Banc of California Reports Strong Profitability, $1.2 Billion in Loan Fundings, and Net Interest Margin Expansion for Second Quarter 2022

Banc of California, Inc. (NYSE: BANC) today reported net income and net income available to common stockholders of $26.7 million, or $0.43 per diluted common share, for the second quarter of 2022. This compares to net income of $48.5 million and net income available to common stockholders of $43.3 million, or $0.69 per diluted common share, for the first quarter of 2022. The first quarter of 2022 net income available to common stockholders included a $31.3 million pre-tax recovery from the settlement of a previously charged-off loan and a $3.7 million after-tax charge related to the redemption of Series E Preferred Stock.

Second quarter highlights:

  • Adjusted EPS of $0.45
  • Pre-tax pre-provision return on average assets of 1.58%, up from 1.54% in the prior quarter
  • Net interest margin of 3.58%, an increase of 7 basis points from the prior quarter
  • Average noninterest-bearing deposits of 38%, flat with the prior quarter
  • Tangible book value per share of $14.05, flat with the prior quarter
  • Average cost of total deposits of 0.17%, an increase of 9 basis points from the prior quarter
  • Allowance for credit losses at 1.34% of total loans and 224% of non-performing loans, up from 1.32% and 181% in the prior quarter
  • Repurchased $38.9 million of common stock during the quarter and $51.9 million cumulatively through July 20

Jared Wolff, President & CEO of Banc of California, commented, “We delivered another quarter of solid operating performance which is a good representation of our strong commercial banking franchise: well diversified, robust loan production funded with a low-cost deposit base; disciplined expense control; and solid asset quality in our conservatively underwritten, well secured loan portfolio. We capitalized on the resilient economic conditions and loan demand we are experiencing in California to generate $1.2 billion in loan fundings during the second quarter, which was the highest level of fundings in over 3 years.”

Mr. Wolff continued, “Although interest rates have increased, our loan pipeline remains strong, which should result in continued loan growth in the second half of the year, as well as further expansion of our operating leverage. We believe that our asset sensitive balance sheet will benefit from the rising rate environment and position us to continue delivering strong financial results for the benefit of shareholders.”

Lynn Hopkins, Chief Financial Officer of Banc of California, said, “During the second quarter, our net interest margin increased seven basis points. We believe our current loan pipeline reflects the higher interest rate environment, which should lead to additional expansion in our net interest margin going forward, providing us with another catalyst for driving further increases in earnings per share and our level of returns.”

Income Statement Highlights

 

Three Months Ended

 

Six Months Ended

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

 

June 30,

2022

 

June 30,

2021

 

($ in thousands)

Total interest and dividend income

$

88,418

 

$

84,269

 

 

$

81,573

 

$

71,791

 

 

$

69,677

 

 

$

172,687

 

 

$

138,295

 

Total interest expense

 

10,119

 

 

7,828

 

 

 

8,534

 

 

8,815

 

 

 

9,830

 

 

 

17,947

 

 

 

20,532

 

Net interest income

 

78,299

 

 

76,441

 

 

 

73,039

 

 

62,976

 

 

 

59,847

 

 

 

154,740

 

 

 

117,763

 

Total noninterest income

 

7,186

 

 

5,910

 

 

 

5,605

 

 

5,519

 

 

 

3,443

 

 

 

13,096

 

 

 

8,252

 

Total revenue

 

85,485

 

 

82,351

 

 

 

78,644

 

 

68,495

 

 

 

63,290

 

 

 

167,836

 

 

 

126,015

 

Total noninterest expense

 

48,612

 

 

46,596

 

 

 

58,872

 

 

37,811

 

 

 

39,832

 

 

 

95,208

 

 

 

86,995

 

Pre-tax / pre-provision income(1)

 

36,873

 

 

35,755

 

 

 

19,772

 

 

30,684

 

 

 

23,458

 

 

 

72,628

 

 

 

39,020

 

Provision for (reversal of) credit losses

 

 

 

(31,542

)

 

 

11,262

 

 

(1,147

)

 

 

(2,154

)

 

 

(31,542

)

 

 

(3,261

)

Income tax expense

 

10,161

 

 

18,785

 

 

 

2,759

 

 

8,661

 

 

 

6,562

 

 

 

28,946

 

 

 

8,856

 

Net income

$

26,712

 

$

48,512

 

 

$

5,751

 

$

23,170

 

 

$

19,050

 

 

$

75,224

 

 

$

33,425

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders(2)

$

26,712

 

$

43,345

 

 

$

4,024

 

$

21,443

 

 

$

17,323

 

 

$

70,057

 

 

$

25,088

 

(1)

Non-GAAP Measure

(2)

Balance represents the net income 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. Refer to the Statements of Operations for additional detail on these amounts.

Net interest income

Q2-2022 vs Q1-2022

Net interest income increased $1.9 million to $78.3 million for the second quarter due to higher yield on interest-earning assets, offset by lower average interest-earning assets and higher average interest-bearing liabilities balances and costs.

The net interest margin increased 7 basis points to 3.58% for the second quarter as the average interest-earning assets yield increased 17 basis points and the cost of average total funding increased 10 basis points. The yield on average interest-earning assets increased to 4.04% for the second quarter from 3.87% for the first quarter due to the mix of interest-earning assets and higher yields on loan and securities. The average yield on loans increased 9 basis points to 4.35% during the second quarter as a result of the portfolio mix and the impact of higher market interest rates. The loan yield includes the impact of prepayment penalty fees, the net reversal or recapture of nonaccrual loan interest, accelerated discount accretion on the early payoff of purchased loans, and accelerated fees from PPP loan forgiveness; these items increased the loan yield by 10 basis points in both the second quarter and prior quarter.

The average cost of funds increased 10 basis points to 0.49% for the second quarter from 0.39% for the first quarter. This increase was driven by the higher average cost of interest-bearing deposits. Average noninterest-bearing deposits represented 38% of total average deposits for both the second quarter and the first quarter. Average noninterest-bearing deposits were $9.2 million higher in the second quarter compared to the first quarter while average deposits were $11.8 million higher for the linked quarters. Average Federal Home Loan Bank (FHLB) advances and other borrowings increased $27.1 million. The average cost of interest-bearing liabilities increased 16 basis points to 0.74% for the second quarter from 0.58% for the first quarter due to higher cost of interest-bearing deposits. The average cost of interest-bearing deposits increased 16 basis points to 0.28% for the second quarter from 0.12% for the first quarter. The average cost of total deposits increased 9 basis points to 0.17% for the second quarter due mostly to higher market interest rates. The spot rate of total deposits was 0.21% at the end of the second quarter.

YTD 2022 vs YTD 2021

Net interest income increased $37.0 million to $154.7 million for the six months ended June 30, 2022 due to higher average balances and yield on interest-earning assets, higher average balances and lower costs of interest-bearing liabilities.

The net interest margin increased 32 basis points to 3.55% as the average earning-assets yield increased 16 basis points and the average cost of total funding decreased 16 basis points. The yield on average interest-earning assets increased to 3.96% for the six months ended June 30, 2022, from 3.80% for 2021 due mostly to the mix of interest-earning assets and higher market interest rates. Average loans represented 82.6% of average earnings assets in 2022 compared to 78.6% for the same period in 2021 Average loans increased by $1.49 billion from ongoing loan growth, including the acquisition of Pacific Mercantile Bancorp (PMB) in the fourth quarter of 2021. The yield on average loans for the six months ended June 30, 2022 was 4.31% compared to 4.30% for the same period in 2021. The yield on average investment securities and other interest-earning assets increased 34 basis points and 47 basis points, respectively, for the six months ended June 30, 2022, compared to the same period in 2021.

The average cost of funds decreased 16 basis points to 0.44% for the six months ended June 30, 2022 from 0.60% for 2021. This decrease was driven by the lower average cost of interest-bearing liabilities and the overall improved funding mix, including higher average noninterest-bearing deposits as a result of growth from business development efforts and the acquisition of PMB. Average noninterest-bearing deposits represented 38% of total average deposits for the six months ended June 30, 2022 compared to 28% for the same period in 2021. Average noninterest-bearing deposits were $1.09 billion higher during the six months ended June 30, 2022 compared to the same period in 2021 while average total deposits were $1.20 billion higher. Average FHLB advances and other borrowings increased $146.5 million due mostly to higher overnight borrowings offset by lower term advances. The average cost of interest-bearing liabilities decreased 14 basis points to 0.66% for the six months ended June 30, 2022 compared to the same period in 2021. This included a 15 basis points decline in the average cost of interest-bearing deposits to 0.20% for the six months ended June 30, 2022 compared to 0.35% for the same period in 2021. The average cost of total deposits decreased 13 basis points to 0.12% for the six months ended June 30, 2022.

Provision for credit losses

Q2-2022 vs Q1-2022

There was no provision for credit losses for the second quarter, compared to a reversal of $31.5 million for the first quarter. The first quarter reversal of credit losses included $31.3 million related to a recovery from the settlement of a loan previously charged-off in 2019.

YTD 2022 vs YTD 2021

During the six months ended June 30, 2022, the provision for credit losses was a reversal of $31.5 million, compared to a reversal of $3.3 million during 2021. The higher reversal of credit losses for the six months ended June 30, 2022 was due to recovery from the settlement of a loan previously charged-off in 2019.

Noninterest income

Q2-2022 vs Q1-2022

Noninterest income increased $1.3 million to $7.2 million for the second quarter compared to the prior quarter due mostly to higher other income. All other income increased $1.2 million due to higher income from equity investments of $2.1 million, partially offset by a fair value write-down of $455 thousand recorded on loans held for sale and the first quarter including a $771 thousand gain related to a sale-leaseback transaction; there were no sale-leaseback transactions in the second quarter. Gains or losses from equity investments are recorded based on the most recent information available from the investee and fluctuates based on their underlying performance.

YTD 2022 vs YTD 2021

Noninterest income for the six months ended June 30, 2022 increased $4.8 million to $13.1 million compared to 2021. The increase in noninterest income reflected a full six months of activity from the acquisition of PMB and was mainly due to higher customer service fees, income from bank-owned life insurance, and all other income. Customer services fees increased $1.3 million due mostly to higher deposit activity fees of $1.8 million attributed to higher average deposit balances, offset by lower loan fees of $594 thousand. Income from bank-owned life insurance increased $244 thousand due to higher average balances. The $3.3 million increase in all other income is due mostly to higher income from equity investments of $2.4 million and a $771 thousand gain related to a sale-leaseback transaction during the first quarter of 2022.

Noninterest expense

Q2-2022 vs Q1-2022

Noninterest expense increased $2.0 million to $48.6 million for the second quarter compared to the first quarter. The increase was due mostly to (i) higher professional fees of $1.2 million, due mostly to higher legal fees and (ii) higher net loss in alternative energy partnership investments of $885 thousand, offset by a decrease in salaries and employee benefits of $723 thousand attributed to higher payroll-related items typical of the first quarter. Professional fees included net indemnified legal expenses of $455 thousand in the second quarter compared to net recoveries of $106 thousand during the first quarter.

Total operating costs, defined as noninterest expense adjusted for certain expense items (refer to section Non-GAAP Measures), increased $570 thousand to $47.1 million for the second quarter compared to $46.5 million for the prior quarter. This increase is due mostly to higher professional fees of $639 thousand and all other expenses of $580 thousand due mostly to loan-related expenses, offset by lower salaries and benefits of $723 thousand as the higher payroll-related items typical of the first quarter were lower in the second quarter.

YTD 2022 vs YTD 2021

Noninterest expense for the six months ended June 30, 2022 increased $8.2 million to $95.2 million compared to the prior year. The increase was primarily due to: (i) higher salaries and employee benefits of $6.5 million and occupancy and equipment of $1.3 million due to the increases in personnel and facilities from the acquisition of PMB, (ii) higher professional fees of $1.2 million, due mostly to a $1.9 million increase in legal fees, net of insurance recoveries, offset by a $619 thousand decrease in other professional fees and (iii) higher all other expenses of $2.2 million due to including the operations of PMB. These increases were partially offset by: (i) higher reversal of loan repurchase reserves of $730 thousand, (ii) lower merger-related costs of $1.4 million and (iii) lower loss in alternative energy partnership investments of $1.6 million.

Income taxes

Q2-2022 vs Q1-2022

Income tax expense totaled $10.2 million for the second quarter resulting in an effective tax rate of 27.6% compared to $18.8 million for the first quarter and an effective tax rate of 27.9%. The effective tax rate for 2022 is expected to be similar to the effective income tax rate for the second quarter.

YTD 2022 vs YTD 2021

Income tax expense totaled $28.9 million for the six months ended June 30, 2022, representing an effective tax rate of 27.8%, compared to $8.9 million and an effective tax rate of 20.9% for 2021. The effective tax rate for the six months ended June 30, 2022 was higher than the comparable 2021 period due mostly to the first quarter of 2021 including a net tax benefit of $2.1 million resulting from the exercise of all previously issued outstanding stock appreciation rights.

Balance Sheet

At June 30, 2022, total assets were $9.50 billion, which represented a linked-quarter decrease of $81.4 million. The following table shows selected balance sheet line items as of the dates indicated:

 

 

 

Amount Change

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

 

Q2-22 vs.

Q1-22

 

Q2-22 vs.

Q2-21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

Securities held-to-maturity

$

329,272

 

$

329,381

 

$

 

$

 

$

 

$

(109

)

 

$

329,272

 

Securities available-for-sale

$

865,435

 

$

898,775

 

$

1,315,703

 

$

1,303,368

 

$

1,353,154

 

$

(33,340

)

 

$

(487,719

)

Loans held-for-investment

$

7,451,264

 

$

7,451,573

 

$

7,251,480

 

$

6,228,575

 

$

5,985,477

 

$

(309

)

 

$

1,465,787

 

Total assets

$

9,502,113

 

$

9,583,540

 

$

9,393,743

 

$

8,278,741

 

$

8,027,413

 

$

(81,427

)

 

$

1,474,700

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

$

2,826,599

 

$

2,958,632

 

$

2,788,196

 

$

2,107,709

 

$

1,808,918

 

$

(132,033

)

 

$

1,017,681

 

Total deposits

$

7,558,683

 

$

7,479,701

 

$

7,439,435

 

$

6,543,225

 

$

6,206,544

 

$

78,982

 

 

$

1,352,139

 

Borrowings (1)

$

884,282

 

$

1,020,842

 

$

775,445

 

$

762,444

 

$

871,973

 

$

(136,560

)

 

$

12,309

 

Total liabilities

$

8,552,983

 

$

8,604,531

 

$

8,328,453

 

$

7,433,938

 

$

7,198,051

 

$

(51,548

)

 

$

1,354,932

 

Total equity

$

949,130

 

$

979,009

 

$

1,065,290

 

$

844,803

 

$

829,362

 

$

(29,879

)

 

$

119,768

 

(1)

Represents Advances from Federal Home Loan Bank, Other Borrowings and Long Term Debt, net.

Investments

Securities held-to-maturity totaled $329.3 million at June 30, 2022 and included $215.1 million in agency securities and $114.2 million in municipal securities.

Securities available-for-sale decreased $33.3 million during the second quarter to $865.4 million at June 30, 2022, including principal payments of $12.2 million and higher unrealized net losses of $21.0 million. The higher net unrealized losses were due mostly to the impact of increases in longer-term market interest rates on the value of each class of securities. As of June 30, 2022, the securities available-for-sale portfolio included $478.2 million of CLOs, $165.4 million of agency securities, $163.3 million of corporate debt securities, $45.5 million of residential collateralized mortgage obligations, and $13.1 million of SBA securities. The CLO portfolio, which is comprised only of AA and AAA rated securities, represented 40% of the total securities portfolio and the carrying value included an unrealized net loss of $14.6 million at June 30, 2022, compared to 40% of the total securities portfolio and an unrealized net loss of $4.8 million at March 31, 2022.

Loans

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

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

 

($ in thousands)

Composition of loans

 

 

 

 

 

 

 

 

 

Commercial real estate

$

1,204,414

 

 

$

1,163,381

 

 

$

1,311,105

 

 

$

907,224

 

 

$

871,790

 

Multifamily

 

1,572,308

 

 

 

1,397,761

 

 

 

1,361,054

 

 

 

1,295,613

 

 

 

1,325,770

 

Construction

 

228,341

 

 

 

225,153

 

 

 

181,841

 

 

 

130,536

 

 

 

150,557

 

Commercial and industrial

 

1,273,307

 

 

 

1,224,908

 

 

 

1,066,497

 

 

 

773,681

 

 

 

725,596

 

Commercial and industrial - warehouse lending

 

1,160,157

 

 

 

1,574,549

 

 

 

1,602,487

 

 

 

1,522,945

 

 

 

1,345,314

 

SBA

 

92,235

 

 

 

133,116

 

 

 

205,548

 

 

 

181,582

 

 

 

253,924

 

Total commercial loans

 

5,530,762

 

 

 

5,718,868

 

 

 

5,728,532

 

 

 

4,811,581

 

 

 

4,672,951

 

Single-family residential mortgage

 

1,832,279

 

 

 

1,637,307

 

 

 

1,420,023

 

 

 

1,393,696

 

 

 

1,288,176

 

Other consumer

 

88,223

 

 

 

95,398

 

 

 

102,925

 

 

 

23,298

 

 

 

24,350

 

Total consumer loans

 

1,920,502

 

 

 

1,732,705

 

 

 

1,522,948

 

 

 

1,416,994

 

 

 

1,312,526

 

Total gross loans

$

7,451,264

 

 

$

7,451,573

 

 

$

7,251,480

 

 

$

6,228,575

 

 

$

5,985,477

 

Composition percentage of loans

 

 

 

 

 

 

 

 

 

Commercial real estate

 

16.2

%

 

 

15.6

%

 

 

18.1

%

 

 

14.6

%

 

 

14.6

%

Multifamily

 

21.1

%

 

 

18.8

%

 

 

18.8

%

 

 

20.7

%

 

 

22.2

%

Construction

 

3.1

%

 

 

3.0

%

 

 

2.5

%

 

 

2.1

%

 

 

2.5

%

Commercial and industrial

 

17.1

%

 

 

16.4

%

 

 

14.7

%

 

 

12.4

%

 

 

12.1

%

Commercial and industrial - warehouse lending

 

15.5

%

 

 

21.1

%

 

 

22.1

%

 

 

24.5

%

 

 

22.5

%

SBA

 

1.2

%

 

 

1.8

%

 

 

2.8

%

 

 

2.9

%

 

 

4.2

%

Total commercial loans

 

74.2

%

 

 

76.7

%

 

 

79.0

%

 

 

77.2

%

 

 

78.1

%

Single-family residential mortgage

 

24.6

%

 

 

22.0

%

 

 

19.6

%

 

 

22.4

%

 

 

21.5

%

Other consumer

 

1.2

%

 

 

1.3

%

 

 

1.4

%

 

 

0.4

%

 

 

0.4

%

Total consumer loans

 

25.8

%

 

 

23.3

%

 

 

21.0

%

 

 

22.8

%

 

 

21.9

%

Total gross loans

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

Total loans ended the second quarter of 2022 at $7.45 billion, relatively unchanged from March 31, 2022, due to growth in commercial real estate, multifamily, commercial and industrial and single-family residential mortgage, which was offset by a decrease in commercial and industrial - warehouse lending and SBA. Loan fundings of $1.21 billion in the second quarter included single-family residential purchases of $277.2 million and were offset by paydowns and payoffs of $793.5 million and net warehouse paydowns of $414.4 million. At June 30, 2022, SBA loans included $28.4 million of PPP loans, compared to $58.3 million at March 31, 2022. Total commercial loans, excluding PPP loans and warehouse lending, increased $256.2 million, or 25.1% on an annualized basis during the second quarter.

Deposits

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

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

 

($ in thousands)

Composition of deposits

 

 

 

 

 

 

 

 

 

Noninterest-bearing checking

$

2,826,599

 

 

$

2,958,632

 

 

$

2,788,196

 

 

$

2,107,709

 

 

$

1,808,918

 

Interest-bearing checking

 

2,359,857

 

 

 

2,395,329

 

 

 

2,393,386

 

 

 

2,214,678

 

 

 

2,217,306

 

Savings and money market

 

1,622,922

 

 

 

1,605,088

 

 

 

1,751,135

 

 

 

1,661,013

 

 

 

1,593,724

 

Non-brokered certificates of deposit

 

615,719

 

 

 

520,652

 

 

 

506,718

 

 

 

559,825

 

 

 

586,596

 

Brokered certificates of deposit

 

133,586

 

 

 

 

 

 

 

 

 

 

 

 

 

Total deposits

$

7,558,683

 

 

$

7,479,701

 

 

$

7,439,435

 

 

$

6,543,225

 

 

$

6,206,544

 

Composition percentage of deposits

 

 

 

 

 

 

 

 

 

Noninterest-bearing checking

 

37.4

%

 

 

39.6

%

 

 

37.5

%

 

 

32.2

%

 

 

29.1

%

Interest-bearing checking

 

31.2

%

 

 

32.0

%

 

 

32.2

%

 

 

33.8

%

 

 

35.7

%

Savings and money market

 

21.5

%

 

 

21.4

%

 

 

23.5

%

 

 

25.4

%

 

 

25.7

%

Non-brokered certificates of deposit

 

8.1

%

 

 

7.0

%

 

 

6.8

%

 

 

8.6

%

 

 

9.5

%

Brokered certificates of deposit

 

1.8

%

 

 

%

 

 

%

 

 

%

 

 

%

Total deposits

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

Total deposits increased $79.0 million during the second quarter of 2022 to $7.56 billion at June 30, 2022, due mostly to higher certificate of deposit balances of $228.7 million and savings and money market balances of $17.8 million, offset by lower noninterest-bearing checking balances of $132.0 million and lower interest-bearing checking balances of $35.5 million. Noninterest-bearing deposits totaled $2.83 billion and represented 37.4% of total deposits at June 30, 2022, compared to $2.96 billion, or 39.6% of total deposits, at March 31, 2022.

Debt

Advances from the FHLB decreased $44.7 million during the second quarter to $511.7 million at June 30, 2022, due to lower overnight advances. At June 30, 2022, FHLB advances included $105.0 million of overnight borrowings and $411.0 million in term advances with a weighted average life of 3.5 years and weighted average interest rate of 2.53%. Other borrowings totaled $98.0 million at June 30, 2022, down from $190.0 million at March 31, 2022, and related mostly to unsecured overnight borrowings from various financial institutions through the American Financial Exchange platform.

Equity

During the second quarter total stockholders’ equity decreased by $29.9 million to $949.1 million and tangible common equity decreased by $29.6 million to $849.3 million at June 30, 2022. The decrease in total common stockholders’ equity for the second quarter included the repurchase of common stock of $38.9 million, accumulated other comprehensive net loss of $14.9 million, and dividends to common stockholders of $3.7 million, partially offset by net income of $26.7 million and share-based award compensation of $1.5 million. Book value per common share increased to $15.70 as of June 30, 2022, from $15.65 at March 31, 2022. Tangible book value per common share (refer to section Non-GAAP Measures) remained unchanged at $14.05 as of June 30, 2022 compared to March 31, 2022.

During the second quarter of 2022, common stock repurchased under the program authorized during the first quarter of 2022 totaled 2,113,176 shares at a weighted average price of $18.38. As of June 30, 2022, the Company had $31.9 million remaining under the current stock repurchase authorization. Through July 20, 2022, repurchases of Company common stock total 2,813,978 shares at a weighted average price of $18.45 per share, or $51.9 million under the stock repurchase plan. The repurchased shares represent approximately 4% of the shares outstanding at the time this $75 million program was authorized.

Capital ratios remain strong with total risk-based capital at 13.68% and a tier 1 leverage ratio of 9.59% at June 30, 2022. 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 9 basis points at June 30, 2022. The following table sets forth our regulatory capital ratios as of the dates indicated:

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

Capital Ratios(1)

 

 

 

 

 

 

 

 

 

Banc of California, Inc.

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

13.68

%

 

13.79

%

 

14.98

%

 

14.73

%

 

15.33

%

Tier 1 risk-based capital ratio

11.28

%

 

11.40

%

 

12.55

%

 

12.35

%

 

12.71

%

Common equity tier 1 capital ratio

11.28

%

 

11.40

%

 

11.31

%

 

10.86

%

 

11.14

%

Tier 1 leverage ratio

9.59

%

 

9.72

%

 

10.37

%

 

9.80

%

 

9.89

%

Banc of California, NA

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

15.54

%

 

15.66

%

 

15.71

%

 

16.31

%

 

17.25

%

Tier 1 risk-based capital ratio

14.41

%

 

14.54

%

 

14.60

%

 

15.22

%

 

16.09

%

Common equity tier 1 capital ratio

14.41

%

 

14.54

%

 

14.60

%

 

15.22

%

 

16.09

%

Tier 1 leverage ratio

12.27

%

 

12.38

%

 

12.06

%

 

12.08

%

 

12.52

%

(1)

June 30, 2022 capital ratios are preliminary.

Credit Quality

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

Asset quality information and ratios

($ in thousands)

Delinquent loans held-for-investment

 

 

 

 

 

 

 

 

 

30 to 89 days delinquent

$

38,285

 

 

$

27,067

 

 

$

40,142

 

 

$

23,144

 

 

$

16,983

 

90+ days delinquent

 

23,905

 

 

 

33,930

 

 

 

32,609

 

 

 

21,979

 

 

 

17,998

 

Total delinquent loans

$

62,190

 

 

$

60,997

 

 

$

72,751

 

 

$

45,123

 

 

$

34,981

 

Total delinquent loans to total loans

 

0.83

%

 

 

0.82

%

 

 

1.00

%

 

 

0.72

%

 

 

0.58

%

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

 

 

 

 

 

 

 

 

 

Non-accrual loans

$

44,443

 

 

$

54,529

 

 

$

52,558

 

 

$

45,621

 

 

$

51,299

 

90+ days delinquent and still accruing loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing loans

 

44,443

 

 

 

54,529

 

 

 

52,558

 

 

 

45,621

 

 

 

51,299

 

Other real estate owned

 

 

 

 

 

 

 

 

 

 

 

 

 

3,253

 

Non-performing assets

$

44,443

 

 

$

54,529

 

 

$

52,558

 

 

$

45,621

 

 

$

54,552

 

ALL to non-performing loans

 

211.04

%

 

 

170.97

%

 

 

176.16

%

 

 

161.16

%

 

 

147.93

%

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

 

0.60

%

 

 

0.73

%

 

 

0.72

%

 

 

0.73

%

 

 

0.86

%

Non-performing assets to total assets

 

0.47

%

 

 

0.57

%

 

 

0.56

%

 

 

0.55

%

 

 

0.68

%

Troubled debt restructurings (TDRs)

 

 

 

 

 

 

 

 

 

Performing TDRs

$

10,946

 

 

$

14,850

 

 

$

12,538

 

 

$

5,835

 

 

$

6,029

 

Non-performing TDRs

 

14,989

 

 

 

15,059

 

 

 

4,146

 

 

 

2,366

 

 

 

3,120

 

Total TDRs

$

25,935

 

 

$

29,909

 

 

$

16,684

 

 

$

8,201

 

 

$

9,149

 

Total delinquent loans increased $1.2 million in the second quarter to $62.2 million at June 30, 2022, due mostly to additions of $29.2 million, offset by $21.7 million returning to current status and $6.3 million in other reductions including paydowns. The additions included (i) $18.1 million in single-family residential mortgage loans, (ii) $6.0 million in commercial and industrial loans and (iii) $4.6 million in SBA loans. At June 30, 2022, delinquent loans included (i) SFR loans of $32.5 million, (ii) SBA loans of $15.0 million, of which $12.6 million are guaranteed, and (iii) other loans of $14.7 million.

Non-performing loans decreased $10.1 million to $44.4 million as of June 30, 2022, of which $18.4 million, or 41%, relates to loans in a current payment status. The second quarter decrease was due mostly to $5.7 million in loans returning to accrual status and $4.7 million in payoffs, paydowns, and charge-offs, offset by additions of $259 thousand. At June 30, 2022, non-performing loans included (i) a $12.4 million commercial and industrial loan acquired in the PMB acquisition, (ii) SBA loans totaling $10.5 million, of which $8.6 million is guaranteed, (iii) SFR loans totaling $7.3 million, and (iv) other commercial loans of $13.9 million.

Allowance for Credit Losses

 

Three Months Ended

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

 

($ in thousands)

Allowance for loan losses (ALL)

 

 

 

 

 

 

 

 

 

Balance at beginning of period

$

93,226

 

 

$

92,584

 

 

$

73,524

 

 

$

75,885

 

 

$

79,353

 

Initial reserve for purchased credit-deteriorated loans(1)

 

 

 

 

 

 

 

13,650

 

 

 

 

 

 

 

Loans charged off

 

(494

)

 

 

(231

)

 

 

(8,108

)

 

 

(327

)

 

 

(886

)

Recoveries

 

1,561

 

 

 

32,215

 

 

 

2,628

 

 

 

532

 

 

 

26

 

Net recoveries (charge-offs)

 

1,067

 

 

 

31,984

 

 

 

(5,480

)

 

 

205

 

 

 

(860

)

(Reversal of) provision for loan losses

 

(500

)

 

 

(31,342

)

 

 

10,890

 

 

 

(2,566

)

 

 

(2,608

)

Balance at end of period

$

93,793

 

 

$

93,226

 

 

$

92,584

 

 

$

73,524

 

 

$

75,885

 

Reserve for unfunded loan commitments

 

 

 

 

 

 

 

 

 

Balance at beginning of period

$

5,405

 

 

$

5,605

 

 

$

5,233

 

 

$

3,814

 

 

$

3,360

 

(Reversal of) provision for credit losses

 

500

 

 

 

(200

)

 

 

372

 

 

 

1,419

 

 

 

454

 

Balance at end of period

 

5,905

 

 

 

5,405

 

 

 

5,605

 

 

 

5,233

 

 

 

3,814

 

Allowance for credit losses (ACL)

$

99,698

 

 

$

98,631

 

 

$

98,189

 

 

$

78,757

 

 

$

79,699

 

 

 

 

 

 

 

 

 

 

 

ALL to total loans

 

1.26

%

 

 

1.25

%

 

 

1.28

%

 

 

1.18

%

 

 

1.27

%

ACL to total loans

 

1.34

%

 

 

1.32

%

 

 

1.35

%

 

 

1.26

%

 

 

1.33

%

ACL to total loans, excluding PPP loans

 

1.34

%

 

 

1.33

%

 

 

1.38

%

 

 

1.29

%

 

 

1.38

%

ACL to NPLs

 

224.33

%

 

 

180.88

%

 

 

186.82

%

 

 

172.63

%

 

 

155.36

%

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

 

(0.06

)%

 

 

(1.79

)%

 

 

0.32

%

 

 

(0.01

)%

 

 

0.06

%

 

 

 

 

 

 

 

 

 

 

Reserve for loss on repurchased loans

 

 

 

 

 

 

 

 

 

Balance at beginning of period

$

3,877

 

 

$

4,348

 

 

$

5,023

 

 

$

5,095

 

 

$

5,383

 

(Reversal of) provision for loan repurchases

 

(490

)

 

 

(471

)

 

 

(675

)

 

 

(42

)

 

 

(99

)

Utilization of reserve for loan repurchases

 

(165

)

 

 

 

 

 

 

 

 

(30

)

 

 

(189

)

Balance at end of period

$

3,222

 

 

$

3,877

 

 

$

4,348

 

 

$

5,023

 

 

$

5,095

 

(1)

Represents the amounts, at acquisition date, of expected credit losses on PCD loans and expected recoveries of PCD loans charged-off prior to acquisition date that we have a contractual right to receive.

The allowance for expected credit losses (ACL), which includes the reserve for unfunded loan commitments, totaled $99.7 million, or 1.34% of total loans, at June 30, 2022, compared to $98.6 million, or 1.32% of total loans, at March 31, 2022. The $1.1 million increase in the ACL was due primarily to: (i) net recoveries of $1.1 million, (ii) higher specific reserves of $484 thousand, and (iii) higher reserve for unfunded commitments of $500 thousand, offset by lower general loan reserves of $1.0 million. The ACL coverage of non-performing loans was 224% at June 30, 2022 compared to 181% at March 31, 2022.

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 released by the model provider during June 2022. The published forecasts consider rising inflation, higher oil prices, ongoing supply chain issues and the military conflict between Russia and Ukraine, among other factors.

Conference Call

The Company will host a conference call to discuss its second quarter 2022 financial results at 10:00 a.m. Pacific Time (PT) on Thursday, July 21, 2022. Interested parties are welcome to attend the conference call by dialing (888) 317-6003, and referencing event code 1795053. 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 8741948.

About Banc of California, Inc.

Banc of California, Inc. (NYSE: BANC) is a bank holding company with $9.5 billion in assets at June 30, 2022 and one wholly-owned banking subsidiary, Banc of California, N.A. (the Bank). The Bank has 36 offices including 31 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. 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.

Banc of California, Inc.

Consolidated Statements of Financial Condition (Unaudited)

(Dollars in thousands)

 

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

ASSETS

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

243,064

 

 

$

254,241

 

 

$

228,123

 

 

$

185,840

 

 

$

163,332

 

Securities held-to-maturity

 

329,272

 

 

 

329,381

 

 

 

 

 

 

 

 

 

 

Securities available-for-sale

 

865,435

 

 

 

898,775

 

 

 

1,315,703

 

 

 

1,303,368

 

 

 

1,353,154

 

Loans

 

7,451,264

 

 

 

7,451,573

 

 

 

7,251,480

 

 

 

6,228,575

 

 

 

5,985,477

 

Allowance for loan losses

 

(93,793

)

 

 

(93,226

)

 

 

(92,584

)

 

 

(73,524

)

 

 

(75,885

)

Federal Home Loan Bank and other bank stock

 

51,489

 

 

 

51,456

 

 

 

44,632

 

 

 

44,604

 

 

 

44,569

 

Servicing rights, net

 

24,043

 

 

 

1,295

 

 

 

1,309

 

 

 

1,022

 

 

 

1,162

 

Other real estate owned, net

 

 

 

 

 

 

 

 

 

 

 

 

 

3,253

 

Premises and equipment, net

 

108,523

 

 

 

109,593

 

 

 

112,868

 

 

 

114,011

 

 

 

118,649

 

Alternative energy partnership investments, net

 

23,531

 

 

 

25,156

 

 

 

25,888

 

 

 

25,196

 

 

 

24,068

 

Goodwill

 

95,127

 

 

 

95,127

 

 

 

94,301

 

 

 

37,144

 

 

 

37,144

 

Other intangible assets, net

 

4,677

 

 

 

4,990

 

 

 

6,411

 

 

 

1,787

 

 

 

2,069

 

Deferred income tax, net

 

54,455

 

 

 

51,516

 

 

 

50,774

 

 

 

40,659

 

 

 

41,628

 

Income tax receivable

 

4,563

 

 

 

1,045

 

 

 

7,952

 

 

 

2,107

 

 

 

4,084

 

Bank owned life insurance investment

 

125,326

 

 

 

124,516

 

 

 

123,720

 

 

 

113,884

 

 

 

113,168

 

Operating lease right of use assets

 

32,632

 

 

 

34,189

 

 

 

35,442

 

 

 

29,054

 

 

 

20,364

 

Other assets

 

182,505

 

 

 

243,913

 

 

 

187,724

 

 

 

225,014

 

 

 

191,177

 

Total assets

$

9,502,113

 

 

$

9,583,540

 

 

$

9,393,743

 

 

$

8,278,741

 

 

$

8,027,413

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

$

2,826,599

 

 

$

2,958,632

 

 

$

2,788,196

 

 

$

2,107,709

 

 

$

1,808,918

 

Interest-bearing deposits

 

4,732,084

 

 

 

4,521,069

 

 

 

4,651,239

 

 

 

4,435,516

 

 

 

4,397,626

 

Total deposits

 

7,558,683

 

 

 

7,479,701

 

 

 

7,439,435

 

 

 

6,543,225

 

 

 

6,206,544

 

Advances from Federal Home Loan Bank

 

511,695

 

 

 

556,374

 

 

 

476,059

 

 

 

405,738

 

 

 

490,419

 

Other borrowings

 

98,000

 

 

 

190,000

 

 

 

25,000

 

 

 

100,000

 

 

 

125,000

 

Long-term debt, net

 

274,587

 

 

 

274,468

 

 

 

274,386

 

 

 

256,706

 

 

 

256,554

 

Reserve for loss on repurchased loans

 

3,222

 

 

 

3,877

 

 

 

4,348

 

 

 

5,023

 

 

 

5,095

 

Operating lease liabilities

 

37,500

 

 

 

39,259

 

 

 

40,675

 

 

 

30,390

 

 

 

21,588

 

Accrued expenses and other liabilities

 

69,296

 

 

 

60,852

 

 

 

68,550

 

 

 

92,856

 

 

 

92,851

 

Total liabilities

 

8,552,983

 

 

 

8,604,531

 

 

 

8,328,453

 

 

 

7,433,938

 

 

 

7,198,051

 

Commitments and contingent liabilities

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

 

94,956

 

 

 

94,956

 

 

 

94,956

 

Common stock

 

647

 

 

 

646

 

 

 

646

 

 

 

527

 

 

 

527

 

Common stock, class B non-voting non-convertible

 

5

 

 

 

5

 

 

 

5

 

 

 

5

 

 

 

5

 

Additional paid-in capital

 

856,079

 

 

 

855,198

 

 

 

854,873

 

 

 

631,512

 

 

 

630,654

 

Retained earnings

 

210,471

 

 

 

187,457

 

 

 

147,894

 

 

 

147,682

 

 

 

129,307

 

Treasury stock

 

(84,013

)

 

 

(45,125

)

 

 

(40,827

)

 

 

(40,827

)

 

 

(40,827

)

Accumulated other comprehensive (loss) income, net

 

(34,059

)

 

 

(19,172

)

 

 

7,743

 

 

 

10,948

 

 

 

14,740

 

Total stockholders’ equity

 

949,130

 

 

 

979,009

 

 

 

1,065,290

 

 

 

844,803

 

 

 

829,362

 

Total liabilities and stockholders’ equity

$

9,502,113

 

 

$

9,583,540

 

 

$

9,393,743

 

 

$

8,278,741

 

 

$

8,027,413

 

Banc of California, Inc.

Consolidated Statements of Operations (Unaudited)

(Dollars in thousands, except per share data)

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

 

June 30,

2022

 

June 30,

2021

Interest and dividend income

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

$

78,895

 

 

$

76,234

 

 

$

73,605

 

 

$

63,837

 

 

$

61,900

 

 

$

155,129

 

 

$

123,245

 

Securities

 

8,124

 

 

 

7,309

 

 

 

6,934

 

 

 

7,167

 

 

 

6,986

 

 

 

15,433

 

 

 

13,487

 

Other interest-earning assets

 

1,399

 

 

 

726

 

 

 

1,034

 

 

 

787

 

 

 

791

 

 

 

2,125

 

 

 

1,563

 

Total interest and dividend income

 

88,418

 

 

 

84,269

 

 

 

81,573

 

 

 

71,791

 

 

 

69,677

 

 

 

172,687

 

 

 

138,295

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

3,180

 

 

 

1,388

 

 

 

2,072

 

 

 

2,412

 

 

 

3,543

 

 

 

4,568

 

 

 

7,829

 

Federal Home Loan Bank advances

 

3,114

 

 

 

2,953

 

 

 

2,977

 

 

 

2,990

 

 

 

2,944

 

 

 

6,067

 

 

 

6,056

 

Other interest-bearing liabilities

 

3,825

 

 

 

3,487

 

 

 

3,485

 

 

 

3,413

 

 

 

3,343

 

 

 

7,312

 

 

 

6,647

 

Total interest expense

 

10,119

 

 

 

7,828

 

 

 

8,534

 

 

 

8,815

 

 

 

9,830

 

 

 

17,947

 

 

 

20,532

 

Net interest income

 

78,299

 

 

 

76,441

 

 

 

73,039

 

 

 

62,976

 

 

 

59,847

 

 

 

154,740

 

 

 

117,763

 

Provision for (reversal of) credit losses

 

 

 

 

(31,542

)

 

 

11,262

 

 

 

(1,147

)

 

 

(2,154

)

 

 

(31,542

)

 

 

(3,261

)

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

 

78,299

 

 

 

107,983

 

 

 

61,777

 

 

 

64,123

 

 

 

62,001

 

 

 

186,282

 

 

 

121,024

 

Noninterest income

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer service fees

 

2,578

 

 

 

2,434

 

 

 

2,037

 

 

 

1,900

 

 

 

1,990

 

 

 

5,012

 

 

 

3,748

 

Loan servicing income

 

109

 

 

 

212

 

 

 

119

 

 

 

170

 

 

 

38

 

 

 

321

 

 

 

306

 

Income from bank owned life insurance

 

810

 

 

 

796

 

 

 

794

 

 

 

715

 

 

 

690

 

 

 

1,606

 

 

 

1,362

 

Net gain on sale of securities available for sale

 

 

 

 

16

 

 

 

 

 

 

 

 

 

 

 

 

16

 

 

 

 

Net gain on sale of loans

 

 

 

 

 

 

 

275

 

 

 

 

 

 

 

 

 

 

 

 

 

All other income

 

3,689

 

 

 

2,452

 

 

 

2,380

 

 

 

2,734

 

 

 

725

 

 

 

6,141

 

 

 

2,836

 

Total noninterest income

 

7,186

 

 

 

5,910

 

 

 

5,605

 

 

 

5,519

 

 

 

3,443

 

 

 

13,096

 

 

 

8,252

 

Noninterest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

28,264

 

 

 

28,987

 

 

 

27,811

 

 

 

24,786

 

 

 

25,042

 

 

 

57,251

 

 

 

50,761

 

Occupancy and equipment

 

7,876

 

 

 

7,855

 

 

 

7,855

 

 

 

7,124

 

 

 

7,277

 

 

 

15,731

 

 

 

14,473

 

Professional fees

 

4,107

 

 

 

2,907

 

 

 

3,921

 

 

 

892

 

 

 

1,749

 

 

 

7,014

 

 

 

5,771

 

Data processing

 

1,782

 

 

 

1,828

 

 

 

1,939

 

 

 

1,646

 

 

 

1,621

 

 

 

3,610

 

 

 

3,276

 

Regulatory assessments

 

1,021

 

 

 

775

 

 

 

1,040

 

 

 

812

 

 

 

769

 

 

 

1,796

 

 

 

1,543

 

(Reversal of) provision for loan repurchase reserves

 

(490

)

 

 

(471

)

 

 

(675

)

 

 

(42

)

 

 

(99

)

 

 

(961

)

 

 

(231

)

Amortization of intangible assets

 

313

 

 

 

441

 

 

 

430

 

 

 

282

 

 

 

282

 

 

 

754

 

 

 

564

 

Merger-related costs

 

 

 

 

 

 

 

13,469

 

 

 

1,000

 

 

 

700

 

 

 

 

 

 

1,400

 

All other expense

 

4,696

 

 

 

4,116

 

 

 

4,302

 

 

 

3,096

 

 

 

3,320

 

 

 

8,812

 

 

 

6,637

 

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

 

47,569

 

 

 

46,438

 

 

 

60,092

 

 

 

39,596

 

 

 

40,661

 

 

 

94,007

 

 

 

84,194

 

Loss (gain) in alternative energy partnership investments

 

1,043

 

 

 

158

 

 

 

(1,220

)

 

 

(1,785

)

 

 

(829

)

 

 

1,201

 

 

 

2,801

 

Total noninterest expense

 

48,612

 

 

 

46,596

 

 

 

58,872

 

 

 

37,811

 

 

 

39,832

 

 

 

95,208

 

 

 

86,995

 

Income before income taxes

 

36,873

 

 

 

67,297

 

 

 

8,510

 

 

 

31,831

 

 

 

25,612

 

 

 

104,170

 

 

 

42,281

 

Income tax expense

 

10,161

 

 

 

18,785

 

 

 

2,759

 

 

 

8,661

 

 

 

6,562

 

 

 

28,946

 

 

 

8,856

 

Net income

 

26,712

 

 

 

48,512

 

 

 

5,751

 

 

 

23,170

 

 

 

19,050

 

 

 

75,224

 

 

 

33,425

 

Preferred stock dividends

 

 

 

 

1,420

 

 

 

1,727

 

 

 

1,727

 

 

 

1,727

 

 

 

1,420

 

 

 

4,868

 

Income allocated to participating securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

122

 

Impact of preferred stock redemption

 

 

 

 

3,747

 

 

 

 

 

 

 

 

 

 

 

 

3,747

 

 

 

3,347

 

Net income available to common stockholders

$

26,712

 

 

$

43,345

 

 

$

4,024

 

 

$

21,443

 

 

$

17,323

 

 

$

70,057

 

 

$

25,088

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.44

 

 

$

0.69

 

 

$

0.07

 

 

$

0.42

 

 

$

0.34

 

 

$

1.13

 

 

$

0.50

 

Diluted

$

0.43

 

 

$

0.69

 

 

$

0.07

 

 

$

0.42

 

 

$

0.34

 

 

$

1.13

 

 

$

0.49

 

Weighted average number of common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

61,350,802

 

 

 

62,606,450

 

 

 

60,401,366

 

 

 

50,716,680

 

 

 

50,650,186

 

 

 

61,974,582

 

 

 

50,501,369

 

Diluted

 

61,600,615

 

 

 

62,906,003

 

 

 

60,690,046

 

 

 

50,909,317

 

 

 

50,892,202

 

 

 

62,248,376

 

 

 

50,810,285

 

Dividends declared per common share

$

0.06

 

 

$

0.06

 

 

$

0.06

 

 

$

0.06

 

 

$

0.06

 

 

$

0.12

 

 

$

0.12

 

Banc of California, Inc.

Selected Financial Data

(Unaudited)

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

 

June 30,

2022

 

June 30,

2021

Profitability and other ratios of consolidated operations

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets(1)

1.15

%

 

2.09

%

 

0.24

%

 

1.13

%

 

0.98

%

 

1.62

%

 

0.86

%

Return on average equity(1)

11.05

%

 

18.74

%

 

2.20

%

 

10.84

%

 

9.38

%

 

15.02

%

 

7.92

%

Return on average tangible common equity(1)(2)

12.43

%

 

20.29

%

 

2.04

%

 

12.04

%

 

10.34

%

 

16.35

%

 

7.55

%

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

1.58

%

 

1.54

%

 

0.84

%

 

1.50

%

 

1.20

%

 

1.56

%

 

1.00

%

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

1.65

%

 

1.55

%

 

1.39

%

 

1.35

%

 

1.13

%

 

1.60

%

 

1.10

%

Dividend payout ratio(3)

13.64

%

 

8.70

%

 

85.71

%

 

14.29

%

 

17.65

%

 

10.62

%

 

24.00

%

Average loan yield

4.35

%

 

4.26

%

 

4.20

%

 

4.18

%

 

4.30

%

 

4.31

%

 

4.30

%

Average cost of interest-bearing deposits

0.28

%

 

0.12

%

 

0.17

%

 

0.22

%

 

0.32

%

 

0.20

%

 

0.35

%

Average cost of total deposits

0.17

%

 

0.08

%

 

0.11

%

 

0.15

%

 

0.23

%

 

0.12

%

 

0.25

%

Net interest spread

3.30

%

 

3.29

%

 

3.05

%

 

3.06

%

 

3.04

%

 

3.30

%

 

3.00

%

Net interest margin(1)

3.58

%

 

3.51

%

 

3.28

%

 

3.28

%

 

3.27

%

 

3.55

%

 

3.23

%

Noninterest income to total revenue(4)

8.41

%

 

7.18

%

 

7.13

%

 

8.06

%

 

5.44

%

 

7.80

%

 

6.55

%

Noninterest income to average total assets(1)

0.31

%

 

0.26

%

 

0.24

%

 

0.27

%

 

0.18

%

 

0.28

%

 

0.21

%

Noninterest expense to average total assets(1)

2.09

%

 

2.01

%

 

2.50

%

 

1.84

%

 

2.04

%

 

2.05

%

 

2.24

%

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

2.02

%

 

2.01

%

 

1.95

%

 

1.99

%

 

2.11

%

 

2.02

%

 

2.14

%

Efficiency ratio(2)(5)

56.87

%

 

56.58

%

 

74.86

%

 

55.20

%

 

62.94

%

 

56.73

%

 

69.04

%

Adjusted efficiency ratio(2)(6)

55.11

%

 

56.52

%

 

58.47

%

 

59.49

%

 

65.17

%

 

55.80

%

 

66.15

%

Average loans to average deposits

98.21

%

 

98.28

%

 

92.99

%

 

94.99

%

 

92.74

%

 

98.25

%

 

93.24

%

Average securities to average total assets

13.02

%

 

13.76

%

 

13.83

%

 

16.55

%

 

16.71

%

 

13.39

%

 

16.22

%

Average stockholders’ equity to average total assets

10.38

%

 

11.18

%

 

11.10

%

 

10.41

%

 

10.41

%

 

10.78

%

 

10.85

%

(1)

Ratio presented on an annualized basis.

(2)

Ratio 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)

Ratio 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)

Ratio calculated by dividing noninterest expense by the sum of net interest income before provision for (reversal of) credit losses and noninterest income.

(6)

Ratio calculated by dividing adjusted noninterest expense by the sum of net interest income before provision for (reversal of) credit losses and adjusted noninterest income.

Banc of California, Inc.

Average Balance, Average Yield Earned, and Average Cost Paid

(Dollars in thousands)

(Unaudited)

 

 

Three Months Ended

 

June 30, 2022

 

March 31, 2022

 

December 31, 2021

 

Average

 

 

 

Yield

 

Average

 

 

 

Yield

 

Average

 

 

 

Yield

 

Balance

 

Interest

 

/ Cost

 

Balance

 

Interest

 

/ Cost

 

Balance

 

Interest

 

/ Cost

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate, multifamily, and construction

$

2,889,652

 

 

$

31,290

 

4.34

%

 

$

2,850,811

 

 

$

31,367

 

4.46

%

 

$

2,809,181

 

 

$

32,184

 

4.55

%

Commercial and industrial and SBA

 

2,527,506

 

 

 

29,334

 

4.66

%

 

 

2,748,541

 

 

 

30,043

 

4.43

%

 

 

2,631,596

 

 

 

28,028

 

4.23

%

SFR mortgage

 

1,755,719

 

 

 

16,795

 

3.84

%

 

 

1,562,478

 

 

 

13,273

 

3.45

%

 

 

1,418,057

 

 

 

11,884

 

3.32

%

Other consumer

 

93,160

 

 

 

1,450

 

6.24

%

 

 

97,516

 

 

 

1,523

 

6.33

%

 

 

85,193

 

 

 

1,483

 

6.91

%

Loans held-for-sale

 

3,618

 

 

 

26

 

2.88

%

 

 

3,428

 

 

 

28

 

3.31

%

 

 

3,309

 

 

 

26

 

3.12

%

Gross loans and leases

 

7,269,655

 

 

 

78,895

 

4.35

%

 

 

7,262,774

 

 

 

76,234

 

4.26

%

 

 

6,947,336

 

 

 

73,605

 

4.20

%

Securities

 

1,216,612

 

 

 

8,124

 

2.68

%

 

 

1,292,079

 

 

 

7,309

 

2.29

%

 

 

1,290,664

 

 

 

6,934

 

2.13

%

Other interest-earning assets

 

295,715

 

 

 

1,399

 

1.90

%

 

 

265,339

 

 

 

726

 

1.11

%

 

 

593,739

 

 

 

1,034

 

0.69

%

Total interest-earning assets

 

8,781,982

 

 

 

88,418

 

4.04

%

 

 

8,820,192

 

 

 

84,269

 

3.87

%

 

 

8,831,739

 

 

 

81,573

 

3.66

%

Allowance for loan losses

 

(94,217

)

 

 

 

 

 

 

(92,618

)

 

 

 

 

 

 

(92,367

)

 

 

 

 

BOLI and noninterest-earning assets

 

654,931

 

 

 

 

 

 

 

664,731

 

 

 

 

 

 

 

592,583

 

 

 

 

 

Total assets

$

9,342,696

 

 

 

 

 

 

$

9,392,305

 

 

 

 

 

 

$

9,331,955

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing checking

$

2,363,233

 

 

$

1,457

 

0.25

%

 

$

2,409,262

 

 

$

641

 

0.11

%

 

$

2,461,397

 

 

$

693

 

0.11

%

Savings and money market

 

1,598,663

 

 

 

860

 

0.22

%

 

 

1,673,244

 

 

 

510

 

0.12

%

 

 

1,780,483

 

 

 

1,078

 

0.24

%

Certificates of deposit

 

631,415

 

 

 

863

 

0.55

%

 

 

508,244

 

 

 

237

 

0.19

%

 

 

610,766

 

 

 

301

 

0.20

%

Total interest-bearing deposits

 

4,593,311

 

 

 

3,180

 

0.28

%

 

 

4,590,750

 

 

 

1,388

 

0.12

%

 

 

4,852,646

 

 

 

2,072

 

0.17

%

FHLB advances

 

485,629

 

 

 

3,114

 

2.57

%

 

 

459,749

 

 

 

2,953

 

2.60

%

 

 

407,122

 

 

 

2,977

 

2.90

%

Other borrowings

 

117,688

 

 

 

325

 

1.11

%

 

 

116,495

 

 

 

55

 

0.19

%

 

 

27,300

 

 

 

7

 

0.10

%

Long-term debt

 

274,515

 

 

 

3,500

 

5.11

%

 

 

274,417

 

 

 

3,432

 

5.07

%

 

 

270,879

 

 

 

3,478

 

5.09

%

Total interest-bearing liabilities

 

5,471,143

 

 

 

10,119

 

0.74

%

 

 

5,441,411

 

 

 

7,828

 

0.58

%

 

 

5,557,947

 

 

 

8,534

 

0.61

%

Noninterest-bearing deposits

 

2,804,877

 

 

 

 

 

 

 

2,795,633

 

 

 

 

 

 

 

2,614,712

 

 

 

 

 

Noninterest-bearing liabilities

 

96,791

 

 

 

 

 

 

 

105,349

 

 

 

 

 

 

 

123,514

 

 

 

 

 

Total liabilities

 

8,372,811

 

 

 

 

 

 

 

8,342,393

 

 

 

 

 

 

 

8,296,173

 

 

 

 

 

Total stockholders’ equity

 

969,885

 

 

 

 

 

 

 

1,049,912

 

 

 

 

 

 

 

1,035,782

 

 

 

 

 

Total liabilities and stockholders’ equity

$

9,342,696

 

 

 

 

 

 

$

9,392,305

 

 

 

 

 

 

$

9,331,955

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income/spread

 

 

$

78,299

 

3.30

%

 

 

 

$

76,441

 

3.29

%

 

 

 

$

73,039

 

3.05

%

Net interest margin

 

 

 

 

3.58

%

 

 

 

 

 

3.51

%

 

 

 

 

 

3.28

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of interest-earning assets to interest-bearing liabilities

 

161

%

 

 

 

 

 

 

162

%

 

 

 

 

 

 

159

%

 

 

 

 

Total deposits

$

7,398,188

 

 

$

3,180

 

0.17

%

 

$

7,386,383

 

 

$

1,388

 

0.08

%

 

$

7,467,358

 

 

$

2,072

 

0.11

%

Total funding (1)

$

8,276,020

 

 

$

10,119

 

0.49

%

 

$

8,237,044

 

 

$

7,828

 

0.39

%

 

$

8,172,659

 

 

$

8,534

 

0.41

%

(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.

 

Three Months Ended

 

September 30, 2021

 

June 30, 2021

 

Average

 

 

 

Yield

 

Average

 

 

 

Yield

 

Balance

 

Interest

 

/ Cost

 

Balance

 

Interest

 

/ Cost

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate, multifamily, and construction

$

2,379,962

 

 

$

26,542

 

4.42

%

 

$

2,313,483

 

 

$

27,222

 

4.72

%

Commercial and industrial and SBA

 

2,322,372

 

 

 

25,345

 

4.33

%

 

 

2,154,512

 

 

 

22,978

 

4.28

%

SFR mortgage

 

1,331,876

 

 

 

11,683

 

3.48

%

 

 

1,277,552

 

 

 

11,410

 

3.58

%

Other consumer

 

22,164

 

 

 

238

 

4.26

%

 

 

23,881

 

 

 

275

 

4.62

%

Loans held-for-sale

 

2,956

 

 

 

29

 

3.89

%

 

 

1,987

 

 

 

15

 

3.03

%

Gross loans and leases

 

6,059,330

 

 

 

63,837

 

4.18

%

 

 

5,771,415

 

 

 

61,900

 

4.30

%

Securities

 

1,347,317

 

 

 

7,167

 

2.11

%

 

 

1,308,230

 

 

 

6,986

 

2.14

%

Other interest-earning assets

 

222,274

 

 

 

787

 

1.40

%

 

 

258,915

 

 

 

791

 

1.23

%

Total interest-earning assets

 

7,628,921

 

 

 

71,791

 

3.73

%

 

 

7,338,560

 

 

 

69,677

 

3.81

%

Allowance for loan losses

 

(76,028

)

 

 

 

 

 

 

(79,103

)

 

 

 

 

BOLI and noninterest-earning assets

 

588,720

 

 

 

 

 

 

 

567,549

 

 

 

 

 

Total assets

$

8,141,613

 

 

 

 

 

 

$

7,827,006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing checking

$

2,280,429

 

 

$

632

 

0.11

%

 

$

2,182,419

 

 

$

679

 

0.12

%

Savings and money market

 

1,583,791

 

 

 

1,350

 

0.34

%

 

 

1,638,105

 

 

 

2,244

 

0.55

%

Certificates of deposit

 

571,822

 

 

 

430

 

0.30

%

 

 

633,101

 

 

 

620

 

0.39

%

Total interest-bearing deposits

 

4,436,042

 

 

 

2,412

 

0.22

%

 

 

4,453,625

 

 

 

3,543

 

0.32

%

FHLB advances

 

435,984

 

 

 

2,990

 

2.72

%

 

 

418,111

 

 

 

2,944

 

2.82

%

Other borrowings

 

126,352

 

 

 

34

 

0.11

%

 

 

17,920

 

 

 

4

 

0.09

%

Long-term debt

 

256,634

 

 

 

3,379

 

5.22

%

 

 

256,492

 

 

 

3,339

 

5.22

%

Total interest-bearing liabilities

 

5,255,012

 

 

 

8,815

 

0.67

%

 

 

5,146,148

 

 

 

9,830

 

0.77

%

Noninterest-bearing deposits

 

1,939,912

 

 

 

 

 

 

 

1,767,711

 

 

 

 

 

Noninterest-bearing liabilities

 

98,748

 

 

 

 

 

 

 

98,174

 

 

 

 

 

Total liabilities

 

7,293,672

 

 

 

 

 

 

 

7,012,033

 

 

 

 

 

Total stockholders’ equity

 

847,941

 

 

 

 

 

 

 

814,973

 

 

 

 

 

Total liabilities and stockholders’ equity

$

8,141,613

 

 

 

 

 

 

$

7,827,006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income/spread

 

 

$

62,976

 

3.06

%

 

 

 

$

59,847

 

3.04

%

Net interest margin

 

 

 

 

3.28

%

 

 

 

 

 

3.27

%

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of interest-earning assets to interest-bearing liabilities

 

145

%

 

 

 

 

 

 

143

%

 

 

 

 

Total deposits

$

6,375,954

 

 

$

2,412

 

0.15

%

 

$

6,221,336

 

 

$

3,543

 

0.23

%

Total funding (1)

$

7,194,924

 

 

$

8,815

 

0.49

%

 

$

6,913,859

 

 

$

9,830

 

0.57

%

(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.

 

Six Months Ended

 

June 30, 2022

 

June 30, 2021

 

Average

 

 

 

Yield

 

Average

 

 

 

Yield

 

Balance

 

Interest

 

/ Cost

 

Balance

 

Interest

 

/ Cost

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate, multifamily, and construction

$

2,870,339

 

 

$

62,658

 

4.40

%

 

$

2,317,971

 

 

$

53,610

 

4.66

%

Commercial and industrial and SBA

 

2,637,413

 

 

 

59,376

 

4.54

%

 

 

2,187,818

 

 

 

45,888

 

4.23

%

SFR mortgage

 

1,659,633

 

 

 

30,068

 

3.65

%

 

 

1,244,015

 

 

 

23,157

 

3.75

%

Other consumer

 

95,326

 

 

 

2,973

 

6.29

%

 

 

26,188

 

 

 

569

 

4.38

%

Loans held-for-sale

 

3,523

 

 

 

54

 

3.09

%

 

 

1,701

 

 

 

21

 

2.49

%

Gross loans and leases

 

7,266,234

 

 

 

155,129

 

4.31

%

 

 

5,777,693

 

 

 

123,245

 

4.30

%

Securities

 

1,254,137

 

 

 

15,433

 

2.48

%

 

 

1,272,383

 

 

 

13,487

 

2.14

%

Other interest-earning assets

 

280,611

 

 

 

2,125

 

1.53

%

 

 

297,465

 

 

 

1,563

 

1.06

%

Total interest-earning assets

 

8,800,982

 

 

 

172,687

 

3.96

%

 

 

7,347,541

 

 

 

138,295

 

3.80

%

Allowance for credit losses

 

(93,422

)

 

 

 

 

 

 

(80,102

)

 

 

 

 

BOLI and noninterest-earning assets

 

659,804

 

 

 

 

 

 

 

576,446

 

 

 

 

 

Total assets

$

9,367,364

 

 

 

 

 

 

$

7,843,885

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing checking

$

2,386,120

 

 

$

2,097

 

0.18

%

 

$

2,161,483

 

 

$

1,581

 

0.15

%

Savings and money market

 

1,635,747

 

 

 

1,371

 

0.17

%

 

 

1,646,269

 

 

 

4,634

 

0.57

%

Certificates of deposit

 

570,170

 

 

 

1,100

 

0.39

%

 

 

676,400

 

 

 

1,614

 

0.48

%

Total interest-bearing deposits

 

4,592,037

 

 

 

4,568

 

0.20

%

 

 

4,484,152

 

 

 

7,829

 

0.35

%

FHLB advances

 

472,760

 

 

 

6,067

 

2.59

%

 

 

432,286

 

 

 

6,056

 

2.83

%

Other borrowings

 

117,095

 

 

 

379

 

0.65

%

 

 

11,061

 

 

 

6

 

0.11

%

Long-term debt

 

274,466

 

 

 

6,933

 

5.09

%

 

 

256,427

 

 

 

6,641

 

5.22

%

Total interest-bearing liabilities

 

5,456,358

 

 

 

17,947

 

0.66

%

 

 

5,183,926

 

 

 

20,532

 

0.80

%

Noninterest-bearing deposits

 

2,800,281

 

 

 

 

 

 

 

1,710,930

 

 

 

 

 

Noninterest-bearing liabilities

 

101,048

 

 

 

 

 

 

 

97,658

 

 

 

 

 

Total liabilities

 

8,357,687

 

 

 

 

 

 

 

6,992,514

 

 

 

 

 

Total stockholders’ equity

 

1,009,677

 

 

 

 

 

 

 

851,371

 

 

 

 

 

Total liabilities and stockholders’ equity

$

9,367,364

 

 

 

 

 

 

$

7,843,885

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income/spread

 

 

$

154,740

 

3.30

%

 

 

 

$

117,763

 

3.00

%

Net interest margin

 

 

 

 

3.55

%

 

 

 

 

 

3.23

%

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of interest-earning assets to interest-bearing liabilities

 

161

%

 

 

 

 

 

 

142

%

 

 

 

 

Total deposits

$

7,392,318

 

 

$

4,568

 

0.12

%

 

$

6,195,082

 

 

$

7,829

 

0.25

%

Total funding (1)

$

8,256,639

 

 

$

17,947

 

0.44

%

 

$

6,894,856

 

 

$

20,532

 

0.60

%

(1)

Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.

Banc of California, Inc.

Consolidated Operations

Non-GAAP Measures

(Dollars in thousands, except per share data)

(Unaudited)

Under Item 10(e) of SEC Regulation S-K, public companies disclosing financial measures in filings with the SEC that are not calculated in accordance with GAAP must also disclose, along with each non-GAAP financial measure, certain additional information, including a presentation of the most directly comparable GAAP financial measure, a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure, as well as a statement of the reasons why the company's management believes that presentation of the non-GAAP financial measure provides useful information to investors regarding the company's financial condition and results of operations and, to the extent material, a statement of the additional purposes, if any, for which the company's management uses the non-GAAP financial measure.

Tangible assets, tangible equity, tangible common equity, tangible equity to tangible assets, tangible common equity to tangible assets, tangible common equity per share, return on average tangible common equity, adjusted noninterest expense, adjusted noninterest expense to average total 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, after adjustment for amortization of intangible assets, 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 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 total revenue.

Adjusted net income (loss) is calculated by adjusting net income (loss) for tax-effected noninterest expense adjustments and the tax impact from the exercise of stock appreciation rights for the periods indicated. Adjusted ROAA is computed by dividing annualized adjusted net income by average assets. Adjusted net income (loss) available to common stockholders is computed by removing the impact of preferred stock redemptions from adjusted net income (loss). Adjusted diluted earnings per share is computed by dividing adjusted net income (loss) available to common stockholders by the weighted average diluted common shares outstanding.

Management believes the presentation of these financial measures adjusting the impact of these items provides useful supplemental information that is essential to a proper understanding of the financial results and operating performance of the Company. This disclosure should not be viewed as a substitute for results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.

The following tables provide reconciliations of the non-GAAP measures with financial measures defined by GAAP.

Banc of California, Inc.

Consolidated Operations

Non-GAAP Measures, Continued

(Dollars in thousands, except per share data)

(Unaudited)

 

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

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

 

 

 

 

 

 

 

 

 

Total assets

$

9,502,113

 

 

$

9,583,540

 

 

$

9,393,743

 

 

$

8,278,741

 

 

$

8,027,413

 

Less goodwill

 

(95,127

)

 

 

(95,127

)

 

 

(94,301

)

 

 

(37,144

)

 

 

(37,144

)

Less other intangible assets

 

(4,677

)

 

 

(4,990

)

 

 

(6,411

)

 

 

(1,787

)

 

 

(2,069

)

Tangible assets(1)

$

9,402,309

 

 

$

9,483,423

 

 

$

9,293,031

 

 

$

8,239,810

 

 

$

7,988,200

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity

$

949,130

 

 

$

979,009

 

 

$

1,065,290

 

 

$

844,803

 

 

$

829,362

 

Less preferred stock

 

 

 

 

 

 

 

(94,956

)

 

 

(94,956

)

 

 

(94,956

)

Total common stockholders' equity

$

949,130

 

 

$

979,009

 

 

$

970,334

 

 

$

749,847

 

 

$

734,406

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity

$

949,130

 

 

$

979,009

 

 

$

1,065,290

 

 

$

844,803

 

 

$

829,362

 

Less goodwill

 

(95,127

)

 

 

(95,127

)

 

 

(94,301

)

 

 

(37,144

)

 

 

(37,144

)

Less other intangible assets

 

(4,677

)

 

 

(4,990

)

 

 

(6,411

)

 

 

(1,787

)

 

 

(2,069

)

Tangible equity(1)

 

849,326

 

 

 

878,892

 

 

 

964,578

 

 

 

805,872

 

 

 

790,149

 

Less preferred stock

 

 

 

 

 

 

 

(94,956

)

 

 

(94,956

)

 

 

(94,956

)

Tangible common equity(1)

$

849,326

 

 

$

878,892

 

 

$

869,622

 

 

$

710,916

 

 

$

695,193

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity to total assets

 

9.99

%

 

 

10.22

%

 

 

11.34

%

 

 

10.20

%

 

 

10.33

%

Tangible equity to tangible assets(1)

 

9.03

%

 

 

9.27

%

 

 

10.38

%

 

 

9.78

%

 

 

9.89

%

Tangible common equity to tangible assets(1)

 

9.03

%

 

 

9.27

%

 

 

9.36

%

 

 

8.63

%

 

 

8.70

%

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

59,985,736

 

 

 

62,077,312

 

 

 

62,188,206

 

 

 

50,321,096

 

 

 

50,313,228

 

Class B non-voting non-convertible common shares outstanding

 

477,321

 

 

 

477,321

 

 

 

477,321

 

 

 

477,321

 

 

 

477,321

 

Total common shares outstanding

 

60,463,057

 

 

 

62,554,633

 

 

 

62,665,527

 

 

 

50,798,417

 

 

 

50,790,549

 

 

 

 

 

 

 

 

 

 

 

Book value per common share

$

15.70

 

 

$

15.65

 

 

$

15.48

 

 

$

14.76

 

 

$

14.46

 

Tangible common equity per share(1)

$

14.05

 

 

$

14.05

 

 

$

13.88

 

 

$

13.99

 

 

$

13.69

 

(1)

Non-GAAP measure.

Banc of California, Inc.

Consolidated Operations

Non-GAAP Measures, Continued

(Dollars in thousands, except per share data)

(Unaudited)

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

 

June 30,

2022

 

June 30,

2021

Return on tangible common equity

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total stockholders' equity

$

969,885

 

 

$

1,049,912

 

 

$

1,035,782

 

 

$

847,941

 

 

$

814,973

 

 

$

1,009,677

 

 

$

851,371

 

Less average preferred stock

 

 

 

 

(75,965

)

 

 

(94,956

)

 

 

(94,956

)

 

 

(94,956

)

 

 

(37,773

)

 

 

(129,733

)

Average common stockholders' equity

 

969,885

 

 

 

973,947

 

 

 

940,826

 

 

 

752,985

 

 

 

720,017

 

 

 

971,904

 

 

 

721,638

 

Less average goodwill

 

(95,127

)

 

 

(94,307

)

 

 

(86,911

)

 

 

(37,144

)

 

 

(37,144

)

 

 

(94,719

)

 

 

(37,144

)

Less average other intangible assets

 

(4,869

)

 

 

(6,224

)

 

 

(4,994

)

 

 

(1,941

)

 

 

(2,224

)

 

 

(5,543

)

 

 

(2,370

)

Average tangible common equity(1)

$

869,889

 

 

$

873,416

 

 

$

848,921

 

 

$

713,900

 

 

$

680,649

 

 

$

871,642

 

 

$

682,124

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders

$

26,712

 

 

$

43,345

 

 

$

4,024

 

 

$

21,443

 

 

$

17,323

 

 

$

70,057

 

 

$

25,088

 

Add amortization of intangible assets

 

313

 

 

 

441

 

 

 

430

 

 

 

282

 

 

 

282

 

 

 

754

 

 

 

564

 

Less tax effect on amortization of intangible assets(2)

 

(66

)

 

 

(93

)

 

 

(90

)

 

 

(59

)

 

 

(59

)

 

 

(158

)

 

 

(118

)

Net income available to common stockholders after adjustments for intangible assets(1)

$

26,959

 

 

$

43,693

 

 

$

4,364

 

 

$

21,666

 

 

$

17,546

 

 

$

70,653

 

 

$

25,534

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average equity

 

11.05

%

 

 

18.74

%

 

 

2.20

%

 

 

10.84

%

 

 

9.38

%

 

 

15.02

%

 

 

7.92

%

Return on average tangible common equity(1)

 

12.43

%

 

 

20.29

%

 

 

2.04

%

 

 

12.04

%

 

 

10.34

%

 

 

16.35

%

 

 

7.55

%

(1)

Non-GAAP measure.

(2)

Adjustments shown net of a statutory Federal tax rate of 21%.

Banc of California, Inc.

Consolidated Operations

Non-GAAP Measures, Continued

(Dollars in thousands, except per share data)

(Unaudited)

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021