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Banc of California, Inc. Reports Fourth Quarter 2023 Financial Results Following Completion of Transformational Merger with PacWest Bancorp

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