Banc of California, Inc. (NYSE: BANC):
$38.5B Total Assets
$17.12 Book Value Per
Share $14.96 Tangible Book Value Per Share(1)
10.12% CET1 Ratio
26% Noninterest-Bearing
Deposits
Banc of California, Inc. (NYSE: BANC) (“Banc of California”),
parent of wholly-owned subsidiary Banc of California (the “Bank”),
today reported financial results for the fourth quarter and year
ended December 31, 2023. On November 30, 2023, Banc of California
and PacWest Bancorp closed their transformational merger, creating
California’s premier business bank. As of December 31, 2023, Banc
of California had total assets of $38.5 billion.
“Following the merger with PacWest, we have created California’s
premier relationship-focused business bank.”
– Jared Wolff, President &
CEO
Fourth quarter highlights include:
- As a result of the impact of the merger and the balance
sheet repositioning, total assets of $38.5 billion increased
$1.7 billion and total loans increased $3.6 billion, or 16% from
the prior quarter, resulting in a year-end loans to deposits ratio
of 84%.
- Total deposits of $30.4 billion increased $3.8 billion, an
increase of 14% from the prior quarter, and noninterest-bearing
deposits of $7.8 billion increased $2.2 billion, or 39% from the
prior quarter. Borrowings decreased $3.4 billion, or 54% from the
prior quarter.
- Completed asset sales of $6.1 billion and completed paydown
of $8.6 billion high-cost funding related to the balance sheet
repositioning, which improved the mix of earning assets and
reduced higher cost funding. Wholesale fundings as a percentage of
total assets down to 17%, compared to 28% in the prior
quarter.
- Improved overall deposit mix, with the period-end
noninterest-bearing deposit percentage increasing from 21% of total
deposits at the prior quarter-end to 26% at year-end and brokered
time deposits decreasing from 15% of total deposits at the prior
quarter-end to 12% at year-end.
- Significant decrease in unrealized losses on securities,
with unrealized losses in accumulated other comprehensive income
(“AOCI”) of $434 million at year-end compared to $879 million at
the prior quarter-end, resulting from security sales and decreased
market forward rates in the fourth quarter.
- High liquidity levels, with immediately available
on-balance sheet liquidity and unused borrowing capacity of $17.2
billion, which was 2.5 times greater than uninsured and
uncollateralized deposits. Cash as a percentage of total assets was
14%, down from 17% in the prior quarter.
- Strong capital ratios well above the regulatory
thresholds for "well capitalized" banks, including an estimated
16.40% Total risk-based capital ratio, 12.42% Tier 1 capital ratio,
10.12% CET1 capital ratio and 9.00% Tier 1 leverage ratio.
- Allowance for credit losses of 1.22%, up from 1.15% at
the prior quarter-end after a provision for credit losses of $47.0
million, which includes a $22.2 million initial provision related
to non-purchased credit deteriorated (“non-PCD”) loan
balances.
- Strong credit quality, with year-end nonperforming loans
to total loans at 0.29%, down from 0.57% at the prior
quarter-end.
- Increased stockholders’ equity as a result of the
merger, with total stockholders’ equity increasing by $1.0
billion in the fourth quarter resulting in book value per share of
$17.12 and tangible book value per share(1) of $14.96.
(1)
Non-GAAP measure; refer to
section 'Non-GAAP Measures'
Jared Wolff, President & CEO of Banc of California,
commented, “Since closing our transformational merger with PacWest
Bancorp on November 30, 2023, we have made excellent progress on
the integration and the balance sheet repositioning actions that we
indicated at the time of the merger announcement. As a result, we
have created the well capitalized, highly-liquid financial
institution we envisioned, with significant earnings potential and
a strong position in key California markets.”
Mr. Wolff continued, “As we move through 2024, we will realize
more of the benefits of our balance sheet repositioning, which will
positively impact our net interest margin, as well as steadily
reduce our noninterest expense as we complete the system conversion
in the second quarter of 2024 and consolidate some of our branches
that are in close proximity to each other. While we will remain
conservative in our new loan production until economic conditions
improve, we are already seeing the positive benefits of being a
larger, stronger financial institution on our business development
efforts. Given the strength of our franchise and the superior level
of service, solutions and expertise that we can provide, we believe
we have great opportunities to consistently add attractive client
relationships that provide both operating deposit accounts and high
quality loans, particularly given the significant changes we have
seen over the past two years in the California banking landscape
with many competitors exiting or significantly pulling back from
the market. We believe we are well-positioned to deliver strong
financial performance for our shareholders in 2024, as well as
capitalize on the strong market position we have created in
California to greatly enhance the value of our franchise in the
coming years.”
Presentation of Results – PacWest Bancorp Merger
On November 30, 2023, PacWest Bancorp merged with and into Banc
of California (the “Merger”), with Banc of California continuing as
the surviving legal corporation and Banc of California concurrently
closed a $400 million equity capital raise. The Merger was
accounted for as a reverse merger using the acquisition method of
accounting, therefore, PacWest Bancorp was deemed the acquirer for
financial reporting purposes, even though Banc of California was
the legal acquirer. The Merger was an all-stock transaction and has
been accounted for as a business combination. Banc of California’s
financial results for all periods ended prior to November 30, 2023
reflect PacWest Bancorp results only on a standalone basis. In
addition, Banc of California’s reported financial results for the
three months and year ended December 31, 2023 reflect PacWest
Bancorp financial results only on a standalone basis until the
closing of the Merger on November 30, 2023, and results of the
combined company for the month of December 2023. The number of
shares issued and outstanding, earnings per share, and all
references to share quantities or metrics of Banc of California
have been retrospectively restated to reflect the equivalent number
of shares issued in the Merger as the Merger was accounted for as a
reverse merger. Under the reverse merger method of accounting, the
assets and liabilities of legacy Banc of California as of November
30, 2023 were recorded at their respective estimated fair
values.
The Company recorded a net loss of $492.9 million, or a loss of
$4.55 per diluted common share, for the fourth quarter of 2023.
This compares to a net loss of $33.3 million, or a loss of $0.42
per diluted common share, for the third quarter of 2023. The fourth
quarter of 2023 included pre-tax amounts of $442.4 million of
losses on security sales relating to our previously announced
balance sheet repositioning strategy, merger costs of $111.8
million, an FDIC special assessment of $32.7 million, and an
initial credit provision on acquired loans of $22.2 million, in
each case in connection with our merger with PacWest Bancorp. The
fourth quarter also included borrowing facility and termination
fees of $19.5 million, additional expenses related to the HOA
business of $16.8 million, and various nonrecurring expenses of
approximately $8.7 million.
INCOME STATEMENT HIGHLIGHTS
Three Months Ended
Year Ended
December 31,
September 30,
December 31,
December 31,
Summary Income Statement
2023
2023
2022
2023
2022
(In thousands) Total interest income
$
467,240
$
446,084
$
473,023
$
1,971,000
$
1,556,489
Total interest expense
316,189
315,355
150,084
1,223,872
265,727
Net interest income
151,051
130,729
322,939
747,128
1,290,762
Provision for credit losses
47,000
-
10,000
52,000
24,500
(Loss) gain on sale of loans
(3,526
)
(1,901
)
388
(161,346
)
518
Loss on sale of securities
(442,413
)
-
(49,302
)
(442,413
)
(50,321
)
Other noninterest income
45,537
45,709
29,958
155,474
124,630
Total noninterest (loss) income
(400,402
)
43,808
(18,956
)
(448,285
)
74,827
Total revenue
(249,351
)
174,537
303,983
298,843
1,365,589
Goodwill impairment
-
-
29,000
1,376,736
29,000
Acquisition, integration and reorganization costs
111,800
9,925
5,703
142,633
5,703
Other noninterest expense
251,838
191,178
192,129
938,812
738,818
Total noninterest expense
363,638
201,103
226,832
2,458,181
773,521
(Loss) earnings before income taxes
(659,989
)
(26,566
)
67,151
(2,211,338
)
567,568
Income tax (benefit) expense
(177,034
)
(3,222
)
17,642
(312,201
)
143,955
Net (loss) earnings
(482,955
)
(23,344
)
49,509
(1,899,137
)
423,613
Preferred stock dividends
9,947
9,947
9,947
39,788
19,339
Net (loss) earnings available to common and equivalent stockholders
$
(492,902
)
$
(33,291
)
$
39,562
$
(1,938,925
)
$
404,274
Net Interest Income
Q4-2023 vs Q3-2023
Net interest income increased by $20.3 million, or 15.5%, to
$151.1 million for the fourth quarter due primarily to a change in
the interest-earning asset mix combined with net interest margin
expansion.
Average interest-earning assets of $35.4 billion decreased by
$0.4 billion from the prior quarter due to the sales of loans and
securities, partially offset by acquired legacy Banc of California
interest-earning assets. The net interest margin increased by 24
basis points to 1.69% for the fourth quarter as the yield on
average interest-earning assets increased by 29 basis points, while
the cost of average total funds increased by 7 basis points. The
net interest margin for the month of December 2023 was 2.15% and
the estimated spot net interest margin at December 31, 2023 was
2.75%.
The yield on average interest-earning assets increased by 29
basis points to 5.23% for the fourth quarter from 4.94% in the
third quarter due mainly to the change in the interest-earning
asset mix driven by the increase in the balance of average loans
and leases as a percentage of average interest-earning assets from
62% to 67%, the decrease in the balance of average investment
securities as a percentage of average interest-earning assets from
19% to 17%, and the balance of average deposits in financial
institutions as a percentage of average interest-earning assets
from 19% to 16%. The yield on average loans and leases increased by
28 basis points to 5.82% during the fourth quarter as a result of
higher discount accretion income and changes in portfolio mix from
loan sales and acquired loans and leases.
The cost of average total funds increased by 7 basis points to
3.68% for the fourth quarter from 3.61% in the third quarter due
mainly to higher market interest rates on borrowings. The cost of
average total deposits decreased by 4 basis points to 2.94% for the
fourth quarter compared to 2.98% in the third quarter. The cost of
average interest-bearing liabilities increased by 17 basis points
to 4.51% for the fourth quarter from 4.34% in the third quarter.
Average noninterest-bearing deposits increased by $0.5 billion for
the fourth quarter compared to the third quarter and average total
deposits increased by $0.6 billion.
The estimated spot rates, or exit run-rates, at December 31,
2023 were 6.18% for loans and leases and 5.63% for interest-earning
assets. The spot rates at December 31, 2023 were 2.69% for total
deposits and 2.99% for the total cost of funds.
Full Year 2023 vs Full Year
2022
Net interest income decreased by $543.6 million, or 42.1%, to
$747.1 million for the year ended December 31, 2023 from the same
period in 2022, due primarily to higher funding costs from higher
market interest rates, changes in the balance sheet mix, and the
enhanced liquidity management strategies in the first half of 2023
due to the operating environment.
The net interest margin decreased by 151 basis points to 1.98%
as the cost of average total funds increased by 260 basis points,
while the yield on average interest-earning assets increased by 101
basis points.
The yield on average interest-earning assets increased by 101
basis points to 5.21% for the year ended December 31, 2023 from
4.20% for the same period in 2022 due mainly to higher market
interest rates, partially offset by the changes in the mix of
average interest-earning assets. The yield on average loans and
leases increased by 85 basis points to 5.92% for the year ended
December 31, 2023 compared to the year ended December 31, 2022. The
yield on average investment securities increased by 20 basis points
to 2.56% for the same period. Average loans and leases represented
67% of average interest-earnings assets for the year ended December
31, 2023 compared to 70% for the year ended December 31, 2022.
Average loans and leases decreased by $714.1 million due mainly to
loan sales during the year to increase liquidity to fund potential
deposit outflows.
The cost of average total funds increased by 260 basis points to
3.34% for the year ended December 31, 2023 from 0.74% for the year
ended December 31, 2022 due mainly to higher market interest rates
and changes in the balance sheet mix. The cost of average total
deposits increased by 202 basis points to 2.61% for the year ended
December 31, 2023 compared to the same period in 2022. The cost of
average interest-bearing liabilities increased by 296 basis points
to 4.14% for the year ended December 31, 2023 compared to 1.18% for
the same period in 2022 driven primarily by a 249 basis point
increase in the cost of average interest-bearing deposits to 3.46%
from 0.97% for the same period in 2022. The increase in the cost of
these funding sources was due mainly to the impact of higher market
interest rates. Average noninterest-bearing deposits decreased by
$6.5 billion for the year ended December 31, 2023 compared to the
same period in 2022 and average total deposits decreased by $5.6
billion. Average noninterest-bearing deposits represented 25% of
total average deposits for the year ended December 31, 2023
compared to 40% for the same period in 2022.
Provision For Credit Losses
Q4-2023 vs Q3-2023
The provision for credit losses was $47.0 million for the fourth
quarter and included an initial provision of $22.2 million for
acquired legacy Banc of California non-PCD loans. Outside this
initial provision, the quarter’s expense was driven by $13.2
million of net charge-offs and a need for increased quantitative
reserves resulting from revising the economic forecast to reflect a
60% probability weighting on recessionary scenarios and updating
expected prepayment speeds based on a high interest rate
environment. There was no provision for credit losses for the third
quarter which included an $8.0 million provision for loan losses
related to higher qualitative reserves on office loans, offset by
an $8.0 million reversal of the provision for credit losses related
to lower unfunded loan commitments.
Full Year 2023 vs Full Year
2022
During the year ended December 31, 2023, the provision for
credit losses was $52.0 million and included a $113.5 million
provision for loan losses, offset partially by a $61.5 million
reversal of the provision for credit losses related to lower
unfunded loan commitments. The provision for loan losses included
an initial provision of $22.2 million for acquired legacy Banc of
California non-PCD loans. The provision for credit losses was $23.0
million during the year ended December 31, 2022, and included a
$5.0 million provision for loan losses and an $18.0 million
provision related to higher unfunded loan commitments.
Noninterest Income
Q4-2023 vs Q3-2023
Noninterest income decreased by $444.2 million to a loss of
$400.4 million for the fourth quarter due almost entirely to an
increase in the loss on sale of securities of $442.4 million. As
part of our balance sheet repositioning strategy, we sold $2.7
billion of legacy PacWest available-for-sale securities in the
fourth quarter resulting in losses of $442.4 million. Additionally,
we sold $0.8 billion of legacy Banc of California
available-for-sale securities in December 2023 resulting in no gain
or loss as these securities were marked to fair value at the close
of the merger.
Full Year 2023 vs Full Year
2022
Noninterest income for the year ended December 31, 2023
decreased by $523.1 million to a loss of $448.3 million compared to
the same period in 2022 due mainly to a $392.1 million increase in
the loss on the sale of securities and a $161.9 million increase in
the loss on the sale of loans, offset partially by higher dividends
and gains from equity investments, higher leased equipment income,
and higher other income primarily from legal settlements totaling
$22.1 million.
Noninterest Expense
Q4-2023 vs Q3-2023
Noninterest expense increased by $162.5 million to $363.6
million for the fourth quarter compared to the third quarter. The
increase was due mainly to acquisition, integration and
reorganization costs of $111.8 million related to our merger with
PacWest, an increase in insurance and assessments expense of $21.7
million, which includes $32.7 million for the FDIC special
assessment, an increase of $18.9 million in customer related
expense, and higher compensation expense of $17.7 million.
Full Year 2023 vs Full Year
2022
Noninterest expense for the year ended December 31, 2023
increased by $1.7 billion to $2.5 billion compared to the same
period in 2022. The increase was due mainly to higher (i) goodwill
impairment of $1.3 billion, (ii) acquisition, integration and
reorganization costs of $136.9 million, (iii) regulatory
assessments of $110.2 million due to the special FDIC assessment
and the generally-applicable FDIC increased assessment rates in
2023, (iv) customer related expense of $68.8 million, and (v) other
expense of $96.8 million, including $106.8 million of unfunded
commitments fair value loss adjustments, offset partially by lower
compensation expense of $74.5 million.
Income Taxes
Q4-2023 vs Q3-2023
An income tax benefit of $177.0 million was recorded for the
fourth quarter resulting in an effective tax rate of 26.8% compared
to a benefit of $3.2 million for the third quarter and an effective
tax rate of 12.1%.
Full Year 2023 vs Full Year
2022
Income tax benefit totaled $312.2 million for the year ended
December 31, 2023, representing an effective tax rate of 14.1%,
compared to tax expense of $144.0 million and an effective tax rate
of 25.4% for the year ended December 31, 2022. The lower effective
tax rate in 2023 was primarily due to the effect of the
non-deductible goodwill impairment.
BALANCE SHEET HIGHLIGHTS
December 31,
September 30,
December 31,
Increase (Decrease)
Selected Balance Sheet Items
2023
2023
2022
CQ vs PQ
CQ vs PYQ
(In thousands) Cash and cash equivalents
$
5,377,576
$
6,069,667
$
2,240,222
$
(692,091
)
$
3,137,354
Securities available-for-sale
2,346,864
4,487,172
4,843,487
(2,140,308
)
(2,496,623
)
Securities held-to-maturity
2,287,291
2,282,586
2,269,135
4,705
18,156
Loan held for investment, net of deferred fees
25,489,687
21,920,946
28,609,129
3,568,741
(3,119,442
)
Total assets
38,534,064
36,877,833
41,228,936
1,656,231
(2,694,872
)
Noninterest-bearing deposits
$
7,774,254
$
5,579,033
$
11,212,357
$
2,195,221
$
(3,438,103
)
Total deposits
30,401,769
26,598,681
33,936,334
3,803,088
(3,534,565
)
Borrowings
2,911,322
6,294,525
1,764,030
(3,383,203
)
1,147,292
Total liabilities
35,143,299
34,478,556
37,278,405
664,743
(2,135,106
)
Total stockholders' equity
3,390,765
2,399,277
3,950,531
991,488
(559,766
)
Securities
The balance of securities held-to-maturity (“HTM”) remained
consistent through the fourth quarter and totaled $2.3 billion at
December 31, 2023. As of December 31, 2023, HTM securities had
aggregate unrealized net after-tax losses in AOCI of $181.4 million
remaining from the balance established at the time of transfer on
June 1, 2022. These HTM unrealized losses are related to changes in
overall interest rates.
Securities available-for-sale (“AFS”) decreased by $2.1 billion
during the fourth quarter to $2.3 billion at December 31, 2023, due
primarily to legacy PacWest securities sales of $2.7 billion,
offset partially by a reduction in the unrealized net pre-tax
losses. The decrease in unrealized net losses was due to the impact
of lower market interest rate forward curves. AFS securities had
aggregate unrealized net after-tax losses in AOCI of $252.2
million. These AFS unrealized net losses related primarily to
changes in overall interest rates and spreads and the resulting
impact on valuations.
Loans
The following table sets forth the composition, by loan
category, of our loan portfolio as of the dates indicated:
December 31,
September 30,
June 30,
March 31,
December 31,
Composition of Loans and Leases
2023
2023
2023
2023
2022
(Dollars in thousands) Real estate mortgage: Commercial
$
5,026,497
$
3,526,308
$
3,610,320
$
3,808,751
$
3,846,831
Multi-family
6,025,179
5,279,659
5,304,544
5,523,320
5,607,865
Other residential
5,060,309
5,228,524
5,373,178
6,075,540
6,275,628
Total real estate mortgage
16,111,985
14,034,491
14,288,042
15,407,611
15,730,324
Real estate construction and land: Commercial
759,585
465,266
415,997
910,327
898,592
Residential
2,399,684
2,272,271
2,049,526
3,698,113
3,253,580
Total real estate construction and land
3,159,269
2,737,537
2,465,523
4,608,440
4,152,172
Total real estate
19,271,254
16,772,028
16,753,565
20,016,051
19,882,496
Commercial: Asset-based
2,189,085
2,287,893
2,357,098
2,068,327
5,140,209
Venture capital
1,446,362
1,464,160
1,723,476
2,058,237
2,033,302
Other commercial
2,129,860
1,002,377
1,014,212
1,102,543
1,108,451
Total commercial
5,765,307
4,754,430
5,094,786
5,229,107
8,281,962
Consumer
453,126
394,488
409,859
427,223
444,671
Total loans and leases held for investment, net of deferred fees
$
25,489,687
$
21,920,946
$
22,258,210
$
25,672,381
$
28,609,129
Total unfunded loan commitments
$
5,578,907
$
5,289,221
$
5,845,375
$
9,776,789
$
11,110,264
Composition as % of Total
December 31,
September 30,
June 30,
March 31,
December 31,
Loans and Leases
2023
2023
2023
2023
2022
Real estate mortgage: Commercial
20
%
16
%
16
%
15
%
13
%
Multi-family
23
%
24
%
24
%
21
%
20
%
Other residential
20
%
24
%
24
%
24
%
22
%
Total real estate mortgage
63
%
64
%
64
%
60
%
55
%
Real estate construction and land: Commercial
3
%
2
%
2
%
4
%
3
%
Residential
9
%
10
%
9
%
14
%
11
%
Total real estate construction and land
12
%
12
%
11
%
18
%
14
%
Total real estate
75
%
76
%
75
%
78
%
69
%
Commercial: Asset-based
9
%
10
%
11
%
8
%
18
%
Venture capital
6
%
7
%
8
%
8
%
7
%
Other commercial
8
%
5
%
4
%
4
%
4
%
Total commercial
23
%
22
%
23
%
20
%
29
%
Consumer
2
%
2
%
2
%
2
%
2
%
Total loans and leases held for investment, net of deferred fees
100
%
100
%
100
%
100
%
100
%
Total loans and leases ended the fourth quarter of 2023 at $25.5
billion, up $3.6 billion from $21.9 billion at September 30, 2023,
due primarily to the addition of $6.1 billion of legacy Banc of
California loans at fair value, partially offset by sales of legacy
Banc of California loans totaling $2.2 billion in December as part
of the balance sheet repositioning. The loan sales consisted of
$1.5 billion of single-family loans and $0.7 billion of
multi-family loans. Loan fundings were $212.2 million in the fourth
quarter at a weighted-average rate of 7.37%.
Deposits and Client Investment Funds
The following table sets forth the composition of our deposits
at the dates indicated:
December 31,
September 30,
June 30,
March 31,
December 31,
Composition of Deposits
2023
2023
2023
2023
2022
(Dollars in thousands) Noninterest-bearing checking
$
7,774,254
$
5,579,033
$
6,055,358
$
7,030,759
$
11,212,357
Interest-bearing: Checking
7,808,764
7,038,808
7,112,807
5,360,622
7,938,911
Money market
6,187,889
5,424,347
5,678,323
8,195,670
9,469,586
Savings
1,997,989
1,441,700
897,277
671,918
577,637
Certificates of deposit: Non-brokered
3,139,270
3,038,005
2,725,265
2,502,914
2,434,414
Brokered
3,493,603
4,076,788
5,428,053
4,425,678
2,303,429
Total certificates of deposit
6,632,873
7,114,793
8,153,318
6,928,592
4,737,843
Total interest-bearing
22,627,515
21,019,648
21,841,725
21,156,802
22,723,977
Total deposits
$
30,401,769
$
26,598,681
$
27,897,083
$
28,187,561
$
33,936,334
December 31,
September 30,
June 30,
March 31,
December 31,
Composition as % of Total
Deposits
2023
2023
2023
2023
2022
Noninterest-bearing checking
26
%
21
%
22
%
25
%
33
%
Interest-bearing: Checking
26
%
27
%
26
%
19
%
23
%
Money market
20
%
20
%
20
%
29
%
28
%
Savings
6
%
5
%
3
%
2
%
2
%
Certificates of deposit: Non-brokered
10
%
12
%
10
%
9
%
7
%
Brokered
12
%
15
%
19
%
16
%
7
%
Total certificates of deposit
22
%
27
%
29
%
25
%
14
%
Total interest-bearing
74
%
79
%
78
%
75
%
67
%
Total deposits
100
%
100
%
100
%
100
%
100
%
Total deposits increased by $3.8 billion during the fourth
quarter of 2023 to $30.4 billion at December 31, 2023, due
primarily to balances acquired in the merger, partially offset by a
decrease in brokered deposits.
Noninterest-bearing checking totaled $7.77 billion and
represented 26% of total deposits at December 31, 2023, compared to
$5.58 billion, or 21% of total deposits, at September 30, 2023.
Period-end noninterest-bearing deposit balance and percentage both
increased in the quarter primarily due to balances acquired in the
merger.
Insured deposits of $23.1 billion represented 76% of total
deposits at December 31, 2023, compared to insured deposits of
$21.6 billion or 81% of total deposits at September 30, 2023.
In addition to deposit products, we also offer alternative,
non-depository corporate treasury solutions for select clients to
invest excess liquidity. These alternative options include
investments managed by BofCal Asset Management Inc. (“BAM”), our
registered investment advisor subsidiary, and third-party sweep
products. Total off-balance sheet client investment funds were $0.7
billion as of September 30, 2023 and decreased to $0.6 billion at
December 31, 2023, of which $0.2 billion was managed by BAM.
Borrowings
Borrowings decreased by $3.4 billion from $6.3 billion at
September 30, 2023, to $2.9 billion at year-end as proceeds from
asset sales were used to pay down the Bank Term Funding Program
balance by $2.3 billion and pay off a $1.3 billion repurchase
agreement. We chose to carry higher on-balance sheet liquidity
while we executed the balance sheet repositioning and have the
ability to strategically pay down or pay off the $2.6 billion
remaining Bank Term Funding Program balance at our discretion.
Equity
During the fourth quarter, total stockholders’ equity increased
by $1.0 billion to $3.4 billion and tangible common equity(1)
increased by $651.6 million to $2.5 billion at December 31, 2023.
The increase in total stockholders’ equity for the fourth quarter
resulted from Banc of California shares issued in exchange for
PacWest Bancorp shares as Merger consideration and shares issued in
connection with the $400 million capital raise and lower
accumulated other comprehensive loss, partially offset by the net
loss in the fourth quarter and by dividends declared and paid.
At December 31, 2023, book value per common share decreased to
$17.12, compared to $24.12 at September 30, 2023, which was
retrospectively restated under the reverse merger method of
accounting. The linked-quarter change in book value per share
reflects Banc of California shares issued as Merger consideration
in exchange for PacWest Bancorp shares and in connection with the
$400 million capital raise, the net loss in the fourth quarter and
lower accumulated other comprehensive loss. Tangible book value per
common share(1) decreased to $14.96, compared to $23.81 restated at
September 30, 2023, mainly as a result of Banc of California shares
issued in exchange for PacWest Bancorp shares as Merger
consideration and shares issued in connection with the $400 million
capital raise combined with $199 million of goodwill and $145
million of core deposit intangible assets added through the
merger.
(1)
Non-GAAP measures; refer to
section 'Non-GAAP Measures'
CAPITAL AND LIQUIDITY
Capital ratios remain strong with total risk-based capital at
16.40% and a tier 1 leverage ratio of 9.00% at December 31, 2023.
The following table sets forth our regulatory capital ratios as of
the dates indicated:
December 31,
September 30,
June 30,
March 31,
December 31,
Capital Ratios
2023 (1)
2023
2023
2023
2022
Banc of California, Inc. Total risk-based capital
ratio
16.40
%
17.83
%
17.61
%
14.21
%
13.61
%
Tier 1 risk-based capital ratio
12.42
%
13.84
%
13.70
%
11.15
%
10.61
%
Common equity tier 1 capital ratio
10.12
%
11.23
%
11.16
%
9.21
%
8.70
%
Tier 1 leverage capital ratio
9.00
%
8.65
%
7.76
%
8.33
%
8.61
%
Banc of California Total risk-based capital ratio
15.73
%
16.37
%
16.07
%
12.94
%
12.34
%
Tier 1 risk-based capital ratio
13.24
%
13.72
%
13.48
%
10.89
%
10.32
%
Common equity tier 1 capital ratio
13.24
%
13.72
%
13.48
%
10.89
%
10.32
%
Tier 1 leverage capital ratio
9.62
%
8.57
%
7.62
%
8.14
%
8.39
%
(1) Capital information for December 31, 2023 is
preliminary.
At December 31, 2023, immediately available cash and cash
equivalents were $5.2 billion, a decrease of $0.7 billion from
September 30, 2023. Combined with total available borrowing
capacity of $12.0 billion, total liquid assets and unused borrowing
capacity of $17.2 billion was 2.5 times greater than total
uninsured and uncollateralized deposits of $6.9 billion.
CREDIT QUALITY
December 31,
September 30,
June 30,
March 31,
December 31,
Asset Quality Information and
Ratios
2023
2023
2023
2023
2022
(Dollars in thousands) Delinquent loans and leases held
for investment: 30 to 89 days delinquent
$
113,307
$
49,970
$
57,428
$
144,431
$
105,845
90+ days delinquent
30,882
77,327
62,322
49,936
70,922
Total delinquent loans and leases
$
144,189
$
127,297
$
119,750
$
194,367
$
176,767
Total delinquent loans and leases to loans and leases held
for investment
0.57
%
0.58
%
0.54
%
0.76
%
0.62
%
Nonperforming assets, excluding loans held for sale:
Nonaccrual loans and leases
$
62,527
$
125,396
$
104,886
$
87,124
$
103,778
90+ days delinquent loans and still accruing
11,750
-
-
-
-
Total nonperforming loans and leases ("NPLs")
74,277
125,396
104,886
87,124
103,778
Foreclosed assets, net
7,394
6,829
8,426
2,135
5,022
Total nonperforming assets ("NPAs")
$
81,671
$
132,225
$
113,312
$
89,259
$
108,800
Allowance for loan and lease losses
$
281,687
$
222,297
$
219,234
$
210,055
$
200,732
Allowance for loan and lease losses to NPLs
379.24
%
177.28
%
209.02
%
241.10
%
193.42
%
NPLs to loans and leases held for investment
0.29
%
0.57
%
0.47
%
0.34
%
0.36
%
NPAs to total assets
0.21
%
0.36
%
0.30
%
0.20
%
0.26
%
At December 31, 2023, total delinquent loans and leases were
$144.2 million, compared to $127.3 million at September 30, 2023.
The increase was due mostly to delinquent Civic loans and leases
acquired from legacy Banc of California. Total delinquent loans and
leases as a percentage of total loans and leases declined to 0.57%
at December 31, 2023, as compared to 0.58% at September 30,
2023.
At December 31, 2023, nonperforming loans were $74.3 million,
and included $31.0 million of other residential loans (mostly
Civic), $27.4 million of CRE loans, $14.0 million of commercial and
industrial loans, $1.0 million of multi-family loans and $0.8
million of consumer loans. During the fourth quarter, nonperforming
loans decreased by $51.1 million due to transfers to held for sale
of $44.0 million, payoffs and paydowns of $26.6 million, net
charge-offs of $7.9 million, and borrowers that became current of
$2.0 million, offset partially by additions (including acquired
loans) of $29.5 million. Nonperforming loans and leases as a
percentage of total loans and leases declined to 0.29% at December
31, 2023 compared to 0.57% at September 30, 2023.
At December 31, 2023, nonperforming assets included $7.4 million
of other real estate owned, consisting entirely of single-family
residences.
ALLOWANCE FOR CREDIT LOSSES - LOANS
Three Months Ended
Year Ended
December 31,
September 30,
December 31,
December 31,
Allowance for Credit Losses -
Loans
2023
2023
2022
2023
2022
(Dollars in thousands) Allowance for loan and lease
losses ("ALLL"): Balance at beginning of period
$
222,297
$
219,234
$
189,327
$
200,732
$
200,564
Initial ALLL on acquired PCD loans
25,623
-
-
25,623
-
Charge-offs
(14,628
)
(6,695
)
(3,352
)
(63,428
)
(14,037
)
Recoveries
1,395
1,758
757
5,260
9,205
Net charge-offs
(13,233
)
(4,937
)
(2,595
)
(58,168
)
(4,832
)
Provision for loan losses
47,000
(1)
8,000
14,000
113,500
5,000
Balance at end of period
$
281,687
$
222,297
$
200,732
$
281,687
$
200,732
Reserve for unfunded loan commitments ("RUC"):
Balance at beginning of period
$
29,571
$
37,571
$
95,071
$
91,071
$
73,071
(Negative provision) provision for credit losses
-
(8,000
)
(4,000
)
(61,500
)
18,000
Balance at end of period
$
29,571
$
29,571
$
91,071
$
29,571
$
91,071
Allowance for credit losses ("ACL") - Loans:
Balance at beginning of period
$
251,868
$
256,805
$
284,398
$
291,803
$
273,635
Initial ALLL on acquired PCD loans
25,623
-
-
25,623
-
Charge-offs
(14,628
)
(6,695
)
(3,352
)
(63,428
)
(14,037
)
Recoveries
1,395
1,758
757
5,260
9,205
Net charge-offs
(13,233
)
(4,937
)
(2,595
)
(58,168
)
(4,832
)
Provision for credit losses
47,000
(1)
-
10,000
52,000
23,000
Balance at end of period
$
311,258
$
251,868
$
291,803
$
311,258
$
291,803
ALLL to loans and leases held for investment
1.11
%
1.01
%
0.70
%
1.11
%
0.70
%
ACL to loans and leases held for investment
1.22
%
1.15
%
1.02
%
1.22
%
1.02
%
ACL to NPLs
419.05
%
200.86
%
281.18
%
419.05
%
281.18
%
ACL to NPAs
381.11
%
190.48
%
268.20
%
381.11
%
268.20
%
Annualized net charge-offs to average loans and leases
0.22
%
0.09
%
0.04
%
0.23
%
0.02
%
(1) Includes $22.2 million initial provision related to
non-PCD loans acquired during the period.
The allowance for credit losses, which includes the reserve for
unfunded loan commitments, totaled $311.3 million, or 1.22% of
total loans and leases, at December 31, 2023, compared to $251.9
million, or 1.15% of total loans and leases, at September 30, 2023.
The $59.4 million increase in the allowance includes the addition
of $25.6 million related to legacy Banc of California PCD loans
booked at the Merger’s close and did not affect the income
statement. The ACL provision for the fourth quarter was $47.0
million, which includes an initial provision of $22.2 million for
acquired legacy Banc of California non-PCD loans. Outside this
initial provision, the quarter’s expense was driven by $13.2
million of net charge-offs and a need for increased quantitative
reserves resulting from revising the economic forecast to reflect a
60% probability weighting on recessionary scenarios and updating
expected prepayment speeds based on a high interest rate
environment. The ACL coverage of nonperforming loans was 419% at
December 31, 2023 compared to 201% at September 30, 2023.
Net charge-offs were 0.22% of average loans and leases
(annualized) for the fourth quarter of 2023, compared to 0.09% for
the third quarter of 2023. The increase in net charge-offs in the
fourth quarter of 2023 was due primarily to $5.3 million of
charge-offs related to the transfer of Civic loans to held for
sale. At December 31, 2023, nonperforming assets were $81.7
million, or 0.21% of total assets, compared to $132.2 million, or
0.36% of total assets, as of September 30, 2023.
Conference Call
The Company will host a conference call to discuss its fourth
quarter 2023 financial results at 10:00 a.m. Pacific Time (PT) on
Thursday, January 25, 2023. Interested parties are welcome to
attend the conference call by dialing (888) 317-6003 and
referencing event code 4864870. 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 7597241.
About Banc of California, Inc.
Banc of California, Inc. (NYSE: BANC) is a bank holding company
headquartered in Los Angeles with one wholly-owned banking
subsidiary, Banc of California (the “bank”). Banc of California is
one of the nation’s premier relationship-based business banks
focused on providing banking and treasury management services to
small-, middle-market, and venture-backed businesses. Banc of
California offers a broad range of loan and deposit products and
services through more than 90 full-service branches throughout
California and in Denver, Colorado, and Durham, North Carolina, as
well as full-stack payment processing solutions through its
subsidiary, Deepstack Technologies. Banc of California also serves
the Community Association Management industry nationwide with its
technology-forward platform SmartStreet™. The bank is committed to
its local communities by supporting organizations that provide
financial literacy and job training, small business support,
affordable housing, and more. 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. Words or phrases such as
“believe,” “will,” “should,” “will likely result,” “are expected
to,” “will continue,” “is anticipated,” “estimate,” “project,”
“plans,” “strategy,” or similar expressions are intended to
identify these forward-looking statements. You are cautioned not to
place undue reliance on any forward-looking statements. 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. (the
“Company”) with the Securities and Exchange Commission (“SEC”). The
Company undertakes no obligation to revise or publicly release any
revision or update to these forward-looking statements to reflect
events or circumstances that occur after the date on which such
statements were made, except as required by law.
Factors that could cause actual results to differ materially
from the results anticipated or projected include, but are not
limited to: (i) changes in general economic conditions, either
nationally or in our market areas, including the impact of supply
chain disruptions, and the risk of recession or an economic
downturn; (ii) changes in the interest rate environment, including
the recent and potential future increases in the FRB benchmark
rate, which could adversely affect our revenue and expenses, the
value of assets and obligations, the availability and cost of
capital and liquidity, and the impacts of continuing inflation;
(iii) the credit risks of lending activities, which may be affected
by deterioration in real estate markets and the financial condition
of borrowers, and the operational risk of lending activities,
including the effectiveness of our underwriting practices and the
risk of fraud, any of which may lead to increased loan
delinquencies, losses, and non-performing assets, and may result in
our allowance for credit losses not being adequate; (iv)
fluctuations in the demand for loans, and fluctuations in
commercial and residential real estate values in our market area;
(v) the quality and composition of our securities portfolio; (vi)
our ability to develop and maintain a strong core deposit base,
including among our venture banking clients, or other low cost
funding sources necessary to fund our activities particularly in a
rising or high interest rate environment; (vii) the rapid
withdrawal of a significant amount of demand deposits over a short
period of time; (viii) the costs and effects of litigation; (ix)
risks related to the Company’s acquisitions, including disruption
to current plans and operations; difficulties in customer and
employee retention; fees, expenses and charges related to these
transactions being significantly higher than anticipated; and our
inability to achieve expected revenues, cost savings, synergies,
and other benefits; and in the case of our recent acquisition of
PacWest Bancorp (“PacWest”), reputational risk, regulatory risk and
potential adverse reactions of the Company's or PacWest's
customers, suppliers, vendors, employees or other business
partners; (x) results of examinations by regulatory authorities of
the Company and the possibility that any such regulatory authority
may, among other things, limit our business activities, restrict
our ability to invest in certain assets, refrain from issuing an
approval or non-objection to certain capital or other actions,
increase our allowance for credit losses, result in write-downs of
asset values, restrict our ability or that of our bank subsidiary
to pay dividends, or impose fines, penalties or sanctions; (xi)
legislative or regulatory changes that adversely affect our
business, including changes in tax laws and policies, accounting
policies and practices, privacy laws, and regulatory capital or
other rules; (xii) the risk that our enterprise risk management
framework may not be effective in mitigating risk and reducing the
potential for losses; (xiii) errors in estimates of the fair values
of certain of our assets and liabilities, which may result in
significant changes in valuation; (xiv) failures or security
breaches with respect to the network, applications, vendors and
computer systems on which we depend, including due to cybersecurity
threats; (xv) our ability to attract and retain key members of our
senior management team; (xvi) the effects of climate change, severe
weather events, natural disasters, pandemics, epidemics and other
public health crises, acts of war or terrorism, and other external
events on our business; (xvii) the impact of bank failures or other
adverse developments at other banks on general investor sentiment
regarding the stability and liquidity of banks; (xviii) the
possibility that our recorded goodwill could become impaired, which
may have an adverse impact on our earnings and capital; (xix) our
existing indebtedness, together with any future incurrence of
additional indebtedness, could adversely affect our ability to
raise additional capital and to meet our debt obligations; (xx) the
risk that we may incur significant losses on future asset sales;
and (xxi) other economic, competitive, governmental, regulatory,
and technological factors affecting our operations, pricing,
products and services and the other risks described in this press
release and from time to time in other documents that we file with
or furnish to the SEC.
BANC OF CALIFORNIA, INC. CONSOLIDATED STATEMENTS OF
FINANCIAL CONDITION (UNAUDITED)
December 31,
September 30,
June 30,
March 31,
December 31,
2023
2023
2023
2023
2022
(In thousands) ASSETS: Cash and due from banks
$
202,427
$
182,261
$
208,300
$
218,830
$
212,273
Interest-earning deposits in financial institutions
5,175,149
5,887,406
6,489,847
6,461,306
2,027,949
Total cash and cash equivalents
5,377,576
6,069,667
6,698,147
6,680,136
2,240,222
Securities available-for-sale
2,346,864
4,487,172
4,708,519
4,848,607
4,843,487
Securities held-to-maturity
2,287,291
2,282,586
2,278,202
2,273,650
2,269,135
FRB and FHLB stock
126,346
17,250
17,250
147,150
34,290
Total investment securities
4,760,501
6,787,008
7,003,971
7,269,407
7,146,912
Loans held for sale
122,757
188,866
478,146
2,796,208
65,076
Gross loans and leases held for investment
25,534,730
21,969,789
22,311,292
25,770,912
28,726,016
Deferred fees, net
(45,043
)
(48,843
)
(53,082
)
(98,531
)
(116,887
)
Total loans and leases held for investment, net of deferred fees
25,489,687
21,920,946
22,258,210
25,672,381
28,609,129
Allowance for loan and lease losses
(281,687
)
(222,297
)
(219,234
)
(210,055
)
(200,732
)
Total loans and leases held for investment, net
25,208,000
21,698,649
22,038,976
25,462,326
28,408,397
Equipment leased to others under operating leases
344,325
352,330
380,022
399,972
404,245
Premises and equipment, net
146,798
50,236
57,078
60,358
54,315
Foreclosed assets, net
7,394
6,829
8,426
2,135
5,022
Goodwill
198,627
-
-
-
1,376,736
Core deposit and customer relationship intangibles, net
165,477
24,192
26,581
28,970
31,381
Deferred tax asset, net
739,111
506,248
426,304
342,557
281,848
Other assets
1,463,498
1,193,808
1,219,599
1,260,912
1,214,782
Total assets
$
38,534,064
$
36,877,833
$
38,337,250
$
44,302,981
$
41,228,936
LIABILITIES: Noninterest-bearing deposits
$
7,774,254
$
5,579,033
$
6,055,358
$
7,030,759
$
11,212,357
Interest-bearing deposits
22,627,515
21,019,648
21,841,725
21,156,802
22,723,977
Total deposits
30,401,769
26,598,681
27,897,083
28,187,561
33,936,334
Borrowings
2,911,322
6,294,525
6,357,338
11,881,712
1,764,030
Subordinated debt
936,599
870,896
870,378
868,815
867,087
Accrued interest payable and other liabilities
893,609
714,454
679,256
593,416
710,954
Total liabilities
$
35,143,299
$
34,478,556
$
35,804,055
$
41,531,504
$
37,278,405
STOCKHOLDERS' EQUITY: Preferred stock
$
498,516
$
498,516
$
498,516
$
498,516
$
498,516
Voting and non-voting common stock (1)
1,690
1,231
1,233
1,232
1,230
Additional paid-in-capital
3,840,974
2,798,611
2,799,357
2,792,536
2,821,064
Retained earnings
(518,301
)
(25,399
)
7,892
215,253
1,420,624
Accumulated other comprehensive loss, net
(432,114
)
(873,682
)
(773,803
)
(736,060
)
(790,903
)
Total stockholders’ equity
$
3,390,765
$
2,399,277
$
2,533,195
$
2,771,477
$
3,950,531
Total liabilities and stockholders’ equity
$
38,534,064
$
36,877,833
$
38,337,250
$
44,302,981
$
41,228,936
Common shares outstanding
168,951,632
78,806,969
78,939,024
78,988,424
78,973,869
(1) Includes non-voting common equivalents of $108.
BANC
OF CALIFORNIA, INC. CONSOLIDATED STATEMENTS OF EARNINGS
(LOSS) (UNAUDITED)
Three Months Ended
Year Ended
December 31,
September 30,
December 31,
December 31,
2023
2023
2022
2023
2022
(In thousands, except per share amounts) Interest
income: Loans and leases
$
346,308
$
310,392
$
404,985
$
1,496,357
$
1,312,580
Investment securities
41,280
45,326
50,292
174,996
209,751
Deposits in financial institutions
79,652
90,366
17,746
299,647
34,158
Total interest income
467,240
446,084
473,023
1,971,000
1,556,489
Interest expense: Deposits
207,760
205,982
117,591
748,423
200,449
Borrowings
92,474
94,234
19,962
416,744
25,645
Subordinated debt
15,955
15,139
12,531
58,705
39,633
Total interest expense
316,189
315,355
150,084
1,223,872
265,727
Net interest income
151,051
130,729
322,939
747,128
1,290,762
Provision for credit losses
47,000
-
10,000
52,000
24,500
Net interest income after provision for credit losses
104,051
130,729
312,939
695,128
1,266,262
Noninterest income: Service charges on deposit accounts
4,562
4,018
3,178
16,468
13,991
Other commissions and fees
8,860
7,641
11,208
38,086
43,635
Leased equipment income
12,369
14,554
12,322
63,167
50,586
(Loss) gain on sale of loans and leases
(3,526
)
(1,901
)
388
(161,346
)
518
Loss on sale of securities
(442,413
)
-
(49,302
)
(442,413
)
(50,321
)
Dividends and gains (losses) on equity investments
8,138
3,837
661
15,731
(3,389
)
Warrant (loss) income
(173
)
(88
)
(46
)
(718
)
2,490
LOCOM HFS adjustment
3,175
307
-
(8,461
)
-
Other income
8,606
15,440
2,635
31,201
17,317
Total noninterest (loss) income
(400,402
)
43,808
(18,956
)
(448,285
)
74,827
Noninterest expense: Compensation
89,354
71,642
106,124
332,353
406,839
Occupancy
15,925
15,293
14,922
61,668
60,964
Data processing
11,247
11,104
9,722
44,252
38,177
Other professional services
2,980
5,597
6,924
24,623
30,278
Insurance and assessments
60,016
38,298
7,205
135,666
25,486
Intangible asset amortization
4,230
2,389
2,629
11,419
13,576
Leased equipment depreciation
7,447
8,333
8,627
34,243
35,658
Foreclosed assets expense (income), net
1,764
(609
)
(108
)
1,520
(3,737
)
Acquisition, integration and reorganization costs
111,800
9,925
5,703
142,633
5,703
Customer related expense
45,826
26,971
18,197
124,104
55,273
Loan expense
4,446
4,243
6,150
20,458
24,572
Goodwill impairment
-
-
29,000
1,376,736
29,000
Other expense
8,603
7,917
11,737
148,506
51,732
Total noninterest expense
363,638
201,103
226,832
2,458,181
773,521
(Loss) earnings before income taxes
(659,989
)
(26,566
)
67,151
(2,211,338
)
567,568
Income tax (benefit) expense
(177,034
)
(3,222
)
17,642
(312,201
)
143,955
Net (loss) earnings
(482,955
)
(23,344
)
49,509
(1,899,137
)
423,613
Preferred stock dividends
9,947
9,947
9,947
39,788
19,339
Net (loss) earnings available to common and equivalent
stockholders
$
(492,902
)
$
(33,291
)
$
39,562
$
(1,938,925
)
$
404,274
Basic and diluted (loss) earnings per common share (1)
$
(4.55
)
$
(0.42
)
$
0.50
$
(22.71
)
$
5.14
Basic and diluted weighted average number of common shares
outstanding (1)
108,290
77,881
77,390
85,394
77,271
(1) Common shares include non-voting common equivalents that
are participating securities.
BANC OF CALIFORNIA, INC.
SELECTED FINANCIAL DATA (UNAUDITED)
Three Months Ended
Year Ended
December 31,
September 30,
December 31,
December 31,
Profitability and Other Ratios
2023
2023
2022
2023
2022
Return on average assets ("ROAA")(1)
(5.09
)%
(0.24
)%
0.48
%
(4.71
)%
1.05
%
Pre-tax, pre-provision, pre-goodwill impairment ROAA (1)(2)
(6.46
)%
(0.28
)%
1.02
%
(1.94
)%
1.53
%
Adjusted pre-tax, pre-provision, pre-goodwill impairment ROAA
(1)(2)
(0.70
)%
(0.33
)%
1.55
%
0.14
%
1.67
%
Return on average equity (1)
(68.49
)%
(3.73
)%
5.04
%
(63.42
)%
10.99
%
Return on average tangible common equity (1)(2)
(87.95
)%
(6.33
)%
12.71
%
(30.66
)%
20.52
%
Dividend payout ratio (3)
(2.42
)%
(2.38
)%
50.00
%
(1.67
)%
19.46
%
Yield on average loans and leases (1)
5.82
%
5.54
%
5.73
%
5.92
%
5.07
%
Cost of average interest-bearing deposits (1)
3.80
%
3.78
%
2.14
%
3.46
%
0.97
%
Cost of average total deposits (1)
2.94
%
2.98
%
1.37
%
2.61
%
0.59
%
Net interest spread
0.72
%
0.60
%
2.53
%
1.07
%
3.02
%
Net interest margin (1)
1.69
%
1.45
%
3.41
%
1.98
%
3.49
%
Noninterest income to total revenue (4)
160.58
%
25.10
%
(6.24
)%
(150.01
)%
5.48
%
Adjusted noninterest income to adjusted total revenue (2)(4)
18.56
%
18.31
%
8.59
%
16.07
%
8.84
%
Noninterest expense to average total assets (1)
3.83
%
2.11
%
2.19
%
6.10
%
1.91
%
Adjusted noninterest expense to average total assets (1)(2)
2.65
%
2.01
%
1.85
%
2.06
%
1.83
%
Efficiency ratio (2)(5)
127.34
%
108.51
%
53.67
%
124.91
%
51.48
%
Adjusted efficiency ratio (2)(6)
114.89
%
118.35
%
53.67
%
88.34
%
51.48
%
Average loans and leases to average deposits
84.34
%
81.03
%
82.71
%
88.32
%
76.08
%
Average investment securities to average total assets
16.01
%
18.30
%
19.01
%
16.94
%
22.53
%
Average stockholders' equity to average total assets
7.43
%
6.56
%
9.47
%
7.43
%
9.52
%
(1) Annualized. (2) Non-GAAP measure. (3) Ratio calculated
by dividing dividends declared per common share by basic earnings
per common share. (4)Total revenue equals the sum of net interest
income and noninterest income. (5) Ratio calculated by dividing
noninterest expense (less intangible asset amortization, foreclosed
assets expense, goodwill impairment, and acquisition, integration
and reorganization costs) by total revenue (less gain on sale of
securities). (6) Ratio calculated by dividing adjusted noninterest
expense by adjusted total revenue.
BANC OF CALIFORNIA, INC.
AVERAGE BALANCE, AVERAGE YIELD EARNED, AND AVERAGE COST PAID
(UNAUDITED) Three Months Ended December 31,
2023 September 30, 2023 December 31, 2022
Interest Average Interest Average
Interest Average Average Income/
Yield/ Average Income/ Yield/
Average Income/ Yield/ Balance
Expense Cost Balance Expense
Cost Balance Expense Cost (Dollars
in thousands) Assets: Loans
and leases (1)(2)(3)
$
23,608,246
$
346,308
5.82
%
$
22,226,390
$
310,392
5.54
%
$
28,192,953
$
407,135
5.73
%
Investment securities (3)
6,024,737
41,280
2.72
%
6,919,948
45,326
2.60
%
7,824,915
50,697
2.57
%
Deposits in financial institutions
5,791,739
79,652
5.46
%
6,645,335
90,366
5.40
%
1,881,950
17,746
3.74
%
Total interest-earning assets (1)
35,424,722
467,240
5.23
%
35,791,673
446,084
4.94
%
37,899,818
475,578
4.98
%
Other assets
2,215,665
2,016,085
3,252,145
Total assets
$
37,640,387
$
37,807,758
$
41,151,963
Liabilities and Stockholders' Equity: Interest checking
$
7,296,234
60,743
3.30
%
$
6,983,013
57,237
3.25
%
$
7,146,333
41,427
2.30
%
Money market
5,758,074
44,279
3.05
%
5,662,980
42,516
2.98
%
10,088,641
51,687
2.03
%
Savings
1,696,222
16,446
3.85
%
1,163,827
10,255
3.50
%
616,298
66
0.04
%
Time
6,915,504
86,292
4.95
%
7,801,880
95,974
4.88
%
3,909,130
24,411
2.48
%
Total interest-bearing deposits
21,666,034
207,760
3.80
%
21,611,700
205,982
3.78
%
21,760,402
117,591
2.14
%
Borrowings
5,229,425
92,474
7.02
%
6,325,537
94,234
5.91
%
1,675,738
19,962
4.73
%
Subordinated debt
894,219
15,955
7.08
%
870,968
15,139
6.90
%
864,581
12,531
5.75
%
Total interest-bearing liabilities
27,789,678
316,189
4.51
%
28,808,205
315,355
4.34
%
24,300,721
150,084
2.45
%
Noninterest-bearing demand deposits
6,326,511
5,817,488
12,325,902
Other liabilities
726,414
701,355
626,540
Total liabilities
34,842,603
35,327,048
37,253,163
Stockholders' equity
2,797,784
2,480,710
3,898,800
Total liabilities and stockholders' equity
$
37,640,387
$
37,807,758
$
41,151,963
Net interest income (1)
$
151,051
$
130,729
$
325,494
Net interest spread (1)
0.72
%
0.60
%
2.53
%
Net interest margin (1)
1.69
%
1.45
%
3.41
%
Total deposits (4)
$
27,992,545
$
207,760
2.94
%
$
27,429,188
$
205,982
2.98
%
$
34,086,304
$
117,591
1.37
%
Total funds (5)
$
34,116,189
$
316,189
3.68
%
$
34,625,693
$
315,355
3.61
%
$
36,626,623
$
150,084
1.63
%
(1) Tax equivalent. (2) Includes net loan discount accretion
of $15.7 million for the three months ended December 31, 2023 and
net loan premium amortization of $1.7 million and $2.5 million for
the three months ended September 30, 2023 and December 31, 2022.
(3) Includes tax-equivalent adjustments of $0.0 million, $0.0
million, and $2.2 million for the three months ended December 31,
2023, September 30, 2023, and December 31, 2022 related to
tax-exempt income on loans. Includes tax-equivalent adjustments of
$0.0 million, $0.0 million, and $0.4 million for the three months
ended December 31, 2023, September 30, 2023, and December 31, 2022
related to tax-exempt income on investment securities. The federal
statutory tax rate utilized was 21%. (4) Total deposits is the sum
of total interest-bearing deposits and noninterest-bearing demand
deposits. The cost of total deposits is calculated as annualized
interest expense on total deposits divided by average total
deposits. (5) Total funds is the sum of total interest-bearing
liabilities and noninterest-bearing demand deposits. The cost of
total funds is calculated as annualized total interest expense
divided by average total funds.
BANC OF CALIFORNIA, INC.
AVERAGE BALANCE, AVERAGE YIELD EARNED, AND AVERAGE COST PAID
(UNAUDITED) Year Ended December 31,
2023 December 31, 2022 Interest Average
Interest Average Average Income/
Yield/ Average Income/ Yield/
Balance Expense Cost Balance
Expense Cost (Dollars in thousands)
Assets: Loans and leases
(1)(2)(3)
$
25,330,351
$
1,498,701
5.92
%
$
26,044,463
$
1,320,449
5.07
%
Investment securities (3)
6,827,059
174,996
2.56
%
9,120,717
215,624
2.36
%
Deposits in financial institutions
5,746,858
299,647
5.21
%
2,185,585
34,158
1.56
%
Total interest-earning assets (1)
37,904,268
1,973,344
5.21
%
37,350,765
1,570,231
4.20
%
Other assets
2,389,112
3,130,816
Total assets
$
40,293,380
$
40,481,581
Liabilities and Stockholders' Equity: Interest checking
6,992,888
220,735
3.16
%
6,851,831
66,494
0.97
%
Money market
6,724,296
190,027
2.83
%
10,601,028
95,376
0.90
%
Savings
1,051,117
30,978
2.95
%
639,720
188
0.03
%
Time
6,840,920
306,683
4.48
%
2,540,426
38,391
1.51
%
Total interest-bearing deposits
21,609,221
748,423
3.46
%
20,633,005
200,449
0.97
%
Borrowings
7,068,826
416,744
5.90
%
961,601
25,645
2.67
%
Subordinated debt
875,621
58,705
6.70
%
863,883
39,633
4.59
%
Total interest-bearing liabilities
29,553,668
1,223,872
4.14
%
22,458,489
265,727
1.18
%
Noninterest-bearing demand deposits
7,072,334
13,601,766
Other liabilities
672,949
568,293
Total liabilities
37,298,952
36,628,548
Stockholders' equity
2,994,428
3,853,033
Total liabilities and stockholders' equity
$
40,298,380
$
40,481,581
Net interest income (1)
$
749,472
$
1,304,504
Net interest spread (1)
1.07
%
3.02
%
Net interest margin (1)
1.98
%
3.49
%
Total deposits (4)
$
28,681,555
$
748,423
2.61
%
$
34,234,771
$
200,449
0.59
%
Total funds (5)
$
36,626,002
$
1,223,872
3.34
%
$
36,060,255
$
265,727
0.74
%
(1) Tax equivalent. (2) Includes net loan discount accretion
of $9.7 million for the year ended December 31, 2023 and net loan
premium amortization of $17.9 million for the year ended December
31, 2022.
(3) Includes tax-equivalent adjustments of
$2.3 million and $7.9 million for the years ended December 31, 2023
and 2022 related to tax-exempt income on loans. Includes
tax-equivalent adjustments of $0.0 million and $5.9 million for the
years ended December 31, 2023 and 2022 related to tax-exempt income
on investment securities. The federal statutory tax rate utilized
was 21%.
(4) Total deposits is the sum of total
interest-bearing deposits and noninterest-bearing demand deposits.
The cost of total deposits is calculated as annualized interest
expense on total deposits divided by average total deposits.
(5) Total funds is the sum of total interest-bearing liabilities
and noninterest-bearing demand deposits. The cost of total funds is
calculated as annualized total interest expense divided by average
total funds.
BANC OF CALIFORNIA, INC.
NON-GAAP MEASURES
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 common equity to tangible assets, tangible book value per
common share, return on average tangible common equity, adjusted
noninterest income, adjusted noninterest expense, adjusted
noninterest income to adjusted total revenue, adjusted noninterest
expense to average total assets, pre-tax, pre-provision,
pre-goodwill impairment (“PTPP”) income, adjusted PTPP income, PTPP
return on average assets (“ROAA”), adjusted PTPP ROAA, efficiency
ratio, and adjusted efficiency ratio 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 stockholders’ equity. Tangible common equity is
calculated by subtracting preferred stock, as applicable, from
tangible equity. Return on average tangible common equity is
calculated by dividing net earnings available to common
stockholders, after adjustment for amortization of intangible
assets and goodwill impairment, 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), subtracting noninterest
expense, and adding goodwill impairment. Adjusted PTPP income is
calculated by adding net interest income and adjusted noninterest
income (adjusted total revenue) and subtracting adjusted
noninterest expense. PTPP ROAA is calculated by dividing annualized
PTPP income by average assets. Adjusted PTPP ROAA is calculated by
dividing annualized adjusted PTPP income by average assets.
Efficiency ratio is calculated by dividing noninterest expense
(less intangible asset amortization, net foreclosed assets expense,
goodwill impairment, and acquisition, integration and
reorganization costs) by total revenue. Adjusted efficiency ratio
is calculated by dividing adjusted noninterest expense by adjusted
total revenue.
Management believes the presentation of these financial measures
adjusting the impact of these items provides useful supplemental
information that is essential to a proper understanding of the
financial results and operating performance of the Company. This
disclosure should not be viewed as a substitute for results
determined in accordance with GAAP, nor is it necessarily
comparable to non-GAAP performance measures that may be presented
by other companies.
The following tables provide reconciliations of the non-GAAP
measures with financial measures defined by GAAP.
BANC OF CALIFORNIA, INC. NON-GAAP MEASURES
(UNAUDITED) Tangible Common Equity to
Tangible Assets and Tangible
December 31,
September 30,
June 30,
March 31,
December 31,
Book Value Per Common Share
2023
2023
2023
2023
2022
(Dollars in thousands, except per share amounts)
Stockholders' equity
$
3,390,765
$
2,399,277
$
2,533,195
$
2,771,477
$
3,950,531
Less: Preferred stock
498,516
498,516
498,516
498,516
498,516
Total common equity
2,892,249
1,900,761
2,034,679
2,272,961
3,452,015
Less: Intangible assets
364,104
24,192
26,581
28,970
1,408,117
Tangible common equity
$
2,528,145
$
1,876,569
$
2,008,098
$
2,243,991
$
2,043,898
Total assets
$
38,534,064
$
36,877,833
$
38,337,250
$
44,302,981
$
41,228,936
Less: Intangible assets
364,104
24,192
26,581
28,970
1,408,117
Tangible assets
$
38,169,960
$
36,853,641
$
38,310,669
$
44,274,011
$
39,820,819
Total stockholders' equity to total assets
8.80
%
6.51
%
6.61
%
6.26
%
9.58
%
Tangible common equity to tangible assets
6.62
%
5.09
%
5.24
%
5.07
%
5.13
%
Book value per common share (1)(4)
$
17.12
$
24.12
$
25.78
$
28.78
$
43.71
Tangible book value per common share (2)(4)
$
14.96
$
23.81
$
25.44
$
28.41
$
25.88
Common shares outstanding (3)(4)
168,951,632
78,806,969
78,939,024
78,988,424
78,973,869
(1) Total common equity divided by common shares
outstanding. (2) Tangible common equity divided by common shares
outstanding. (3) Common shares outstanding include non-voting
common equivalents and are participating securities. (4) Common
shares outstanding in prior periods have been restated by
multiplying the historical amounts by the Merger exchange ratio of
0.6569.
BANC OF CALIFORNIA, INC. NON-GAAP MEASURES
(UNAUDITED)
Three Months Ended
Year Ended
Return on Average
December 31,
September 30,
December 31,
December 31,
Tangible Common Equity
2023
2023
2022
2023
2022
(Dollars in thousands) Net (loss) earnings
$
(482,955
)
$
(23,344
)
$
49,509
$
(1,899,137
)
$
423,613
(Loss) earnings before income taxes
$
(659,989
)
$
(26,566
)
$
67,151
$
(2,211,338
)
$
567,568
Add: Goodwill impairment
-
-
29,000
1,376,736
29,000
Add: Intangible asset amortization
4,230
2,389
2,629
11,419
13,576
Adjusted (loss) earnings before income taxes
(655,759
)
(24,177
)
98,780
(823,183
)
610,144
Adjusted income tax expense (1)
(175,743
)
(2,925
)
25,979
(214,028
)
154,977
Adjusted net (loss) earnings
(480,016
)
(21,252
)
72,801
(609,155
)
455,167
Less: Preferred stock dividends
9,947
9,947
9,947
39,788
19,339
Adjusted net (loss) earnings available to common stockholders
$
(489,963
)
$
(31,199
)
$
62,854
$
(648,943
)
$
435,828
Average stockholders' equity
$
2,797,784
$
2,480,710
$
3,898,800
$
2,994,428
$
3,853,033
Less: Average intangible assets
89,041
25,499
1,438,173
379,005
1,443,528
Less: Average preferred stock
498,516
498,516
498,516
498,516
285,488
Average tangible common equity
$
2,210,227
$
1,956,695
$
1,962,111
$
2,116,907
$
2,124,017
Return on average equity (2)
(68.49
)%
(3.73
)%
5.04
%
(63.42
)%
10.99
%
Return on average tangible common equity (3)
(87.95
)%
(6.33
)%
12.71
%
(30.66
)%
20.52
%
(1) Effective tax rates of 26.8%, 12.1%, and 26.3% used for
the three months ended December 31, 2023, September 30, 2023, and
December 31, 2022. Adjusted effective tax rate of 26.0% used to
normalize the effect of goodwill impairment for the year ended
December 31, 2023; effective tax rate of 25.4% used for the year
ended December 31, 2022. (2) Annualized net (loss) earnings divided
by average stockholders' equity. (3) Annualized adjusted net (loss)
earnings available to common stockholders divided by average
tangible common equity.
BANC OF CALIFORNIA, INC. NON-GAAP
MEASURES (UNAUDITED) Adjusted Noninterest
Income to
Three Months Ended
Year Ended
Adjusted Total Revenue and Adjusted
December 31,
September 30,
December 31,
December 31,
Noninterest Expense to Average
Assets
2023
2023
2022
2023
2022
(Dollars in thousands) Net interest income
$
151,051
$
130,729
$
322,939
$
747,128
$
1,290,762
Noninterest (loss) income
(400,402
)
43,808
(18,956
)
(448,285
)
74,827
Total revenue
$
(249,351
)
$
174,537
$
303,983
$
298,843
$
1,365,589
Noninterest (loss) income
$
(400,402
)
$
43,808
$
(18,956
)
$
(448,285
)
$
74,827
Add: Loss on sale of securities
442,413
-
49,302
442,413
50,321
Less: Legal recovery
(7,587
)
(14,500
)
-
(22,087
)
-
Add: Loan fair value loss adjustments
-
-
-
170,971
-
Adjusted noninterest income
34,424
29,308
30,346
143,012
125,148
Net interest income
151,051
130,729
322,939
747,128
1,290,762
Adjusted total revenue
$
185,475
$
160,037
$
353,285
$
890,140
$
1,415,910
Noninterest expense
$
363,638
$
201,103
$
226,832
$
2,458,181
$
773,521
Less: Goodwill impairment
-
-
(29,000
)
(1,376,736
)
(29,000
)
Less: Acquisition, integration, and reorganization costs
(111,800
)
(9,925
)
(5,703
)
(142,633
)
(5,703
)
Less: Unfunded commitments fair value loss adjustments
-
-
-
(106,767
)
-
Adjusted noninterest expense
$
251,838
$
191,178
$
192,129
$
832,045
$
738,818
Average total assets
37,640,387
37,807,758
41,151,963
40,293,380
40,481,581
Noninterest (loss) income to total revenue
160.58
%
25.10
%
(6.24
)%
(150.01
)%
5.48
%
Adjusted noninterest income to adjusted total revenue
18.56
%
18.31
%
8.59
%
16.07
%
8.84
%
Noninterest expense to average total assets
3.83
%
2.11
%
2.19
%
6.10
%
1.91
%
Adjusted noninterest expense to average total assets
2.65
%
2.01
%
1.85
%
2.06
%
1.83
%
BANC OF CALIFORNIA, INC. NON-GAAP MEASURES
(UNAUDITED) Three Months Ended Year
Ended PTPP Income, Adjusted PTPP Income,
December 31,
September 30,
December 31,
December 31,
PTPP ROAA, and Adjusted PTPP
ROAA
2023
2023
2022
2023
2022
(Dollars in thousands) Net (loss) earnings
$
(482,955
)
$
(23,344
)
$
49,509
$
(1,899,137
)
$
423,613
Net interest income
$
151,051
$
130,729
$
322,939
$
747,128
$
1,290,762
Add: Noninterest (loss) income
(400,402
)
43,808
(18,956
)
(448,285
)
74,827
Total revenue
(249,351
)
174,537
303,983
298,843
1,365,589
Less: Noninterest expense
(363,638
)
(201,103
)
(226,832
)
(2,458,181
)
(773,521
)
Add: Goodwill impairment
-
-
29,000
1,376,736
29,000
Pre-tax, pre-provision, pre-goodwill
impairment ("PTPP") income
$
(612,989
)
$
(26,566
)
$
106,151
$
(782,602
)
$
621,068
Total revenue
$
(249,351
)
$
174,537
$
303,983
$
298,843
$
1,365,589
Add: Loss on sale of securities
442,413
-
49,302
442,413
50,321
Less: Legal recovery
(7,587
)
(14,500
)
-
(22,087
)
-
Add: Loan fair value loss adjustments
-
-
-
170,971
-
Adjusted total revenue
$
185,475
$
160,037
$
353,285
$
890,140
$
1,415,910
Noninterest expense
$
363,638
$
201,103
$
226,832
$
2,458,181
$
773,521
Less: Goodwill impairment
-
-
(29,000
)
(1,376,736
)
(29,000
)
Less: Acquisition, integration, and reorganization costs
(111,800
)
(9,925
)
(5,703
)
(142,633
)
(5,703
)
Less: Unfunded commitments fair value loss adjustments
-
-
-
(106,767
)
-
Adjusted noninterest expense
$
251,838
$
191,178
$
192,129
$
832,045
$
738,818
Adjusted total revenue
$
185,475
$
160,037
$
353,285
$
890,140
$
1,415,910
Less: Adjusted noninterest expense
(251,838
)
(191,178
)
(192,129
)
(832,045
)
(738,818
)
Adjusted pre-tax, pre-provision, pre-goodwill impairment ("PTPP")
income
$
(66,363
)
$
(31,141
)
$
161,156
$
58,095
$
677,092
Average assets
$
37,640,387
$
37,807,758
$
41,151,963
$
40,293,380
$
40,481,581
Return on average assets ("ROAA")
(5.09
)%
(0.24
)%
0.48
%
(4.71
)%
1.05
%
Pre-tax, pre-provision, pre-goodwill impairment ("PTPP") ROAA (1)
(6.46
)%
(0.28
)%
1.02
%
(1.94
)%
1.53
%
Adjusted pre-tax, pre-provision, pre-goodwill impairment ("PTPP")
ROAA (2)
(0.70
)%
(0.33
)%
1.55
%
0.14
%
1.67
%
(1) Annualized PTPP income divided by average assets. (2)
Annualized adjusted PTPP income divided by average assets.
BANC
OF CALIFORNIA, INC. NON-GAAP MEASURES (UNAUDITED)
Three Months Ended
Year Ended
December 31,
September 30,
December 31,
December 31,
Adjusted Efficiency Ratio
2023
2023
2022
2023
2022
(Dollars in thousands) Noninterest expense
$
363,638
$
201,103
$
226,832
$
2,458,181
$
773,521
Less: Intangible asset amortization
4,230
2,389
2,629
11,419
13,576
Less: Foreclosed assets expense (income), net
1,764
(609
)
(108
)
1,520
(3,737
)
Less: Goodwill impairment
-
-
29,000
1,376,736
29,000
Less: Acquisition, integration, and reorganization costs
111,800
9,925
5,703
142,633
5,703
Noninterest expense used for efficiency ratio
245,844
189,398
189,608
925,873
728,979
Less: Unfunded commitments fair value loss adjustments
-
-
-
106,767
-
Less: FDIC special assessment
32,746
-
-
32,746
-
Noninterest expense used for adjusted efficiency ratio
$
213,098
$
189,398
$
189,608
$
786,360
$
728,979
Net interest income
$
151,051
$
130,729
$
322,939
$
747,128
$
1,290,762
Noninterest (loss) income
(400,402
)
43,808
(18,956
)
(448,285
)
74,827
Total revenue
(249,351
)
174,537
303,983
298,843
1,365,589
Less: Gain (loss) on sale of securities
(442,413
)
-
(49,302
)
(442,413
)
(50,321
)
Total revenue used for efficiency ratio
193,062
174,537
353,285
741,256
1,415,910
Less: Legal recovery
(7,587
)
(14,500
)
-
(22,087
)
-
Add: Loan fair value loss adjustments
-
-
-
170,971
-
Total revenue used for adjusted efficiency ratio
$
185,475
$
160,037
$
353,285
$
890,140
$
1,415,910
Efficiency ratio (1)
127.34
%
108.51
%
53.67
%
124.91
%
51.48
%
Adjusted efficiency ratio (2)
114.89
%
118.35
%
53.67
%
88.34
%
51.48
%
(1) Noninterest expense used for efficiency ratio divided by
total revenue used for efficiency ratio. (2) Noninterest expense
used for adjusted efficiency ratio divided by total revenue used
for adjusted efficiency ratio.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240122277523/en/
Investor Relations Inquiries: Banc of California, Inc.
(855) 361-2262 Jared Wolff, (310) 424-1230 Joe Kauder, (310)
844-5224 William Black, (919) 597-7466
Media Contact: Debora Vrana, Banc of California (213)
999-4141 Deb.Vrana@bancofcal.com Source: Banc of California,
Inc.
Grafico Azioni Banc of California (NYSE:BANC)
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Da Nov 2024 a Dic 2024
Grafico Azioni Banc of California (NYSE:BANC)
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