Banc of California Reports Fourth Quarter 2019 Financial Results
SANTA ANA, Calif., (January 23, 2020) — Banc of California, Inc. (NYSE: BANC) today reported net income available to common stockholders for the fourth quarter of $10.4 million, resulting in diluted income per common share of $0.20.
Highlights for the fourth quarter (as compared to third quarter 2019) included:
| |
| • | Net interest margin increased 18 basis points to 3.04% |
| |
| • | Cost of total deposits decreased by 21 basis points to 1.27% |
| |
| • | Noninterest-bearing deposit balances increased to 20.1% of total deposits, up from 19.2% |
| |
| • | Average noninterest-bearing deposits increased by $60 million, or 5.7% |
| |
| • | Return on average assets was 0.71% and return on average equity was 6.20% |
“2019 was the beginning of the transformation of Banc of California,” said Jared Wolff, President and Chief Executive Officer of Banc of California. “We successfully executed on each of our key strategic priorities, reducing cost of deposits, lowering expenses and right-sizing the balance sheet. As a result of our efforts, we have solidified our foundation as a relationship focused business bank, and are poised to create true franchise value going forward.”
Mr. Wolff continued, “As we enter 2020, we will continue to build on the momentum from 2019, remixing our loans and deposits to improve our franchise, and expanding our presence in the key lending segments we are targeting. Further, having built up excess capital, we will be looking for opportunities to deploy it that optimize our franchise and improve earnings in the future. We look forward to showing progress on these initiatives in 2020.”
Lynn Hopkins, Chief Financial Officer of Banc of California said, “The significant improvement in our cost of funds drove the 18 basis point increase in our net interest margin as interest earning asset yields remained steady at 4.50%. Our overall cost of funds decreased to 1.55% as we have been able to reduce our reliance on wholesale funding sources. The fourth quarter, average noninterest-bearing deposit balances increased for the third consecutive quarter and represented over 19% of our total average deposits. Looking forward, we expect to continue seeing benefits from the loan and securities remixing activities and we are well-positioned to show ongoing improvement on both sides of the balance sheet.”
Business Results - Income Statement Highlights
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Year Ended |
| | December 31,
2019 | | September 30,
2019 | | June 30,
2019 | | March 31,
2019 | | December 31,
2018 | | December 31,
2019 | | December 31,
2018 |
| | ($ in thousands) |
| Total interest and dividend income | $ | 83,702 |
| | $ | 92,657 |
| | $ | 104,040 |
| | $ | 110,712 |
| | $ | 111,130 |
| | $ | 391,111 |
| | $ | 422,796 |
|
| Total interest expense | 27,042 |
| | 33,742 |
| | 39,260 |
| | 42,904 |
| | 40,448 |
| | 142,948 |
| | 136,720 |
|
| Net interest income | 56,660 |
| | 58,915 |
| | 64,780 |
| | 67,808 |
| | 70,682 |
| | 248,163 |
| | 286,076 |
|
| (Reversal of) provision for loan and lease losses | (2,678 | ) | | 38,540 |
| | (1,987 | ) | | 2,512 |
| | 6,653 |
| | 36,387 |
| | 30,215 |
|
| Net interest income after provision for loan and lease losses | 59,338 |
| | 20,375 |
| | 66,767 |
| | 65,296 |
| | 64,029 |
| | 211,776 |
| | 255,861 |
|
| Total noninterest income (loss) | 4,930 |
| | 3,181 |
| | (2,290 | ) | | 6,295 |
| | 2,448 |
| | 12,116 |
| | 23,915 |
|
| Total noninterest expense | 47,185 |
| | 43,307 |
| | 43,587 |
| | 61,835 |
| | 49,569 |
| | 195,914 |
| | 232,785 |
|
| Income tax expense (benefit) | 2,811 |
| | (5,619 | ) | | 4,308 |
| | 2,719 |
| | 6,117 |
| | 4,219 |
| | 4,844 |
|
| Income (loss) from continuing operations | 14,272 |
| | (14,132 | ) | | 16,582 |
| | 7,037 |
| | 10,791 |
| | 23,759 |
| | 42,147 |
|
| Income from discontinued operations, net of tax | — |
| | — |
| | — |
| | — |
| | 247 |
| | — |
| | 3,325 |
|
| Net income (loss) | $ | 14,272 |
| | $ | (14,132 | ) | | $ | 16,582 |
| | $ | 7,037 |
| | $ | 11,038 |
| | $ | 23,759 |
| | $ | 45,472 |
|
| | | | | | | | | | | | | | |
Net income (loss) available to common stockholders(1) | $ | 10,415 |
| | $ | (22,722 | ) | | $ | 11,909 |
| | $ | 2,527 |
| | $ | 6,527 |
| | $ | 2,624 |
| | $ | 22,850 |
|
| |
| (1) | Balance represents the net income (loss) available to common stockholders after subtracting preferred stock dividends, income allocated to participating securities, participating securities dividends and impact of preferred stock redemption from net income (loss). Refer to the Statement of Operations at the end for additional detail on these amounts. |
Net interest income
Q4 2019 vs Q3 2019.
Net interest income for the fourth quarter decreased $2.3 million to $56.7 million due mostly to lower average loans and securities partially offset by an expanded net interest margin. Average interest-earning assets declined from the prior quarter by $781 million to $7.4 billion. During the prior quarter, we sold lower yielding, longer duration earning assets and used the sale proceeds to repay high cost funding liabilities; the full impact of this strategic objective was recognized during the fourth quarter.
The net interest margin improved 18 basis points to 3.04%. Our average yield on interest-earning assets remained flat quarter over quarter at 4.50%, primarily attributable to higher yielding loans representing a higher percentage of interest earning assets and a higher average yield on securities offset by a lower average loan yield. Our average yield on loans declined 4 basis points to 4.71% for the fourth quarter and the linked quarter decrease is due mostly to loans being originated and repriced into the lower rate environment, partially offset by higher average yields on commercial real estate, multifamily and construction loans. Our average yield on securities increased 12 basis points primarily as a result of our concentrated efforts to remix the securities portfolio and the high-yielding, variable rate CLOs representing a higher percentage of the portfolio, offset by these variable rate investments resetting into the lower interest rate environment.
Our average cost of interest-bearing liabilities decreased 18 basis points to 1.85% for the fourth quarter from 2.03% for the third quarter, driven by the lower average cost of interest-bearing deposits, which decreased by 21 basis points to 1.57% from the prior quarter. Additionally, average noninterest-bearing deposits increased by $60 million, or 5.7%, and represented 19.4% of total average deposits in the fourth quarter. Our total cost of deposits decreased 21 basis points to 1.27% for the fourth quarter. The decrease in our funding cost is due to a lower reliance on high cost transaction accounts and wholesale funds as we have managed down the balance sheet and continue to execute on our strategy to focus on relationship clients.
FY 2019 vs FY 2018.
Net interest income for the year ended December 31, 2019 decreased $37.9 million to $248.2 million as compared to $286.1 million for 2018 primarily as a result of targeted sales of securities and loans offset by the overall focus on remixing the loan portfolio towards relationship based lending during the year. For the year ended December 31, 2019, average interest-earning assets declined $1.12 billion to $8.60 billion, and the net interest margin decreased to 2.89% from 2.95% for the comparable 2018 period.
Our average yield on interest-earning assets increased 19 basis points to 4.55% for the year ended December 31, 2019 as compared to 4.36% for the full year of 2018, due to higher average yields on the loan and securities portfolios and an increased mix of loans versus securities. Our average yield on loans was 4.76% for the year ended December 31, 2019, compared to 4.64% for the full year of 2018, primarily attributable to higher average commercial and industrial balances in the portfolio mix and higher average yields on commercial real estate, multifamily and construction loans. Our average yield on securities increased 14 basis points primarily as a result of interest rate resets on our CLOs, partially offset by a decrease in our average balance attributable to the sale and calls of higher yielding CLOs between periods.
Provision for loan losses
Q4 2019 vs Q3 2019.
During the fourth quarter, we recognized a provision release of $2.7 million driven primarily by $431 million in lower loan balances. The provision release was partially offset by downgrades of several loans. In particular, a $24.9 million commercial and industrial (“C&I”) loan was downgraded during the quarter and classified loan balances increased $14.9 million.
FY 2019 vs FY 2018.
During the year ended December 31, 2019, we recognized a loan loss provision of $36.4 million, primarily attributable to a previously reported $35 million charge-off of a line of credit originated in November 2017 to a borrower purportedly the subject of a fraudulent scheme. We are actively evaluating all available sources of recovery, although no assurance can be given that we will be successful in that regard. For the comparable prior year period, $30.2 million of loan loss provisions were recorded, inclusive of a $13.9 million charge-off related to borrower fraud.
Noninterest income
Q4 2019 vs Q3 2019.
Noninterest income for the fourth quarter was $4.9 million, which represented an increase of $1.7 million, or 55% from the prior quarter. The increase was primarily due to no net loss on the sale of available-for-sale securities during the fourth quarter of 2019 as compared to a $5.1 million net loss during the third quarter of 2019, higher loan servicing income, and higher all other income. In addition, the Company had lower impairment losses on investment securities during the fourth quarter. These increases were partially offset by a lower gain on sale of loans of $5.2 million as the fourth quarter recognized a net loss of $833 thousand compared to a net gain of $4.3 million in the prior quarter.
FY 2019 vs FY 2018.
Noninterest income for the year ended December 31, 2019 was $12.1 million, which represented a decrease of $11.8 million, or 49.3% from the prior year. The decrease was primarily attributable to (1) a higher net loss on sale of investment securities of $10.4 million, (2) lower other income of $6.6 million due to the elimination of non-core assets in prior periods and the previously reported $9.6 million loss from interest rate swap agreements entered into in order to offset variability in the fair value of the Freddie Mac securitization completed in 2019, and (3) lower loan servicing income of $3.0 million as a result of the sale of mortgage servicing rights in 2018. These decreases are partially offset by a higher net gain on sale of loans of $5.9 million and a lower impairment loss on investment securities of $2.5 million.
Noninterest expense
Q4 2019 vs Q3 2019.
Noninterest expense for the fourth quarter was $47.2 million, representing an increase of $3.9 million over the prior quarter. Noninterest expense included: (1) $1.9 million lower salaries and benefits expense primarily related to lower headcount, (2) higher professional fees of $1.1 million, (3) $615 thousand higher regulatory assessments related to the one-time small bank assessment credit recorded in the third quarter, (4) $1.6 million in higher restructuring expense related to severance during the fourth quarter of 2019, and (5) a $2.0 million increase in loss on investments in alternative energy partnerships.
FY 2019 vs FY 2018.
Noninterest expense for the year ended December 31, 2019 was $195.9 million, which represented a decrease of $36.9 million, or 15.8% from the prior year. The lower noninterest expense primarily consisted of: (1) lower professional fees of $21.4 million, primarily attributable to $9.6 million of insurance recoveries net of expenses related to securities litigation, indemnification, investigation and other legal expenses, (2) lower salaries and benefits expense of $4.1 million resulting from lower headcount and lower consulting fees, (3) lower advertising costs of $4.2 million, and (4) a $3.4 million decrease in loss on investments in alternative energy partnerships.
Income taxes
Q4 2019 vs Q3 2019.
Income tax expense totaled $2.8 million for the quarter resulting in an effective tax rate of 16.5%. This compares to a $5.6 million tax benefit for the third quarter and an effective tax benefit rate of 28.5%.
FY 2019 vs FY 2018.
Income tax expense totaled $4.2 million for the year ended December 31, 2019, representing an effective tax rate of 15.1%, compared to $6.1 million and 11.9% for 2018. The higher effective tax rate in 2019 is due in part to a reduction in available tax credits generated by the Company compared to 2018. Looking forward, we expect our tax rate to normalize in the range of 22 — 24% as we expect a continued reduction in the generation of tax credits related to investments in alternative energy partnerships.
Balance Sheet
At December 31, 2019, total assets were $7.83 billion, which represented a linked quarter decrease of $796.9 million, consistent with our strategic shift towards reducing our balance sheet and focusing on relationship lending. The following table shows selected balance sheet line items as of the dates indicated.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of and for the Three Months Ended | | Amount Change |
| | December 31,
2019 | | September 30,
2019 | | June 30,
2019 | | March 31,
2019 | | December 31,
2018 | | Q4-19 vs. Q3-19 | | Q4-19 vs. Q4-18 |
| | | | | | | | | | | | | | |
| | ($ in thousands) |
| Total assets | $ | 7,828,410 |
| | $ | 8,625,337 |
| | $ | 9,359,931 |
| | $ | 9,886,525 |
| | $ | 10,630,067 |
| | $ | (796,927 | ) | | $ | (2,801,657 | ) |
| Securities available-for-sale | $ | 912,580 |
| | $ | 775,662 |
| | $ | 1,167,687 |
| | $ | 1,471,303 |
| | $ | 1,992,500 |
| | $ | 136,918 |
| | $ | (1,079,920 | ) |
| Loans held-for-investment | $ | 5,951,885 |
| | $ | 6,383,259 |
| | $ | 6,719,570 |
| | $ | 7,557,200 |
| | $ | 7,700,873 |
| | $ | (431,374 | ) | | $ | (1,748,988 | ) |
| Loans held-for-sale | $ | 22,642 |
| | $ | 23,936 |
| | $ | 597,720 |
| | $ | 25,191 |
| | $ | 8,116 |
| | $ | (1,294 | ) | | $ | 14,526 |
|
| | | | | | | | | | | | | | |
| Demand deposits | $ | 2,622,398 |
| | $ | 2,602,011 |
| | $ | 2,510,233 |
| | $ | 2,690,738 |
| | $ | 2,579,000 |
| | $ | 20,387 |
| | $ | 43,398 |
|
| Other core deposits | 2,794,769 |
| | 3,074,936 |
| | 3,301,080 |
| | 3,575,140 |
| | 3,629,100 |
| | (280,167 | ) | | (834,331 | ) |
| Brokered deposits | 10,000 |
| | 93,111 |
| | 480,977 |
| | 1,459,054 |
| | 1,708,544 |
| | (83,111 | ) | �� | (1,698,544 | ) |
| Total Deposits | $ | 5,427,167 |
| | $ | 5,770,058 |
| | $ | 6,292,290 |
| | $ | 7,724,932 |
| | $ | 7,916,644 |
| | $ | (342,891 | ) | | $ | (2,489,477 | ) |
| As percentage of total deposits | | | | | | | | | | | | | |
| Demand deposits | 48.32 | % | | 45.10 | % | | 39.89 | % | | 34.83 | % | | 32.58 | % | | 3.22 | % | | 15.74 | % |
| Other core deposits | 51.50 | % | | 53.29 | % | | 52.46 | % | | 46.28 | % | | 45.84 | % | | (1.79 | )% | | 5.66 | % |
| Brokered deposits | 0.18 | % | | 1.61 | % | | 7.64 | % | | 18.89 | % | | 21.58 | % | | (1.43 | )% | | (21.40 | )% |
| | | | | | | | | | | | | | |
| Average loan yield | 4.71 | % | | 4.75 | % | | 4.80 | % | | 4.76 | % | | 4.74 | % | | (0.04 | )% | | (0.03 | )% |
| Average cost of interest-bearing deposits | 1.57 | % | | 1.78 | % | | 1.89 | % | | 1.92 | % | | 1.77 | % | | (0.21 | )% | | (0.20 | )% |
Investments
Securities available-for-sale was $912.6 million at December 31, 2019, an increase of 17.7% from the previous quarter, primarily due to the purchase of $195.3 million of investment securities, comprised of $128.8 million of agency securities, $53.0 million of municipal bonds and $13.5 million of corporate debt securities during the quarter, partially offset by the sale of $39.4 million of our legacy agency MBS. The funds from the sales of our MBS during the quarter and other available cash balances were reinvested into a mix of security
classes, resulting in an overall shorter duration for the securities portfolio. As of December 31, 2019, our securities portfolio included $718.4 million of CLOs, $127.8 million of agency securities, $52.7 million of municipal securities, and $13.6 million of corporate debt securities.
Loans
The following table sets forth the composition, by loan category, of our loan portfolio as of the dates indicated:
|
| | | | | | | | | | | | | | | | | | | |
| | December 31,
2019 | | September 30,
2019 | | June 30,
2019 | | March 31,
2019 | | December 31,
2018 |
| | ($ in thousands) |
| Composition of held-for-investment loans | | | | | | | | | |
| Commercial real estate | $ | 818,817 |
| | $ | 891,029 |
| | $ | 856,497 |
| | $ | 865,521 |
| | $ | 867,013 |
|
| Multifamily | 1,494,528 |
| | 1,563,757 |
| | 1,598,978 |
| | 2,332,527 |
| | 2,241,246 |
|
| Construction | 231,350 |
| | 228,561 |
| | 209,029 |
| | 211,549 |
| | 203,976 |
|
| Commercial and industrial | 1,691,270 |
| | 1,789,478 |
| | 1,951,707 |
| | 1,907,102 |
| | 1,944,142 |
|
| SBA | 70,981 |
| | 75,359 |
| | 80,929 |
| | 74,998 |
| | 68,741 |
|
| Total commercial loans | 4,306,946 |
| | 4,548,184 |
| | 4,697,140 |
| | 5,391,697 |
| | 5,325,118 |
|
| Single family residential mortgage | 1,590,774 |
| | 1,775,953 |
| | 1,961,065 |
| | 2,102,694 |
| | 2,305,490 |
|
| Other consumer | 54,165 |
| | 59,122 |
| | 61,365 |
| | 62,809 |
| | 70,265 |
|
| Total consumer loans | 1,644,939 |
| | 1,835,075 |
| | 2,022,430 |
| | 2,165,503 |
| | 2,375,755 |
|
| Total gross loans | $ | 5,951,885 |
| | $ | 6,383,259 |
| | $ | 6,719,570 |
| | $ | 7,557,200 |
| | $ | 7,700,873 |
|
| Composition percentage of held-for-investment loans | | | | | | | | | |
| Commercial real estate | 13.8 | % | | 14.0 | % | | 12.7 | % | | 11.5 | % | | 11.3 | % |
| Multifamily | 25.1 | % | | 24.5 | % | | 23.8 | % | | 30.9 | % | | 29.2 | % |
| Construction | 3.9 | % | | 3.6 | % | | 3.1 | % | | 2.8 | % | | 2.6 | % |
| Commercial and industrial | 28.4 | % | | 28.0 | % | | 29.1 | % | | 25.2 | % | | 25.2 | % |
| SBA | 1.2 | % | | 1.2 | % | | 1.2 | % | | 1.0 | % | | 0.9 | % |
| Total commercial loans | 72.4 | % | | 71.3 | % | | 69.9 | % | | 71.4 | % | | 69.2 | % |
| Single family residential mortgage | 26.7 | % | | 27.8 | % | | 29.2 | % | | 27.8 | % | | 29.9 | % |
| Other consumer | 0.9 | % | | 0.9 | % | | 0.9 | % | | 0.8 | % | | 0.9 | % |
| Total consumer loans | 27.6 | % | | 28.7 | % | | 30.1 | % | | 28.6 | % | | 30.8 | % |
| Total gross loans | 100.0 | % | | 100.0 | % | | 100.0 | % | | 100.0 | % | | 100.0 | % |
Held-for-investment loans decreased $431 million to $6.0 billion from the prior quarter, due mostly to lower single family residential mortgage loans of $185 million, lower C&I loans of $98 million, lower commercial real estate of $72 million, and lower multifamily of $69 million. The decline in single family residential and multifamily is due to mostly to accelerated payoffs as the loans refinance in the lower rate environment. The decline in C&I loans is due primarily to the payoff of a few large loans and lower average outstanding balances on credit lines.
Single family residential mortgage and multifamily loans now comprise 51.8% of the total held-for-investment loan portfolio as compared to 59.1% one year ago. Commercial real estate loans comprised 13.8% of the loan portfolio and commercial and industrial loans constituted 28.4%, with average yields of 4.94% and 5.09% for the fourth quarter of 2019.
Deposits
The following table sets forth the composition of our deposits at the dates indicated.
|
| | | | | | | | | | | | | | | | | | | |
| | December 31,
2019 | | September 30,
2019 | | June 30,
2019 | | March 31,
2019 | | December 31,
2018 |
| | ($ in thousands) |
| Composition of deposits | | | | | | | | | |
| Noninterest-bearing checking | $ | 1,088,516 |
| | $ | 1,107,442 |
| | $ | 993,745 |
| | $ | 1,120,700 |
| | $ | 1,023,360 |
|
| Interest-bearing checking | 1,533,882 |
| | 1,503,208 |
| | 1,577,901 |
| | 1,573,499 |
| | 1,556,410 |
|
| Money market | 715,479 |
| | 695,530 |
| | 800,898 |
| | 899,330 |
| | 873,153 |
|
| Savings | 885,246 |
| | 1,042,162 |
| | 1,061,115 |
| | 1,151,442 |
| | 1,265,847 |
|
| Non-brokered certificates of deposit | 1,204,044 |
| | 1,367,284 |
| | 1,479,137 |
| | 1,684,895 |
| | 1,654,605 |
|
| Brokered certificates of deposit | — |
| | 54,432 |
| | 379,494 |
| | 1,295,066 |
| | 1,543,269 |
|
| Total deposits | $ | 5,427,167 |
| | $ | 5,770,058 |
| | $ | 6,292,290 |
| | $ | 7,724,932 |
| | $ | 7,916,644 |
|
| Composition percentage of deposits | | | | | | | | | |
| Noninterest-bearing checking | 20.1 | % | | 19.2 | % | | 15.8 | % | | 14.5 | % | | 12.9 | % |
| Interest-bearing checking | 28.2 | % | | 26.1 | % | | 25.1 | % | | 20.4 | % | | 19.7 | % |
| Money market | 13.2 | % | | 12.0 | % | | 12.7 | % | | 11.6 | % | | 11.0 | % |
| Savings | 16.3 | % | | 18.1 | % | | 16.9 | % | | 14.9 | % | | 16.0 | % |
| Non-brokered certificates of deposit | 22.2 | % | | 23.7 | % | | 23.5 | % | | 21.8 | % | | 20.9 | % |
| Brokered certificates of deposit | — | % | | 0.9 | % | | 6.0 | % | | 16.8 | % | | 19.5 | % |
| Total deposits | 100.0 | % | | 100.0 | % | | 100.0 | % | | 100.0 | % | | 100.0 | % |
Total deposits decreased $342.9 million during the fourth quarter of 2019 to $5.43 billion due to lower savings balances of $156.9 million, non-brokered certificates of deposit balances of $163.2 million, brokered certificates of deposit balances of $54.4 million, and noninterest-bearing checking of $18.9 million, offset by higher interest-bearing checking of $30.7 million and money market of $19.9 million. The decline in non-brokered certificates of deposit is attributed to a lower amount of renewals for maturing certificates as they reset to lower offer rates. The decline in savings is due to rate sensitive customers lowering balances as this product continues to be priced in to the current rate environment as we focus on building relationship-based deposits. In addition, we reduced our reliance on wholesale funding with no new brokered certificates of deposit acquired in the quarter. Noninterest-bearing deposits totaled $1.09 billion and represented 20.1% of total deposits at year end, which compares to $1.11 billion and 19.2% at September 30, 2019 and $1.02 billion and 12.9% at December 31, 2018.
Debt
Advances from the FHLB decreased $455 million on a linked-quarter basis, or 28%, to $1.20 billion as of December 31, 2019, primarily as a result of the maturity of $300 million in fixed rate-advances and a reduction in overnight advances of $205 million. At the end of the fourth quarter of 2019, the maturity dates of FHLB advances consisted of $465 million of overnight, $74 million maturing in three months or less, and $656 million maturing beyond three months. As of the end of the fourth quarter of 2019, the overnight advance interest rate was 1.66%.
Equity
At December 31, 2019, total stockholders’ equity increased by $6.3 million to $907.2 million on a linked-quarter basis, while tangible common equity increased by $6.7 million to $676.1 million. The increase in total stockholders’ equity related to net income of $14.3 million, partially offset by the dividends to common and preferred stockholders of $6.8 million and an increase in accumulated other comprehensive loss of $2.3 million as a result of reductions in the fair value of securities available-for-sale.
Capital ratios remain strong with total risk-based capital at 15.90% and a tier 1 leverage ratio of 10.89%. The following table sets forth our regulatory capital ratios at December 31, 2019 and the previous four quarters.
|
| | | | | | | | | | | | | | |
| | December 31,
2019 | | September 30,
2019 | | June 30,
2019 | | March 31,
2019 | | December 31,
2018 |
Capital Ratios(1) | | | | | | | | | |
| Banc of California, Inc. | | | | | | | | | |
| Total risk-based capital ratio | 15.90 | % | | 14.37 | % | | 15.00 | % | | 14.01 | % | | 13.71 | % |
| Tier 1 risk-based capital ratio | 14.83 | % | | 13.32 | % | | 14.03 | % | | 13.03 | % | | 12.77 | % |
| Common equity tier 1 capital ratio | 11.56 | % | | 10.34 | % | | 10.50 | % | | 9.72 | % | | 9.53 | % |
| Tier 1 leverage ratio | 10.89 | % | | 9.84 | % | | 9.62 | % | | 8.87 | % | | 8.95 | % |
| Banc of California, NA | | | | | | | | | |
| Total risk-based capital ratio | 17.46 | % | | 15.65 | % | | 16.70 | % | | 15.79 | % | | 15.71 | % |
| Tier 1 risk-based capital ratio | 16.39 | % | | 14.60 | % | | 15.73 | % | | 14.81 | % | | 14.77 | % |
| Common equity tier 1 capital ratio | 16.39 | % | | 14.60 | % | | 15.73 | % | | 14.81 | % | | 14.77 | % |
| Tier 1 leverage ratio | 12.02 | % | | 10.75 | % | | 10.80 | % | | 10.07 | % | | 10.36 | % |
| |
| (1) | December 31, 2019 capital ratios are preliminary, |
Credit Quality
|
| | | | | | | | | | | | | | | | | | | |
| | December 31,
2019 | | September 30,
2019 | | June 30,
2019 | | March 31,
2019 | | December 31,
2018 |
| Asset quality information and ratios | ($ in thousands) |
| Delinquent loans held-for-investment | | | | | | | | | |
| 30 to 89 days delinquent | $ | 32,873 |
| | $ | 39,122 |
| | $ | 34,938 |
| | $ | 44,840 |
| | $ | 26,684 |
|
| 90+ days delinquent | 24,734 |
| | 17,220 |
| | 17,272 |
| | 14,623 |
| | 13,846 |
|
| Total delinquent loans | $ | 57,607 |
| | $ | 56,342 |
| | $ | 52,210 |
| | $ | 59,463 |
| | $ | 40,530 |
|
| Total delinquent loans to total loans | 0.97 | % | | 0.88 | % | | 0.78 | % | | 0.79 | % | | 0.53 | % |
| Non-performing assets, excluding loans held-for-sale | | | | | | | | | |
| Non-performing loans | $ | 43,354 |
| | $ | 45,169 |
| | $ | 28,499 |
| | $ | 27,739 |
| | $ | 21,585 |
|
| 90+ days delinquent and still accruing loans | — |
| | — |
| | 275 |
| | 731 |
| | 470 |
|
| Other real estate owned | — |
| | — |
| | 276 |
| | 316 |
| | 672 |
|
| Non-performing assets | $ | 43,354 |
| | $ | 45,169 |
| | $ | 29,050 |
| | $ | 28,786 |
| | $ | 22,727 |
|
| ALLL to non-performing loans | 132.97 | % | | 139.31 | % | | 206.86 | % | | 224.40 | % | | 281.99 | % |
| Non-performing loans to total loans held-for-investment | 0.73 | % | | 0.71 | % | | 0.43 | % | | 0.38 | % | | 0.29 | % |
| Non-performing assets to total assets | 0.55 | % | | 0.52 | % | | 0.31 | % | | 0.29 | % | | 0.21 | % |
| Troubled debt restructurings (TDRs) | | | | | | | | | |
| Performing TDRs | $ | 6,620 |
| | $ | 6,800 |
| | $ | 20,245 |
| | $ | 5,574 |
| | $ | 5,745 |
|
| Non-performing TDRs | 21,837 |
| | 14,605 |
| | 2,428 |
| | 1,943 |
| | 2,276 |
|
| Total TDRs | $ | 28,457 |
| | $ | 21,405 |
| | $ | 22,673 |
| | $ | 7,517 |
| | $ | 8,021 |
|
Total delinquent loans increased $1.3 million in the fourth quarter to $57.6 million at December 31, 2019, due to $22.8 million of additions, offset by $7.8 million returning to current status and $13.7 million of principal payments or payoffs. The $22.8 million of additions includes a $9.0 million single family residential mortgage loan with a 38% loan-to-value ratio and a $5.0 million C&I loan in process of restructuring. Loans 90+ days delinquent includes single family residential mortgage loans, which account for 75% of the balance.
Non-performing loans decreased $1.8 million in the fourth quarter to $43.4 million as of December 31, 2019, due to the sale of $11.9 million of non-performing loans and $4.1 million of loans returning to performing status, offset by $14.3 million of performing loans being placed on nonaccrual status. The year end balance includes two large loans that comprise 54% of our total nonperforming loans, one is a $14.0 million shared national credit and the other is a $9.0 million single family mortgage residential loan,with a loan-to-value ratio of 38%. Aside from those two loans, nonperforming loans total $20 million, of which 48% relates to single family residential mortgage loans. Of the $43.4 million non-performing loans at December 31, 2019, $17.7 million relates to loans in a current payment status.
Allowance for Loan Losses
|
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended |
| | December 31,
2019 | | September 30,
2019 | | June 30,
2019 | | March 31,
2019 | | December 31,
2018 |
| | ($ in thousands) |
| Allowance for loan losses (ALLL) | | | | | | | | | |
| Balance at beginning of period | $ | 62,927 |
| | $ | 59,523 |
| | $ | 63,885 |
| | $ | 62,192 |
| | $ | 57,782 |
|
| Loans and leases charged off | (2,706 | ) | | (35,546 | ) | | (2,451 | ) | | (1,063 | ) | | (2,522 | ) |
| Recoveries | 106 |
| | 410 |
| | 76 |
| | 244 |
| | 279 |
|
| Net charge-offs | (2,600 | ) | | (35,136 | ) | | (2,375 | ) | | (819 | ) | | (2,243 | ) |
| (Reversal of) provision for loan losses | (2,678 | ) | | 38,540 |
| | (1,987 | ) | | 2,512 |
| | 6,653 |
|
| Balance at end of period | $ | 57,649 |
| | $ | 62,927 |
| | $ | 59,523 |
| | $ | 63,885 |
| | $ | 62,192 |
|
| Annualized net loan charge-offs to average total loans held-for-investment | 0.17 | % | | 2.19 | % | | 0.13 | % | | 0.04 | % | | 0.12 | % |
| Reserve for loss on repurchased loans | | | | | | | | | |
| Balance at beginning of period | $ | 6,561 |
| | $ | 2,478 |
| | $ | 2,486 |
| | $ | 2,506 |
| | $ | 2,575 |
|
| Initial provision for loan repurchases | — |
| | 4,415 |
| | 53 |
| | 96 |
| | 53 |
|
| Reversal of provision for loan repurchases | (360 | ) | | (123 | ) | | (61 | ) | | (116 | ) | | (122 | ) |
| Utilization of reserve for loan repurchases | — |
| | (209 | ) | | — |
| | — |
| | — |
|
| Balance at end of period | $ | 6,201 |
| | $ | 6,561 |
| | $ | 2,478 |
| | $ | 2,486 |
| | $ | 2,506 |
|
During the fourth quarter of 2019, the allowance for loan losses decreased by $5.3 million as a result of a $2.7 million provision release and net charge-offs of $2.6 million. The net charge-offs include $1.7 million related to the sale of $11.9 million of nonperforming loans. The provision release was driven primarily by $431 million in lower loan balances.
The reserve for loss on repurchased loans decreased by $360 thousand in the fourth quarter due to continued runoff of principal balances associated with the multifamily loan securitization and single-family residential mortgage loans previously sold. This runoff of the associated sold balances results in reduced anticipated losses from repurchases.
Subsequent Events
On January 22, 2020 the Company filed a Shelf Registration Statement on Form S-3 with the Securities and Exchange Commission to provide the Company with flexibility and enable it to access the public capital markets to respond to financing and business opportunities that may arise in the future. The Company’s prior Shelf Registration Statement expired in August 2019.
The Company will host a conference call to discuss its fourth quarter 2019 financial results at 10:00 a.m. Pacific Time (PT) on Thursday, January 23, 2020. Interested parties are welcome to attend the conference call by dialing 888-317-6003, and referencing event code 1520432. A live audio webcast will also be available and the webcast link will be posted on the Company’s Investor Relations website at www.bancofcal.com/investor. The slide presentation for the call will also be available on the Company's Investor Relations website prior to the call.
About Banc of California, Inc.
Banc of California, Inc. (NYSE: BANC) is a bank holding company with approximately $7.8 billion in assets and one wholly-owned banking subsidiary, Banc of California, N.A. (the “Bank”). The Bank has 43 offices including 32 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 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. You should not place undue reliance on forward-looking statements and Banc of California, Inc. undertakes no obligation to update any such statements to reflect circumstances or events that occur after the date on which the forward-looking statement is made.
|
|
| Source: Banc of California, Inc. |
| Investor Relations Inquiries: |
| Banc of California, Inc. |
| (855) 361-2262 |
| Jared Wolff, (949) 385-8700 |
| Lynn Hopkins, (949) 265-6599 |
Banc of California, Inc.
Consolidated Statements of Financial Condition
(Dollars in thousands)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| | December 31,
2019 | | September 30,
2019 | | June 30,
2019 | | March 31,
2019 | | December 31,
2018 |
| ASSETS | | | | | | | | | |
| Cash and cash equivalents | $ | 373,472 |
| | $ | 526,874 |
| | $ | 313,850 |
| | $ | 304,705 |
| | $ | 391,592 |
|
| Securities available-for-sale | 912,580 |
| | 775,662 |
| | 1,167,687 |
| | 1,471,303 |
| | 1,992,500 |
|
| Loans held-for-sale | 22,642 |
| | 23,936 |
| | 597,720 |
| | 25,191 |
| | 8,116 |
|
| Loans held-for-investment | 5,951,885 |
| | 6,383,259 |
| | 6,719,570 |
| | 7,557,200 |
| | 7,700,873 |
|
| Allowance for loan losses | (57,649 | ) | | (62,927 | ) | | (59,523 | ) | | (63,885 | ) | | (62,192 | ) |
| Federal Home Loan Bank and other bank stock | 59,420 |
| | 71,679 |
| | 76,373 |
| | 55,794 |
| | 68,094 |
|
| Servicing rights, net | 2,299 |
| | 2,407 |
| | 2,715 |
| | 3,053 |
| | 3,428 |
|
| Other real estate owned, net | — |
| | — |
| | 276 |
| | 316 |
| | 672 |
|
| Premises and equipment, net | 128,021 |
| | 128,979 |
| | 129,227 |
| | 130,417 |
| | 129,394 |
|
| Investments in alternative energy partnerships, net | 29,300 |
| | 27,039 |
| | 26,633 |
| | 26,578 |
| | 28,988 |
|
| Goodwill | 37,144 |
| | 37,144 |
| | 37,144 |
| | 37,144 |
| | 37,144 |
|
| Other intangible assets, net | 4,151 |
| | 4,605 |
| | 5,105 |
| | 5,726 |
| | 6,346 |
|
| Deferred income tax, net | 44,906 |
| | 45,950 |
| | 42,798 |
| | 45,111 |
| | 49,404 |
|
| Income tax receivable | 4,233 |
| | 4,459 |
| | 2,547 |
| | 4,787 |
| | 2,695 |
|
| Bank owned life insurance investment | 109,819 |
| | 108,720 |
| | 108,132 |
| | 107,552 |
| | 107,027 |
|
| Right of use assets | 22,540 |
| | 23,907 |
| | 24,118 |
| | 24,519 |
| | — |
|
| Due from unsettled securities sales | — |
| | 334,769 |
| | — |
| | — |
| | — |
|
| Other assets | 183,647 |
| | 188,875 |
| | 165,559 |
| | 151,014 |
| | 146,496 |
|
| Assets of discontinued operations | — |
| | — |
| | — |
| | — |
| | 19,490 |
|
| Total assets | $ | 7,828,410 |
| | $ | 8,625,337 |
| | $ | 9,359,931 |
| | $ | 9,886,525 |
| | $ | 10,630,067 |
|
| | | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | |
| Noninterest-bearing deposits | $ | 1,088,516 |
| | $ | 1,107,442 |
| | $ | 993,745 |
| | $ | 1,120,700 |
| | $ | 1,023,360 |
|
| Interest-bearing deposits | 4,338,651 |
| | 4,662,616 |
| | 5,298,545 |
| | 6,604,232 |
| | 6,893,284 |
|
| Total deposits | 5,427,167 |
| | 5,770,058 |
| | 6,292,290 |
| | 7,724,932 |
| | 7,916,644 |
|
| Advances from Federal Home Loan Bank | 1,195,000 |
| | 1,650,000 |
| | 1,825,000 |
| | 935,000 |
| | 1,520,000 |
|
| Notes payable, net | 173,421 |
| | 173,339 |
| | 173,257 |
| | 173,203 |
| | 173,174 |
|
| Reserve for loss on repurchased loans | 6,201 |
| | 6,561 |
| | 2,478 |
| | 2,486 |
| | 2,506 |
|
| Lease liabilities | 23,692 |
| | 25,210 |
| | 25,457 |
| | 25,893 |
| | — |
|
| Accrued expenses and other liabilities | 95,684 |
| | 99,181 |
| | 77,905 |
| | 76,686 |
| | 72,209 |
|
| Total liabilities | 6,921,165 |
| | 7,724,349 |
| | 8,396,387 |
| | 8,938,200 |
| | 9,684,533 |
|
| Commitments and contingent liabilities | | | | | | | | | |
| Preferred stock | 189,825 |
| | 189,825 |
| | 231,128 |
| | 231,128 |
| | 231,128 |
|
| Common stock | 520 |
| | 520 |
| | 520 |
| | 518 |
| | 518 |
|
| Common stock, class B non-voting non-convertible | 5 |
| | 5 |
| | 5 |
| | 5 |
| | 5 |
|
| Additional paid-in capital | 629,848 |
| | 628,774 |
| | 627,306 |
| | 626,608 |
| | 625,834 |
|
| Retained earnings | 127,733 |
| | 120,221 |
| | 146,039 |
| | 136,943 |
| | 140,952 |
|
| Treasury stock | (28,786 | ) | | (28,786 | ) | | (28,786 | ) | | (28,786 | ) | | (28,786 | ) |
| Accumulated other comprehensive loss, net | (11,900 | ) | | (9,571 | ) | | (12,668 | ) | | (18,091 | ) | | (24,117 | ) |
| Total stockholders’ equity | 907,245 |
| | 900,988 |
| | 963,544 |
| | 948,325 |
| | 945,534 |
|
| Total liabilities and stockholders’ equity | $ | 7,828,410 |
| | $ | 8,625,337 |
| | $ | 9,359,931 |
| | $ | 9,886,525 |
| | $ | 10,630,067 |
|
Banc of California, Inc.
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Year Ended |
| | December 31,
2019 | | September 30,
2019 | | June 30,
2019 | | March 31,
2019 | | December 31,
2018 | | December 31,
2019 | | December 31,
2018 |
| Interest and dividend income | | | | | | | | | | | | | |
| Loans, including fees | $ | 73,930 |
| | $ | 80,287 |
| | $ | 89,159 |
| | $ | 90,558 |
| | $ | 88,258 |
| | $ | 333,934 |
| | $ | 329,272 |
|
| Securities | 7,812 |
| | 10,024 |
| | 12,457 |
| | 17,841 |
| | 19,882 |
| | 48,134 |
| | 83,567 |
|
| Other interest-earning assets | 1,960 |
| | 2,346 |
| | 2,424 |
| | 2,313 |
| | 2,990 |
| | 9,043 |
| | 9,957 |
|
| Total interest and dividend income | 83,702 |
| | 92,657 |
| | 104,040 |
| | 110,712 |
| | 111,130 |
| | 391,111 |
| | 422,796 |
|
| Interest expense | | | | | | | | | | | | | |
| Deposits | 18,247 |
| | 22,811 |
| | 28,598 |
| | 31,443 |
| | 28,972 |
| | 101,099 |
| | 91,236 |
|
| Federal Home Loan Bank advances | 6,396 |
| | 8,519 |
| | 8,289 |
| | 9,081 |
| | 9,068 |
| | 32,285 |
| | 34,995 |
|
| Securities sold under repurchase agreements | 15 |
| | 13 |
| | 16 |
| | 18 |
| | 25 |
| | 62 |
| | 1,033 |
|
| Notes payable and other interest-bearing liabilities | 2,384 |
| | 2,399 |
| | 2,357 |
| | 2,362 |
| | 2,383 |
| | 9,502 |
| | 9,456 |
|
| Total interest expense | 27,042 |
| | 33,742 |
| | 39,260 |
| | 42,904 |
| | 40,448 |
| | 142,948 |
| | 136,720 |
|
| Net interest income | 56,660 |
| | 58,915 |
| | 64,780 |
| | 67,808 |
| | 70,682 |
| | 248,163 |
| | 286,076 |
|
| (Reversal of) provision for loan losses | (2,678 | ) | | 38,540 |
| | (1,987 | ) | | 2,512 |
| | 6,653 |
| | 36,387 |
| | 30,215 |
|
| Net interest income after (reversal of) provision for loan losses | 59,338 |
| | 20,375 |
| | 66,767 |
| | 65,296 |
| | 64,029 |
| | 211,776 |
| | 255,861 |
|
| Noninterest income | | | | | | | | | | | | | |
| Customer service fees | 1,451 |
| | 1,582 |
| | 1,434 |
| | 1,515 |
| | 1,786 |
| | 5,982 |
| | 6,315 |
|
| Loan servicing income | 312 |
| | 128 |
| | 121 |
| | 118 |
| | 22 |
| | 679 |
| | 3,720 |
|
| Income from bank owned life insurance | 599 |
| | 588 |
| | 580 |
| | 525 |
| | 559 |
| | 2,292 |
| | 2,176 |
|
| Impairment loss on investment securities | — |
| | (731 | ) | | — |
| | — |
| | (3,252 | ) | | (731 | ) | | (3,252 | ) |
| Net gain (loss) on sale of securities available for sale | 3 |
| | (5,063 | ) | | — |
| | 208 |
| | — |
| | (4,852 | ) | | 5,532 |
|
| Net (loss) gain on sale of loans | (833 | ) | | 4,326 |
| | 2,826 |
| | 1,553 |
| | 873 |
| | 7,872 |
| | 1,932 |
|
| All other income (loss) | 3,398 |
| | 2,351 |
| | (7,251 | ) | | 2,376 |
| | 2,460 |
| | 874 |
| | 7,492 |
|
| Total noninterest income (loss) | 4,930 |
| | 3,181 |
| | (2,290 | ) | | 6,295 |
| | 2,448 |
| | 12,116 |
| | 23,915 |
|
| Noninterest expense | | | | | | | | | | | | | |
| Salaries and employee benefits | 24,036 |
| | 25,934 |
| | 27,506 |
| | 28,439 |
| | 24,587 |
| | 105,915 |
| | 109,974 |
|
| Occupancy and equipment | 7,900 |
| | 7,767 |
| | 7,955 |
| | 7,686 |
| | 8,064 |
| | 31,308 |
| | 31,847 |
|
| Professional fees (reimbursement) | 2,611 |
| | 1,463 |
| | (2,903 | ) | | 11,041 |
| | 6,206 |
| | 12,212 |
| | 33,652 |
|
| Data processing | 1,684 |
| | 1,568 |
| | 1,672 |
| | 1,496 |
| | 1,733 |
| | 6,420 |
| | 6,951 |
|
| Advertising | 2,227 |
| | 2,090 |
| | 2,048 |
| | 2,057 |
| | 3,371 |
| | 8,422 |
| | 12,664 |
|
| Regulatory assessments | 1,854 |
| | 1,239 |
| | 2,136 |
| | 2,482 |
| | 1,252 |
| | 7,711 |
| | 7,678 |
|
| Reversal of loan repurchase reserves | (360 | ) | | (123 | ) | | (61 | ) | | (116 | ) | | (122 | ) | | (660 | ) | | (2,488 | ) |
| Amortization of intangible assets | 454 |
| | 500 |
| | 621 |
| | 620 |
| | 644 |
| | 2,195 |
| | 3,007 |
|
| Restructuring expense (reversal) | 1,626 |
| | — |
| | (158 | ) | | 2,795 |
| | (105 | ) | | 4,263 |
| | 4,431 |
|
| All other expenses | 4,114 |
| | 3,809 |
| | 5,126 |
| | 3,385 |
| | 3,153 |
| | 16,434 |
| | 20,025 |
|
| Total noninterest expense excluding loss (gain) on investments in alternative energy partnerships | 46,146 |
| | 44,247 |
| | 43,942 |
| | 59,885 |
| | 48,783 |
| | 194,220 |
| | 227,741 |
|
| Loss (gain) on investments in alternative energy partnerships | 1,039 |
| | (940 | ) | | (355 | ) | | 1,950 |
| | 786 |
| | 1,694 |
| | 5,044 |
|
| Total noninterest expense | 47,185 |
| | 43,307 |
| | 43,587 |
| | 61,835 |
| | 49,569 |
| | 195,914 |
| | 232,785 |
|
| Income (loss) from continuing operations before income taxes | 17,083 |
| | (19,751 | ) | | 20,890 |
| | 9,756 |
| | 16,908 |
| | 27,978 |
| | 46,991 |
|
| Income tax expense (benefit) | 2,811 |
| | (5,619 | ) | | 4,308 |
| | 2,719 |
| | 6,117 |
| | 4,219 |
| | 4,844 |
|
| Income (loss) from continuing operations | 14,272 |
| | (14,132 | ) | | 16,582 |
| | 7,037 |
| | 10,791 |
| | 23,759 |
| | 42,147 |
|
| Income from discontinued operations before income taxes | — |
| | — |
| | — |
| | — |
| | 347 |
| | — |
| | 4,596 |
|
| Income tax expense | — |
| | — |
| | — |
| | — |
| | 100 |
| | — |
| | 1,271 |
|
| Income from discontinued operations | — |
| | — |
| | — |
| | — |
| | 247 |
| | — |
| | 3,325 |
|
| Net income (loss) | 14,272 |
| | (14,132 | ) | | 16,582 |
| | 7,037 |
| | 11,038 |
| | 23,759 |
| | 45,472 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Preferred stock dividends | 3,540 |
| | 3,403 |
| | 4,308 |
| | 4,308 |
| | 4,308 |
| | 15,559 |
| | 19,504 |
|
| Income allocated to participating securities | 224 |
| | — |
| | 271 |
| | — |
| | — |
| | — |
| | — |
|
| Participating securities dividends | 93 |
| | 94 |
| | 94 |
| | 202 |
| | 203 |
| | 483 |
| | 811 |
|
| Impact of preferred stock redemption | — |
| | 5,093 |
| | — |
| | — |
| | — |
| | 5,093 |
| | 2,307 |
|
| Net income (loss) available to common stockholders | $ | 10,415 |
| | $ | (22,722 | ) | | $ | 11,909 |
| | $ | 2,527 |
| | $ | 6,527 |
| | $ | 2,624 |
| | $ | 22,850 |
|
| Basic earnings (loss) per common share | | | | | | | | | | | | | |
| Income (loss) from continuing operations | $ | 0.21 |
| | $ | (0.45 | ) | | $ | 0.23 |
| | $ | 0.05 |
| | $ | 0.12 |
| | $ | 0.05 |
| | $ | 0.38 |
|
| Income from discontinued operations | — |
| | — |
| | — |
| | — |
| | 0.01 |
| | — |
| | 0.07 |
|
| Net income (loss) | $ | 0.21 |
| | $ | (0.45 | ) | | $ | 0.23 |
| | $ | 0.05 |
| | $ | 0.13 |
| | $ | 0.05 |
| | $ | 0.45 |
|
| Diluted earnings (loss) per common share | | | | | | | | | | | | | |
| Income (loss) from continuing operations | $ | 0.20 |
| | $ | (0.45 | ) | | $ | 0.23 |
| | $ | 0.05 |
| | $ | 0.12 |
| | $ | 0.05 |
| | $ | 0.38 |
|
| Income from discontinued operations | — |
| | — |
| | — |
| | — |
| | 0.01 |
| | — |
| | 0.07 |
|
| Net income (loss) | $ | 0.20 |
| | $ | (0.45 | ) | | $ | 0.23 |
| | $ | 0.05 |
| | $ | 0.13 |
| | $ | 0.05 |
| | $ | 0.45 |
|
| Weighted average number of common shares outstanding | | | | | | | | | | | | | |
| Basic | 50,699,915 |
| | 50,882,227 |
| | 50,857,137 |
| | 50,676,722 |
| | 50,651,805 |
| | 50,621,785 |
| | 50,623,222 |
|
| Diluted | 50,927,978 |
| | 50,882,227 |
| | 50,964,956 |
| | 50,846,722 |
| | 50,812,874 |
| | 50,724,951 |
| | 50,724,951 |
|
| Dividends declared per common share | $ | 0.06 |
| | $ | 0.06 |
| | $ | 0.06 |
| | $ | 0.13 |
| | $ | 0.13 |
| | $ | 0.31 |
| | $ | 0.52 |
|
Banc of California, Inc.
Selected Financial Data
(Unaudited)
|
| | | | | | | | | | | | | | |
| | Three Months Ended |
| | December 31,
2019 | | September 30,
2019 | | June 30,
2019 | | March 31,
2019 | | December 31,
2018 |
| Profitability and other ratios of consolidated operations | | | | | | | | | |
Return on average assets(1) | 0.71 | % | | (0.64 | )% | | 0.69 | % | | 0.28 | % | | 0.43 | % |
Return on average equity(1) | 6.20 | % | | (5.83 | )% | | 6.91 | % | | 2.98 | % | | 4.56 | % |
Return on average tangible common equity(2) | 6.46 | % | | (12.49 | )% | | 7.43 | % | | 1.91 | % | | 4.19 | % |
Dividend payout ratio(3) | 28.57 | % | | (13.33 | )% | | 26.09 | % | | 260.00 | % | | 100.00 | % |
| Net interest spread | 2.65 | % | | 2.47 | % | | 2.50 | % | | 2.47 | % | | 2.56 | % |
Net interest margin(1) | 3.04 | % | | 2.86 | % | | 2.86 | % | | 2.81 | % | | 2.88 | % |
Noninterest income (loss) to total revenue(4) | 8.00 | % | | 5.12 | % | | (3.66 | )% | | 8.49 | % | | 3.60 | % |
Noninterest income (loss) to average total assets(1) | 0.25 | % | | 0.15 | % | | (0.10 | )% | | 0.25 | % | | 0.10 | % |
Noninterest expense to average total assets(1) | 2.35 | % | | 1.98 | % | | 1.82 | % | | 2.43 | % | | 1.92 | % |
Efficiency ratio(2)(5) | 76.61 | % | | 69.74 | % | | 69.75 | % | | 83.44 | % | | 67.47 | % |
Adjusted efficiency ratio including the pre-tax effect of investments in alternative energy partnerships(2)(5) | 74.03 | % | | 70.11 | % | | 67.84 | % | | 83.00 | % | | 67.09 | % |
| Average loans held-for-investment to average deposits | 108.50 | % | | 105.92 | % | | 104.38 | % | | 100.45 | % | | 97.40 | % |
| Average securities available-for-sale to average total assets | 10.48 | % | | 12.71 | % | | 13.58 | % | | 17.00 | % | | 19.85 | % |
| Average stockholders’ equity to average total assets | 11.47 | % | | 11.06 | % | | 10.02 | % | | 9.29 | % | | 9.38 | % |
| |
| (1) | Ratios are presented on an annualized basis. |
| |
| (2) | The ratios are determined by methods other than in accordance with U.S. generally accepted accounting principles (GAAP). See Non-GAAP measures section for reconciliation of the calculation. |
| |
| (3) | The ratio is calculated by dividing dividends declared per common share by basic earnings per common share. |
| |
| (4) | Total revenue is equal to the sum of net interest income before provision for loan losses and noninterest income (loss). |
| |
| (5) | The ratios are calculated by dividing noninterest expense by the sum of net interest income before provision for loan and lease losses and noninterest income (loss). |
Banc of California, Inc.
Selected Financial Data, Continued
(Dollars in thousands)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| | December 31,
2019 | | September 30,
2019 | | June 30,
2019 | | March 31,
2019 | | December 31,
2018 |
| Loans and ALLL by loan origination type | | | | | | | | | |
| Loan breakdown by origination type | | | | | | | | | |
| Originated loans | $ | 5,510,242 |
| | $ | 5,888,647 |
| | $ | 6,181,583 |
| | $ | 6,991,056 |
| | $ | 7,105,171 |
|
| Acquired loans not impaired at acquisition | 441,643 |
| | 494,612 |
| | 537,987 |
| | 566,144 |
| | 595,702 |
|
| Total loans | $ | 5,951,885 |
| | $ | 6,383,259 |
| | $ | 6,719,570 |
| | $ | 7,557,200 |
| | $ | 7,700,873 |
|
| ALLL breakdown by origination type | | | | | | | | | |
| Originated loans | $ | 56,175 |
| | $ | 61,306 |
| | $ | 58,135 |
| | $ | 63,003 |
| | $ | 61,255 |
|
| Acquired loans not impaired at acquisition | 1,474 |
| | 1,621 |
| | 1,388 |
| | 882 |
| | 937 |
|
| Total ALLL | $ | 57,649 |
| | $ | 62,927 |
| | $ | 59,523 |
| | $ | 63,885 |
| | $ | 62,192 |
|
| Discount on acquired loans not impaired at acquisition | $ | 8,071 |
| | $ | 9,062 |
| | $ | 10,680 |
| | $ | 11,184 |
| | $ | 11,645 |
|
| Percentage of ALLL to: | | | | | | | | | |
| Originated loans | 1.02 | % | | 1.04 | % | | 0.94 | % | | 0.90 | % | | 0.86 | % |
| Total loans | 0.97 | % | | 0.99 | % | | 0.89 | % | | 0.85 | % | | 0.81 | % |
Banc of California, Inc.
Average Balance, Average Yield Earned, and Average Cost Paid
(Dollars in thousands)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended |
| | December 31, 2019 | | September 30, 2019 | | June 30, 2019 |
| | Average | | | | Yield | | Average | | | | Yield | | Average | | | | Yield |
| | Balance | | Interest | | / Cost | | Balance | | Interest | | / Cost | | Balance | | Interest | | / Cost |
| Interest earning assets | | | | | | | | | | | | | | | | | |
| Loans held-for-sale | $ | 23,527 |
| | $ | 221 |
| | 3.73 | % | | $ | 216,746 |
| | $ | 1,894 |
| | 3.47 | % | | $ | 47,233 |
| | $ | 265 |
| | 2.25 | % |
| SFR mortgage | 1,689,228 |
| | 16,788 |
| | 3.94 | % | | 1,866,103 |
| | 19,179 |
| | 4.08 | % | | 2,059,704 |
| | 21,390 |
| | 4.17 | % |
| Commercial real estate, multifamily, and construction | 2,633,342 |
| | 32,763 |
| | 4.94 | % | | 2,717,609 |
| | 33,343 |
| | 4.87 | % | | 3,406,672 |
| | 39,659 |
| | 4.67 | % |
| Commercial and industrial, SBA, and lease financing | 1,821,064 |
| | 23,381 |
| | 5.09 | % | | 1,840,202 |
| | 24,970 |
| | 5.38 | % | | 1,872,289 |
| | 26,940 |
| | 5.77 | % |
| Other consumer | 54,088 |
| | 777 |
| | 5.70 | % | | 58,652 |
| | 901 |
| | 6.09 | % | | 59,806 |
| | 905 |
| | 6.07 | % |
| Gross loans and leases | 6,221,249 |
| | 73,930 |
| | 4.71 | % | | 6,699,312 |
| | 80,287 |
| | 4.75 | % | | 7,445,704 |
| | 89,159 |
| | 4.80 | % |
| Securities | 833,726 |
| | 7,812 |
| | 3.72 | % | | 1,105,499 |
| | 10,024 |
| | 3.60 | % | | 1,304,876 |
| | 12,457 |
| | 3.83 | % |
| Other interest-earning assets | 330,950 |
| | 1,960 |
| | 2.35 | % | | 362,613 |
| | 2,346 |
| | 2.57 | % | | 342,908 |
| | 2,424 |
| | 2.84 | % |
| Total interest-earning assets | 7,385,925 |
| | 83,702 |
| | 4.50 | % | | 8,167,424 |
| | 92,657 |
| | 4.50 | % | | 9,093,488 |
| | 104,040 |
| | 4.59 | % |
| Allowance for loan losses | (61,642 | ) | | | | | | (55,976 | ) | | | | | | (63,046 | ) | | | | |
| BOLI and noninterest earning assets | 630,308 |
| | | | | | 584,190 |
| | | | | | 580,133 |
| | | | |
| Total assets | $ | 7,954,591 |
| | | | | | $ | 8,695,638 |
| | | | | | $ | 9,610,575 |
| | | | |
| | | | | | | | | | | | | | | | | | |
| Interest-bearing liabilities | | | | | | | | | | | | | | | | | |
| Savings | $ | 981,346 |
| | $ | 3,889 |
| | 1.57 | % | | $ | 1,055,086 |
| | $ | 4,722 |
| | 1.78 | % | | $ | 1,083,571 |
| | $ | 4,950 |
| | 1.83 | % |
| Interest-bearing checking | 1,546,322 |
| | 4,234 |
| | 1.09 | % | | 1,511,432 |
| | 4,483 |
| | 1.18 | % | | 1,580,165 |
| | 4,554 |
| | 1.16 | % |
| Money market | 743,695 |
| | 2,593 |
| | 1.38 | % | | 755,114 |
| | 3,093 |
| | 1.63 | % | | 853,007 |
| | 3,902 |
| | 1.83 | % |
| Certificates of deposit | 1,332,911 |
| | 7,531 |
| | 2.24 | % | | 1,750,970 |
| | 10,513 |
| | 2.38 | % | | 2,537,060 |
| | 15,192 |
| | 2.40 | % |
| Total interest-bearing deposits | 4,604,274 |
| | 18,247 |
| | 1.57 | % | | 5,072,602 |
| | 22,811 |
| | 1.78 | % | | 6,053,803 |
| | 28,598 |
| | 1.89 | % |
| FHLB advances | 1,020,478 |
| | 6,396 |
| | 2.49 | % | | 1,333,739 |
| | 8,519 |
| | 2.53 | % | | 1,287,121 |
| | 8,289 |
| | 2.58 | % |
| Securities sold under repurchase agreements | 2,223 |
| | 15 |
| | 2.68 | % | | 1,922 |
| | 13 |
| | 2.68 | % | | 2,173 |
| | 16 |
| | 2.95 | % |
| Long-term debt and other interest-bearing liabilities | 174,092 |
| | 2,384 |
| | 5.43 | % | | 174,111 |
| | 2,399 |
| | 5.47 | % | | 174,161 |
| | 2,357 |
| | 5.43 | % |
| Total interest-bearing liabilities | 5,801,067 |
| | 27,042 |
| | 1.85 | % | | 6,582,374 |
| | 33,742 |
| | 2.03 | % | | 7,517,258 |
| | 39,260 |
| | 2.09 | % |
| Noninterest-bearing deposits | 1,108,077 |
| | | | | | 1,047,858 |
| | | | | | 1,034,205 |
| | | | |
| Noninterest-bearing liabilities | 132,698 |
| | | | | | 103,667 |
| | | | | | 96,179 |
| | | | |
| Total liabilities | 7,041,842 |
| | | | | | 7,733,899 |
| | | | | | 8,647,642 |
| | | | |
| Total stockholders’ equity | 912,749 |
| | | | | | 961,739 |
| | | | | | 962,933 |
| | | | |
| Total liabilities and stockholders’ equity | $ | 7,954,591 |
| | | | | | $ | 8,695,638 |
| | | | | | $ | 9,610,575 |
| | | | |
| | | | | | | | | | | | | | | | | | |
| Net interest income/spread | | | $ | 56,660 |
| | 2.65 | % | | | | $ | 58,915 |
| | 2.47 | % | | | | $ | 64,780 |
| | 2.50 | % |
| Net interest margin | | | | | 3.04 | % | | | | | | 2.86 | % | | | | | | 2.86 | % |
| | | | | | | | | | | | | | | | | | |
| Ratio of interest-earning assets to interest-bearing liabilities | 127.32 | % | | | | | | 124.08 | % | | | | | | 120.97 | % | | | | |
| Total deposits | $ | 5,712,351 |
| | $ | 18,247 |
| | 1.27 | % | | $ | 6,120,460 |
| | $ | 22,811 |
| | 1.48 | % | | $ | 7,088,008 |
| | $ | 28,598 |
| | 1.62 | % |
Total funding (1) | $ | 6,909,144 |
| | $ | 27,042 |
| | 1.55 | % | | $ | 7,630,232 |
| | $ | 33,742 |
| | 1.75 | % | | $ | 8,551,463 |
| | $ | 39,260 |
| | 1.84 | % |
| |
| (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 |
| | March 31, 2019 | | December 31, 2018 |
| | Average | | | | Yield | | Average | | | | Yield |
| | Balance | | Interest | | / Cost | | Balance | | Interest | | / Cost |
| Interest earning assets | | | | | | | | | | | |
Loans held-for-sale (1) | $ | 31,374 |
| | $ | 228 |
| | 2.95 | % | | $ | 33,243 |
| | $ | 221 |
| | 2.64 | % |
| SFR mortgage | 2,312,900 |
| | 24,062 |
| | 4.22 | % | | 2,260,205 |
| | 23,585 |
| | 4.14 | % |
| Commercial real estate, multifamily, and construction | 3,387,698 |
| | 38,117 |
| | 4.56 | % | | 3,246,860 |
| | 37,403 |
| | 4.57 | % |
| Commercial and industrial, SBA, and lease financing | 1,920,220 |
| | 27,235 |
| | 5.75 | % | | 1,791,708 |
| | 26,219 |
| | 5.81 | % |
| Other consumer | 62,558 |
| | 916 |
| | 5.94 | % | | 68,479 |
| | 990 |
| | 5.74 | % |
| Gross loans and leases | 7,714,750 |
| | 90,558 |
| | 4.76 | % | | 7,400,495 |
| | 88,418 |
| | 4.74 | % |
| Securities | 1,751,509 |
| | 17,841 |
| | 4.13 | % | | 2,032,632 |
| | 19,882 |
| | 3.88 | % |
| Other interest-earning assets | 321,823 |
| | 2,313 |
| | 2.91 | % | | 318,419 |
| | 2,990 |
| | 3.73 | % |
| Total interest-earning assets | 9,788,082 |
| | 110,712 |
| | 4.59 | % | | 9,751,546 |
| | 111,290 |
| | 4.53 | % |
| Allowance for loan losses | (61,924 | ) | | | | | | (58,099 | ) | | | | |
| BOLI and non-interest earning assets | 575,559 |
| | | | | | 544,302 |
| | | | |
| Total assets | $ | 10,301,717 |
| | | | | | $ | 10,237,749 |
| | | | |
| | | | | | | | | | | | |
| Interest-bearing liabilities | | | | | | | | | | | |
| Savings | 1,201,802 |
| | 5,480 |
| | 1.85 | % | | 1,279,155 |
| | 5,663 |
| | 1.76 | % |
| Interest-bearing checking | 1,554,846 |
| | 4,525 |
| | 1.18 | % | | 1,666,884 |
| | 4,916 |
| | 1.17 | % |
| Money market | 887,538 |
| | 4,128 |
| | 1.89 | % | | 803,157 |
| | 3,168 |
| | 1.56 | % |
| Certificates of deposit | 2,982,980 |
| | 17,310 |
| | 2.35 | % | | 2,759,665 |
| | 15,225 |
| | 2.19 | % |
| Total interest-bearing deposits | 6,627,166 |
| | 31,443 |
| | 1.92 | % | | 6,508,861 |
| | 28,972 |
| | 1.77 | % |
| FHLB advances | 1,422,100 |
| | 9,081 |
| | 2.59 | % | | 1,447,348 |
| | 9,068 |
| | 2.49 | % |
| Securities sold under repurchase agreements | 2,350 |
| | 18 |
| | 3.11 | % | | 3,116 |
| | 25 |
| | 3.18 | % |
| Long-term debt and other interest-bearing liabilities | 174,230 |
| | 2,362 |
| | 5.50 | % | | 174,281 |
| | 2,383 |
| | 5.42 | % |
| Total interest-bearing liabilities | 8,225,846 |
| | 42,904 |
| | 2.12 | % | | 8,133,606 |
| | 40,448 |
| | 1.97 | % |
| Noninterest-bearing deposits | 1,021,741 |
| | | | | | 1,054,790 |
| | | | |
| Non-interest-bearing liabilities | 97,430 |
| | | | | | 89,111 |
| | | | |
| Total liabilities | 9,345,017 |
| | | | | | 9,277,507 |
| | | | |
| Total stockholders’ equity | 956,700 |
| | | | | | 960,242 |
| | | | |
| Total liabilities and stockholders’ equity | $ | 10,301,717 |
| | | | | | $ | 10,237,749 |
| | | | |
| | | | | | | | | | | | |
| Net interest income/spread | | | $ | 67,808 |
| | 2.47 | % | | | | $ | 70,842 |
| | 2.56 | % |
| Net interest margin | | | | | 2.81 | % | | | | | | 2.88 | % |
| | | | | | | | | | | | |
| Ratio of interest-earning assets to interest-bearing liabilities | 118.99 | % | | | | | | 119.89 | % | | | | |
| Total deposits | $ | 7,648,907 |
| | $ | 31,443 |
| | 1.67 | % | | $ | 7,563,651 |
| | $ | 28,972 |
| | 1.52 | % |
Total funding (2) | $ | 9,247,587 |
| | $ | 42,904 |
| | 1.88 | % | | $ | 9,188,396 |
| | $ | 40,448 |
| | 1.75 | % |
| |
| (1) | Includes loans held-for-sale of discontinued operations for the three months ended December 31, 2018. |
| |
| (2) | 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. |
|
| | | | | | | | | | | | | | | | | | | | | |
| | Year Ended |
| | December 31, 2019 | | December 31, 2018 |
| | Average | | | | Yield | | Average | | | | Yield |
| | Balance | | Interest | | / Cost | | Balance | | Interest | | / Cost |
| Interest earning assets | | | | | | | | | | | |
Loans held-for-sale (1) | $ | 80,074 |
| | $ | 2,609 |
| | 3.26 | % | | $ | 56,757 |
| | $ | 1,109 |
| | 1.95 | % |
| SFR mortgage | 1,979,957 |
| | 81,419 |
| | 4.11 | % | | 2,207,689 |
| | 91,188 |
| | 4.13 | % |
| Commercial real estate, multifamily, and construction | 3,033,392 |
| | 143,882 |
| | 4.74 | % | | 3,047,164 |
| | 138,416 |
| | 4.54 | % |
| Commercial and industrial, SBA, and lease financing | 1,863,108 |
| | 102,526 |
| | 5.50 | % | | 1,716,631 |
| | 95,115 |
| | 5.54 | % |
| Other consumer | 58,752 |
| | 3,498 |
| | 5.95 | % | | 80,359 |
| | 4,109 |
| | 5.11 | % |
| Gross loans and leases | 7,015,283 |
| | 333,934 |
| | 4.76 | % | | 7,108,600 |
| | 329,937 |
| | 4.64 | % |
| Securities | 1,245,995 |
| | 48,134 |
| | 3.86 | % | | 2,248,488 |
| | 83,567 |
| | 3.72 | % |
| Other interest-earning assets | 339,661 |
| | 9,043 |
| | 2.66 | % | | 362,927 |
| | 9,957 |
| | 2.74 | % |
| Total interest-earning assets | 8,600,939 |
| | 391,111 |
| | 4.55 | % | | 9,720,015 |
| | 423,461 |
| | 4.36 | % |
| Allowance for loan losses | (60,633 | ) | | | | | | (54,777 | ) | | | | |
| BOLI and non-interest earning assets | 592,674 |
| | | | | | 559,675 |
| | | | |
| Total assets | $ | 9,132,980 |
| | | | | | $ | 10,224,913 |
| | | | |
| | | | | | | | | | | | |
| Interest-bearing liabilities | | | | | | | | | | | |
| Savings | 1,079,778 |
| | 19,040 |
| | 1.76 | % | | 1,156,292 |
| | 17,971 |
| | 1.55 | % |
| Interest-bearing checking | 1,548,067 |
| | 17,797 |
| | 1.15 | % | | 1,812,980 |
| | 18,261 |
| | 1.01 | % |
| Money market | 809,295 |
| | 13,717 |
| | 1.69 | % | | 994,103 |
| | 13,146 |
| | 1.32 | % |
| Certificates of deposit | 2,145,363 |
| | 50,545 |
| | 2.36 | % | | 2,272,093 |
| | 41,858 |
| | 1.84 | % |
| Total interest-bearing deposits | 5,582,503 |
| | 101,099 |
| | 1.81 | % | | 6,235,468 |
| | 91,236 |
| | 1.46 | % |
| FHLB advances | 1,264,945 |
| | 32,285 |
| | 2.55 | % | | 1,627,608 |
| | 34,995 |
| | 2.15 | % |
| Securities sold under repurchase agreements | 2,166 |
| | 62 |
| | 2.86 | % | | 39,336 |
| | 1,033 |
| | 2.63 | % |
| Long-term debt and other interest-bearing liabilities | 174,148 |
| | 9,502 |
| | 5.46 | % | | 174,340 |
| | 9,456 |
| | 5.42 | % |
| Total interest-bearing liabilities | 7,023,762 |
| | 142,948 |
| | 2.04 | % | | 8,076,752 |
| | 136,720 |
| | 1.69 | % |
| Noninterest-bearing deposits | 1,053,193 |
| | | | | | 1,034,937 |
| | | | |
| Non-interest-bearing liabilities | 107,579 |
| | | | | | 117,904 |
| | | | |
| Total liabilities | 8,184,534 |
| | | | | | 9,229,593 |
| | | | |
| Total stockholders’ equity | 948,446 |
| | | | | | 995,320 |
| | | | |
| Total liabilities and stockholders’ equity | $ | 9,132,980 |
| | | | | | $ | 10,224,913 |
| | | | |
| | | | | | | | | | | | |
| Net interest income/spread | | | $ | 248,163 |
| | 2.51 | % | | | | $ | 286,741 |
| | 2.67 | % |
| Net interest margin | | | | | 2.89 | % | | | | | | 2.95 | % |
| | | | | | | | | | | | |
| Ratio of interest-earning assets to interest-bearing liabilities | 122.45 | % | | | | | | 120.35 | % | | | | |
| Total deposits | $ | 6,635,696 |
| | $ | 101,099 |
| | 1.52 | % | | $ | 7,270,405 |
| | $ | 91,236 |
| | 1.25 | % |
Total funding (2) | $ | 8,076,955 |
| | $ | 142,948 |
| | 1.77 | % | | $ | 9,111,689 |
| | $ | 136,720 |
| | 1.50 | % |
| |
| (1) | Includes loans held-for-sale of discontinued operations for the year ended December 31, 2018. |
| |
| (2) | 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.
Return on average tangible common equity and efficiency ratio, as adjusted, tangible common equity, tangible common equity to tangible assets, and tangible common equity per common share 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 common equity is calculated by subtracting preferred stock, goodwill, and other intangible assets from stockholders' equity. Tangible assets is calculated by subtracting goodwill and other intangible assets from total assets. Banking regulators also exclude goodwill and other intangible assets from stockholders' equity when assessing the capital adequacy of a financial institution.
Adjusted efficiency ratio is calculated by subtracting loss on investments in alternative energy partnerships from noninterest expense and adding total pre-tax return, which includes the loss on investments in alternative energy partnerships, to the sum of net interest income and noninterest income (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 final 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.
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| | | | | | | | | | | | | | | | | | | |
| | December 31,
2019 | | September 30,
2019 | | June 30,
2019 | | March 31,
2019 | | December 31,
2018 |
| Tangible common equity, and tangible common equity to tangible assets ratio | | | | | | | | | |
| Total assets | $ | 7,828,410 |
| | $ | 8,625,337 |
| | $ | 9,359,931 |
| | $ | 9,886,525 |
| | $ | 10,630,067 |
|
| Less goodwill | (37,144 | ) | | (37,144 | ) | | (37,144 | ) | | (37,144 | ) | | (37,144 | ) |
| Less other intangible assets | (4,151 | ) | | (4,605 | ) | | (5,105 | ) | | (5,726 | ) | | (6,346 | ) |
Tangible assets(1) | $ | 7,787,115 |
| | $ | 8,583,588 |
| | $ | 9,317,682 |
| | $ | 9,843,655 |
| | $ | 10,586,577 |
|
| | | | | | | | | | |
| Total stockholders' equity | $ | 907,245 |
| | $ | 900,988 |
| | $ | 963,544 |
| | $ | 948,325 |
| | $ | 945,534 |
|
| Less goodwill | (37,144 | ) | | (37,144 | ) | | (37,144 | ) | | (37,144 | ) | | (37,144 | ) |
| Less other intangible assets | (4,151 | ) | | (4,605 | ) | | (5,105 | ) | | (5,726 | ) | | (6,346 | ) |
Tangible equity(1) | 865,950 |
| | 859,239 |
| | 921,295 |
| | 905,455 |
| | 902,044 |
|
| Less preferred stock | (189,825 | ) | | (189,825 | ) | | (231,128 | ) | | (231,128 | ) | | (231,128 | ) |
Tangible common equity(1) | $ | 676,125 |
| | $ | 669,414 |
| | $ | 690,167 |
| | $ | 674,327 |
| | $ | 670,916 |
|
| | | | | | | | | | |
| Total stockholders' equity to total assets | 11.59 | % | | 10.45 | % | | 10.29 | % | | 9.59 | % | | 8.89 | % |
Tangible equity to tangible assets(1) | 11.12 | % | | 10.01 | % | | 9.89 | % | | 9.20 | % | | 8.52 | % |
Tangible common equity to tangible assets(1) | 8.68 | % | | 7.80 | % | | 7.41 | % | | 6.85 | % | | 6.34 | % |
| | | | | | | | | | |
| Common shares outstanding | 50,413,681 |
| | 50,406,763 |
| | 50,397,769 |
| | 50,315,490 |
| | 50,172,018 |
|
| Class B non-voting non-convertible common shares outstanding | 477,321 |
| | 477,321 |
| | 477,321 |
| | 477,321 |
| | 477,321 |
|
| Total common shares outstanding | 50,891,002 |
| | 50,884,084 |
| | 50,875,090 |
| | 50,792,811 |
| | 50,649,339 |
|
| | | | | | | | | | |
Tangible common equity per common share(1) | $ | 13.29 |
| | $ | 13.16 |
| | $ | 13.57 |
| | $ | 13.28 |
| | $ | 13.25 |
|
| Book value per common share | $ | 14.10 |
| | $ | 13.98 |
| | $ | 14.40 |
| | $ | 14.12 |
| | $ | 14.10 |
|
(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 |
| | December 31,
2019 | | September 30,
2019 | | June 30,
2019 | | March 31,
2019 | | December 31,
2018 |
| Return on tangible common equity | | | | | | | | | |
| Average total stockholders' equity | $ | 912,749 |
| | $ | 961,739 |
| | $ | 962,933 |
| | $ | 956,700 |
| | $ | 960,242 |
|
| Less average preferred stock | (189,824 | ) | | (213,619 | ) | | (231,128 | ) | | (231,128 | ) | | (231,128 | ) |
| Less average goodwill | (37,144 | ) | | (37,144 | ) | | (37,144 | ) | | (37,144 | ) | | (37,144 | ) |
| Less average other intangible assets | (4,441 | ) | | (4,935 | ) | | (5,503 | ) | | (6,128 | ) | | (6,731 | ) |
Average tangible common equity(1) | $ | 681,340 |
| | $ | 706,041 |
| | $ | 689,158 |
| | $ | 682,300 |
| | $ | 685,239 |
|
| | | | | | | | | | |
| Net income (loss) | $ | 14,272 |
| | $ | (14,132 | ) | | $ | 16,582 |
| | $ | 7,037 |
| | $ | 11,038 |
|
| Less preferred stock dividends and impact of preferred stock redemption | (3,540 | ) | | (8,496 | ) | | (4,308 | ) | | (4,308 | ) | | (4,308 | ) |
| Add amortization of intangible assets | 454 |
| | 500 |
| | 621 |
| | 620 |
| | 644 |
|
| Less tax effect on amortization and impairment of intangible assets | (95 | ) | | (105 | ) | | (130 | ) | | (130 | ) | | (135 | ) |
Net income (loss) available to common stockholders(1) | $ | 11,091 |
| | $ | (22,233 | ) | | $ | 12,765 |
| | $ | 3,219 |
| | $ | 7,239 |
|
| | | | | | | | | | |
| Return on average equity | 6.20 | % | | (5.83 | )% | | 6.91 | % | | 2.98 | % | | 4.56 | % |
Return on average tangible common equity(1) | 6.46 | % | | (12.49 | )% | | 7.43 | % | | 1.91 | % | | 4.19 | % |
| | | | | | | | | | |
| Statutory tax rate utilized for calculating tax effect on amortization of intangible assets | 21.00 | % | | 21.00 | % | | 21.00 | % | | 21.00 | % | | 21.00 | % |
|
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended |
| | December 31,
2019 | | September 30,
2019 | | June 30,
2019 | | March 31,
2019 | | December 31,
2018 |
Adjusted efficiency ratio including the pre-tax effect of
investments in alternative energy partnerships | | | | | | | | | |
| Noninterest expense | $ | 47,185 |
| | $ | 43,307 |
| | $ | 43,587 |
| | $ | 61,835 |
| | $ | 49,578 |
|
| (Loss) gain on investments in alternative energy partnerships | (1,039 | ) | | 940 |
| | 355 |
| | (1,950 | ) | | (786 | ) |
Adjusted noninterest expense(1) | $ | 46,146 |
| | $ | 44,247 |
| | $ | 43,942 |
| | $ | 59,885 |
| | $ | 48,792 |
|
| | | | | | | | | | |
| Net interest income | $ | 56,660 |
| | $ | 58,915 |
| | $ | 64,780 |
| | $ | 67,808 |
| | $ | 70,842 |
|
| Noninterest income | 4,930 |
| | 3,181 |
| | (2,290 | ) | | 6,295 |
| | 2,644 |
|
| Total revenue | 61,590 |
| | 62,096 |
| | 62,490 |
| | 74,103 |
| | 73,486 |
|
| Tax credit from investments in alternative energy partnerships | 1,689 |
| | 77 |
| | 1,680 |
| | — |
| | — |
|
| Deferred tax expense on investments in alternative energy partnerships | (177 | ) | | (8 | ) | | (176 | ) | | — |
| | — |
|
| Tax effect on tax credit and deferred tax expense | 267 |
| | 7 |
| | 426 |
| | — |
| | 26 |
|
| (Loss) gain on investments in alternative energy partnerships | (1,039 | ) | | 940 |
| | 355 |
| | (1,950 | ) | | (786 | ) |
| Total pre-tax adjustments for investments in alternative energy partnerships | 740 |
| | 1,016 |
| | 2,285 |
| | (1,950 | ) | | (760 | ) |
Adjusted total revenue(1) | $ | 62,330 |
| | $ | 63,112 |
| | $ | 64,775 |
| | $ | 72,153 |
| | $ | 72,726 |
|
Efficiency ratio(1) | 76.61 | % | | 69.74 | % | | 69.75 | % | | 83.44 | % | | 67.47 | % |
Adjusted efficiency ratio including the pre-tax effect of investments in alternative energy partnerships(1) | 74.03 | % | | 70.11 | % | | 67.84 | % | | 83.00 | % | | 67.09 | % |
| Effective tax rate utilized for calculating tax effect on tax credit and deferred tax expense | 15.00 | % | | 9.36 | % | | 22.07 | % | | 27.00 | % | | 27.42 | % |
(1)Non-GAAP measure.
(2)2018 balances includes income from discontinued operations.
Banc of California, Inc.
Consolidated Operations
Non-GAAP Measures, Continued
(Dollars in thousands, except per share data)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended |
| | December 31,
2019 | | September 30,
2019 | | June 30,
2019 | | March 31,
2019 | | December 31,
2018 |
| Total noninterest expense excluding loss (gain) on investments in alternative energy partnerships | $ | 46,146 |
| | $ | 44,247 |
| | $ | 43,942 |
| | $ | 59,885 |
| | $ | 48,783 |
|
| Loss (gain) on investments in alternative energy partnerships | 1,039 |
| | (940 | ) | | (355 | ) | | 1,950 |
| | 786 |
|
| Total noninterest expense | 47,185 |
| | 43,307 |
| | 43,587 |
| | 61,835 |
| | 49,569 |
|
| | | | | | | | | | |
| Adjustment for non-core items | | | | | | | | | |
| Data processing | — |
| | — |
| | (797 | ) | | — |
| | — |
|
| Professional fees | 3,557 |
| | 2,615 |
| | 6,214 |
| | (2,979 | ) | | 2,711 |
|
| Restructuring (expense) reversal | (1,626 | ) | | — |
| | 158 |
| | (2,795 | ) | | 105 |
|
| Other expenses | — |
| | (131 | ) | | — |
| | — |
| | 585 |
|
| Total | 49,116 |
| | 45,791 |
| | 49,162 |
| | 56,061 |
| | 52,970 |
|
| (Loss) gain on investments in alternative energy partnerships | (1,039 | ) | | 940 |
| | 355 |
| | (1,950 | ) | | (786 | ) |
| Total operating expense | $ | 48,077 |
| | $ | 46,731 |
| | $ | 49,517 |
| | $ | 54,111 |
| | $ | 52,184 |
|
(1)Non-GAAP measure.
