8-K
BANC OF CALIFORNIA, INC. (BANC)
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): April 22, 2021
BANC OF CALIFORNIA, INC.
(Exact name of registrant as specified in its charter)
| Maryland | 001-35522 | 04-3639825 | |
|---|---|---|---|
| (State or other jurisdiction<br>of incorporation) | (Commission File Number) | (IRS Employer<br>Identification No.) | |
| 3 MacArthur Place, | Santa Ana, | California | 92707 |
| --- | --- | --- | --- |
| (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))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.01 per share | BANC | New York Stock Exchange |
| Depositary Shares each representing a 1/40th Interest in a share of 7.00% Non-Cumulative Perpetual Preferred Stock, Series E | BANC PRE | New York Stock Exchange |
Item 2.02 Results of Operations and Financial Condition.
On April 22, 2021, Banc of California, Inc. (the “Company”) issued a press release announcing 2021 first quarter financial results.
A copy of the press release is attached to this report as Exhibit 99.1 and is incorporated by reference herein.
Item 7.01 Regulation FD Disclosure.
The Company will host a conference call to discuss its first quarter and full year results at 10:00 A.M. Pacific Time on Thursday, April 22, 2021. Interested parties may attend the conference call by dialing (888) 317-6003, and referencing event code 3056351. 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. A copy of the presentation materials is attached to this report as Exhibit 99.2 and is incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
99.1 Banc of California, Inc. Press Release dated April 22, 2021.
99.2 Banc of California, Inc. Earnings Conference Call Presentation Materials dated April 22, 2021.
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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.
| April 22, 2021 | /s/ Lynn M. Hopkins |
|---|---|
| Lynn M. Hopkins | |
| Executive Vice President and Chief Financial Officer |
3
Document
EX 99.1
Banc of California Reports First Quarter 2021 Financial Results
SANTA ANA, Calif., (April 22, 2021) — Banc of California, Inc. (NYSE: BANC) today reported net income of $14.4 million and net income available to common stockholders for the first quarter of 2021 of $7.8 million, or diluted earnings per common share of $0.15.
Highlights for the first quarter included:
•Return on average assets of 0.74%
•Average cost of total deposits of 0.28%, an 8 basis point decrease from the prior quarter, and period-end total cost of deposits of 0.24%
•Noninterest-bearing deposit balances represented 28% of total deposits at March 31, 2021, up from 23% a year earlier
•Allowance for credit losses at 1.43% of total loans and 148% of non-performing loans
•Total deferrals/forbearances declined to $108.7 million at March 31, 2021 from $251.9 million at December 31, 2020
•Common Equity Tier 1 capital at 11.50%
•Entered into an agreement and plan of merger with Pacific Mercantile Bancorp, a commercial bank headquartered in Costa Mesa, California with total assets of $1.6 billion at December 31, 2020
•Redemption of all Series D Preferred Stock for total consideration of $93.3 million
Jared Wolff, President & CEO of Banc of California, commented, “Our first quarter results reflected solid core operating performance and execution on the strategies that are enhancing the value of our franchise. We continued to grow average loans and earning assets, improve our deposit mix, reduce our cost of deposits, and maintain disciplined expense control. Certain non- core items in the quarter masked some of these results but, adjusted for these items, our quarterly results were very good.”
Mr. Wolff continued, “Strong loan production helped to offset runoff in certain legacy areas of our portfolio. Our loan pipeline is steadily building which should support continued loan and earning asset growth through the year, assuming economic trends continue. During the first quarter, we also announced that we entered into a definitive agreement to acquire Pacific Mercantile Bancorp. The transaction is currently on track to close during the third quarter of 2021 and both organizations are excited about the opportunities to leverage the collective strengths of the combined company, and to realize the earnings accretion and other benefits that will further accelerate profitability.”
Lynn Hopkins, Chief Financial Officer of Banc of California, said, “Given the high level of reserves we built during 2020 and improving economic forecasts, we had a small reserve release in the first quarter, and our allowance for credit losses to total loans ratio was unchanged from the prior quarter. We continued to see a significant decline in loan deferrals during the first quarter, although non-performing loans increased due to the downgrade of well-secured single family residential loans. We are pleased we were able to redeem our Series D Preferred Stock during the first quarter, which we expect to be accretive to our earnings per share going forward. With the improvement we are seeing in our financial performance and strong capital ratios, we remain well positioned to redeem our Series E Preferred Stock late in 2021 or in early 2022, which we expect will provide additional earnings accretion.”
Ms. Hopkins continued, “Our net income available to common stockholders and earnings per share in the first quarter included $3.6 million in pre-tax losses on alternative energy investment partnership investments, $1.4 million in pre-tax merger-related and indemnified professional fees, $3.4 million in Series D preferred stock redemption expense, and $2.1 million in tax benefits related to the exercise of all previously issued outstanding stock appreciation rights. Excluding these items, net of a more normalized effective tax rate of 25%, our adjusted net income available to common stockholders for the quarter would have been $12.9 million or $0.25 per diluted share.”
EX 99.1
Income Statement Highlights
| Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| March 31,2021 | December 31,<br>2020 | September 30,<br>2020 | June 30,<br>2020 | March 31,<br>2020 | |||||
| ( in thousands) | |||||||||
| Total interest and dividend income | $ | 73,530 | $ | 69,666 | $ | 72,697 | $ | 74,714 | |
| Total interest expense | 10,702 | 11,967 | 13,811 | 17,382 | 22,853 | ||||
| Net interest income | 57,916 | 61,563 | 55,855 | 55,315 | 51,861 | ||||
| Total noninterest income | 4,381 | 6,975 | 3,954 | 5,528 | 2,061 | ||||
| Total revenue | 62,297 | 68,538 | 59,809 | 60,843 | 53,922 | ||||
| Total noninterest expense | 46,735 | 38,950 | 40,394 | 72,770 | 46,919 | ||||
| Pre-tax / pre-provision income (loss) | 15,562 | 29,588 | 19,415 | (11,927) | 7,003 | ||||
| (Reversal of) provision for credit losses | (1,107) | 991 | 1,141 | 11,826 | 15,761 | ||||
| Income tax expense (benefit) | 2,294 | 6,894 | 2,361 | (5,304) | (2,165) | ||||
| Net income (loss) | $ | 21,703 | $ | 15,913 | $ | (18,449) | $ | (6,593) | |
| Net income (loss) available to common stockholders(1) | $ | 17,706 | $ | 12,084 | $ | (21,936) | $ | (9,694) |
All values are in US Dollars.
(1)Balance represents the net income (loss) available to common stockholders after subtracting preferred stock dividends, income allocated to participating securities, participating securities dividends, and impact of preferred stock redemption from net income (loss). Refer to the Statements of Operations for additional detail on these amounts.
Net interest income
Q1-2021 vs Q4-2020
Net interest income decreased $3.6 million to $57.9 million for the first quarter due to lower prepayment fees, higher net nonaccrual interest reversal, lower amortized fee income from PPP loan forgiveness, and 2 less days in the current quarter, offset by higher average interest-earning assets and lower interest expense. Compared to the prior quarter, average interest-earning assets increased by $110.0 million to $7.36 billion, including higher average loans of $39.1 million and higher other interest-earning assets of $74.1 million.
The net interest margin decreased 19 basis points to 3.19% for the first quarter of 2021 from 3.38% for the fourth quarter of 2020 as the average earning-assets yield decreased 26 basis points and the average cost of total funding decreased 7 basis points. The yield on average interest-earning assets decreased to 3.78% for the first quarter from 4.04% for the fourth quarter due mostly to lower loan yields. The average yield on loans decreased 28 basis points to 4.30% during the first quarter due to impact of lower prepayment penalty fees, higher net reversal of nonaccrual loan interest, and lower amortized fees from PPP loan forgiveness; these items increased the first quarter loan yield by 13 basis points and the fourth quarter loan yield by 34 basis points. The average yield on securities remained flat at 2.13% between quarters. The average yield on our collateralized loan obligations (CLOs) decreased 3 basis points to 1.91% for the first quarter from 1.94% for the fourth quarter as these securities reprice quarterly.
The average cost of total funding decreased 7 basis points to 0.63% for the first quarter from 0.70% for the fourth quarter. This decrease was driven by the lower average cost of interest-bearing liabilities and improved funding mix, including higher average noninterest-bearing deposits during the first quarter. During the first quarter, average deposits increased $164.2 million, consisting of higher average noninterest-bearing deposits of $205.1 million and lower average interest-bearing deposits of $40.9 million. Average Federal Home Loan Bank (FHLB) advances decreased $87.7 million primarily due to maturities of $105.0 million in advances during the prior quarter. The average cost of interest-bearing liabilities decreased 6 basis points to 0.83% for the first quarter of 2021 from 0.89% for the fourth quarter of 2020 due to actively managing down the cost of interest-bearing deposits into the current rate environment. The average cost of interest-bearing deposits declined 9 basis points to 0.38% for the first quarter from 0.47% for the prior quarter. Additionally, average noninterest-bearing deposits represented 27% of total average deposits for the first quarter compared to 24% of total average deposits for the fourth quarter. The average cost of total deposits decreased 8 basis points to 0.28% for the first quarter. The spot rate of total deposits at the end of the first quarter of 2021 was 0.24%.
EX 99.1
Provision for credit losses
Q1-2021 vs Q4-2020
The provision for credit losses was a reversal of $1.1 million for the first quarter, compared to a provision for credit losses of $1.0 million for the fourth quarter. The first quarter reversal of credit losses was due primarily to improvements in key macro-economic forecast variables, such as unemployment and gross domestic product, consideration of credit quality metrics, and lower period end loan balances of $134.0 million.
Noninterest income
Q1-2021 vs Q4-2020
Noninterest income decreased $2.6 million, to $4.4 million for the first quarter due mostly to lower other income from legacy legal settlements for the benefit of the Company which totaled $2.8 million during the fourth quarter of 2020. Customer service fees decreased by $195 thousand due to lower loan fees of $367 thousand, offset by higher deposit activity fees of $172 thousand. The increase in deposit activity fees is attributed to higher balances and our initiative to bring our service fee schedules more in line with market.
Noninterest expense
Q1-2021 vs Q4-2020
Noninterest expense increased $7.8 million to $46.7 million for the first quarter compared to the prior quarter. The increase was primarily due to higher professional fees of $4.0 million, higher merger-related costs of $700 thousand, and higher net losses in alternative energy partnership investments of $4.3 million. Professional fees included indemnified legal expenses, net of recoveries, of $721 thousand in the first quarter compared to net recoveries of $4.2 million during the fourth quarter. These increases were offset by lower occupancy and equipment of $364 thousand due mostly to lower rent and other facility-related expenses and a $566 thousand decrease in all other expense. The fourth quarter all other expenses included the write-off of capitalized software costs of $336 thousand; there were no similar charges in the first quarter. Total operating costs, defined as noninterest expense adjusted for certain non-core items (refer to section Non-GAAP Measures), decreased $2.3 million to $41.7 million for the first quarter compared to $44.0 million for the prior quarter primarily due to lower professional fees, occupancy and equipment, and other expenses.
Income taxes
Q1-2021 vs Q4-2020
Income tax expense totaled $2.3 million for the first quarter resulting in an effective tax rate of 13.8% compared to $6.9 million for the fourth quarter and an effective tax rate of 24.1%. The lower effective tax rate between quarters was due to a tax benefit resulting from the exercise of all previously issued outstanding stock appreciation rights, including a net benefit of $2.1 million in the first quarter. The effective tax rate is expected to be in the 25% to 27% range for the remaining quarters in 2021.
EX 99.1
Balance Sheet
At March 31, 2021, total assets were $7.93 billion, which represented a linked-quarter increase of $56.1 million. The following table shows selected balance sheet line items as of the dates indicated.
| Amount Change | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31,2021 | December 31,<br>2020 | September 30,<br>2020 | June 30,<br>2020 | March 31,<br>2020 | Q1-21 vs. Q4-20 | Q1-21 vs. Q1-20 | |||||||
| ( in thousands) | |||||||||||||
| Securities available-for-sale | $ | 1,231,431 | $ | 1,245,867 | $ | 1,176,029 | $ | 969,427 | $ | 39,399 | $ | 301,403 | |
| Loans held-for-investment | $ | 5,898,405 | $ | 5,678,002 | $ | 5,627,696 | $ | 5,667,464 | $ | (134,004) | $ | 96,937 | |
| Loans held-for-sale | $ | 1,413 | $ | 1,849 | $ | 19,768 | $ | 20,234 | $ | (5) | $ | (18,826) | |
| Total assets | $ | 7,877,334 | $ | 7,738,106 | $ | 7,770,138 | $ | 7,662,607 | $ | 56,125 | $ | 270,852 | |
| Noninterest-bearing deposits | $ | 1,559,248 | $ | 1,450,744 | $ | 1,391,504 | $ | 1,256,081 | $ | 141,095 | $ | 444,262 | |
| Total deposits | $ | 6,085,800 | $ | 6,032,266 | $ | 6,037,465 | $ | 5,562,838 | $ | 56,242 | $ | 579,204 | |
| Borrowings (1) | $ | 796,110 | $ | 733,105 | $ | 790,707 | $ | 1,151,479 | $ | 95,436 | $ | (259,933) | |
| Total liabilities | $ | 6,980,127 | $ | 6,863,852 | $ | 6,923,179 | $ | 6,827,605 | $ | 148,639 | $ | 301,161 | |
| Total equity | $ | 897,207 | $ | 874,254 | $ | 846,959 | $ | 835,002 | $ | (92,514) | $ | (30,309) |
All values are in US Dollars.
(1)Represents Advances from Federal Home Loan Bank and Notes payable, net
Investments
Securities available-for-sale increased $39.4 million during the first quarter to $1.27 billion at March 31, 2021 primarily due to purchases of $52.8 million, offset by principal payments of $9.4 million and lower unrealized net gains of $3.6 million. The decrease in the unrealized net gains was due mostly to decreases in the value of mortgage-backed securities as a result of increases in longer term interest rates, offset by improved pricing of CLOs and corporate debt securities due to lower credit spreads. There were no sales of securities during the first quarter. As of March 31, 2021, our securities portfolio included $683.9 million of CLOs, $334.3 million of agency securities, $85.5 million of municipal securities, $150.3 million of corporate debt securities, and $16.7 million of SBA pool securities. The CLO portfolio, which is comprised only of AA and AAA rated securities, represented 53.8% of the total securities portfolio and the carrying value included an unrealized net loss of $3.6 million at March 31, 2021 compared to an unrealized net loss of $9.7 million at December 31, 2020.
EX 99.1
Loans
The following table sets forth the composition, by loan category, of our loan portfolio as of the dates indicated:
| March 31,2021 | December 31,<br>2020 | September 30,<br>2020 | June 30,<br>2020 | March 31,<br>2020 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ( in thousands) | ||||||||||||||
| Composition of held-for-investment loans | ||||||||||||||
| Commercial real estate | $ | 807,195 | $ | 826,683 | $ | 822,694 | $ | 810,024 | ||||||
| Multifamily | 1,258,278 | 1,289,820 | 1,476,803 | 1,434,071 | 1,466,083 | |||||||||
| Construction | 169,122 | 176,016 | 197,629 | 212,979 | 227,947 | |||||||||
| Commercial and industrial | 1,878,325 | 2,088,308 | 1,586,824 | 1,436,990 | 1,578,223 | |||||||||
| SBA | 338,903 | 273,444 | 320,573 | 310,784 | 70,583 | |||||||||
| Total commercial loans | 4,484,593 | 4,634,783 | 4,408,512 | 4,217,518 | 4,152,860 | |||||||||
| Single-family residential mortgage | 1,253,251 | 1,230,236 | 1,234,479 | 1,370,785 | 1,467,375 | |||||||||
| Other consumer | 26,557 | 33,386 | 35,011 | 39,393 | 47,229 | |||||||||
| Total consumer loans | 1,279,808 | 1,263,622 | 1,269,490 | 1,410,178 | 1,514,604 | |||||||||
| Total gross loans | $ | 5,898,405 | $ | 5,678,002 | $ | 5,627,696 | $ | 5,667,464 | ||||||
| Composition percentage of held-for-investment loans | ||||||||||||||
| Commercial real estate | 14.6 | % | 13.7 | % | 14.6 | % | 14.6 | % | 14.3 | % | ||||
| Multifamily | 21.8 | % | 21.9 | % | 26.0 | % | 25.5 | % | 25.9 | % | ||||
| Construction | 2.9 | % | 3.0 | % | 3.5 | % | 3.8 | % | 4.0 | % | ||||
| Commercial and industrial | 32.6 | % | 35.3 | % | 28.0 | % | 25.5 | % | 27.9 | % | ||||
| SBA | 5.9 | % | 4.6 | % | 5.6 | % | 5.5 | % | 1.2 | % | ||||
| Total commercial loans | 77.8 | % | 78.5 | % | 77.7 | % | 74.9 | % | 73.3 | % | ||||
| Single-family residential mortgage | 21.7 | % | 20.9 | % | 21.7 | % | 24.4 | % | 25.9 | % | ||||
| Other consumer | 0.5 | % | 0.6 | % | 0.6 | % | 0.7 | % | 0.8 | % | ||||
| Total consumer loans | 22.2 | % | 21.5 | % | 22.3 | % | 25.1 | % | 26.7 | % | ||||
| Total gross loans | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
All values are in US Dollars.
Held-for-investment loans decreased $134.0 million to $5.76 billion from the prior quarter, resulting from lower commercial and industrial (C&I) loans of $210.0 million due, in part, to decreased utilization of credit facilities and decreases in multifamily loans of $31.5 million, and construction loans of $6.9 million due to prepayment activity. The decreases were partially offset by increases in commercial real estate loans of $32.8 million and SBA loans of $65.5 million due mostly to $131.9 million in new PPP loans originated, offset by the SBA processing forgiveness requests of $62.5 million during the quarter. At March 31, 2021, SBA loans included $276.0 million of PPP loans, net of fees.
We continue to focus the real estate loan portfolio toward relationship-based multifamily, bridge, light infill construction, and commercial real estate loans. Currently, loans secured by residential real estate (single-family, multifamily, single-family construction, and credit facilities) represent approximately 66% of our total loans outstanding.
EX 99.1
The C&I portfolio has limited exposure to certain business sectors undergoing severe stress. The C&I industry concentrations in dollars and as a percentage of total outstanding C&I loan balances are summarized below:
| March 31, 2021 | |||
|---|---|---|---|
| Amount | % of Portfolio | ||
| ( in thousands) | |||
| C&I Portfolio by Industry | |||
| Finance and insurance (includes Warehouse lending) | 65 | % | |
| Real Estate & Rental Leasing | 230,781 | 12 | % |
| Gas Stations | 68,672 | 4 | % |
| Healthcare | 68,964 | 4 | % |
| Wholesale Trade | 40,803 | 2 | % |
| Television / Motion Pictures | 34,067 | 2 | % |
| Manufacturing | 25,198 | 1 | % |
| Food Services | 31,366 | 2 | % |
| Other Retail Trade | 21,167 | 1 | % |
| Professional Services | 16,993 | 1 | % |
| Transportation | 4,773 | — | % |
| Accommodations | 2,427 | — | % |
| All other | 112,706 | 6 | % |
| Total | 100 | % |
All values are in US Dollars.
Deposits
The following table sets forth the composition of our deposits at the dates indicated.
| March 31,2021 | December 31,<br>2020 | September 30,<br>2020 | June 30,<br>2020 | March 31,<br>2020 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ( in thousands) | ||||||||||||||
| Composition of deposits | ||||||||||||||
| Noninterest-bearing checking | $ | 1,559,248 | $ | 1,450,744 | $ | 1,391,504 | $ | 1,256,081 | ||||||
| Interest-bearing checking | 2,088,528 | 2,107,942 | 2,045,115 | 1,846,698 | 1,572,389 | |||||||||
| Money market | 775,072 | 714,297 | 689,769 | 765,854 | 575,820 | |||||||||
| Savings | 909,631 | 932,363 | 946,293 | 939,018 | 877,947 | |||||||||
| Non-brokered certificates of deposit | 668,468 | 755,727 | 820,531 | 924,630 | 1,071,936 | |||||||||
| Brokered certificates of deposit | — | 16,223 | 79,814 | 169,761 | 208,665 | |||||||||
| Total deposits | $ | 6,085,800 | $ | 6,032,266 | $ | 6,037,465 | $ | 5,562,838 | ||||||
| Composition percentage of deposits | ||||||||||||||
| Noninterest-bearing checking | 27.7 | % | 25.6 | % | 24.1 | % | 23.0 | % | 22.6 | % | ||||
| Interest-bearing checking | 34.0 | % | 34.6 | % | 33.9 | % | 30.6 | % | 28.3 | % | ||||
| Money market | 12.6 | % | 11.7 | % | 11.4 | % | 12.7 | % | 10.3 | % | ||||
| Savings | 14.8 | % | 15.3 | % | 15.7 | % | 15.6 | % | 15.8 | % | ||||
| Non-brokered certificates of deposit | 10.9 | % | 12.4 | % | 13.6 | % | 15.3 | % | 19.3 | % | ||||
| Brokered certificates of deposit | — | % | 0.4 | % | 1.3 | % | 2.8 | % | 3.7 | % | ||||
| Total deposits | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
All values are in US Dollars.
Total deposits increased $56.2 million during the first quarter of 2021 to $6.14 billion due to higher noninterest-bearing checking balances of $141.1 million and money market balances of $60.8 million, offset by lower interest-bearing checking of $19.4 million, savings balances of $22.7 million, and non-brokered certificates of deposit of $87.3 million. We continue to focus on growing relationship-based deposits, strategically augmented by wholesale funding, as we actively managed down deposit costs in response to the current interest rate environment. Noninterest-bearing deposits totaled $1.70 billion and represented 27.7% of total deposits at March 31, 2021 compared to $1.56 billion, or 25.6% of total deposits, at December 31, 2020.
EX 99.1
Debt
Advances from the FHLB increased $95.3 million, or 18%, to $635.1 million, as of March 31, 2021, due to higher overnight advances, offset by maturities of $45.0 million in term advances. At the end of the first quarter, FHLB advances included $225.0 million in overnight borrowings, $5.0 million in term advances maturing within three months, and $411.0 million maturing beyond three months with a weighted average life of 4.7 years and weighted average interest rate of 2.53%.
Equity
At March 31, 2021, total stockholders’ equity decreased by $92.5 million to $804.7 million and tangible common equity decreased by $2.3 million to $670.2 million on a linked-quarter basis. The decrease in total stockholders’ equity for the first quarter, was a result of the redemption of all remaining Series D Preferred Stock for $93.3 million, lower net accumulated other comprehensive income of $2.6 million, dividends to common and preferred stockholders of $6.2 million and the impact of vested and exercised share-based awards of $6.4 million, offset by net income of $14.4 million and share-based award compensation of $1.5 million. Tangible book value per share decreased to $13.24 as of March 31, 2021 from $13.39 at December 31, 2020.
Capital ratios remain strong with total risk-based capital at 15.87% and a tier 1 leverage ratio of 9.62%. The following table sets forth our regulatory capital ratios at March 31, 2021 and the previous four quarters. The interim capital relief related to the adoption of the current expected credit losses (CECL) accounting standard increased the Bank's leverage ratio by approximately 10 basis points at March 31, 2021.
| March 31,<br>2021 | December 31,<br>2020 | September 30,<br>2020 | June 30,<br>2020 | March 31,<br>2020 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Capital Ratios(1) | ||||||||||
| Banc of California, Inc. | ||||||||||
| Total risk-based capital ratio | 15.87 | % | 17.01 | % | 16.19 | % | 16.35 | % | 16.16 | % |
| Tier 1 risk-based capital ratio | 13.17 | % | 14.35 | % | 14.94 | % | 15.10 | % | 14.91 | % |
| Common equity tier 1 capital ratio | 11.50 | % | 11.19 | % | 11.59 | % | 11.68 | % | 11.58 | % |
| Tier 1 leverage ratio | 9.62 | % | 10.90 | % | 10.79 | % | 10.56 | % | 11.20 | % |
| Banc of California, NA | ||||||||||
| Total risk-based capital ratio | 17.82 | % | 17.27 | % | 18.14 | % | 18.17 | % | 18.21 | % |
| Tier 1 risk-based capital ratio | 16.57 | % | 16.02 | % | 16.89 | % | 16.92 | % | 16.96 | % |
| Common equity tier 1 capital ratio | 16.57 | % | 16.02 | % | 16.89 | % | 16.92 | % | 16.96 | % |
| Tier 1 leverage ratio | 12.13 | % | 12.19 | % | 12.21 | % | 11.84 | % | 12.67 | % |
(1)March 31, 2021 capital ratios are preliminary.
EX 99.1
Credit Quality
| March 31,2021 | December 31,<br>2020 | September 30,<br>2020 | June 30,<br>2020 | March 31,<br>2020 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Asset quality information and ratios | ( in thousands) | |||||||||||||
| Delinquent loans held-for-investment | ||||||||||||||
| 30 to 89 days delinquent | $ | 13,981 | $ | 51,229 | $ | 49,810 | $ | 56,338 | ||||||
| 90+ days delinquent | 30,292 | 17,636 | 31,809 | 45,384 | 28,632 | |||||||||
| Total delinquent loans | $ | 31,617 | $ | 83,038 | $ | 95,194 | $ | 84,970 | ||||||
| Total delinquent loans to total loans | 1.06 | % | 0.54 | % | 1.46 | % | 1.69 | % | 1.50 | % | ||||
| Non-performing assets, excluding loans held-for-sale | ||||||||||||||
| Non-accrual loans | $ | 35,900 | $ | 66,337 | $ | 72,703 | $ | 56,471 | ||||||
| 90+ days delinquent and still accruing loans | — | 728 | 547 | — | — | |||||||||
| Non-performing loans | 55,920 | 36,628 | 66,884 | 72,703 | 56,471 | |||||||||
| Other real estate owned | — | — | — | — | — | |||||||||
| Non-performing assets | $ | 36,628 | $ | 66,884 | $ | 72,703 | $ | 56,471 | ||||||
| ALL to non-performing loans | 141.90 | % | 221.22 | % | 135.95 | % | 124.30 | % | 138.55 | % | ||||
| Non-performing loans to total loans held-for-investment | 0.97 | % | 0.62 | % | 1.18 | % | 1.29 | % | 1.00 | % | ||||
| Non-performing assets to total assets | 0.70 | % | 0.46 | % | 0.86 | % | 0.94 | % | 0.74 | % | ||||
| Troubled debt restructurings (TDRs) | ||||||||||||||
| Performing TDRs | $ | 4,733 | $ | 5,408 | $ | 5,597 | $ | 6,100 | ||||||
| Non-performing TDRs | 4,130 | 4,264 | 20,002 | 20,275 | 20,852 | |||||||||
| Total TDRs | $ | 8,997 | $ | 25,410 | $ | 25,872 | $ | 26,952 |
All values are in US Dollars.
Total delinquent loans increased $29.7 million in the first quarter to $61.3 million at March 31, 2021, due to $39.0 million of additions, offset by $9.2 million returning to current status and $0.2 million of principal payments or payoffs. Delinquent loans included single-family residential (SFR) loans of $47.8 million, or 78% of the total delinquent balance at quarter end, and represented $24.9 million of the quarter over quarter increase. Excluding delinquent SFR loans, the remaining delinquent loans totaled $13.5 million, or 0.30% of total loans at March 31, 2021.
Non-performing loans increased $19.3 million to $55.9 million as of March 31, 2021, of which $18.1 million, or 32%, relates to loans in a current payment status. The first quarter increase was due to $22.5 million of loans placed on non-accrual status, offset by $3.2 million in cured loans and payoffs. Of the $22.5 million of loans placed on non-accrual status, $20.0 million, or 88.7%, of such loans, related to SFR loans.
At March 31, 2021, non-performing loans included (i) a legacy relationship totaling $7.3 million, or 13% of total non-performing loans, that is well-secured by a combination of commercial real estate and SFR properties with an average loan-to-value ratio of 51%, (ii) SFR loans totaling $32.4 million, or 58% of total non-performing loans, and (iii) other commercial loans of $16.1 million, or 29% of total non-performing loans.
In light of the pandemic, we provided support to clients by granting loan deferments or forbearances. The loans on deferment or forbearance status as of the dates indicated are shown below:
| March 31, 2021 | December 31, 2020 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Count | % of Loans in Category | Count | Amount | % of Loans in Category | |||||
| ( in thousands) | |||||||||
| Single-family residential mortgage | 47 | 48,831 | 4 | % | 123 | $ | 138,771 | 11 | % |
| All other loans | 15 | 1 | % | 33 | 113,163 | 2 | % | ||
| Total | 62 | 108,689 | 2 | % | 156 | $ | 251,934 | 4 | % |
All values are in US Dollars.
(1)Includes loans in the process of deferment or forbearance which are not reported as delinquent.
Loans on deferment or forbearance status decreased $143.2 million, or 57%, during the first quarter of 2021. Of the balances as of March 31, 2021, all other loans include 8 commercial loans totaling $34.0 million under review and pending approval for deferral, of which 3 loans totaling $17.3 million were initial deferral requests. We continue to actively monitor and manage all lending relationships in a manner that supports our clients and protects the Bank.
EX 99.1
Allowance for Credit Losses
| Three Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31,2021 | December 31,<br>2020 | September 30,<br>2020 | June 30,<br>2020 | March 31,<br>2020 | ||||||||||
| ( in thousands) | ||||||||||||||
| Allowance for loan losses (ALL) | ||||||||||||||
| Balance at beginning of period | $ | 90,927 | $ | 90,370 | $ | 78,243 | $ | 57,649 | ||||||
| Adoption of ASU 2016-13 (1) | — | — | — | — | 7,609 | |||||||||
| Loans charged off | (565) | (11,520) | (1,821) | — | (2,076) | |||||||||
| Recoveries | 172 | 609 | 248 | 608 | 350 | |||||||||
| Net (charge-offs) recoveries | (393) | (10,911) | (1,573) | 608 | (1,726) | |||||||||
| Provision for (reversal of) loan losses | (1,284) | 1,014 | 2,130 | 11,519 | 14,711 | |||||||||
| Balance at end of period | $ | 81,030 | $ | 90,927 | $ | 90,370 | $ | 78,243 | ||||||
| Reserve for unfunded loan commitments | ||||||||||||||
| Balance at beginning of period | $ | 3,206 | $ | 4,195 | $ | 3,888 | $ | 4,064 | ||||||
| Adoption of ASU 2016-13 (1) | — | — | — | — | (1,226) | |||||||||
| Provision for (reversal of) credit losses | 177 | (23) | (989) | 307 | 1,050 | |||||||||
| Balance at end of period | 3,360 | 3,183 | 3,206 | 4,195 | 3,888 | |||||||||
| Allowance for credit losses (ACL) | $ | 84,213 | $ | 94,133 | $ | 94,565 | $ | 82,131 | ||||||
| ALL to total loans | 1.38 | % | 1.37 | % | 1.60 | % | 1.61 | % | 1.38 | % | ||||
| ACL to total loans | 1.43 | % | 1.43 | % | 1.66 | % | 1.68 | % | 1.45 | % | ||||
| ACL to total loans, excluding PPP loans | 1.51 | % | 1.48 | % | 1.74 | % | 1.76 | % | 1.45 | % | ||||
| ACL to NPLs | 147.91 | % | 229.91 | % | 140.74 | % | 130.07 | % | 145.44 | % | ||||
| Annualized net loan charge-offs (recoveries) to average total loans held-for-investment | 0.03 | % | 0.77 | % | 0.12 | % | (0.04) | % | 0.12 | % | ||||
| Reserve for loss on repurchased loans | ||||||||||||||
| Balance at beginning of period | $ | 5,487 | $ | 5,567 | $ | 5,601 | $ | 6,201 | ||||||
| Initial provision for loan repurchases | — | — | 11 | — | — | |||||||||
| Provision for (reversal of) provision for loan repurchases | (132) | 28 | (91) | (34) | (600) | |||||||||
| Balance at end of period | $ | 5,515 | $ | 5,487 | $ | 5,567 | $ | 5,601 |
All values are in US Dollars.
(1)Represents the impact of adopting ASU 2016-13, Financial Instruments - Credit Losses on January 1, 2020. As a result of adopting ASU 2016-13, our methodology to compute our allowance for credit losses is based on a current expected credit loss methodology, rather than the previously applied incurred loss methodology.
The allowance for expected credit losses (ACL), which includes the reserve for unfunded loan commitments, totaled $82.7 million, or 1.43% of total loans, at March 31, 2021, compared to $84.2 million, or 1.43% of total loans, at December 31, 2020. The $1.5 million decrease in the ACL was due to: (i) lower general reserves of $1.0 million from portfolio mix, (ii) net charge-offs of $393 thousand, and (iii) lower specific reserves of $58 thousand. The ACL coverage of non-performing loans was 148% at March 31, 2021 compared to 230% at December 31, 2020.
Our ACL methodology and resulting provision continues to be impacted by the current economic uncertainty and volatility caused by the COVID-19 pandemic. The ACL methodology uses a nationally recognized, third-party model that includes many assumptions based on historical and peer loss data, current loan portfolio risk profile including risk ratings, and economic forecasts including macroeconomic variables (MEVs) released by our model provider during March 2021. In contrast to the December 2020 forecasts, the March forecasts reflect a more favorable view of the economy (i.e. higher GDP growth rates and lower unemployment rates). While the forecasts are improving and the economy is showing signs of recovery with the rollout of the vaccine and additional government stimulus, there remains uncertainty regarding the ultimate impact of the pandemic and the pace of the recovery. Accordingly, our economic assumptions and the resulting ACL level and provision reflect these uncertainties. The ACL also incorporated qualitative factors to account for certain loan portfolio characteristics that are not taken into consideration by the third-party model including underlying strengths and weaknesses in the loan portfolio. As is the case with all estimates, the ACL is expected to be impacted in future periods by economic volatility, changing economic
EX 99.1
forecasts, underlying model assumptions, and asset quality metrics, all of which may be better than or worse than current estimates.
The Company will host a conference call to discuss its first quarter 2021 financial results at 10:00 a.m. Pacific Time (PT) on Thursday, April 22, 2021. Interested parties are welcome to attend the conference call by dialing (888) 317-6003, and referencing event code 3056351. A live audio webcast will also be available and the webcast link will be posted on the Company’s Investor Relations website at www.bancofcal.com/investor. The slide presentation for the call will also be available on the Company's Investor Relations website prior to the call. A replay of the call will be made available approximately one hour after the call has ended on the Company’s Investor Relations website at www.bancofcal.com/investor or by dialing (877) 344-7529 and referencing event code 10145608.
About Banc of California, Inc.
Banc of California, Inc. (NYSE: BANC) is a bank holding company with approximately $7.9 billion in assets and one wholly-owned banking subsidiary, Banc of California, N.A. (the Bank). The Bank has 36 offices including 29 full-service branches located throughout Southern California. Through our dedicated professionals, we provide customized and innovative banking and lending solutions to businesses, entrepreneurs and individuals throughout California. We help to improve the communities where we live and work, by supporting organizations that provide financial literacy and job training, small business support and affordable housing. With a commitment to service and to building enduring relationships, we provide a higher standard of banking. We look forward to helping you achieve your goals. For more information, please visit us at www.bancofcal.com.
Forward-Looking Statements
This press release includes forward-looking statements within the meaning of the “Safe-Harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are necessarily subject to risk and uncertainty and actual results could differ materially from those anticipated due to various factors, including those set forth from time to time in the documents filed or furnished by Banc of California, Inc. with the Securities and Exchange Commission (SEC). In addition to those, statements about the potential effects of the COVID-19 pandemic on the business, financial results and condition of Banc of California, Inc. and its subsidiaries may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond the control of Banc of California, Inc., including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on Banc of California Inc. and its subsidiaries, their customers and third parties. Further, statements about the potential effects of the proposed acquisition of Pacific Mercantile Bancorp on the business, financial results and condition of Banc of California, Inc. and its subsidiaries may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond the control of Banc of California, Inc., including (i) the possibility that the merger does not close when expected or at all because required regulatory, shareholder or other approvals, financial tests or other conditions to closing are not received or satisfied on a timely basis or at all; (ii) changes in Banc of California Inc.’s or Pacific Mercantile Bancorp’s stock price before closing, including as a result of its financial performance prior to closing, or more generally due to broader stock market movements, and the performance of financial companies and peer group companies; (iii) the risk that the benefits from the transaction may not be fully realized or may take longer to realize than expected, including as a result of changes in general economic and market conditions, interest and exchange rates, monetary policy, laws and regulations and their enforcement, and the degree of competition in the geographic and business areas in which Banc of California Inc. and Pacific Mercantile Bancorp operate; (iv) the ability to promptly and effectively integrate the businesses of Banc of California Inc. and Pacific Mercantile Bancorp; (v) the reaction to the transaction of the companies’ customers, employees and counterparties; (vi) diversion of management time on merger-related issues; (vii) lower than expected revenues, credit quality deterioration or a reduction in real estate values or a reduction in net earnings; and (viii) other risks that are described in Banc of California Inc.’s and Pacific Mercantile Bancorp’s public filings with the SEC. You should not place undue reliance on forward-looking statements and Banc of California, Inc. undertakes no obligation to update any such statements to reflect circumstances or events that occur after the date on which the forward-looking statement is made.
Additional Information About the Merger and Where to Find It
Investors and security holders are urged to carefully review and consider each of Banc of California Inc.’s and Pacific Mercantile Bancorp’s public filings with the SEC, including but not limited to their Annual Reports on Form 10-K, their proxy statements, their Current Reports on Form 8-K and their Quarterly Reports on Form 10-Q. The documents filed by Banc of California Inc. with the SEC may be obtained free of charge at Banc of California Inc.’s website at www.bancofcal.com or at
EX 99.1
the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from Banc of California Inc. by requesting them in writing to Banc of California, Inc., 3 MacArthur Place, Santa Ana, CA 92707; Attention: Investor Relations, by submitting an email request to ir@bancofcal.com or by telephone at (855) 361-2262.
The documents filed by Pacific Mercantile Bancorp with the SEC may be obtained free of charge at Pacific Mercantile Bancorp’s website at www.pmbank.com or at the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from Pacific Mercantile Bancorp by requesting them in writing to Pacific Mercantile Bancorp, 949 South Coast Drive, Suite 300, Costa Mesa, CA 92626; Attention: Investor Relations, or by telephone at 714-438-2500.
Banc of California Inc. intends to file a registration statement with the SEC, which will include a joint proxy statement of Banc of California Inc. and Pacific Mercantile Bancorp and a prospectus of Banc of California Inc., and each party will file other documents regarding the proposed transaction with the SEC. Before making any voting or investment decision, investors and security holders of Banc of California Inc. and Pacific Mercantile Bancorp are urged to carefully read the entire registration statement and joint proxy statement/prospectus, when they become available, as well as any amendments or supplements to these documents, because they will contain important information about the proposed transaction. A definitive joint proxy statement/prospectus will be sent to the shareholders of Banc of California Inc. and Pacific Mercantile Bancorp seeking any required shareholder approvals. Investors and security holders will be able to obtain the registration statement and the joint proxy statement/prospectus free of charge from the SEC’s website or from Banc of California Inc. or Pacific Mercantile Bancorp by writing to the addresses provided for each company set forth in the paragraphs above.
Banc of California Inc., Pacific Mercantile Bancorp, their directors, executive officers and certain other persons may be deemed to be participants in the solicitation of proxies from Banc of California Inc. and Pacific Mercantile Bancorp shareholders in favor of the approval of the transaction. Information about the directors and executive officers of Banc of California Inc. and their ownership of Banc of California Inc. common stock is set forth in the proxy statement for Banc of California Inc.’s 2021 annual meeting of stockholders, as previously filed with the SEC. Information about the directors and executive officers of Pacific Mercantile Bancorp and their ownership of Pacific Mercantile Bancorp common stock is set forth in the proxy statement for PMB’s 2020 annual meeting of shareholders, as previously filed with the SEC. Shareholders may obtain additional information regarding the interests of such participants by reading the registration statement and the joint proxy statement/prospectus when they become available.
| Source: Banc of California, Inc. |
|---|
| Investor Relations Inquiries: |
| Banc of California, Inc. |
| (855) 361-2262 |
| Jared Wolff, (949) 385-8700 |
| Lynn Hopkins, (949) 265-6599 |
EX 99.1
Banc of California, Inc.
Consolidated Statements of Financial Condition (Unaudited)
(Dollars in thousands)
| March 31,<br>2021 | December 31,<br>2020 | September 30,<br>2020 | June 30,<br>2020 | March 31,<br>2020 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ASSETS | ||||||||||
| Cash and cash equivalents | $ | 379,509 | $ | 220,819 | $ | 292,490 | $ | 420,640 | $ | 435,992 |
| Securities available-for-sale | 1,270,830 | 1,231,431 | 1,245,867 | 1,176,029 | 969,427 | |||||
| Loans held-for-sale | 1,408 | 1,413 | 1,849 | 19,768 | 20,234 | |||||
| Loans held-for-investment | 5,764,401 | 5,898,405 | 5,678,002 | 5,627,696 | 5,667,464 | |||||
| Allowance for loan losses | (79,353) | (81,030) | (90,927) | (90,370) | (78,243) | |||||
| Federal Home Loan Bank and other bank stock | 44,964 | 44,506 | 44,809 | 46,585 | 57,237 | |||||
| Servicing rights, net | 1,407 | 1,454 | 1,621 | 1,753 | 2,009 | |||||
| Premises and equipment, net | 120,071 | 121,520 | 123,812 | 125,247 | 127,379 | |||||
| Alternative energy partnership investments, net | 23,809 | 27,977 | 27,786 | 26,967 | 27,347 | |||||
| Goodwill | 37,144 | 37,144 | 37,144 | 37,144 | 37,144 | |||||
| Other intangible assets, net | 2,351 | 2,633 | 2,939 | 3,292 | 3,722 | |||||
| Deferred income tax, net | 47,877 | 45,957 | 43,744 | 48,288 | 63,849 | |||||
| Income tax receivable | 210 | 1,105 | 10,701 | 13,094 | 7,198 | |||||
| Bank owned life insurance investment | 112,479 | 111,807 | 111,115 | 110,487 | 110,397 | |||||
| Right of use assets | 22,069 | 19,633 | 18,909 | 19,408 | 20,882 | |||||
| Other assets | 184,283 | 192,560 | 188,245 | 184,110 | 190,569 | |||||
| Total assets | $ | 7,933,459 | $ | 7,877,334 | $ | 7,738,106 | $ | 7,770,138 | $ | 7,662,607 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
| Noninterest-bearing deposits | $ | 1,700,343 | $ | 1,559,248 | $ | 1,450,744 | $ | 1,391,504 | $ | 1,256,081 |
| Interest-bearing deposits | 4,441,699 | 4,526,552 | 4,581,522 | 4,645,961 | 4,306,757 | |||||
| Total deposits | 6,142,042 | 6,085,800 | 6,032,266 | 6,037,465 | 5,562,838 | |||||
| Advances from Federal Home Loan Bank | 635,105 | 539,795 | 559,482 | 617,170 | 978,000 | |||||
| Notes payable, net | 256,441 | 256,315 | 173,623 | 173,537 | 173,479 | |||||
| Reserve for loss on repurchased loans | 5,383 | 5,515 | 5,487 | 5,567 | 5,601 | |||||
| Lease liabilities | 23,173 | 20,647 | 19,938 | 20,531 | 22,075 | |||||
| Accrued expenses and other liabilities | 66,622 | 72,055 | 73,056 | 68,909 | 85,612 | |||||
| Total liabilities | 7,128,766 | 6,980,127 | 6,863,852 | 6,923,179 | 6,827,605 | |||||
| Commitments and contingent liabilities | ||||||||||
| Preferred stock | 94,956 | 184,878 | 184,878 | 185,037 | 187,687 | |||||
| Common stock | 526 | 522 | 522 | 522 | 520 | |||||
| Common stock, class B non-voting non-convertible | 5 | 5 | 5 | 5 | 5 | |||||
| Additional paid-in capital | 629,844 | 634,704 | 633,409 | 632,117 | 631,125 | |||||
| Retained earnings | 115,004 | 110,179 | 95,001 | 85,670 | 110,640 | |||||
| Treasury stock | (40,827) | (40,827) | (40,827) | (40,827) | (40,827) | |||||
| Accumulated other comprehensive income (loss), net | 5,185 | 7,746 | 1,266 | (15,565) | (54,148) | |||||
| Total stockholders’ equity | 804,693 | 897,207 | 874,254 | 846,959 | 835,002 | |||||
| Total liabilities and stockholders’ equity | $ | 7,933,459 | $ | 7,877,334 | $ | 7,738,106 | $ | 7,770,138 | $ | 7,662,607 |
EX 99.1
Banc of California, Inc.
Consolidated Statements of Operations (Unaudited)
(Dollars in thousands, except per share data)
| Three Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| March 31,<br>2021 | December 31,<br>2020 | September 30,<br>2020 | June 30,<br>2020 | March 31,<br>2020 | ||||||
| Interest and dividend income | ||||||||||
| Loans, including fees | $ | 61,345 | $ | 66,105 | $ | 62,019 | $ | 63,642 | $ | 65,534 |
| Securities | 6,501 | 6,636 | 6,766 | 7,816 | 7,820 | |||||
| Other interest-earning assets | 772 | 789 | 881 | 1,239 | 1,360 | |||||
| Total interest and dividend income | 68,618 | 73,530 | 69,666 | 72,697 | 74,714 | |||||
| Interest expense | ||||||||||
| Deposits | 4,286 | 5,436 | 7,564 | 10,205 | 14,611 | |||||
| Federal Home Loan Bank advances | 3,112 | 3,479 | 3,860 | 4,818 | 5,883 | |||||
| Notes payable and other interest-bearing liabilities | 3,304 | 3,052 | 2,387 | 2,359 | 2,359 | |||||
| Total interest expense | 10,702 | 11,967 | 13,811 | 17,382 | 22,853 | |||||
| Net interest income | 57,916 | 61,563 | 55,855 | 55,315 | 51,861 | |||||
| (Reversal of) provision for credit losses | (1,107) | 991 | 1,141 | 11,826 | 15,761 | |||||
| Net interest income after (reversal of) provision for credit losses | 59,023 | 60,572 | 54,714 | 43,489 | 36,100 | |||||
| Noninterest income | ||||||||||
| Customer service fees | 1,758 | 1,953 | 1,498 | 1,224 | 1,096 | |||||
| Loan servicing income | 268 | 149 | 186 | 95 | 75 | |||||
| Income from bank owned life insurance | 672 | 691 | 629 | 591 | 578 | |||||
| Net gain (loss) on sale of securities available for sale | — | — | — | 2,011 | — | |||||
| Fair value adjustment on loans held for sale | — | 36 | 24 | 25 | (1,586) | |||||
| Net gain (loss) on sale of loans | — | — | 272 | — | (27) | |||||
| All other income | 1,683 | 4,146 | 1,345 | 1,582 | 1,925 | |||||
| Total noninterest income | 4,381 | 6,975 | 3,954 | 5,528 | 2,061 | |||||
| Noninterest expense | ||||||||||
| Salaries and employee benefits | 25,719 | 25,836 | 23,277 | 24,260 | 23,436 | |||||
| Naming rights termination | — | — | — | 26,769 | — | |||||
| Occupancy and equipment | 7,196 | 7,560 | 7,457 | 7,090 | 7,243 | |||||
| Professional fees | 4,022 | 29 | 5,147 | 4,596 | 5,964 | |||||
| Data processing | 1,655 | 1,608 | 1,657 | 1,536 | 1,773 | |||||
| Advertising | 118 | 171 | 219 | 1,157 | 1,756 | |||||
| Regulatory assessments | 774 | 748 | 784 | 725 | 484 | |||||
| Reversal of loan repurchase reserves | (132) | 28 | (91) | (34) | (600) | |||||
| Amortization of intangible assets | 282 | 306 | 353 | 430 | 429 | |||||
| Merger-related costs | 700 | — | — | — | — | |||||
| All other expense | 2,771 | 3,337 | 3,021 | 6,408 | 4,529 | |||||
| Total noninterest expense before loss (gain) in alternative energy partnership investments | 43,105 | 39,623 | 41,824 | 72,937 | 45,014 | |||||
| Loss (gain) in alternative energy partnership investments | 3,630 | (673) | (1,430) | (167) | 1,905 | |||||
| Total noninterest expense | 46,735 | 38,950 | 40,394 | 72,770 | 46,919 | |||||
| Income (loss) before income taxes | 16,669 | 28,597 | 18,274 | (23,753) | (8,758) | |||||
| Income tax expense (benefit) | 2,294 | 6,894 | 2,361 | (5,304) | (2,165) | |||||
| Net income (loss) | 14,375 | 21,703 | 15,913 | (18,449) | (6,593) | |||||
| Preferred stock dividends | 3,141 | 3,447 | 3,447 | 3,442 | 3,533 | |||||
| Income allocated to participating securities | 62 | 456 | 281 | — | — | |||||
| Participating securities dividends | — | 94 | 94 | 94 | 94 | |||||
| Impact of preferred stock redemption | 3,347 | — | 7 | (49) | (526) | |||||
| Net income (loss) available to common stockholders | $ | 7,825 | $ | 17,706 | $ | 12,084 | $ | (21,936) | $ | (9,694) |
| Earnings (loss) per common share: | ||||||||||
| Basic | $ | 0.16 | $ | 0.35 | $ | 0.24 | $ | (0.44) | $ | (0.19) |
| Diluted | $ | 0.15 | $ | 0.35 | $ | 0.24 | $ | (0.44) | $ | (0.19) |
EX 99.1
| Weighted average number of common shares outstanding | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Basic | 50,350,897 | 50,125,462 | 50,108,655 | 50,030,919 | 50,464,777 | |||||
| Diluted | 50,750,522 | 50,335,271 | 50,190,933 | 50,030,919 | 50,464,777 | |||||
| Dividends declared per common share | $ | 0.06 | $ | 0.06 | $ | 0.06 | $ | 0.06 | $ | 0.06 |
EX 99.1
Banc of California, Inc.
Selected Financial Data
(Unaudited)
| Three Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| March 31,<br>2021 | December 31,<br>2020 | September 30,<br>2020 | June 30,<br>2020 | March 31,<br>2020 | ||||||
| Profitability and other ratios of consolidated operations | ||||||||||
| Return on average assets(1) | 0.74 | % | 1.11 | % | 0.82 | % | (0.96) | % | (0.35) | % |
| Return on average equity(1) | 6.56 | % | 9.67 | % | 7.32 | % | (8.69) | % | (2.89) | % |
| Return on average tangible common equity(2) | 4.81 | % | 11.02 | % | 7.92 | % | (13.77) | % | (5.44) | % |
| Pre-tax pre-provision income (loss) ROAA | 0.80 | % | 1.52 | % | 1.00 | % | (0.62) | % | 0.37 | % |
| Adjusted pre-tax pre-provision income ROAA(1)(2) | 1.06 | % | 1.25 | % | 0.98 | % | 0.83 | % | 0.65 | % |
| Dividend payout ratio(3) | 37.50 | % | 17.14 | % | 25.00 | % | (13.64) | % | (31.58) | % |
| Average loan yield | 4.30 | % | 4.58 | % | 4.46 | % | 4.48 | % | 4.56 | % |
| Average cost of interest-bearing deposits | 0.38 | % | 0.47 | % | 0.66 | % | 0.93 | % | 1.41 | % |
| Average cost of total deposits | 0.28 | % | 0.36 | % | 0.51 | % | 0.71 | % | 1.11 | % |
| Net interest spread | 2.95 | % | 3.15 | % | 2.84 | % | 2.77 | % | 2.56 | % |
| Net interest margin(1) | 3.19 | % | 3.38 | % | 3.09 | % | 3.09 | % | 2.97 | % |
| Noninterest income to total revenue(4) | 7.03 | % | 10.18 | % | 6.61 | % | 9.09 | % | 3.82 | % |
| Noninterest income to average total assets(1) | 0.23 | % | 0.36 | % | 0.20 | % | 0.29 | % | 0.11 | % |
| Noninterest expense to average total assets(1) | 2.41 | % | 2.00 | % | 2.09 | % | 3.78 | % | 2.50 | % |
| Adjusted noninterest expense to average total assets(1)(2) | 2.15 | % | 2.26 | % | 2.10 | % | 2.22 | % | 2.30 | % |
| Efficiency ratio(2)(5) | 75.02 | % | 56.83 | % | 67.54 | % | 119.60 | % | 87.01 | % |
| Adjusted efficiency ratio(2)(5) | 66.91 | % | 64.26 | % | 68.31 | % | 72.74 | % | 78.07 | % |
| Average loans held-for-investment to average deposits | 93.74 | % | 95.65 | % | 92.86 | % | 98.51 | % | 108.54 | % |
| Average securities available-for-sale to average total assets | 15.73 | % | 15.96 | % | 15.49 | % | 13.75 | % | 12.60 | % |
| Average stockholders’ equity to average total assets | 11.30 | % | 11.49 | % | 11.26 | % | 11.04 | % | 12.11 | % |
(1)Ratios are presented on an annualized basis.
(2)The ratios are determined by methods other than in accordance with U.S. generally accepted accounting principles (GAAP). See Non-GAAP measures section for reconciliation of the calculation.
(3)The ratio is calculated by dividing dividends declared per common share by basic earnings (loss) per common share.
(4)Total revenue is equal to the sum of net interest income before provision for (reversal of) credit losses and noninterest income.
(5)The ratios are calculated by dividing noninterest expense by the sum of net interest income before provision for credit losses and noninterest income.
EX 99.1
Banc of California, Inc.
Average Balance, Average Yield Earned, and Average Cost Paid
(Dollars in thousands)
(Unaudited)
| Three Months Ended | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31, 2021 | December 31, 2020 | September 30, 2020 | |||||||||||||||||||
| Average | Yield | Average | Yield | Average | Yield | ||||||||||||||||
| Balance | Interest | / Cost | Balance | Interest | / Cost | Balance | Interest | / Cost | |||||||||||||
| Interest-earning assets | |||||||||||||||||||||
| Loans held-for-sale | $ | 1,413 | $ | 7 | 2.01 | % | $ | 1,564 | $ | 8 | 2.03 | % | $ | 19,544 | $ | 139 | 2.83 | % | |||
| SFR mortgage | 1,210,105 | 11,747 | 3.94 | % | 1,224,865 | 12,955 | 4.21 | % | 1,311,513 | 13,178 | 4.00 | % | |||||||||
| Commercial real estate, multifamily, and construction | 2,322,509 | 26,387 | 4.61 | % | 2,507,950 | 30,371 | 4.82 | % | 2,493,408 | 29,666 | 4.73 | % | |||||||||
| Commercial and industrial, SBA, and lease financing | 2,221,494 | 22,910 | 4.18 | % | 1,978,684 | 21,984 | 4.42 | % | 1,673,548 | 18,585 | 4.42 | % | |||||||||
| Other consumer | 28,520 | 294 | 4.18 | % | 31,856 | 787 | 9.83 | % | 35,563 | 451 | 5.05 | % | |||||||||
| Gross loans and leases | 5,784,041 | 61,345 | 4.30 | % | 5,744,919 | 66,105 | 4.58 | % | 5,533,576 | 62,019 | 4.46 | % | |||||||||
| Securities | 1,236,138 | 6,501 | 2.13 | % | 1,239,295 | 6,636 | 2.13 | % | 1,190,765 | 6,766 | 2.26 | % | |||||||||
| Other interest-earning assets | 336,443 | 772 | 0.93 | % | 262,363 | 789 | 1.20 | % | 457,558 | 881 | 0.77 | % | |||||||||
| Total interest-earning assets | 7,356,622 | 68,618 | 3.78 | % | 7,246,577 | 73,530 | 4.04 | % | 7,181,899 | 69,666 | 3.86 | % | |||||||||
| Allowance for loan losses | (81,111) | (83,745) | (89,679) | ||||||||||||||||||
| BOLI and noninterest-earning assets | 585,441 | 602,165 | 594,885 | ||||||||||||||||||
| Total assets | $ | 7,860,952 | $ | 7,764,997 | $ | 7,687,105 | |||||||||||||||
| Interest-bearing liabilities | |||||||||||||||||||||
| Savings | $ | 928,446 | $ | 2,013 | 0.88 | % | $ | 937,649 | $ | 2,128 | 0.90 | % | $ | 948,898 | $ | 2,353 | 0.99 | % | |||
| Interest-bearing checking | 2,140,314 | 901 | 0.17 | % | 2,086,146 | 1,131 | 0.22 | % | 1,919,327 | 1,660 | 0.34 | % | |||||||||
| Money market | 726,079 | 377 | 0.21 | % | 671,949 | 414 | 0.25 | % | 681,421 | 645 | 0.38 | % | |||||||||
| Certificates of deposit | 720,180 | 995 | 0.56 | % | 860,131 | 1,763 | 0.82 | % | 1,030,829 | 2,906 | 1.12 | % | |||||||||
| Total interest-bearing deposits | 4,515,019 | 4,286 | 0.38 | % | 4,555,875 | 5,436 | 0.47 | % | 4,580,475 | 7,564 | 0.66 | % | |||||||||
| FHLB advances | 446,618 | 3,112 | 2.83 | % | 534,303 | 3,479 | 2.59 | % | 608,169 | 3,860 | 2.52 | % | |||||||||
| Securities sold under repurchase agreements | — | — | — | % | — | — | — | % | 1,309 | 2 | 0.61 | % | |||||||||
| Long-term debt and other interest-bearing liabilities | 260,488 | 3,304 | 5.14 | % | 238,265 | 3,052 | 5.10 | % | 173,911 | 2,385 | 5.46 | % | |||||||||
| Total interest-bearing liabilities | 5,222,125 | 10,702 | 0.83 | % | 5,328,443 | 11,967 | 0.89 | % | 5,363,864 | 13,811 | 1.02 | % | |||||||||
| Noninterest-bearing deposits | 1,653,517 | 1,448,422 | 1,357,411 | ||||||||||||||||||
| Noninterest-bearing liabilities | 97,136 | 95,567 | 100,424 | ||||||||||||||||||
| Total liabilities | 6,972,778 | 6,872,432 | 6,821,699 | ||||||||||||||||||
| Total stockholders’ equity | 888,174 | 892,565 | 865,406 | ||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 7,860,952 | $ | 7,764,997 | $ | 7,687,105 | |||||||||||||||
| Net interest income/spread | $ | 57,916 | 2.95 | % | $ | 61,563 | 3.15 | % | $ | 55,855 | 2.84 | % | |||||||||
| Net interest margin | 3.19 | % | 3.38 | % | 3.09 | % | |||||||||||||||
| Ratio of interest-earning assets to interest-bearing liabilities | 141 | % | 136 | % | 134 | % | |||||||||||||||
| Total deposits | $ | 6,168,536 | $ | 4,286 | 0.28 | % | $ | 6,004,297 | $ | 5,436 | 0.36 | % | $ | 5,937,886 | $ | 7,564 | 0.51 | % | |||
| Total funding (1) | $ | 6,875,642 | $ | 10,702 | 0.63 | % | $ | 6,776,865 | $ | 11,967 | 0.70 | % | $ | 6,721,275 | $ | 13,811 | 0.82 | % |
(1)Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.
EX 99.1
| Three Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2020 | March 31, 2020 | |||||||||||||
| Average | Yield | Average | Yield | |||||||||||
| Balance | Interest | / Cost | Balance | Interest | / Cost | |||||||||
| Interest-earning assets | ||||||||||||||
| Loans held-for-sale | $ | 19,967 | $ | 155 | 3.12 | % | $ | 22,273 | $ | 220 | 3.97 | % | ||
| SFR mortgage | 1,416,358 | 14,187 | 4.03 | % | 1,532,967 | 15,295 | 4.01 | % | ||||||
| Commercial real estate, multifamily, and construction | 2,524,477 | 29,459 | 4.69 | % | 2,564,485 | 30,223 | 4.74 | % | ||||||
| Commercial and industrial, SBA, and lease financing | 1,706,120 | 19,392 | 4.57 | % | 1,613,324 | 19,157 | 4.78 | % | ||||||
| Other consumer | 40,697 | 449 | 4.44 | % | 47,761 | 639 | 5.38 | % | ||||||
| Gross loans and leases | 5,707,619 | 63,642 | 4.48 | % | 5,780,810 | 65,534 | 4.56 | % | ||||||
| Securities | 1,063,941 | 7,816 | 2.95 | % | 952,966 | 7,820 | 3.30 | % | ||||||
| Other interest-earning assets | 424,776 | 1,239 | 1.17 | % | 297,444 | 1,360 | 1.84 | % | ||||||
| Total interest-earning assets | 7,196,336 | 72,697 | 4.06 | % | 7,031,220 | 74,714 | 4.27 | % | ||||||
| Allowance for loan losses | (78,528) | (60,470) | ||||||||||||
| BOLI and noninterest-earning assets | 622,398 | 592,192 | ||||||||||||
| Total assets | $ | 7,740,206 | $ | 7,562,942 | ||||||||||
| Interest-bearing liabilities | ||||||||||||||
| Savings | 905,997 | 2,718 | 1.21 | % | 890,830 | 3,296 | 1.49 | % | ||||||
| Interest-bearing checking | 1,710,038 | 2,186 | 0.51 | % | 1,520,922 | 3,728 | 0.99 | % | ||||||
| Money market | 592,872 | 850 | 0.58 | % | 608,926 | 1,760 | 1.16 | % | ||||||
| Certificates of deposit | 1,214,939 | 4,451 | 1.47 | % | 1,151,518 | 5,827 | 2.04 | % | ||||||
| Total interest-bearing deposits | 4,423,846 | 10,205 | 0.93 | % | 4,172,196 | 14,611 | 1.41 | % | ||||||
| FHLB advances | 819,166 | 4,818 | 2.37 | % | 1,039,055 | 5,883 | 2.28 | % | ||||||
| Securities sold under repurchase agreements | 1,024 | 2 | 0.79 | % | — | — | — | % | ||||||
| Long-term debt and other interest-bearing liabilities | 173,977 | 2,357 | 5.45 | % | 174,056 | 2,359 | 5.45 | % | ||||||
| Total interest-bearing liabilities | 5,418,013 | 17,382 | 1.29 | % | 5,385,307 | 22,853 | 1.71 | % | ||||||
| Noninterest-bearing deposits | 1,349,735 | 1,133,306 | ||||||||||||
| Noninterest-bearing liabilities | 118,208 | 128,282 | ||||||||||||
| Total liabilities | 6,885,956 | 6,646,895 | ||||||||||||
| Total stockholders’ equity | 854,250 | 916,047 | ||||||||||||
| Total liabilities and stockholders’ equity | $ | 7,740,206 | $ | 7,562,942 | ||||||||||
| Net interest income/spread | $ | 55,315 | 2.77 | % | $ | 51,861 | 2.56 | % | ||||||
| Net interest margin | 3.09 | % | 2.97 | % | ||||||||||
| Ratio of interest-earning assets to interest-bearing liabilities | 133 | % | 131 | % | ||||||||||
| Total deposits | $ | 5,773,581 | $ | 10,205 | 0.71 | % | $ | 5,305,502 | $ | 14,611 | 1.11 | % | ||
| Total funding (1) | $ | 6,767,748 | $ | 17,382 | 1.03 | % | $ | 6,518,613 | $ | 22,853 | 1.41 | % |
(1)Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.
EX 99.1
Banc of California, Inc.
Consolidated Operations
Non-GAAP Measures
(Dollars in thousands, except per share data)
(Unaudited)
Under Item 10(e) of SEC Regulation S-K, public companies disclosing financial measures in filings with the SEC that are not calculated in accordance with GAAP must also disclose, along with each non-GAAP financial measure, certain additional information, including a presentation of the most directly comparable GAAP financial measure, a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure, as well as a statement of the reasons why the company's management believes that presentation of the non-GAAP financial measure provides useful information to investors regarding the company's financial condition and results of operations and, to the extent material, a statement of the additional purposes, if any, for which the company's management uses the non-GAAP financial measure.
Tangible assets, tangible equity, tangible common equity, tangible equity to tangible assets, tangible common equity to tangible assets, tangible common equity per common share, return on average tangible common equity, adjusted noninterest income, adjusted noninterest expense, adjusted noninterest expense to average assets, pre-tax pre-provision (PTPP) income (loss), adjusted PTPP income (loss), PTPP income (loss) ROAA, adjusted PTPP income (loss) ROAA, efficiency ratio, adjusted efficiency ratio, adjusted net income, adjusted net income available to common stockholders, adjusted diluted earnings per share (EPS) and adjusted return on average assets (ROAA) constitute supplemental financial information determined by methods other than in accordance with GAAP. These non-GAAP measures are used by management in its analysis of the Company's performance.
Tangible assets and tangible equity are calculated by subtracting goodwill and other intangible assets from total assets and total equity. Tangible common equity is calculated by subtracting preferred stock from tangible equity. Return on average tangible common equity is computed by dividing net income (loss) available to common stockholders by average tangible common equity. Banking regulators also exclude goodwill and other intangible assets from stockholders' equity when assessing the capital adequacy of a financial institution.
PTPP income is calculated by adding net interest income and noninterest income (total revenue) and subtracting noninterest expense. Adjusted PTPP income is calculated by adding net interest income and adjusted noninterest income (adjusted total revenue) and subtracting adjusted noninterest expense. PTPP income ROAA is computed by dividing annualized PTPP income by average assets. Adjusted PTPP income ROAA is computed by dividing annualized adjusted PTPP income by average assets. Efficiency ratio is computed by dividing noninterest expense by total revenue. Adjusted efficiency ratio is computed by dividing adjusted noninterest expense by adjusted total revenue.
Adjusted net income (loss) is calculated by adjusting net income (loss) for tax-effected noninterest income and expense adjustments and the tax impact from the exercise of stock appreciation rights. Adjusted ROAA is computed by dividing annualized adjusted net income by average assets. Adjusted net income (loss) available to common shareholders is computed by removing the impact of preferred stock redemptions from adjusted net income (loss).
Management believes the presentation of these financial measures adjusting the impact of these items provides useful supplemental information that is essential to a proper understanding of the financial results and operating performance of the Company. This disclosure should not be viewed as a substitute for results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.
The following tables provide reconciliations of the non-GAAP measures with financial measures defined by GAAP.
EX 99.1
Banc of California, Inc.
Consolidated Operations
Non-GAAP Measures, Continued
(Dollars in thousands, except per share data)
(Unaudited)
| March 31,<br>2021 | December 31,<br>2020 | September 30,<br>2020 | June 30,<br>2020 | March 31,<br>2020 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Tangible common equity, and tangible common equity to tangible assets ratio | |||||||||||||||
| Total assets | $ | 7,933,459 | $ | 7,877,334 | $ | 7,738,106 | $ | 7,770,138 | $ | 7,662,607 | |||||
| Less goodwill | (37,144) | (37,144) | (37,144) | (37,144) | (37,144) | ||||||||||
| Less other intangible assets | (2,351) | (2,633) | (2,939) | (3,292) | (3,722) | ||||||||||
| Tangible assets(1) | $ | 7,893,964 | $ | 7,837,557 | $ | 7,698,023 | $ | 7,729,702 | $ | 7,621,741 | |||||
| Total stockholders' equity | $ | 804,693 | $ | 897,207 | $ | 874,254 | $ | 846,959 | $ | 835,002 | |||||
| Less goodwill | (37,144) | (37,144) | (37,144) | (37,144) | (37,144) | ||||||||||
| Less other intangible assets | (2,351) | (2,633) | (2,939) | (3,292) | (3,722) | ||||||||||
| Tangible equity(1) | 765,198 | 857,430 | 834,171 | 806,523 | 794,136 | ||||||||||
| Less preferred stock | (94,956) | (184,878) | (184,878) | (185,037) | (187,687) | ||||||||||
| Tangible common equity(1) | $ | 670,242 | $ | 672,552 | $ | 649,293 | $ | 621,486 | $ | 606,449 | |||||
| Total stockholders' equity to total assets | 10.14 | % | 11.39 | % | 11.30 | % | 10.90 | % | 10.90 | % | |||||
| Tangible equity to tangible assets(1) | 9.69 | % | 10.94 | % | 10.84 | % | 10.43 | % | 10.42 | % | |||||
| Tangible common equity to tangible assets(1) | 8.49 | % | 8.58 | % | 8.43 | % | 8.04 | % | 7.96 | % | |||||
| Common shares outstanding | 50,150,447 | 49,767,489 | 49,760,543 | 49,750,958 | 49,593,077 | ||||||||||
| Class B non-voting non-convertible common shares outstanding | 477,321 | 477,321 | 477,321 | 477,321 | 477,321 | ||||||||||
| Total common shares outstanding | 50,627,768 | 50,244,810 | 50,237,864 | 50,228,279 | 50,070,398 | ||||||||||
| Tangible common equity per common share(1) | $ | 13.24 | $ | 13.39 | $ | 12.92 | $ | 12.37 | $ | 12.11 | |||||
| Book value per common share | $ | 14.02 | $ | 14.18 | $ | 13.72 | $ | 13.18 | $ | 12.93 |
(1)Non-GAAP measure.
EX 99.1
Banc of California, Inc.
Consolidated Operations
Non-GAAP Measures, Continued
(Dollars in thousands, except per share data)
(Unaudited)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31,<br>2021 | December 31,<br>2020 | September 30,<br>2020 | June 30,<br>2020 | March 31,<br>2020 | |||||||||||
| Return on tangible common equity | |||||||||||||||
| Average total stockholders' equity | $ | 888,174 | $ | 892,565 | $ | 865,406 | $ | 854,250 | $ | 916,047 | |||||
| Less average preferred stock | (164,895) | (184,878) | (184,910) | (185,471) | (189,607) | ||||||||||
| Less average goodwill | (37,144) | (37,144) | (37,144) | (37,144) | (37,144) | ||||||||||
| Less average other intangible assets | (2,517) | (2,826) | (3,172) | (3,574) | (4,003) | ||||||||||
| Average tangible common equity(1) | $ | 683,618 | $ | 667,717 | $ | 640,180 | $ | 628,061 | $ | 685,293 | |||||
| Net income (loss) | $ | 14,375 | $ | 21,703 | $ | 15,913 | $ | (18,449) | $ | (6,593) | |||||
| Less preferred stock dividends and impact of preferred stock redemption | (6,488) | (3,447) | (3,454) | (3,393) | (3,007) | ||||||||||
| Add amortization of intangible assets | 282 | 306 | 353 | 430 | 429 | ||||||||||
| Less tax effect on amortization of intangible assets | (59) | (64) | (74) | (90) | (90) | ||||||||||
| Net income (loss) available to common stockholders(1) | $ | 8,110 | $ | 18,498 | $ | 12,738 | $ | (21,502) | $ | (9,261) | |||||
| Return on average equity | 6.56 | % | 9.67 | % | 7.32 | % | (8.69) | % | (2.89) | % | |||||
| Return on average tangible common equity(1) | 4.81 | % | 11.02 | % | 7.92 | % | (13.77) | % | (5.44) | % | |||||
| Statutory Federal tax rate utilized for calculating tax effect on amortization of intangible assets | 21.00 | % | 21.00 | % | 21.00 | % | 21.00 | % | 21.00 | % |
(1)Non-GAAP measure.
EX 99.1
Banc of California, Inc.
Consolidated Operations
Non-GAAP Measures, Continued
(Dollars in thousands, except per share data)
(Unaudited)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31,<br>2021 | December 31,<br>2020 | September 30,<br>2020 | June 30,<br>2020 | March 31,<br>2020 | |||||||||||
| Adjusted noninterest income and expense | |||||||||||||||
| Total noninterest income | $ | 4,381 | $ | 6,975 | $ | 3,954 | $ | 5,528 | $ | 2,061 | |||||
| Noninterest income adjustments: | |||||||||||||||
| Net (gain) loss on securities available for sale | — | — | — | (2,011) | — | ||||||||||
| Net (gain) loss on sale of legacy SFR loans held for sale | — | — | (272) | — | — | ||||||||||
| Fair value adjustment on legacy SFR loans held for sale | — | (36) | (24) | (25) | 1,586 | ||||||||||
| Total noninterest income adjustments | — | (36) | (296) | (2,036) | 1,586 | ||||||||||
| Adjusted noninterest income(1) | $ | 4,381 | $ | 6,939 | $ | 3,658 | $ | 3,492 | $ | 3,647 | |||||
| Total noninterest expense | $ | 46,735 | $ | 38,950 | $ | 40,394 | $ | 72,770 | $ | 46,919 | |||||
| Noninterest expense adjustments: | |||||||||||||||
| Naming rights termination | — | — | — | (26,769) | — | ||||||||||
| Extinguishment of debt | — | — | — | (2,515) | — | ||||||||||
| Professional (fees) recoveries | (721) | 4,398 | (1,172) | (875) | (1,678) | ||||||||||
| Merger-related costs | (700) | — | — | — | — | ||||||||||
| Adjusted noninterest expense before gain (loss) in alternative energy partnership investments | (1,421) | 4,398 | (1,172) | (30,159) | (1,678) | ||||||||||
| Gain (loss) in alternative energy partnership investments | (3,630) | 673 | 1,430 | 167 | (1,905) | ||||||||||
| Total noninterest expense adjustments | (5,051) | 5,071 | 258 | (29,992) | (3,583) | ||||||||||
| Adjusted noninterest expense(1) | $ | 41,684 | $ | 44,021 | $ | 40,652 | $ | 42,778 | $ | 43,336 | |||||
| Average assets | $ | 7,860,952 | $ | 7,764,997 | $ | 7,687,105 | $ | 7,740,206 | $ | 7,562,942 | |||||
| Noninterest expense to average total assets | 2.41 | % | 2.00 | % | 2.09 | % | 3.78 | % | 2.50 | % | |||||
| Adjusted noninterest expense to average total assets(1) | 2.15 | % | 2.26 | % | 2.10 | % | 2.22 | % | 2.30 | % |
(1)Non-GAAP measure.
EX 99.1
Banc of California, Inc.
Consolidated Operations
Non-GAAP Measures, Continued
(Dollars in thousands, except per share data)
(Unaudited)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31,<br>2021 | December 31,<br>2020 | September 30,<br>2020 | June 30,<br>2020 | March 31,<br>2020 | |||||||||||
| Adjusted pre-tax pre-provision income | |||||||||||||||
| Net interest income | $ | 57,916 | $ | 61,563 | $ | 55,855 | $ | 55,315 | $ | 51,861 | |||||
| Noninterest income | 4,381 | 6,975 | 3,954 | 5,528 | 2,061 | ||||||||||
| Total revenue | 62,297 | 68,538 | 59,809 | 60,843 | 53,922 | ||||||||||
| Noninterest expense | 46,735 | 38,950 | 40,394 | 72,770 | 46,919 | ||||||||||
| Pre-tax pre-provision income (loss)(1) | $ | 15,562 | $ | 29,588 | $ | 19,415 | $ | (11,927) | $ | 7,003 | |||||
| Total revenue | $ | 62,297 | $ | 68,538 | $ | 59,809 | $ | 60,843 | $ | 53,922 | |||||
| Total noninterest income adjustments | — | (36) | (296) | (2,036) | 1,586 | ||||||||||
| Adjusted total revenue(1) | 62,297 | 68,502 | 59,513 | 58,807 | 55,508 | ||||||||||
| Noninterest expense | 46,735 | 38,950 | 40,394 | 72,770 | 46,919 | ||||||||||
| Total noninterest expense adjustments | (5,051) | 5,071 | 258 | (29,992) | (3,583) | ||||||||||
| Adjusted noninterest expense(1) | 41,684 | 44,021 | 40,652 | 42,778 | 43,336 | ||||||||||
| Adjusted pre-tax pre-provision income(1) | $ | 20,613 | $ | 24,481 | $ | 18,861 | $ | 16,029 | $ | 12,172 | |||||
| Average assets | $ | 7,860,952 | $ | 7,764,997 | $ | 7,687,105 | $ | 7,740,206 | $ | 7,562,942 | |||||
| Pre-tax pre-provision income (loss) ROAA(1) | 0.80 | % | 1.52 | % | 1.00 | % | (0.62) | % | 0.37 | % | |||||
| Adjusted pre-tax pre-provision income ROAA(1) | 1.06 | % | 1.25 | % | 0.98 | % | 0.83 | % | 0.65 | % | |||||
| Efficiency ratio(1) | 75.02 | % | 56.83 | % | 67.54 | % | 119.60 | % | 87.01 | % | |||||
| Adjusted efficiency ratio(1) | 66.91 | % | 64.26 | % | 68.31 | % | 72.74 | % | 78.07 | % |
(1)Non-GAAP measure.
EX 99.1
Banc of California, Inc.
Consolidated Operations
Non-GAAP Measures, Continued
(Dollars in thousands, except per share data)
(Unaudited)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31,<br>2021 | December 31,<br>2020 | September 30,<br>2020 | June 30,<br>2020 | March 31,<br>2020 | |||||||||||
| Adjusted net income (loss) | |||||||||||||||
| Net income (loss) | $ | 14,375 | $ | 21,703 | $ | 15,913 | $ | (18,449) | $ | (6,593) | |||||
| Adjustments, net:(1) | |||||||||||||||
| Noninterest income | — | 27 | 222 | 1,527 | (1,190) | ||||||||||
| Noninterest expense | 3,788 | (3,803) | (194) | 22,494 | 2,687 | ||||||||||
| Adjusted net income (loss) before tax adjustment | 18,163 | 17,927 | 15,941 | 5,572 | (5,096) | ||||||||||
| Tax adjustment: tax impact from exercise of stock appreciation rights | 2,093 | — | — | — | — | ||||||||||
| Adjusted net income (loss)(2) | $ | 16,070 | $ | 17,927 | $ | 15,941 | $ | 5,572 | $ | (5,096) | |||||
| Average assets | $ | 7,860,952 | $ | 7,764,997 | $ | 7,687,105 | $ | 7,740,206 | $ | 7,562,942 | |||||
| ROAA | 0.74 | % | 1.11 | % | 0.82 | % | (0.96) | % | (0.35) | % | |||||
| Adjusted ROAA(2) | 0.83 | % | 0.92 | % | 0.82 | % | 0.29 | % | (0.27) | % | |||||
| Adjusted net income (loss) available to common stockholders | |||||||||||||||
| Net income (loss) available to common stockholders | $ | 7,825 | $ | 17,706 | $ | 12,084 | $ | (21,936) | $ | (9,694) | |||||
| Adjustments to net income (loss)(3) | 1,695 | (3,776) | 28 | 24,021 | 1,497 | ||||||||||
| Adjustments for impact of preferred stock redemption | 3,347 | — | 7 | (49) | (526) | ||||||||||
| Adjusted net income (loss) available to common stockholders(2) | $ | 12,867 | $ | 13,930 | $ | 12,119 | $ | 2,036 | $ | (8,723) | |||||
| Average diluted common shares | 50,750,522 | 50,335,271 | 50,190,933 | 50,030,919 | 50,464,777 | ||||||||||
| Diluted EPS | $ | 0.15 | $ | 0.35 | $ | 0.24 | $ | (0.44) | $ | (0.19) | |||||
| Adjusted diluted EPS(2) | $ | 0.25 | $ | 0.28 | $ | 0.24 | $ | 0.04 | $ | (0.17) |
(1)Adjustments shown net of an effective tax rate of 25%
(2)Non-GAAP measure.
(3)Represents the difference between net income and adjusted net income
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