BANC - Earnings call transcript Q2 2019 | Banc of California, Inc.

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Operator

Hello, and welcome to the Banc of California Second Quarter 2019 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note today's event is being recorded.

I'd now like to turn the call over to your host today, Jared Wolff, Mr. Wolff please go ahead.

Jared Wolff

everyone. morning, Good of Banc quarter earnings XXXX Welcome California's call. conference to second California's is Bogler. today me CFO; Banc With of John I'm very of pleased $X.XX. quarter diluted delivering with per the results income earnings to of available common share stockholders common $XX.X and net million of our second will about quarterly more results depth in talk shortly. John the to I'd some on made progress to I a take strategy. before But him, few handed we've our over like moments highlight business to

the three business, call, quarter's will our team key last areas long on on of and our mentioned I short As for community which franchise. was have Management benefits focusing term banking

we're our accomplish deposit our did not more We and First, business. of quarter, steps relationship meaningful of several accounts, which banking undertook taking runoff to costing this funding cost deposits. higher within cost to our reduce fit including generally approach to centered initiatives the specifically, some

rates in our further the products. CDs advances. lowered total resulted further this trim we by of decreased QX Overall, cost basis interest reduced during XXXX. to And expenses of our addition, on on for those since decrease costs first point basis decrease a brokered combination CDs reliance FHLB quarter in consumer our sequential In X in as funding reduced points the we X average and deposits,

will reclassified additional of sale in held $XXX early million loans multi-family value the our from declining took actions franchise balance additional almost $XXX our I margin John that expect June. to sold continue million during say securities off August. lower of We close of shortly. those Mac an for of Furthermore, and more our reduced the of balances in of size term, by in the sheet. and near Freddie securitization the enhance to the products anticipation that quarter, XX% to by will portfolio multi-family upcoming have the in on an quarter loans we We moving as first more

runoff points basis our NIM funding loan are allowing to improving reduce by We as maintaining X costs efforts to of yields. a with pleased while CDs healthy result cost high

we to need from delighted driven are $XX.X to aligned expenses prior benefit are QX by this items. on million, from will probably XX% enhance our and quarter a normalized footprint. experience. we we there the one-time rate low Lastly, our although will second non-interest This a a the for to should we in surgically part size be ensure more and year areas point client efficiencies to create expenses I decreased and the the in see as that be in focused half was see with can where by run some such, continue was

some months business very our initiatives and strategy. these great progress executed important We making in past on three

results Our already banking positive community banking has strengthened relationship showing on our and is business. focus franchise our been within

and call Go on quarterly to turn return I'll results and initiatives. John John. operating some other the to over to our I'll a go few give you highlight ahead more ahead, detail then

John Bogler

Thank you, Jared.

to were Our of million the billion optimize to quarter, CLOs. securities by million balance end our billion prior mainly $XXX assets $XXX second strategy of from sheet. disposition decrease the the our driven quarter our quarter in total through reduced balance We $X.X at a $X.X

sold we and coupons be single to multifamily multifamily also million to loans tended lower longer addition Jared of not the family we're our to driven central approach loans, of sales were to single In $XXX mentioned and were $XXX the family lending. duration, sold relationship million that

approximately has in HFS loan break was related securitization this achieve Mac multifamily through and the multifamily August. In to hedge to the expect and from an of pool down from touched for hedge cost $X.X quarter. to overall The we also overnight coupon We the sale Freddie onetime which upon Q accounting the advances, that, against settle an which improve placed preparation by profile loans average program. of currently X.XX%. paying X.XX. to move second structured be for of economic weighted million $XXX rate Jared upcoming loss will the million our The even HFI and position a in proceeds the we funding used a interest resulted movement, pure

However, fair of completion this be the offset by of the of at the in will securitization. the the increase realization the value loans

see overall negative some a increased of some in and the impacts yielding points multifamily The more lower the to from quarter. yields the from of we although X.XX% X yield basis portfolio decline than pressure LIBOR we to The our loan during during quarter, SFR loans LIBOR dispose on activities any took did offset move.

and securitization, our balance to the HFI portfolio, $X.X up the more SFR multifamily loans transform SBA mix sheet XX% efforts billion growth reflecting the sales; in to based are Currently, with CNI total for HFI of in along XX% from and relationship mentioned quarter, portfolio. billion QX. of previously the to our balances prior our $X.X a in decline Preparing from

by $XXX deposits, Moving brokerage XX% quarter million by $XXX on to CDs million end. or decreased to

the funding the drift from money XX%. further our should savings last wholesale to QX. from wholesale $XX for to in million deposits, funding average or efforts securitization towards our by lower ending XX% X.XX%. overnight now account of Overall, multifamily reduce non-broker by this mix reduce we toward of Additionally, from deposits proceeds an targeted by When ratio QX deposits reduced Core and XX% XX% XX% and flat fell quarter. total closes advances respectively. deposits market left with apply up to cost us which accounts higher cost the our $XX million costing and We X basis QX, $XX of million points

rate $XX.X results income to non-core quarter or for share. available common stockholders the items The to Turning in our million the for statement, per benefit non-core income recorded common for adjusting these with the same additional was were second $X.XX with $XX.X tax $X.X the more $XX.X quarter with QX. than were to amortization expenses expenses charge our operating item net diluted by associated After an the million is reversal expense were with today's net by related operating and including quarter, impacted items, diluted legal line XX% located offset of second $X.XX along of share million. Slide per XX totaling million and $X.X operations of reconciliations recovery the respectively indemnification for equity to million which Normalizing deck. X our earnings solar a core $XXX,XXX insurance restructuring the quarterly on from tax program, common

X and and portfolio lower at level. days quarter the a smaller April to lower and average flat net combined the at The towards increased margin due funding month rates the a we of on July, average will indexed by current largely based from reset sales funds of are LIBOR basis slight negative yield CLO reset X.XX%. book $X.X asset end quarterly impact about bank's from decreased remaining to reset the securities and with mixed of interest with to to the prior the again balance with securities three points an assets interest lower Average basis end XX CLO by the Since a decreased basis points XX points XX rate prior average and mostly LIBOR this the investments X.XX%. from The billion, or is yield during from X.XX% to cost loan from quarter resets. base earning

partially interest decreased the LIBOR was to decline from in prior $X.X the a of QX in $XXX XX% somewhat income $X.X income up average the Loan by yield. securities to offset million of and average income quarter in muted interest million. $X reset balances, rate in decreased the $XX.X million respectively. income previously from mentioned. interest quarter, by XX% interest This income million sequentially basis million commercial average a income by interest increase a and now on comprises total Net decrease X XX% balances, in on loan Loan XX% due respectively interest point including and lower by

fell With the in first average modeled quarter more funds expenses interest of in or sensitive by reductions to first over rate balances a the bearing basis respect a the basis with our advances cost balance down side, on On average potential indices slightly on risk assuming average deposits position in a flat the cost. FHLB and XX The Fed of a point lower points on XX. cost rate X.XX%. deposits. liabilities basis X in from Interest point and shift XXX,XXX X by months sequentially to average XX-months, interest bearing to million interest overall other decreased also decline $X.X and average fell liability XXX assets on expense liability QX lower the interest by is sensitive parallel

The rate a net charge investment provision impairment. floors resets in quarter deck balance XX Slides information securities million. was increase net presents and today's in loan FHLB deposits in of to advances. included timing reversal off XX and mainly in a regarding due and that sheet impacted $XXX,XXX losses specific by reserves activity and one our loans, for optimization, of $X million the is in resulting the indices, for rate $X.X in Included

a basis previously were ALLL mostly quarter benefit balanced XXX,XXX This solar from Total of non-interest balance discussed and million, loans the driven portfolio points. the overall $X.X of XX which XXX%, The by coverage securitization. the is by non-performing was noncore expenses a investments. ratio ratio and the offset included million the million multi-family is in from ALLL $XX.X for $X.X decrease, sales benefit reduction pending the while

of our assets expenses, align see for level QX million coming and annualized. and benefited QX with expense the non-core quarters. heavily rate continue insurance size as normalized over core previously footprint, operating run recovery, from we were $XX.X rate we more or expenses to should average Adjusting run a mentioned expenses X.XX% the

common capital reduced improved position XX.X% risk capital XX.X%. and to due capital during X totaled equity quarter, base. Tier the Tier X based asset mainly The was ratio a Our

Lastly, let's quality to asset move and on metrics. credit

XX%. the points, quarter Our basis the XX by $X.X was X delinquent declined asset Total loans for from prior or ratio non-performing points million quarter. basis up

portfolio line strong have the the We a with in bank is performance culture and credit expectations. of at credit the

equity during at any of X%. remain the of our basis broad $X.X in to We a quarter, resulting in loan Non-performing to Delinquent points. total loan deterioration indication did delinquent continues XX portfolio. to million not decreased ratio loans see assets strong

quarter over back summary turn Jared. of now that the I'll call second financials, to our With

Jared Wolff

I see have being Thank my to is depository you, the clients. quarterly occasion second John. more employees for had bank opportunity that California's a a Being really our community over time, reporting in than our results. This institution action. of And Banc just is

to and We provide and company businesses, clients. experience our better relationships within do execution, they our most about local professionals colleagues focused day service create about a footprint. and It's and and with clients entrepreneurs that on every what really premium service for partner. to building into can help work trusted better It's come a provide execution into individuals banking having exceptional our being their

As community before, a don't is I to everything things have do on our relationship really business. effects said we bank few creating focused our positive being well. to And dedication a just

quarter's this indicate. As results

We're as as Lynn as of well going also law the and in meaningful the Risk forward. quarter, had both am confident areas new second we Both months and excellent ago. bringing joining experience since talented in extensive Executives have impacts the risk and and bank these make will General our company individuals welcome EVP contributions they they of corporate meaningful backgrounds around on two Ido the management. as I Dotan; Counsel, And Officer. in Sullivan EVP Chief have

speaking, assets generally the billion we also see of year We're assets, total to out ending assuming continue on our could margin value. on I franchise on in our cooperate through as continue strategy see shrink year To keeping stay that going expenses enhance and should $XXX we the we with execute footprint. As lower aligned as reducing to rest with you asset laid focused size size stay the assets. do focused the not end, to which markets have our

base the for million back earlier, should through As and of $XX exceptional I fourth I reflective in half that be see approaching XXXX normalizing non-interest XXXX. mentioned million items, our to should $XX quarter be of expense excluding our expense the and

endeavor cost offer we are we highest of capital an today return, balances end, seeking second to commitment deposit minimize relationships building managing costs rather to maintain that feel $XX which stockholders commence into high will with just price shares. deposits the preferred the E will aggressively for appropriate on we than deploying our half, continue our level our our purchase transactions. We to into aggregate where the to our To confident by deposit are and of we tender risk. Heading stock up centered achieving areas preferred and D balanced possible class million

capital, We will holders expect other This to in right of capital our third common an execute start for action is we of the pro pending and quarters, look executed to sizing the the initiatives our acquisitions were deploy capital as to to immediate growth. tender present amount line of of forma deck continue to offer the assuming share securitization and stimulate quarter Please the full QX. repurchases, QX shares. completed tender we that anticipate bottom and and over the ratios, in future note other both including options stack, organic is today's impact at impact

adjusted and of in with expenses up, that of had with reduction almost aligned years. four reduced of our balance the Banc level our closely To we quarter in profile. wrap of saw California. an deposits successful first very things by sheet non-core earnings more to We We assets steps important sequential disposing cost we a is second our took

issues that customer will flight experience. the have improve We technology also numerous in

enter the focused today. franchise And we focused and our remain on bank. of to Thank look you your in next a quarter, our community for a our third value to employees quarter's few our results I you being for As we clients, the superior forward shareholders relationship reporting months. time enhancing and banking

ahead go and for the Now let's open line up questions.

John Bogler

acquired well, in Relations some questions, statements both information, and available today's Investor everybody call earnings forward-looking release. remind toward be company's the will the including to presentation presentation. today the like recording the safe and as on The measures, compiling right, Investor release I harbor non-GAAP direct later on included is available to Today's the web also site. we're earnings items reference available also include the want that We company's is would statement in the presentation company's for recorded on reconciliation earnings everyone a website. the being of Relations copy will All some

Brady, please. move now we questions, can to

Operator

Yes, thank you.

today's Clark We begin first question will from session. the comes now question-and-answer Jaffray. Matthew Instructions] Piper [Operator And with

Matthew Clark

FHLB there's morning, good about to know, with given week. to about previously talked, think in the up and upcoming guys. back think lot moving potentially quarter margin, remix you Jared, of a Hi, securitization, How paying that and cut do know you that obviously rate I and I next you continue? margin here getting parts the the down trajectory plan you a the the X%.

Jared Wolff

to and We in changes of quarter. deposit think of see that had I benefit a the late this lot quarter, the we're going

some was didn't came there We quarter it. stuff So full get that of off. benefit

we've You know, held our loan margins.

our the flat Our not of loan on seeing, And level. end lower at repricing market, trying yields the of get in compete do the we're paid the front-end and at the going what we're instead a to range in more the trying lending. at rebalancing we type more pretty least kind we're that's obviously, we're back-end to side multi-family lending commodity where of portfolio

are things of you our John, think? So higher. going protect it all do to drive what I and margin those think help

John Bogler

add very kind we I'd split and periods and we off to third piece should million the $XXX put two very ran see of what of begin of that so that that's between had roughly combination it brokered evenly the benefit, end Matthew, the the quarter to representing behind at and Jared's deposits end agree full of June benefit May those quarter. I a the some numbers in we

Matthew Clark

I sheet range that the balance million reassess next in expense the would size the that be sheet in million know further contemplate in with $XX expense continue you in the reflective does be slightly or at will base? balance then below you XXXX And that on year $XX that to just range, assume being Okay. billion and $X into year-end, outlook does it shrinkage shrinkage

Jared Wolff

reassess -- company amount is ROA to of to the got we're No, earning mean, of you all solid to trying good that and a and know between I looking credit, trying we targeting find of would company that to a what pieces expenses size not we've you it know, said we've before good equilibrium the the right specific we've find and there's we for the this we equilibrium before run really loan a start we're kind assets with with is to generating got so if and at good too to get great add unit the volumes that spreads affects we're then and from a now get that things. we're comfortable sudden all what particular

think million of expenses based So it have right and the a base. in to equilibrium is go you and lower, now, around terms side assets we I just as is We where we level, know earning higher we'll that would a but re-evaluate kind it's our figuring we of then on size in expense we're out $X asset a and lower are in if got have mind. out lower we we're if less even at figure target much being though get producing that

Matthew Clark

it. Got

Okay, Thanks. great.

Operator

next comes with Thank you. Tenner And from D.A. Davidson. the Gary question

Gary Tenner

Thanks, guys. good morning,

a see I and mentioned Just it interest to I'm probably want quarter the make an move you obviously to ask I more when balance positive net quarter bit over the a the on of of margin lag sheet guys couple this some point wanted of think, are? way that John, if two, you thinking that NII shrinkage saw questions the comes though at income, sure the the we're about just you inflection next or side to things, not given a we same

John Bogler

We downward have see movement as should a that correct. of well. bit is Yeah. little That

Gary Tenner

retail have actively rate your reduce next you'll of here you upcoming and you deposits? week maturity give sense the ability CD know non CD assuming we a to or outlook of a your us side how there. you a on Okay. cut And the Can then, detail much think funding get great, things great

John Bogler

good be Yeah, opportunities. there think will I some

in sensitive have went rates higher as depositors they for that were rates. up, some have been historically and We looking rate so

And to or so the the funds deposit think as those I rates reset have once comes Fed down, decrease it comes if we'll rates through go through. ability rate

are our of look back institutional come guess, putting We of deposits you in another you volume, of And with periods bucket bought some -- you which FHLB, we know, with for up have our we part that aside funding. know, companies really at. that Specialty, rate of on kind terms it three based buckets of know, could have as and deposits funding. that kind you I

our else. we CDs then have have and everything We

prioritizing the you as on and they rates between we've John's annually pretty because so so and point, been the XX% been and XX% rates dropped watching we've and taking dropping And those to been CDs we're rates is to we've been retention, retention mature, know, good. reduce that's opportunity

as we're for right many product trying different their of kind put the relates then and people we a menu. was in it was of it and needs. many, products relationships everything to There huge else, types those maintain volume product a And of had convoluted here, to

it And rate so instituted going as earnings for we've been the trying and and forward their out. the attractive to to going pretty credit clients, clients a it shrinking for we that, product so right our needs. complicated something We less and helpful get roll that's making be that's

past, deposits doing that about we loans making sure the we can mentioned other you and to from and So, ourselves by us. very any things from deposits not think have we're all so, everybody in know, that trying the borrows deposits, the strategically without Gary, helping we're we're I've

Gary Tenner

I to? question, adjustment quick can. The last $XXX,XXX relate one does if on that just what occupancy and line, the you, Thank

Jared Wolff

to off initiatives capitalized There previously we we've just undertaken initiatives we was so wrote and those any some and had further opted that the cost. pursue not technology

Operator

next question And with the comes Andrew you. from O'Neill. Liesch Thank Sandler

Andrew Liesch

on questions up securitization size with the follow here this plan month. sheet balance couple a for of next the Just

size the of Beyond portfolio paying borrowing parts total so it quarter billion securities is together? is other going comes base there should of be what's trying the down at this the out I these in working of kind sense and for was securitization to I any use the some there get then cash to we mean, how all there below of asset the how that and are just fall if some in just the a looking take $X

John Bogler

interest to you come are Thank the play, billion variables we're that single obviously in today we could rates you, the at in family the if take start level. that uptick rates an Andrew, did lower if year. repayments that is portfolio, uptick the range, about the of an securitization, uptick so $X where There in out persisted see there. elevated at and other see We we if the going that level rate I be know you not in of in but see think with balance would into did an an stay in may repayments high will we'll some for multi-family decline, the at we a are level, be portfolio,

it. We which are coming our some help C&I of decent out should seeing book, normalize production to

So a our at in CLOs. then securities, the looking been of terms to remix largely book reduce the to dependent overall, more will of we've and terms give exposure in we're us within our market ability the upon loan what

So spread pending. further tightening will opportunity but advantage to see to were to our really if opportunities some we would exposure reduce part that that of some be of their CLOs and take we

Jared Wolff

doubled obviously to on it the of don't we saw loans pull Andrew, multi-family we a was is loan quarter, we're to of million family continue, in was $XXX levers with Yeah rate. look at expect for we that single couple rate side, so John's pay-off the that have to a production $XXX to this trying point repay million both what of

trying just the are what but probably play pretty put in wanted right terms balance our on rate make looking if a the yields because to loans with decisions books. the both to and as we're we our right getting at credit those we're to, originate, up best we long to now, it on not We but could volumes ramp low we

So we'll just have goes. to market the see where

Andrew Liesch

have guys other all covered you Yes, my Great. questions.

Operator

Securities. comes Wells Fargo from [Operator Instructions] And question the you. Braziler Timur with Thank next

Timur Braziler

CLO there Maybe total past? incremental so is going morning. we securities portfolio, that thinking about is to had been of extent be should in level reinvested, XX% good to that to the following that reduction that out relative kind in just guess on that assets be I Hi, how that the question thrown up to

John Bogler

as little comfortable and choppiness from forward a that our more mix I it, remove investment we simplify bit securities Yeah, go to think having sheet of balance lower we and of some assets.

So, range XX% in probably to a to better that or bit the if here XX% we're is a more it in near think term. a about little probably way

so reduction take And book of to build out start to us to latter business; the something year in see that balances, into and place much extent part I traditional so I that in we CLO then next a a this the think do more year. have of we'll you'll start think securities that that's

Timur Braziler

the get then mentioned reduction rebound quarter confidence I period a to gives press the that bit think and I in in And reduction? from transitory that helpful. balances far done release, balances think rebound. DDA you that that's Okay, what and you what it third the is going have guess quarter expect to back to in thus the you're and that DDA second the

John Bogler

we Most the quarter came very of start back quarter. and of the late then at the reverse first out the that the second in in in quarter growth saw

our And operate. NBI, the in knowledge actually of and have based if those relationship much it's the So they average of you up was upon of that our at and for more it how confidence quarter-over-quarter. terms returned kind balances client look and

deposits return. that where So those will is belief our that's

Timur Braziler

loans million then related that something Is that C&I off this switching credit, to on were is NPL leveraged different? charge and the Okay, the off that two $X to quarter? the last quarter, charge put

Jared Wolff

ago, loan was originators actually. No, it's it couple different. a And totally of something years a

we south. did it this that took quarter. have And on loans, we out side we leverage the off just of went so loan it just and one, leverage got And direct three we

was there which like participate. of we have opportunity them. pleased was and just of of we'd get some which we them, did the refinanced out to one to do. out get two, the got were which So But but to great, didn't hair take It was we out on other

Timur Braziler

bank there. chapter not Okay, that you was the get great. seems the SEC last any related Glad mentioned story that to provide understood. I to or Does And it guess close would was to at of then the all one that for can likely headlines. this some last one in on part me; the XXXX like that of see be the color month just charged

John Bogler

gotten So, speed all up legal to on I've open thoroughly the matters.

As I quarter, I worse. charges the last bank. not bank, getting not mentioning were mentioned that directed they're the for you're better of thing the at think terms in The

are to insurance, so don't But I nothing have soon. going you hopefully and, and matters better reimbursement any I of think know makes legal me to that later, resolve expenses those. So comment lumpy bit about little get but we as it's think said, it's we rather open I've making a obviously progress there's They're going by in our terms we and you worse hope can know, it's that it's get covered and to the hopefully. be of out soon of seen sooner them I

Timur Braziler

Thank that appreciate color. Great, you.

Operator

Wooten KBW. next with Thank from Luke comes you. the And question

Luke Wooten

guys. forward in is hear thinking redeemable XXXX? of up of to just is 'XX, offer, it morning, kind and point forward I and about kind and through just in to wanted wanted just to going were capital you D see kind of about of but the repurchase that talked you wanted what the tender you Series little a just with that know XQ Good talked about a management opportunities there dig kind going little I bit bit to

Jared Wolff

our the in as Board able to of of this up year. to call be are but decisioning Thanks, appropriate the obviously at move XQ options If are process we'll to and you the take obviously Series think will come being D to appropriate. part other that meantime going to to those evaluate opportunities next we be that Luke evaluate on that and as and and there is focus look we next the continue indicated, continue probably forward

Luke Wooten

know I coming there's good then Okay, rate aren't just a that kind assuming little lot insurance you professional item pieces for down us that's the fees helpful. a in the forward, going to run on do but have moving of use And recoveries a bit line of there expenses pipe?

Jared Wolff

You're out recovery? saying indemnification, if we take related they're the

Luke Wooten

Yeah.

Jared Wolff

down an No, a level this of we'll lot bit have as in for rate have to a motion good sort the quarter. third little we'll kind quarter, that going things that then to the at quarter to time, I fourth run out to a in is internally we to of us. still the simply and we we're hesitant of here guidance think I get think level just be of a on that elevated I'm give third through let any just play because and have

John Bogler

mean, XXXX I that things and we take, know that the position end than of run rate. not get trigger can't pull those movement yet of the so quarter. by because able to you expected complete. fourth actions co-operated the bunch confidence we of a we start said what and things to things we the yet been that end we you There's issues in with are just think slide the to some take technology there to why And we know, are by going a we so or there other numbers we right many things of but know the on have whole we're that are as that's the year, got the we be Yeah, more last just so we've want quarter, the wanted faster expenses on in I

it's but to going we'll predict. lumpy to hard You before we not we're very going you know to know that but it's have be good maybe another quarter, and, be just

Luke Wooten

on deposits, that was were balances touching bit the skewed. bearing understandable. on know just briefly And a up little asked deposits, question I that the Yeah, was non-interest the EOP average then a while just Okay.

off. running assets Just somewhere on wholesale, see as Should deposits. But read look year, total kind just the of of to the we number the at below just kind of with how you because, just that I you will the deposit should end follow of get deposit basis, kind the said growth can a we nine close out of how growth. asset coming wanted wholesale total look at on loans that kind and and of we deposits should get towards those down know

John Bogler

deposits. of you as higher obviously percentage non-interest our low our bearing DDA overall terms looking know, mix, at of in we're Well, a increasing cost the and

And that the so thing is. looking what at that's I'm mix is mostly the

a You know, of mentioned started we know, deposit initiatives, whole I base. whole bunch of bunch growing are there components good core quarter a a to that, last you

a teams we accounts then should to don't things you place. $XX You the million you We we been you right and with two need and the the from cost partnering have right and have. the of new need the putting about products and almost all we and we XXX and products those training understand in need That's spent the good people excluding have low you making is I've that part a sure place here, people, clients right half that since need from need and money close added And that it incentives. months, money in training, and new deposits existing in people clients. right

as I an before. not a process, good said making progress, we're It's event. so And

And volumes so of very what kind those hard be. going predict to to are

I becomes and culture and know, changed start systematized after from is pick it own up momentum the people more quarters kind stuff Although it. to that laid the does experience because my have everybody, groundwork gets all necessary a really bringing of of couple you know to in

deposits. pretty to story a got to Some fast. without only a loan And committee spreads mistake, has bring wants make loan that to

So, quickly of a all have process the sure clients. in relationship we important. you changing are of our and way terms about anymore. in we're culturally, pretty serving a complete our things oriented And will footprint. making with In understanding businesses That very know, very relationship that's not happening what here is

I say get it's we perspective, think it's be to need volumes will why the quarters dividends we terms there. be. well. hard I then to to cost those our than going looking build, a to to in predict would but the non-interest what pay higher volumes balances come as know from our bearing But and are mixed it'll I'm that's at and balances be But because low mix I'd going of today in

Jared Wolff

will first proceeds is we down other going say sheet, be go thing to the I'd balance there's all reduce shrink so the those overnight And the movement securitization, the to advances.

the to overnight So to the term described being continue cost and it'll looking to to previously And that and the balance able they side cost deposits. those we've then we'll reduce the lower in as of liability of at a retail movement a reduce coming be on and broker would is then of it's what be mature, or first continuation will they're reset higher out. be whether as deposits run deposits, more

Luke Wooten

guys And that. floors. slide the that for the you helpful. thank distance, variable the you for questions. my that really on loans, interesting that's rate to in look for But kind Thanks Great, taking at also of was super putting thank

Jared Wolff

Yeah, you. of course. Thank

Operator

with the Thank you. Tim question next comes And Janney. from Coffey

Tim Coffey

Thank you and good morning, gentlemen.

like at that two if rate of last that's You And those a CLOs you wondering good in kind those run see take reduce? to whack quarters. the would the I'm that balances

John Bogler

not. it's No,

to You know, the to to upon more market dependent is what ability much us. is reduce our give CLOs going

last And a You get an out spread were those securities we significant know, of year all was they not because opportunity widening. any late to there of underwater. saw

any spreads gave as without exit them it taking So, opportunity losses. us tightened, to the

we to have our So losses. it's to to don't where intent look to for continue take opportunities exit

to us give exit. that right have points back And that XX so basis and and of would cost our XX we'd we're give to chunk now, basis opportunity an come probably before spread terms in wide another of to kind

Jared Wolff

find do to We've of make of you a an know, our got earnings an is not with, replace permitting. issue running overall sure them is them for mix to that our concentrate, our to But to CLOs them. appropriate an power got place to the have know, to there security And the we we're on circumstances security got as they're into, feel our were sheet. completely. we want have right as replacement assets, something concentrate, total you've but, put trying we off looking for do keep just And to mix you alternative And to assets. safe. you're portfolio, think We appropriate with. are decimate to balance We

Tim Coffey

if have I the you I think prepared end wondering be where And this Okay. comments, quarter I'm you missed but think at in the overnights have target? of a your might might next

Jared Wolff

but a I much would $XXX would out so roughly target, million say you Not take that of the overnights.

will overnights As bit buffer. in the the we've said as we use a of a past,

FHLB then the that maturing CDs, and we the asset order deposit as to in we'll asset or against have will low subsequently, incremental those we then have advances cost extent So have mature proceeds to that don't we any and reduce advances. utilize use proceeds growth CDs overnight

bit buffer. overnight the So a of a is

Tim Coffey

my Sure, thanks been okay you. of questions rest Thank well, answered. have

Jared Wolff

Thanks, Tim. Appreciate it.

Operator

Tenner you. is Davidson. a And the with question D.A. next Thank Gary from follow-up

Gary Tenner

Thanks.

securitization multifamily to close? the on actually that quickly is the Just expected quarter in one

Jared Wolff

that Gary, say again.

Gary Tenner

timing that's I just of within wonder quarter on one the securitization the to expected the close?

Jared Wolff

August, very place settlement and this be takes a August. the the with At of as there'll working beginning at final of now beginning been that the the went past bonds and circled or through they're process then of IOPs we out Monday down have taken and the yesterday so

Gary Tenner

rate alternative And run there loss now or you great. investments expect behind Okay, just that us? then what's the on kind energy of normalized is partnership the the

John Bogler

been during into a has we've some and program will quarter-to-quarter. expense effective to to small would we it our so solar but closer some relatively second No, to forward those I expense tax there'll entered to opportunity we rate to wanted be be XX% prior had tax and we as quarter, from two an and our manage something down the expect additional the completed transactions large as we small create commitment on that equity down said, previously and take investment go

Gary Tenner

Thanks again. Okay.

John Bogler

Gary. Thanks

Operator

conference well much as listening today's all -- for presentation does you presentation. Thank it And conclude you. Thank so today's the call. for today's question-and-answer as session,

now lines. You your disconnect may

Banc of California (BANC) 25 Jul 192019 Q2 Earnings call transcript