total assets by $0.5 billion, reduced its total borrowings by over $0.6 billion, and maintained its net interest margin. These results occurred while the yield on the 10-year Treasury fell from 1.78% to 1.49%.
“We are proud that our interest rate risk controls and balance sheet management strategy enabled our bank to successfully navigate a volatile rate environment for the second quarter in a row without impacting the consistency and predictability of our earnings,” Sugarman said. “The losses from negative valuation marks in our mortgage servicing rights and SWAPs were offset by concurrent fair market value gains realized in our securities portfolio. We believe this further validates the investments we have made and continue to make in our enterprise risk analytics and controls. Our analytical approach to building our balance sheet and our business continues to support our track record of consistent, growing earnings.”
The Company will host a conference call to discuss its second quarter financial results at 7:00 a.m. Pacific Time (PT) on Thursday, July 21, 2016. Interested parties are welcome to attend the conference call by dialing 888-317-6003, and referencing event code 6455872. 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.
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 |
2
Banc of California, Inc.
Consolidated Statements of Financial Condition
(Dollars in thousands)
(Unaudited)
| June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
June 30, 2015 |
||||||||||||||||
| ASSETS | ||||||||||||||||||||
| Cash and cash equivalents |
$ | 271,732 | $ | 215,012 | $ | 156,124 | $ | 378,963 | $ | 458,990 | ||||||||||
| Time deposits in financial institutions |
1,500 | 1,500 | 1,500 | 1,900 | 1,900 | |||||||||||||||
| Securities available for sale |
1,302,785 | 1,663,711 | 833,596 | 693,219 | 487,293 | |||||||||||||||
| Securities held to maturity |
962,282 | 962,262 | 962,203 | 529,532 | 53,414 | |||||||||||||||
| Loans held for sale |
893,782 | 863,944 | 668,841 | 596,565 | 746,651 | |||||||||||||||
| Loans and leases receivable |
6,236,115 | 5,463,068 | 5,184,394 | 4,730,077 | 4,473,095 | |||||||||||||||
| Allowance for loan and lease losses |
(37,483 | ) | (35,845 | ) | (35,533 | ) | (34,774 | ) | (34,787 | ) | ||||||||||
| Federal Home Loan Bank and other bank stock |
81,115 | 61,146 | 59,069 | 40,643 | 34,187 | |||||||||||||||
| Servicing rights, net |
53,650 | 49,406 | 50,727 | 41,646 | 34,942 | |||||||||||||||
| Other real estate owned, net |
429 | 325 | 1,097 | 34 | 50 | |||||||||||||||
| Premises and equipment, net |
120,755 | 114,668 | 111,539 | 34,689 | 35,229 | |||||||||||||||
| Goodwill |
39,244 | 39,244 | 39,244 | 39,244 | 31,591 | |||||||||||||||
| Other intangible assets, net |
16,514 | 17,836 | 19,158 | 20,504 | 21,905 | |||||||||||||||
| Deferred income tax |
7,270 | 7,441 | 11,341 | 13,388 | 12,081 | |||||||||||||||
| Income tax receivable |
5,904 | — | 604 | 2,649 | 3,091 | |||||||||||||||
| Bank-owned life insurance investment |
101,314 | 100,734 | 100,171 | 99,570 | 19,201 | |||||||||||||||
| Other assets |
100,754 | 92,520 | 71,480 | 68,961 | 59,049 | |||||||||||||||
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| Total assets |
$ | 10,157,662 | $ | 9,616,972 | $ | 8,235,555 | $ | 7,256,810 | $ | 6,437,882 | ||||||||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
| Deposits |
||||||||||||||||||||
| Noninterest-bearing deposits |
$ | 1,093,686 | $ | 1,398,728 | $ | 1,121,124 | $ | 1,011,169 | $ | 867,930 | ||||||||||
| Interest-bearing deposits |
6,835,270 | 5,438,873 | 5,181,961 | 4,410,821 | 4,184,260 | |||||||||||||||
| Deposits held for sale |
— | — | — | — | 52,820 | |||||||||||||||
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| Total deposits |
7,928,956 | 6,837,601 | 6,303,085 | 5,421,990 | 5,105,010 | |||||||||||||||
| Advances from Federal Home Loan Bank |
930,000 | 1,195,000 | 930,000 | 830,000 | 350,000 | |||||||||||||||
| Securities sold under repurchase agreements |
— | 257,100 | — | — | — | |||||||||||||||
| Notes payable, net |
177,743 | 260,896 | 261,876 | 262,779 | 264,077 | |||||||||||||||
| Reserve for loss on repurchased loans |
10,438 | 9,781 | 9,700 | 9,098 | 9,411 | |||||||||||||||
| Income taxes payable |
— | 12,303 | 1,241 | 5,939 | — | |||||||||||||||
| Accrued expenses and other liabilities |
170,641 | 176,761 | 77,248 | 83,470 | 75,502 | |||||||||||||||
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| Total liabilities |
9,217,778 | 8,749,442 | 7,583,150 | 6,613,276 | 5,804,000 | |||||||||||||||
| Commitments and contingent liabilities |
||||||||||||||||||||
| Preferred stock, Series A, non-cumulative perpetual |
— | 31,934 | 31,934 | 31,934 | 31,934 | |||||||||||||||
| Preferred stock, Series B, non-cumulative perpetual |
— | 10,000 | 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 | 120,258 | — | — | — | |||||||||||||||
| Common stock |
510 | 454 | 395 | 393 | 372 | |||||||||||||||
| Common stock, class B non-voting non-convertible |
2 | 1 | 1 | — | — | |||||||||||||||
| Additional paid-in capital |
608,303 | 509,123 | 429,790 | 427,599 | 425,784 | |||||||||||||||
| Retained earnings |
88,385 | 73,179 | 63,534 | 52,277 | 45,494 | |||||||||||||||
| Treasury stock |
(29,070 | ) | (29,070 | ) | (29,070 | ) | (29,070 | ) | (29,070 | ) | ||||||||||
| Accumulated other comprehensive income/(loss), net |
2,683 | 2,835 | (2,995 | ) | 1,585 | 552 | ||||||||||||||
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| Total stockholders’ equity |
939,884 | 867,530 | 652,405 | 643,534 | 633,882 | |||||||||||||||
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| Total liabilities and stockholders’ equity |
$ | 10,157,662 | $ | 9,616,972 | $ | 8,235,555 | $ | 7,256,810 | $ | 6,437,882 | ||||||||||
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1
Banc of California, Inc.
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
| June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
June 30, 2015 |
June 30, 2016 |
June 30, 2015 |
||||||||||||||||||||||
| Interest and dividend income |
||||||||||||||||||||||||||||
| Loans, including fees |
$ | 73,743 | $ | 67,144 | $ | 62,248 | $ | 60,454 | $ | 60,699 | $ | 140,887 | $ | 118,854 | ||||||||||||||
| Securities |
19,393 | 16,047 | 11,163 | 5,054 | 2,119 | 35,440 | 4,046 | |||||||||||||||||||||
| Dividends and other interest-earning assets |
1,504 | 1,049 | 788 | 1,007 | 2,026 | 2,553 | 2,724 | |||||||||||||||||||||
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| Total interest and dividend income |
94,640 | 84,240 | 74,199 | 66,515 | 64,844 | 178,880 | 125,624 | |||||||||||||||||||||
| Interest expense |
||||||||||||||||||||||||||||
| Deposits |
8,385 | 8,107 | 6,862 | 6,395 | 6,165 | 16,492 | 12,526 | |||||||||||||||||||||
| Federal Home Loan Bank advances |
1,966 | 1,262 | 890 | 587 | 290 | 3,228 | 643 | |||||||||||||||||||||
| Securities sold under repurchase agreements |
389 | 160 | 15 | 3 | — | 549 | — | |||||||||||||||||||||
| Notes payable and other interest-bearing liabilities |
2,863 | 4,294 | 4,366 | 3,980 | 4,285 | 7,157 | 6,354 | |||||||||||||||||||||
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| Total interest expense |
13,603 | 13,823 | 12,133 | 10,965 | 10,740 | 27,426 | 19,523 | |||||||||||||||||||||
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| Net interest income |
81,037 | 70,417 | 62,066 | 55,550 | 54,104 | 151,454 | 106,101 | |||||||||||||||||||||
| Provision for loan and lease losses |
1,769 | 321 | 1,260 | 735 | 5,474 | 2,090 | 5,474 | |||||||||||||||||||||
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| Net interest income after provision for loan and lease losses |
79,268 | 70,096 | 60,806 | 54,815 | 48,630 | 149,364 | 100,627 | |||||||||||||||||||||
| Noninterest income |
||||||||||||||||||||||||||||
| Customer service fees |
1,173 | 848 | 957 | 1,118 | 1,072 | 2,021 | 1,982 | |||||||||||||||||||||
| Loan servicing (loss) income |
(3,347 | ) | (5,288 | ) | 3,663 | (2,254 | ) | 2,007 | (8,635 | ) | 1,565 | |||||||||||||||||
| Net gain on sale of securities available for sale |
12,824 | 16,789 | 1,510 | 1,750 | — | 29,613 | (2 | ) | ||||||||||||||||||||
| Net gain on sale of loans |
2,147 | 2,195 | 15,164 | 9,737 | 7,838 | 4,342 | 12,310 | |||||||||||||||||||||
| Mortgage banking income |
43,795 | 33,684 | 30,334 | 37,015 | 39,403 | 77,479 | 77,336 | |||||||||||||||||||||
| Advisory service fees |
510 | 997 | 1,942 | 2,294 | 4,435 | 1,507 | 5,632 | |||||||||||||||||||||
| Loan brokerage income |
759 | 874 | 678 | 660 | 661 | 1,633 | 1,802 | |||||||||||||||||||||
| Gain on sale of building |
— | — | — | — | 9,919 | — | 9,919 | |||||||||||||||||||||
| All other income |
7,743 | 1,860 | 2,571 | 407 | 1,358 | 9,603 | 2,129 | |||||||||||||||||||||
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| Total noninterest income |
65,604 | 51,959 | 56,819 | 50,727 | 66,693 | 117,563 | 112,673 | |||||||||||||||||||||
| Noninterest expense |
||||||||||||||||||||||||||||
| Salaries and employee benefits |
61,022 | 57,183 | 54,008 | 53,215 | 56,120 | 118,205 | 105,891 | |||||||||||||||||||||
| Occupancy and equipment |
11,943 | 11,740 | 11,200 | 10,109 | 10,325 | 23,683 | 20,096 | |||||||||||||||||||||
| Professional fees |
6,763 | 6,212 | 4,808 | 5,261 | 6,689 | 12,975 | 10,124 | |||||||||||||||||||||
| Data processing |
2,838 | 2,194 | 2,104 | 2,170 | 2,075 | 5,032 | 3,910 | |||||||||||||||||||||
| Amortization of intangible assets |
1,322 | 1,322 | 1,346 | 1,401 | 1,545 | 2,644 | 3,089 | |||||||||||||||||||||
| All other expenses |
16,187 | 10,449 | 13,193 | 9,587 | 11,166 | 26,636 | 20,689 | |||||||||||||||||||||
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| Total noninterest expense |
100,075 | 89,100 | 86,659 | 81,743 | 87,920 | 189,175 | 163,799 | |||||||||||||||||||||
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| Income before income taxes |
44,797 | 32,955 | 30,966 | 23,799 | 27,403 | 77,752 | 49,501 | |||||||||||||||||||||
| Income tax (benefit) expense |
18,269 | 13,268 | 11,928 | 9,263 | 11,479 | 31,537 | 21,003 | |||||||||||||||||||||
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| Net income |
26,528 | 19,687 | 19,038 | 14,536 | 15,924 | 46,215 | 28,498 | |||||||||||||||||||||
| Preferred stock dividends |
5,114 | 4,575 | 3,030 | 3,040 | 2,843 | 9,689 | 3,753 | |||||||||||||||||||||
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| Net income available to common stockholders |
$ | 21,414 | $ | 15,112 | $ | 16,008 | $ | 11,496 | $ | 13,081 | $ | 36,526 | $ | 24,745 | ||||||||||||||
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| Basic earnings per total common share |
$ | 0.44 | $ | 0.36 | $ | 0.40 | $ | 0.29 | $ | 0.33 | $ | 0.81 | $ | 0.62 | ||||||||||||||
| Diluted earnings per total common share |
$ | 0.43 | $ | 0.36 | $ | 0.39 | $ | 0.29 | $ | 0.32 | $ | 0.79 | $ | 0.62 | ||||||||||||||
2
Banc of California, Inc.
Selected Financial Data
(Dollars in thousands)
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
| June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
June 30, 2015 |
June 30, 2016 |
June 30, 2015 |
||||||||||||||||||||||
| Average balances |
||||||||||||||||||||||||||||
| Total assets |
$ | 10,061,237 | $ | 8,833,176 | $ | 7,590,781 | $ | 6,681,590 | $ | 6,253,350 | $ | 9,447,206 | $ | 6,093,277 | ||||||||||||||
| Total gross loans and leases |
6,663,340 | 5,995,436 | 5,531,539 | 5,271,293 | 5,254,729 | 6,329,388 | 5,197,382 | |||||||||||||||||||||
| Investment Securities |
2,696,524 | 2,128,882 | 1,506,626 | 828,326 | 402,366 | 2,412,703 | 378,553 | |||||||||||||||||||||
| Total interest earning assets |
9,619,937 | 8,344,167 | 7,264,341 | 6,449,862 | 5,967,200 | 8,982,052 | 5,841,183 | |||||||||||||||||||||
| Total interest-bearing deposits |
5,696,893 | 5,332,032 | 4,685,145 | 4,314,330 | 4,078,540 | 5,514,463 | 4,082,087 | |||||||||||||||||||||
| Total borrowings |
2,067,234 | 1,309,710 | 1,141,554 | 745,959 | 635,460 | 1,688,472 | 609,862 | |||||||||||||||||||||
| Total interest bearing liabilities |
7,764,127 | 6,641,742 | 5,826,699 | 5,060,289 | 4,714,000 | 7,202,935 | 4,691,949 | |||||||||||||||||||||
| Total stockholders’ equity |
898,164 | 762,923 | 654,106 | 645,713 | 630,547 | 830,544 | 574,254 | |||||||||||||||||||||
| Profitability and other ratios |
||||||||||||||||||||||||||||
| Return on average assets (1) |
1.06 | % | 0.90 | % | 1.00 | % | 0.86 | % | 1.02 | % | 0.98 | % | 0.94 | % | ||||||||||||||
| Return on average equity (1) |
11.88 | % | 10.38 | % | 11.55 | % | 8.93 | % | 10.13 | % | 11.19 | % | 10.01 | % | ||||||||||||||
| Return on average tangible common equity (2) |
15.65 | % | 14.46 | % | 16.57 | % | 12.25 | % | 14.52 | % | 15.13 | % | 14.01 | % | ||||||||||||||
| Dividend payout ratio (3) |
27.27 | % | 33.33 | % | 30.00 | % | 41.38 | % | 36.36 | % | 29.63 | % | 38.71 | % | ||||||||||||||
| Net interest spread |
3.26 | % | 3.22 | % | 3.22 | % | 3.23 | % | 3.45 | % | 3.23 | % | 3.50 | % | ||||||||||||||
| Net interest margin (1) |
3.39 | % | 3.39 | % | 3.39 | % | 3.42 | % | 3.64 | % | 3.39 | % | 3.66 | % | ||||||||||||||
| Noninterest income to total revenue (4) |
44.74 | % | 42.46 | % | 47.79 | % | 47.73 | % | 55.21 | % | 43.70 | % | 51.50 | % | ||||||||||||||
| Noninterest income to average total assets (1) |
2.62 | % | 2.37 | % | 2.97 | % | 3.01 | % | 4.28 | % | 2.50 | % | 3.73 | % | ||||||||||||||
| Noninterest expense to average total assets (1) |
4.00 | % | 4.06 | % | 4.53 | % | 4.85 | % | 5.64 | % | 4.03 | % | 5.42 | % | ||||||||||||||
| Efficiency ratio (5) |
68.24 | % | 72.81 | % | 72.89 | % | 76.92 | % | 72.78 | % | 70.32 | % | 74.87 | % | ||||||||||||||
| Average held for investment loans and leases to average deposits |
82.88 | % | 79.76 | % | 86.88 | % | 86.03 | % | 79.87 | % | 81.36 | % | 80.78 | % | ||||||||||||||
| Average investment securities to average total assets |
26.80 | % | 24.10 | % | 19.85 | % | 12.40 | % | 6.43 | % | 25.54 | % | 6.21 | % | ||||||||||||||
| Average stockholders’ equity to average total assets |
8.93 | % | 8.64 | % | 8.62 | % | 9.66 | % | 10.08 | % | 8.79 | % | 9.42 | % | ||||||||||||||
| Allowance for loan and lease losses (ALLL) |
||||||||||||||||||||||||||||
| Balance at beginning of period |
$ | 35,845 | $ | 35,533 | $ | 34,774 | $ | 34,787 | $ | 29,345 | $ | 35,533 | $ | 29,480 | ||||||||||||||
| Loans and leases charged off |
(772 | ) | (102 | ) | (718 | ) | (788 | ) | (79 | ) | (874 | ) | (436 | ) | ||||||||||||||
| Recoveries |
641 | 93 | 217 | 40 | 47 | 734 | 269 | |||||||||||||||||||||
| Provision for loan and lease losses |
1,769 | 321 | 1,260 | 735 | 5,474 | 2,090 | 5,474 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Balance at end of period |
$ | 37,483 | $ | 35,845 | $ | 35,533 | $ | 34,774 | $ | 34,787 | $ | 37,483 | $ | 34,787 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Annualized net loan charge-offs to average total gross loans held for investment |
0.01 | % | 0.00 | % | 0.04 | % | 0.07 | % | 0.00 | % | 0.01 | % | 0.01 | % | ||||||||||||||
| Reserve for loss on repurchased loans |
||||||||||||||||||||||||||||
| Balance at beginning of period |
$ | 9,781 | $ | 9,700 | $ | 9,098 | $ | 9,411 | $ | 8,432 | $ | 9,700 | $ | 8,303 | ||||||||||||||
| Provision for loan repurchases |
851 | 379 | 735 | 716 | 1,573 | 1,230 | 2,901 | |||||||||||||||||||||
| Change in estimates |
— | — | 846 | — | — | — | — | |||||||||||||||||||||
| Utilization of reserve for loan repurchases |
(194 | ) | (298 | ) | (979 | ) | (1,029 | ) | (594 | ) | (492 | ) | (1,793 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Balance at end of period |
$ | 10,438 | $ | 9,781 | $ | 9,700 | $ | 9,098 | $ | 9,411 | $ | 10,438 | $ | 9,411 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| (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)
| June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
June 30, 2015 |
||||||||||||||||
| Asset quality information and ratios |
||||||||||||||||||||
| 30 to 89 days delinquent, excluding PCI loans |
$ | 50,494 | $ | 36,022 | $ | 39,946 | $ | 48,550 | $ | 46,820 | ||||||||||
| 90+ days delinquent, excluding PCI loans |
28,675 | 27,469 | 23,338 | 23,725 | 22,855 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total delinquent loans, excluding PCI loans |
79,169 | 63,491 | 63,284 | 72,275 | 69,675 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| PCI loans, 30 to 89 days delinquent |
48,255 | 44,191 | 40,291 | 17,593 | 17,351 | |||||||||||||||
| PCI loans, 90+ days delinquent |
8,952 | 9,806 | 6,894 | 6,223 | 8,648 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total delinquent PCI loans |
57,207 | 53,997 | 47,185 | 23,816 | 25,999 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total delinquent loans |
$ | 136,376 | $ | 117,488 | $ | 110,469 | $ | 96,091 | $ | 95,674 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total delinquent non-PCI loans to total non-PCI loans |
1.44 | % | 1.33 | % | 1.42 | % | 1.66 | % | 1.66 | % | ||||||||||
| Total delinquent loans to gross loans |
2.19 | % | 2.15 | % | 2.13 | % | 2.03 | % | 2.14 | % | ||||||||||
| Non-performing loans, excluding PCI loans |
$ | 45,012 | $ | 44,216 | $ | 45,129 | $ | 45,188 | $ | 42,708 | ||||||||||
| 90+ days delinquent and still accruing loans, excluding PCI loans |
— | — | — | — | — | |||||||||||||||
| Other real estate owned |
429 | 325 | 1,097 | 34 | 50 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-performing assets |
$ | 45,441 | $ | 44,541 | $ | 46,226 | $ | 45,222 | $ | 42,758 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| ALLL to non-performing loans |
83.27 | % | 81.07 | % | 78.74 | % | 76.95 | % | 81.45 | % | ||||||||||
| Non-performing loans to gross loans |
0.72 | % | 0.81 | % | 0.87 | % | 0.96 | % | 0.95 | % | ||||||||||
| Non-performing assets to total assets |
0.45 | % | 0.46 | % | 0.56 | % | 0.62 | % | 0.66 | % | ||||||||||
| Troubled Debt Restructings (TDRs) |
||||||||||||||||||||
| Performing TDRs |
$ | 14,450 | $ | 15,128 | $ | 7,842 | $ | 9,378 | $ | 7,402 | ||||||||||
| Non-performing TDRs |
2,864 | 2,545 | 1,970 | 2,017 | 1,937 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total TDRs |
$ | 17,314 | $ | 17,673 | $ | 9,812 | $ | 11,395 | $ | 9,339 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
4
Banc of California, Inc.
Selected Financial Data, Continued
(Dollars in thousands)
(Unaudited)
| June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
June 30, 2015 |
||||||||||||||||
| Loan and lease breakdown by ALLL evaluation type |
||||||||||||||||||||
| Originated loans and leases |
||||||||||||||||||||
| Individually evaluated for impairment |
$ | 25,661 | $ | 26,565 | $ | 30,654 | $ | 31,008 | $ | 31,791 | ||||||||||
| Collectively evaluated for impairment |
4,254,975 | 3,484,995 | 3,117,528 | 2,776,601 | 2,489,347 | |||||||||||||||
| Acquired loans not impaired at acquisition |
||||||||||||||||||||
| Individually evaluated for impairment |
3,470 | 3,530 | 3,629 | 1,704 | 8 | |||||||||||||||
| Collectively evaluated for impairment |
1,022,696 | 1,079,711 | 1,124,874 | 1,174,573 | 1,294,384 | |||||||||||||||
| Seasoned SFR mortgage loan pools - non-impaired |
||||||||||||||||||||
| Individually evaluated for impairment |
9,717 | 9,287 | — | — | — | |||||||||||||||
| Collectively evaluated for impairment |
168,352 | 175,004 | 194,978 | 373,634 | 391,193 | |||||||||||||||
| Acquired with deteriorated credit quality |
751,244 | 683,976 | 712,731 | 372,557 | 266,372 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total loans |
$ | 6,236,115 | $ | 5,463,068 | $ | 5,184,394 | $ | 4,730,077 | $ | 4,473,095 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| ALLL breakdown |
||||||||||||||||||||
| Originated loans and leases |
||||||||||||||||||||
| Individually evaluated for impairment |
$ | 215 | $ | 365 | $ | 369 | $ | 512 | $ | 686 | ||||||||||
| Collectively evaluated for impairment |
34,575 | 32,202 | 32,713 | 31,419 | 31,440 | |||||||||||||||
| Acquired loans not impaired at acquisition |
||||||||||||||||||||
| Individually evaluated for impairment |
— | — | — | — | — | |||||||||||||||
| Collectively evaluated for impairment |
1,458 | 2,061 | 2,245 | 2,637 | 2,455 | |||||||||||||||
| Seasoned SFR mortgage loan pools - non-impaired |
||||||||||||||||||||
| Individually evaluated for impairment |
1,131 | 1,011 | — | — | — | |||||||||||||||
| Collectively evaluated for impairment |
— | — | — | — | — | |||||||||||||||
| Acquired with deteriorated credit quality |
104 | 206 | 206 | 206 | 206 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total ALLL |
$ | 37,483 | $ | 35,845 | $ | 35,533 | $ | 34,774 | $ | 34,787 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Discount on Purchased/Acquired Loans |
||||||||||||||||||||
| Acquired loans not impaired at acquisition |
$ | 20,136 | $ | 20,781 | $ | 21,366 | $ | 21,759 | $ | 15,245 | ||||||||||
| Seasoned SFR mortgage loan pools - non-impaired |
11,304 | 11,862 | 12,545 | 27,699 | 29,201 | |||||||||||||||
| Acquired with deteriorated credit quality |
76,505 | 66,573 | 68,372 | 41,280 | 52,394 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total Discount |
$ | 107,945 | $ | 99,216 | $ | 102,283 | $ | 90,738 | $ | 96,840 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Ratios |
||||||||||||||||||||
| To originated loans and leases: |
||||||||||||||||||||
| Individually evaluated for impairment |
0.84 | % | 1.37 | % | 1.20 | % | 1.65 | % | 2.16 | % | ||||||||||
| Collectively evaluated for impairment (1) |
0.81 | % | 0.92 | % | 1.05 | % | 1.13 | % | 1.26 | % | ||||||||||
| Total ALLL |
0.81 | % | 0.93 | % | 1.05 | % | 1.14 | % | 1.27 | % | ||||||||||
| To originated loans and leases and acquired loans not impaired at acquisition: |
||||||||||||||||||||
| Individually evaluated for impairment |
0.74 | % | 1.21 | % | 1.08 | % | 1.57 | % | 2.16 | % | ||||||||||
| Collectively evaluated for impairment |
0.68 | % | 0.75 | % | 0.82 | % | 0.86 | % | 0.90 | % | ||||||||||
| Total ALLL |
0.68 | % | 0.75 | % | 0.83 | % | 0.87 | % | 0.91 | % | ||||||||||
| Total ALLL and discount (2) |
1.06 | % | 1.21 | % | 1.33 | % | 1.41 | % | 1.31 | % | ||||||||||
| To total loans and leases: |
||||||||||||||||||||
| Individually evaluated for impairment |
3.46 | % | 3.49 | % | 1.08 | % | 1.57 | % | 2.16 | % | ||||||||||
| Collectively evaluated for impairment |
0.66 | % | 0.72 | % | 0.79 | % | 0.79 | % | 0.81 | % | ||||||||||
| Total ALLL |
0.60 | % | 0.66 | % | 0.69 | % | 0.74 | % | 0.78 | % | ||||||||||
| Total ALLL and discount (2) |
2.33 | % | 2.47 | % | 2.66 | % | 2.65 | % | 2.94 | % | ||||||||||
| (1) | At June 30, 2015, the ratio included an unallocated ALLL of $2.2 million. Without the unallocated, the ratio was 1.17% at June 30, 2015. |
| (2) | 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)
| June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
June 30, 2015 |
||||||||||||||||
| Composition of held for investment loans and leases |
||||||||||||||||||||
| Commercial real estate |
$ | 725,107 | $ | 713,693 | $ | 727,707 | $ | 690,862 | $ | 807,146 | ||||||||||
| Multi-family |
1,147,597 | 1,021,097 | 904,300 | 823,415 | 696,768 | |||||||||||||||
| Construction |
86,852 | 68,241 | 55,289 | 39,475 | 32,022 | |||||||||||||||
| Commercial and industrial |
1,306,866 | 983,961 | 876,999 | 822,690 | 771,477 | |||||||||||||||
| SBA |
65,477 | 71,640 | 57,706 | 52,985 | 56,887 | |||||||||||||||
| Lease financing |
228,663 | 212,836 | 192,424 | 162,504 | 131,189 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total commercial loans |
3,560,562 | 3,071,468 | 2,814,425 | 2,591,931 | 2,495,489 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Single family residential mortgage |
2,555,344 | 2,282,445 | 2,255,584 | 2,013,450 | 1,840,924 | |||||||||||||||
| Other consumer |
120,209 | 109,155 | 114,385 | 124,696 | 136,682 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total consumer loans |
2,675,553 | 2,391,600 | 2,369,969 | 2,138,146 | 1,977,606 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total gross loans and leases |
$ | 6,236,115 | $ | 5,463,068 | $ | 5,184,394 | $ | 4,730,077 | $ | 4,473,095 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Composition percentage of held for investment loans and leases |
||||||||||||||||||||
| Commercial real estate |
11.6 | % | 13.1 | % | 14.0 | % | 14.6 | % | 18.0 | % | ||||||||||
| Multi-family |
18.4 | % | 18.7 | % | 17.4 | % | 17.4 | % | 15.6 | % | ||||||||||
| Construction |
1.4 | % | 1.2 | % | 1.1 | % | 0.8 | % | 0.7 | % | ||||||||||
| Commercial and industrial |
21.0 | % | 18.0 | % | 16.9 | % | 17.4 | % | 17.2 | % | ||||||||||
| SBA |
1.0 | % | 1.3 | % | 1.1 | % | 1.1 | % | 1.3 | % | ||||||||||
| Lease financing |
3.7 | % | 3.9 | % | 3.7 | % | 3.4 | % | 2.9 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total commercial loans |
57.1 | % | 56.2 | % | 54.2 | % | 54.7 | % | 55.7 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Single family residential mortgage |
41.0 | % | 41.8 | % | 43.6 | % | 42.7 | % | 41.2 | % | ||||||||||
| Other consumer |
1.9 | % | 2.0 | % | 2.2 | % | 2.6 | % | 3.1 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total consumer loans |
42.9 | % | 43.8 | % | 45.8 | % | 45.3 | % | 44.3 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total gross loans and leases |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Composition of deposits |
||||||||||||||||||||
| Noninterest-bearing checking |
$ | 1,093,686 | $ | 1,398,728 | $ | 1,121,124 | $ | 1,011,169 | $ | 880,766 | ||||||||||
| Interest-bearing checking |
2,053,656 | 2,052,507 | 1,697,055 | 1,458,208 | 1,002,443 | |||||||||||||||
| Money market |
2,343,561 | 1,534,492 | 1,479,931 | 1,238,180 | 1,393,751 | |||||||||||||||
| Savings |
909,242 | 844,177 | 823,618 | 814,230 | 843,274 | |||||||||||||||
| Certificates of deposit |
1,528,811 | 1,007,697 | 1,181,357 | 900,203 | 984,776 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total deposits |
$ | 7,928,956 | $ | 6,837,601 | $ | 6,303,085 | $ | 5,421,990 | $ | 5,105,010 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Composition percentage of deposits |
||||||||||||||||||||
| Noninterest-bearing checking |
13.8 | % | 20.5 | % | 17.8 | % | 18.6 | % | 17.3 | % | ||||||||||
| Interest-bearing checking |
25.9 | % | 30.0 | % | 26.8 | % | 26.9 | % | 19.6 | % | ||||||||||
| Money market |
29.5 | % | 22.4 | % | 23.5 | % | 22.8 | % | 27.3 | % | ||||||||||
| Savings |
11.5 | % | 12.3 | % | 13.1 | % | 15.0 | % | 16.5 | % | ||||||||||
| Certificates of deposit |
19.3 | % | 14.8 | % | 18.8 | % | 16.7 | % | 19.3 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| 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 | ||||||||||||||||||||||||||||||||||||
| June 30, 2016 | March 31, 2016 | December 31, 2015 | ||||||||||||||||||||||||||||||||||
| Average Balance |
Interest | Yield / Cost |
Average Balance |
Interest | Yield / Cost |
Average Balance |
Interest | Yield / Cost |
||||||||||||||||||||||||||||
| Interest earning assets |
||||||||||||||||||||||||||||||||||||
| Loans held for sale and SFR mortgage |
$ | 2,428,168 | $ | 22,488 | 3.72 | % | $ | 2,144,834 | $ | 19,808 | 3.71 | % | $ | 1,903,331 | $ | 17,584 | 3.67 | % | ||||||||||||||||||
| Seasoned SFR mortgage loan pools |
878,068 | 12,404 | 5.68 | % | 876,142 | 12,710 | 5.83 | % | 858,601 | 12,098 | 5.59 | % | ||||||||||||||||||||||||
| Commercial real estate, multi-family, and construction |
1,907,649 | 21,049 | 4.44 | % | 1,760,646 | 19,816 | 4.53 | % | 1,638,329 | 19,006 | 4.60 | % | ||||||||||||||||||||||||
| Commercial and industrial, SBA, and lease financing |
1,343,961 | 16,642 | 4.98 | % | 1,105,971 | 13,665 | 4.97 | % | 1,020,306 | 12,754 | 4.96 | % | ||||||||||||||||||||||||
| Other consumer |
105,494 | 1,160 | 4.42 | % | 107,843 | 1,145 | 4.27 | % | 110,972 | 806 | 2.88 | % | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
| Gross loans and leases |
6,663,340 | 73,743 | 4.45 | % | 5,995,436 | 67,144 | 4.50 | % | 5,531,539 | 62,248 | 4.46 | % | ||||||||||||||||||||||||
| Securities |
2,696,524 | 19,393 | 2.89 | % | 2,128,882 | 16,047 | 3.03 | % | 1,506,626 | 11,163 | 2.94 | % | ||||||||||||||||||||||||
| Other interest-earning assets |
260,073 | 1,504 | 2.33 | % | 219,849 | 1,049 | 1.92 | % | 226,176 | 788 | 1.38 | % | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
| Total interest-earning assets |
9,619,937 | 94,640 | 3.96 | % | 8,344,167 | 84,240 | 4.06 | % | 7,264,341 | 74,199 | 4.05 | % | ||||||||||||||||||||||||
| Allowance for loan and lease losses |
(37,637 | ) | (35,575 | ) | (35,894 | ) | ||||||||||||||||||||||||||||||
| BOLI and non-interest earning assets |
478,937 | 524,584 | 362,334 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Total assets |
$ | 10,061,237 | $ | 8,833,176 | $ | 7,590,781 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Interest-bearing liabilities |
||||||||||||||||||||||||||||||||||||
| Savings |
$ | 866,051 | $ | 1,603 | 0.74 | % | $ | 834,965 | $ | 1,572 | 0.76 | % | $ | 805,445 | $ | 1,538 | 0.76 | % | ||||||||||||||||||
| Interest-bearing checking |
1,981,702 | 3,135 | 0.64 | % | 1,900,834 | 3,244 | 0.69 | % | 1,475,461 | 2,663 | 0.72 | % | ||||||||||||||||||||||||
| Money market |
1,672,662 | 1,962 | 0.47 | % | 1,437,332 | 1,679 | 0.47 | % | 1,343,683 | 1,267 | 0.37 | % | ||||||||||||||||||||||||
| Certificates of deposit |
1,176,478 | 1,685 | 0.58 | % | 1,158,901 | 1,612 | 0.56 | % | 1,060,556 | 1,394 | 0.52 | % | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
| Total interest-bearing deposits |
5,696,893 | 8,385 | 0.59 | % | 5,332,032 | 8,107 | 0.61 | % | 4,685,145 | 6,862 | 0.58 | % | ||||||||||||||||||||||||
| FHLB advances |
1,663,791 | 1,966 | 0.48 | % | 955,659 | 1,262 | 0.53 | % | 869,457 | 890 | 0.41 | % | ||||||||||||||||||||||||
| Securities sold under repurchase agreements |
210,299 | 389 | 0.74 | % | 90,395 | 160 | 0.71 | % | 7,010 | 15 | 0.85 | % | ||||||||||||||||||||||||
| Long-term debt and other interest-bearing liabilities |
193,144 | 2,863 | 5.96 | % | 263,656 | 4,294 | 6.55 | % | 265,087 | 4,366 | 6.53 | % | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
| Total interest-bearing liabilities |
7,764,127 | 13,603 | 0.70 | % | 6,641,742 | 13,823 | 0.84 | % | 5,826,699 | 12,133 | 0.83 | % | ||||||||||||||||||||||||
| Noninterest-bearing deposits |
1,205,987 | 1,230,991 | 1,037,966 | |||||||||||||||||||||||||||||||||
| Non-interest-bearing liabilities |
192,959 | 197,520 | 72,010 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Total Liabilities |
9,163,073 | 8,070,253 | 6,936,675 | |||||||||||||||||||||||||||||||||
| Total stockholders’ equity |
898,164 | 762,923 | 654,106 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity |
$ | 10,061,237 | $ | 8,833,176 | $ | 7,590,781 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Net interest income/spread |
$ | 81,037 | 3.26 | % | $ | 70,417 | 3.22 | % | $ | 62,066 | 3.22 | % | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Net interest margin |
3.39 | % | 3.39 | % | 3.39 | % | ||||||||||||||||||||||||||||||
| Ratio of interest-earning assets to interest-bearing liabilities |
123.90 | % | 125.63 | % | 124.67 | % | ||||||||||||||||||||||||||||||
| Total deposits |
$ | 6,902,880 | $ | 8,385 | 0.49 | % | $ | 6,563,023 | $ | 8,107 | 0.50 | % | $ | 5,723,111 | $ | 6,862 | 0.48 | % | ||||||||||||||||||
| Total funding (1) |
$ | 8,970,114 | $ | 13,603 | 0.61 | % | $ | 7,872,733 | $ | 13,823 | 0.71 | % | $ | 6,864,665 | $ | 12,133 | 0.70 | % | ||||||||||||||||||
| (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 | ||||||||||||||||||||||||
| September 30, 2015 | June 30, 2015 | |||||||||||||||||||||||
| Average Balance |
Interest | Yield / Cost |
Average Balance |
Interest | Yield / Cost |
|||||||||||||||||||
| Interest earning assets |
||||||||||||||||||||||||
| Loans held for sale and SFR mortgage |
$ | 1,966,373 | $ | 18,123 | 3.66 | % | $ | 1,959,738 | $ | 18,984 | 3.89 | % | ||||||||||||
| Seasoned SFR mortgage loan pools |
689,666 | 10,901 | 6.27 | % | 591,460 | 9,690 | 6.57 | % | ||||||||||||||||
| Commercial real estate, multi-family, and construction |
1,568,975 | 17,643 | 4.46 | % | 1,848,780 | 21,552 | 4.68 | % | ||||||||||||||||
| Commercial and industrial, SBA, and lease financing |
914,811 | 12,125 | 5.26 | % | 697,291 | 8,871 | 5.10 | % | ||||||||||||||||
| Other consumer |
131,468 | 1,662 | 5.02 | % | 157,460 | 1,602 | 4.08 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Gross loans and leases |
5,271,293 | 60,454 | 4.55 | % | 5,254,729 | 60,699 | 4.63 | % | ||||||||||||||||
| Securities |
828,326 | 5,054 | 2.42 | % | 402,366 | 2,119 | 2.11 | % | ||||||||||||||||
| Other interest-earning assets |
350,243 | 1,007 | 1.14 | % | 310,105 | 2,026 | 2.62 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total interest-earning assets |
6,449,862 | 66,515 | 4.09 | % | 5,967,200 | 64,844 | 4.36 | % | ||||||||||||||||
| Allowance for loan and lease losses |
(34,810 | ) | (29,445 | ) | ||||||||||||||||||||
| BOLI and non-interest earning assets |
266,538 | 315,595 | ||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Total assets |
$ | 6,681,590 | $ | 6,253,350 | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Interest-bearing liabilities |
||||||||||||||||||||||||
| Savings |
$ | 832,006 | $ | 1,575 | 0.75 | % | $ | 867,532 | $ | 1,606 | 0.74 | % | ||||||||||||
| Interest-bearing checking |
1,282,066 | 2,273 | 0.70 | % | 1,012,211 | 1,996 | 0.79 | % | ||||||||||||||||
| Money market |
1,294,554 | 1,337 | 0.41 | % | 1,142,858 | 1,028 | 0.36 | % | ||||||||||||||||
| Certificates of deposit |
905,704 | 1,210 | 0.53 | % | 1,055,939 | 1,535 | 0.58 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total interest-bearing deposits |
4,314,330 | 6,395 | 0.59 | % | 4,078,540 | 6,165 | 0.61 | % | ||||||||||||||||
| FHLB advances |
476,848 | 587 | 0.49 | % | 375,385 | 290 | 0.31 | % | ||||||||||||||||
| Securities sold under repurchase agreements |
2,681 | 3 | 0.44 | % | — | — | — | |||||||||||||||||
| Long-term debt and other interest-bearing liabilities |
266,430 | 3,980 | 5.93 | % | 260,075 | 4,285 | 6.61 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total interest-bearing liabilities |
5,060,289 | 10,965 | 0.86 | % | 4,714,000 | 10,740 | 0.91 | % | ||||||||||||||||
| Noninterest-bearing deposits |
916,670 | 859,420 | ||||||||||||||||||||||
| Non-interest-bearing liabilities |
58,918 | 49,383 | ||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Total liabilities |
6,035,877 | 5,622,803 | ||||||||||||||||||||||
| Total stockholders’ equity |
645,713 | 630,547 | ||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Total liabilities and stockholders’ equity |
$ | 6,681,590 | $ | 6,253,350 | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Net interest income/spread |
$ | 55,550 | 3.23 | % | $ | 54,104 | 3.45 | % | ||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Net interest margin |
3.42 | % | 3.64 | % | ||||||||||||||||||||
| Ratio of interest-earning assets to interest-bearing liabilities |
127.46 | % | 126.58 | % | ||||||||||||||||||||
| Total deposits |
$ | 5,231,000 | $ | 6,395 | 0.49 | % | $ | 4,937,960 | $ | 6,165 | 0.50 | % | ||||||||||||
| Total funding (1) |
$ | 5,976,959 | $ | 10,965 | 0.73 | % | $ | 5,573,420 | $ | 10,740 | 0.77 | % | ||||||||||||
| (1) | Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding. |
8
Banc of California, Inc.
Average Balance, Average Yield Earned, and Average Cost Paid, Continued
(Dollars in thousands)
(Unaudited)
| Six Months Ended | ||||||||||||||||||||||||
| June 30, 2016 | June 30, 2015 | |||||||||||||||||||||||
| Average Balance |
Interest | Yield / Cost |
Average Balance |
Interest | Yield / Cost |
|||||||||||||||||||
| Interest earning assets |
||||||||||||||||||||||||
| Loans held for sale and SFR mortgage |
$ | 2,286,502 | $ | 42,296 | 3.72 | % | $ | 1,914,165 | $ | 36,461 | 3.84 | % | ||||||||||||
| Seasoned SFR mortgage loan pools |
877,105 | 25,114 | 5.76 | % | 591,591 | 19,103 | 6.51 | % | ||||||||||||||||
| Commercial real estate, multi-family, and construction |
1,834,147 | 40,865 | 4.48 | % | 1,902,507 | 44,060 | 4.67 | % | ||||||||||||||||
| Commercial and industrial, SBA, and lease financing |
1,224,966 | 30,307 | 4.98 | % | 635,353 | 16,110 | 5.11 | % | ||||||||||||||||
| Other consumer |
106,668 | 2,305 | 4.35 | % | 153,766 | 3,120 | 4.09 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Gross loans and leases |
6,329,388 | 140,887 | 4.48 | % | 5,197,382 | 118,854 | 4.61 | % | ||||||||||||||||
| Securities |
2,412,703 | 35,440 | 2.95 | % | 378,553 | 4,046 | 2.16 | % | ||||||||||||||||
| Other interest-earning assets |
239,961 | 2,553 | 2.14 | % | 265,248 | 2,724 | 2.07 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total interest-earning assets |
8,982,052 | 178,880 | 4.00 | % | 5,841,183 | 125,624 | 4.34 | % | ||||||||||||||||
| Allowance for loan and lease losses |
(36,606 | ) | (29,533 | ) | ||||||||||||||||||||
| BOLI and non-interest earning assets |
501,760 | 281,627 | ||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Total assets |
$ | 9,447,206 | $ | 6,093,277 | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Interest-bearing liabilities |
||||||||||||||||||||||||
| Savings |
$ | 850,508 | $ | 3,175 | 0.75 | % | $ | 906,316 | $ | 3,354 | 0.75 | % | ||||||||||||
| Interest-bearing checking |
1,941,268 | 6,378 | 0.66 | % | 1,027,468 | 4,037 | 0.79 | % | ||||||||||||||||
| Money market |
1,554,997 | 3,641 | 0.47 | % | 1,118,060 | 1,986 | 0.36 | % | ||||||||||||||||
| Certificates of deposit |
1,167,690 | 3,298 | 0.57 | % | 1,030,243 | 3,149 | 0.62 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total interest-bearing deposits |
5,514,463 | 16,492 | 0.60 | % | 4,082,087 | 12,526 | 0.62 | % | ||||||||||||||||
| FHLB advances |
1,309,725 | 3,228 | 0.50 | % | 431,182 | 643 | 0.30 | % | ||||||||||||||||
| Securities sold under repurchase agreements |
150,347 | 549 | 0.73 | % | — | — | — | |||||||||||||||||
| Long-term debt and other interest-bearing liabilities |
228,400 | 7,157 | 6.30 | % | 178,680 | 6,354 | 7.17 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total interest-bearing liabilities |
7,202,935 | 27,426 | 0.77 | % | 4,691,949 | 19,523 | 0.84 | % | ||||||||||||||||
| Noninterest-bearing deposits |
1,218,489 | 771,445 | ||||||||||||||||||||||
| Non-interest-bearing liabilities |
195,238 | 55,629 | ||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Total liabilities |
8,616,662 | 5,519,023 | ||||||||||||||||||||||
| Total stockholders’ equity |
830,544 | 574,254 | ||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Total liabilities and stockholders’ equity |
$ | 9,447,206 | $ | 6,093,277 | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Net interest income/spread |
$ | 151,454 | 3.23 | % | $ | 106,101 | 3.50 | % | ||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Net interest margin |
3.39 | % | 3.66 | % | ||||||||||||||||||||
| Ratio of interest-earning assets to interest-bearing liabilities |
124.70 | % | 124.49 | % | ||||||||||||||||||||
| Total deposits |
$ | 6,732,952 | $ | 16,492 | 0.49 | % | $ | 4,853,532 | $ | 12,526 | 0.52 | % | ||||||||||||
| Total funding (1) |
$ | 8,421,424 | $ | 27,426 | 0.65 | % | $ | 5,463,394 | $ | 19,523 | 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
Banc of California, Inc.
Capital Ratios
(Unaudited)
| June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
June 30, 2015 |
||||||||||||||||
| Capital Ratios |
||||||||||||||||||||
| Banc of California, Inc. |
||||||||||||||||||||
| Total risk-based capital ratio |
13.45 | % | 13.59 | % | 11.18 | % | 12.56 | % | 14.01 | % | ||||||||||
| Tier 1 risk-based capital ratio |
13.14 | % | 13.17 | % | 10.71 | % | 12.06 | % | 13.19 | % | ||||||||||
| Common equity tier 1 capital ratio |
9.16 | % | 8.14 | % | 7.36 | % | 8.19 | % | 8.96 | % | ||||||||||
| Tier 1 leverage ratio |
8.87 | % | 9.27 | % | 8.07 | % | 8.97 | % | 9.55 | % | ||||||||||
| Banc of California, NA |
||||||||||||||||||||
| Total risk-based capital ratio |
14.96 | % | 14.03 | % | 13.45 | % | 14.93 | % | 14.86 | % | ||||||||||
| Tier 1 risk-based capital ratio |
14.38 | % | 13.42 | % | 12.79 | % | 14.19 | % | 14.04 | % | ||||||||||
| Common equity tier 1 capital ratio |
14.38 | % | 13.42 | % | 12.79 | % | 14.19 | % | 14.04 | % | ||||||||||
| Tier 1 leverage ratio |
9.70 | % | 9.44 | % | 9.64 | % | 10.53 | % | 10.26 | % | ||||||||||
10
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 and return on average tangible common equity 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. 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 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:
| June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
June 30, 2015 |
||||||||||||||||
| Tangible common equity to tangible assets ratio |
||||||||||||||||||||
| Total assets |
$ | 10,157,662 | $ | 9,616,972 | $ | 8,235,555 | $ | 7,256,810 | $ | 6,437,882 | ||||||||||
| Less goodwill |
(39,244 | ) | (39,244 | ) | (39,244 | ) | (39,244 | ) | (31,591 | ) | ||||||||||
| Less other intangible assets |
(16,514 | ) | (17,836 | ) | (19,158 | ) | (20,504 | ) | (21,905 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Tangible assets |
$ | 10,101,904 | $ | 9,559,892 | $ | 8,177,153 | $ | 7,197,062 | $ | 6,384,386 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total stockholders’ equity |
$ | 939,884 | $ | 867,530 | $ | 652,405 | $ | 643,534 | $ | 633,882 | ||||||||||
| Less goodwill |
(39,244 | ) | (39,244 | ) | (39,244 | ) | (39,244 | ) | (31,591 | ) | ||||||||||
| Less other intangible assets |
(16,514 | ) | (17,836 | ) | (19,158 | ) | (20,504 | ) | (21,905 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Tangible equity |
884,126 | 810,450 | 594,003 | 583,786 | 580,386 | |||||||||||||||
| Less preferred stock |
(269,071 | ) | (311,008 | ) | (190,750 | ) | (190,750 | ) | (190,750 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Tangible common equity |
$ | 615,055 | $ | 499,442 | $ | 403,253 | $ | 393,036 | $ | 389,636 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total stockholders’ equity to total assets |
9.25 | % | 9.02 | % | 7.92 | % | 8.87 | % | 9.85 | % | ||||||||||
| Tangible equity to tangible assets |
8.75 | % | 8.48 | % | 7.26 | % | 8.11 | % | 9.09 | % | ||||||||||
| Tangible common equity to tangible assets |
6.09 | % | 5.22 | % | 4.93 | % | 5.46 | % | 6.10 | % | ||||||||||
| Common stock outstanding |
49,478,348 | 43,907,587 | 38,002,267 | 37,751,445 | 35,647,476 | |||||||||||||||
| Class B non-voting non-convertible common stock outstanding |
161,841 | 91,066 | 37,355 | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total common stock outstanding |
49,640,189 | 43,998,653 | 38,039,622 | 37,751,445 | 35,647,476 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Minimum number of shares issuable under purchase contracts (1) |
218,928 | 253,155 | 601,299 | 828,246 | 2,883,892 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total common stock outstanding and shares issuable under purchase contracts |
49,859,117 | 44,251,808 | 38,640,921 | 38,579,691 | 38,531,368 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| (1) Purchase contracts relating to the tangible equity units |
|
|||||||||||||||||||
| Tangible common equity per common stock |
$ | 12.39 | $ | 11.35 | $ | 10.60 | $ | 10.41 | $ | 10.93 | ||||||||||
| Book value per common stock |
$ | 13.51 | $ | 12.65 | $ | 12.14 | $ | 11.99 | $ | 12.43 | ||||||||||
| Tangible common equity per common stock and shares issuable under purchase contracts |
$ | 12.34 | $ | 11.29 | $ | 10.44 | $ | 10.19 | $ | 10.11 | ||||||||||
| Book value per common stock and shares issuable under purchase contracts |
$ | 13.45 | $ | 12.58 | $ | 11.95 | $ | 11.74 | $ | 11.50 | ||||||||||
11
Banc of California, Inc.
Non-GAAP Measures, Continued
(Dollars in thousands, except per share data)
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
| June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
June 30, 2015 |
June 30, 2016 |
June 30, 2015 |
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| Return on tangible common equity |
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| Average total stockholders’ equity |
$ | 898,164 | $ | 762,923 | $ | 654,106 | $ | 645,713 | $ | 630,547 | $ | 830,544 | $ | 574,254 | ||||||||||||||
| Less average preferred stock |
(269,073 | ) | (260,959 | ) | (190,750 | ) | (190,750 | ) | (182,233 | ) | (265,016 | ) | (131,338 | ) | ||||||||||||||
| Less average goodwill |
(39,244 | ) | (39,244 | ) | (39,244 | ) | (31,674 | ) | (31,591 | ) | (39,244 | ) | (31,591 | ) | ||||||||||||||
| Less average other intangible assets |
(17,299 | ) | (18,601 | ) | (19,877 | ) | (21,320 | ) | (23,032 | ) | (17,950 | ) | (23,871 | ) | ||||||||||||||
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| Average tangible common equity |
$ | 572,548 | $ | 444,119 | $ | 404,235 | $ | 401,969 | $ | 393,691 | $ | 508,334 | $ | 387,454 | ||||||||||||||
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| Net income |
$ | 26,528 | $ | 19,687 | $ | 19,038 | $ | 14,536 | $ | 15,924 | $ | 46,215 | $ | 28,498 | ||||||||||||||
| Less preferred stock dividends |
(5,114 | ) | (4,575 | ) | (3,030 | ) | (3,040 | ) | (2,843 | ) | (9,689 | ) | (3,753 | ) | ||||||||||||||
| Add tax-effected amortization of intangible assets (1) |
859 | 859 | 875 | 911 | 1,004 | 1,719 | 2,008 | |||||||||||||||||||||
| Add tax-effected impairment on intangible assets (1) |
— | — | — | — | 168 | — | 168 | |||||||||||||||||||||
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| Net income available to common stockholders |
$ | 22,273 | $ | 15,971 | $ | 16,883 | $ | 12,407 | $ | 14,253 | $ | 38,245 | $ | 26,921 | ||||||||||||||
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| (1) Utilized a 35% effective tax rate |
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| Return on average equity |
11.88 | % | 10.38 | % | 11.55 | % | 8.93 | % | 10.13 | % | 11.19 | % | 10.01 | % | ||||||||||||||
| Return on average tangible common equity |
15.65 | % | 14.46 | % | 16.57 | % | 12.25 | % | 14.52 | % | 15.13 | % | 14.01 | % | ||||||||||||||
12
July 21, 2016 2016 Second Quarter Earnings Investor Presentation Exhibit 99.2
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.
Banc of California: California Strong $10.2 billion in Assets Record $1.1 billion deposit growth in 2Q Record $803 million of organic loan growth in 2Q #1 Total Shareholder Return of all banks on 2016 Forbes Top 100 Banks List from January 1, 2015 to July 13, 2016 Dollars in billions 3 Dollars in millions 1.1% ROAA 2Q16 16% ROATCE 2Q16 68% Efficiency Ratio 2Q16 Pretax Income3 Total Assets2 Banc of California is the #1 Performing Bank Stock Since YE 20141 Annualized CAGR +67% CAGR +129%
Diluted 2 Dollars in million 3 $0.43 GAAP Reported, adjusted excluding $2.7 million of debt redemption costs incurred in Q2 related to senior note redemption 4 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 Compelling Financial Results Ninth Straight Quarter Exceeding Analyst Estimates Pretax Income2 Earnings per Share1 Return on Tangible Common Equity4 Return on Assets4 $0.463
+50% Accelerating Growth of Core, Spread-based Businesses Commercial Banking Segment Driving Earnings Strength Dollars in millions 2 Business Segment Pretax Income inclusive of intra-company allocations; excludes unallocated Corporate / Other interest expense. Mortgage Banking and Financial Advisory segments reported negative pre-tax income after allocated intra-company expenses for 1Q16 High quality earnings resulting in low earnings volatility Pretax Income by Business Segment2 Net Interest Income1
Scale Resulting in Increased Efficiencies and Productivity Continue to Target 40% Marginal Efficiency Ratio ($ in millions) Assets / FTE Efficiency Ratio -21% Business Segment Noninterest Expense / Total Assets 5.6% 4.9% 4.5% 4.0% 4.0%
Record 2Q Deposit Growth Helped to Reduce Borrowings Strong Liquidity Position Key to Continued Long Term Growth Total Liabilities (Quarter-over-Quarter) ($ in millions) Record quarterly deposit growth of $1.1 billion; Decline in total interest expense $(275) $9,218 $1,091 Total funding includes total interest-bearing liabilities and noninterest-bearing deposits Total funding cost1 fell by 10bps quarter over quarter resulting in lower total interest expense Net Interest Margin has remained stable at 3.39% for the third consecutive quarter $2.8 billion of deposit growth over the prior four quarters
Loan Production by Business Segment Commercial Banking Drives Growth in Loan Production On Track to Meet or Exceed 2016 Production Target of $8 Billion ($ in millions) +37% Total 2Q loan production of $2.6 billion, including $1.3 billion of commercial banking segment production Commercial banking loan production up 109% year over year while mortgage banking production flat Commercial banking loan production lead by C&I, CRE/MFL and Residential lending businesses
Commercial Banking Loan Production Led By C&I Lending New Commercial Banking Team Additions Resulting in Increased C&I Lending C&I Loans include SBA and Lease loans $1.3 billion in total 2Q16 commercial banking segment production Record $473 million 2Q16 C&I production Record $302 million 2Q16 CRE & Multifamily production 100% = $1.3 billion Commercial Banking Segment Loan Production
Capital Ratios Continue to Exceed Basel III Guidelines 2Q Equity Raise Resulted in Stronger Mix of Capital and Increased Consolidated Liquidity BASEL III Capital Requirements BANC Capital Ratios
Market Leading Asset and Earnings Growth Rates Platform and Infrastructure Investments Leading to Increased Long-term Value Creation Dollars in billions 2 Dollars in millions 3 Diluted 4 Normalized to assume full 40% tax rate Deposits1 Earnings per Share3 Pretax Income2 Assets1 4 2016 Guidance Annualized CAGR +67% CAGR +67% CAGR +129% CAGR +42%
Asset Quality Remains Strong and Stable 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016 % Change YoY NPAs / Assets 0.66% 0.62% 0.56% 0.46% 0.45% (32%) NPAs / Equity 6.7% 7.0% 7.1% 5.1% 4.8% (28%) ALLL / NPLs 81% 77% 79% 81% 83% 2% ALLL / Total Loans 0.78% 0.74% 0.69% 0.66% 0.60% (23%) ALLL and Discount / Total Loans 2.94% 2.65% 2.66% 2.47% 2.33% (21%)
2016 Guidance Implies Continued Outperformance Maintaining ROATCE and ROAA with Strong Balance Sheet Growth Will Yield 15%+ EPS Growth Excluding expenses related to capital transactions Metric FY 2016 On Target ROATCE 15% ROAA 1%+ Efficiency Ratio 65% – 70% Total Assets $10 – $11 billion Earnings Per Share1 $1.60+ ü ü ü ü ü