Banc Of California, Inc. · NYSE:BANC
Banc Of California — Q4 2024 Earnings Presentation
36 slides from Banc Of California's earnings presentation, Jan 23, 2025
Slide 1: Investor Presentation: Fourth Quarter and Full Year 2024 Results
Draft v4.5 1/21/24 Investor Presentation Fourth Quarter and Full Year 2024 Results
Slide 2: Forward-Looking Statements and Other Matters
Forward-Looking Statements and Other Matters This presentation includes forward-looking statements within the meaning of the “Safe-Harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements related to our expectations rega
Slide 3: Update on California Wildfires
Update on California Wildfires We are committed to supporting the recovery efforts to help rebuild Los Angeles ❖ Launched the Banc of California Wildfire Relief and Recovery Fund and donated $1mm through our Foundation to aid relief and rebuilding efforts ❖ We are not currently aware of any material
Slide 4: 4Q24 Financial Highlights
EPS of $0.28 driven by NIM expansion and lower 4Q24 Financial noninterest expenses 4Q24 3Q24 Highlights PTPP(1) / Adjusted PTPP(1) $82.9mm/NA $20.5mm/$80.0mm ❖ Strong growth in core earnings with adjusted EPS / Adjusted EPS(1) $0.28/NA ($0.01)/$0.25 PTPP(1) of $82.9mm up 4% QoQ driven by: Operating
Slide 5: 4Q24 Earnings Results
Strong earnings growth driven by declining cost of funds and noninterest expenses 4Q24 Earnings ($ in millions) Total interest income $ 4Q24 424.5 $ 3Q24 446.9 $ 2Q24 462.6 $ 1Q24 478.7 Cost of funds -27 bps Results Total interest expense Net interest income 189.2 235.3 214.7 232.2 233.1 229.5 249.6
Slide 6: 2025 Strategic Priorities and Outlook
2025 outlook reflects growth in core profitability drivers 2025 Strategic Priorities 2025 Outlook Key factors ❖ Driven by growth in commercial loans ❖ Strengthen core earnings power through loan ❖ Target mid to high single digit growth Loans and noninterest-bearing deposit growth, prudent ❖ Assumes
Slide 7: Balance Sheet
Stable balance sheet following repositioning actions Balance Sheet ($ in millions) 4Q24 3Q24 2Q24 1Q24 4Q23 Cash and cash equivalents $ 2,502 $ 2,554 $ 2,699 $ 3,085 $ 5,378 Investment securities 4,701 4,747 4,673 4,708 4,761 4Q24 Highlights Loans held for sale 26 29 1,935 81 123 Loans and leases HF
Slide 8: Net Interest Income and Net Interest Margin Expansion
Lower funding costs drove NII and NIM expansion Net Interest Income and Net Interest Net Interest Income (NII) ($mm) and Net Interest Margin (NIM) (%) Margin Expansion 2.80% 2.93% 3.04% 2.66% 4Q24 Highlights 1.69% ❖ NIM expanded 11 bps to 3.04% $229.1 $229.5 $232.2 $235.3 ❖ NII increase of $3.1mm re
Slide 9: Funding Cost Reduction Actions and Mix Shift
Lower interest expenses driven by stronger funding mix Funding Cost and deposit repricing Reduction Actions Strengthening Funding Mix(1) % of Total Funding(1) and Mix Shift 4Q24 Highlights 80.8% 82.1% 81.9% 87.4% 87.9% ❖ Deposit costs declined QoQ driven by repricing actions resulting in 54% beta on
Slide 10: Noninterest Income Composition
4Q24 noninterest income lower due primarily to negative Noninterest Income mark-to-market adjustment on CRA equity investments Composition 4Q24 Highlights $44.6(1) ❖ Dividends and gains on equity ($ in millions) $4.6 investments down $4mm QoQ due to both mark-to-market and income from (1,2) $34.3 $8
Slide 11: Noninterest Expenses
Noninterest expenses declined reflecting continued Noninterest efficiency gains Expenses ($ in millions) 4Q24 3Q24 2Q24 1Q24 4Q23 Normalized 4Q23(2) Compensation $ 77.7 $ 85.6 $ 85.9 $ 92.2 $ 89.4 $ 114.9 4Q24 Highlights Occupancy Information technology and data processing 15.7 14.5 16.9 15.0 17.5 1
Slide 12: Customer-Related Expenses
Customer-related expenses down due to lower ECR Customer-Related expenses Expenses Adjusted Noninterest Expense Detail(1) ($mm) Customer-Related Expenses ($mm) 4Q24 Highlights FDIC Special Assessment: 1Q24: $4.8 $34.5 ❖ Customer-related expenses of $216.3 $210.5 $32.4 $31.7 $31.7mm down 8% QoQ $196.
Slide 13: Building a Strong Commercial Deposit Franchise
Core deposit growth QoQ driven by checking and money Building a Strong market accounts Management has a track record of successful deposit strategy execution Commercial ($ in m illions) 4Q24 3Q24 2Q24 1Q24 4Q23 Deposit Franchise Noninterest-bearing Checking Checking 7,720 7,611 7,812 7,540 7,825 7,3
Slide 14: NIB Deposit Growth Remains a Key Priority
Steady growth continuing in new NIB business deposit NIB Deposit relationships and balances(1) Growth Remains a Key Priority 2,390 4Q24 Highlights ❖ Enterprise-wide focus 1,889 ❖ Deposit incentive programs, including competitions and leaderboards 1,288 ❖ RM performance goals include specific NIB tar
Slide 15: Diversified Loan Portfolio
Core portfolio growth of 1.5% driven by higher yielding Diversified Loan commercial loans Portfolio Existing core portfolios have strong credit quality Loan Segment HFI % of Total Wtd. Avg. NPL % DQ % ❖ Core loan portfolio(1) increased $334mm ($ in millions) 4Q24 3Q24 Variance Loans 4Q24 Rate 4Q24 4
Slide 16: Loan Activity
Net loan growth driven by strong production and net line Loan Activity utilization 8.29% Rate on Production 8.21% 7.80% Total Loan Yield 4Q24 Highlights 7.24% 6.08% 6.18% 6.18% 7.02% 5.82% 6.01% ❖ Rate on new production of 7.02% $2,290 ($ in millions) $2,004 reflects commercial loan production $1,83
Slide 17: Asset Quality Ratios and Trends
Continuing conservative outlook and heightened Asset Quality Ratios monitoring given uncertain economic environment and Trends ACL / Total Loans ($mm) Nonperforming Loans (NPLs) ($mm) 0.80% ❖ ACL coverage ratio impacted by 0.72% 0.57% 0.50% 1.26% improvement in the economic forecast, a 1.22% 1.19% 1
Slide 18: Allowance for Credit Losses Walk
ACL coverage ratio at appropriate level under CECL Allowance for given portfolio mix Credit Losses Walk ($ in millions) $281.9 $268.4 $(26.5) $13.0 4Q24 Highlights ❖ ACL decreased $13.5mm driven by: ❖ Net charge-offs of $26.5mm primarily driven 1.20% 1.13% 1.20% 1.19% by a commercial loan exposure w
Slide 19: California-Centric CRE Portfolio
High quality CRE portfolio has low weighted-average LTV California-Centric and high debt-service coverage ratio (DSCR) CRE Portfolio Total CRE is well diversified across multiple industries 4Q24 Highlights Property Type ($ in millions) Count 4Q24 % of Total CRE % of Total Loans Avg Loan Size WA LTV(
Slide 20: Interest Rate Sensitivity
Balance sheet mix shift drives IRR position closer to Interest Rate neutral Asset/Liabilities Repricing Mix ($B) Sensitivity Short $13.5$12.9 40%1 Term A/L $19.7 ❖ IRR position closer to neutral as gap $19.7 59%1 between short-term liabilities and assets Long decreased ~$1.1B in 4Q from $7.3B at 3Q
Slide 21: Investment Securities Portfolio
Higher yield and lower duration vs. prior quarter due to Investment benefits of 3Q AFS securities repositioning Portfolio Profile Securities Portfolio Credit Rating 3% (1) Duration (yrs) Security Type AAA 5% ($ in millions) 4Q24 3Q24 Variance 4Q24 0% 16% AA 4Q24 Highlights AFS - Gov't & Agency $ 1,3
Slide 22: High Level of Available Liquidity
Maintaining high levels of primary and secondary High Level of liquidity as prudent risk management Available Liquidity ($ in Millions) Current 4Q24 Highlights December 31, 2024 Availability Utilization Capacity Primary Liquidity(1) Cash $ 2,317 ❖ Total primary liquidity of $4.4B, AFS Securities (un
Slide 23: Strong Capital Base
Building capital levels for strength and flexibility Strong Capital Regulatory Well- Excess of Well- Base 4Q24 3Q24 2Q24 1Q24 Capitalized Capitalized Total Risk-Based Ratio 17.05% 17.00% 16.57% 16.40% 10.00% 7.05% Tier 1 Risk-Based Capital 12.97% 12.88% 12.62% 12.38% 8.00% 4.97% 4Q24 Highlights Comm
Slide 24: Executed significant balance sheet repositioning in 2024
Executed significant balance sheet repositioning in 2024 . . . ($ in millions) 4Q23 2024 repositioning actions 4Q24 Cash / assets 14.0% Cash / assets 7.5% Cash + securities / assets 26.3% ❖ Sold $1.95B Civic loan portfolio Cash + securities / assets 21.5% Interest earning assets 35,425 Interest earn
Slide 25: Resulting in strong growth in core earnings and capital
. . . resulting in strong growth in core earnings and capital Balance sheet repositioning actions and swift delivery of merger integration milestones throughout 2024 have driven significant growth in key profitability drivers and capital Noninterest Operating Avg. NIB / Deposits Wholesale Funding Ra
Slide 26: Appendix
Appendix
Slide 27: Non-GAAP Financial Information
Non-GAAP Financial Information Tangible assets, tangible common equity, tangible common equity to tangible assets, tangible assets. book value per common share, adjusted net earnings (loss), adjusted return on average assets, PTPP income is calculated by adding net interest income and noninterest in
Slide 28: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in thousands, except per share data) 4Q24 3Q24 2Q24 1Q24 4Q23 Tangible Common Equity Ratio Total stockholders' equity $ 3,499,949 $ 3,496,198 $ 3,407,848 $ 3,394,150 $ 3,390,765 Less: preferred stock 498,516 498,516 498,516 498,516 498,516 Total common equity 3,001,433 2,9
Slide 29: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in thousands) 4Q24 3Q24 2Q24 1Q24 4Q23 Return on Average Tangible Common Equity ("ROATCE") Net earnings (loss) $ 56,919 $ 8,784 $ 30,333 $ 30,852 $ (482,955) Earnings (loss) before income taxes $ 70,103 $ 11,514 $ 44,637 $ 42,400 $ (659,989) Add: Intangible asset amortizat
Slide 30: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in thousand, except per share amounts) 4Q24 3Q24 2Q24 1Q24 4Q23 Adjusted Net Earnings Net earnings (loss) $ 56,919 $ 8,784 $ 30,333 $ 30,852 $ (482,955) Earnings (loss) before income taxes $ 70,103 $ 11,514 $ 44,637 $ 42,400 $ (659,989) Add: FDIC special assessment - - NA
Slide 31: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in thousands) 4Q24 3Q24 2Q24 1Q24 PTPP Income Net interest income $ 235,285 $ 232,175 $ 229,488 $ 229,102 Add: Noninterest (loss) income 28,989 (15,452) 29,792 33,816 Total revenue (loss) 264,274 216,723 259,280 262,918 Less: Noninterest expense (181,370) (196,209) (203,64
Slide 32: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in thousands) 4Q24 3Q24 2Q24 1Q24 4Q23 Adjusted Noninterest Expense to Average Total Assets Noninterest expense $ 181,370 $ 196,209 $ 203,643 $ 210,518 $ 363,638 Less: Acquisition, integration, and reorganization costs $ 1,023 $ 510 $ 12,650 $ - $ (111,800) Adjusted nonint
Slide 33: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in thousands) Economic coverage ratio 4Q24 Allowance for Credit Losses 268,431 Add: Unearned Credit Mark from Purchase Accounting (1) 22,473 Add: Credit Linked Notes (2) 116,991 Adjusted Allowance for Credit Losses 407,895 Loans and leases held for investment, net of defer
Slide 34: 4Q24 Noteworthy Items
4Q24 results included several noteworthy items, which 4Q24 Noteworthy impacted financial results but partially offset each other Items ❖ Revenue lower due to combination of lower dividends and negative fair ($ in millions) After-tax P&L impact(1) value adjustment on CRA equity Revenue investments In
Slide 35: Loan Interest Rate Sensitivity
20% of fixed rate and hybrid loans will reprice / reset Loan Interest Rate within one year at higher rates Sensitivity Floors: Variable Rate Loans Loan Portfolio by Index Rate 4Q24 4Q24 ❖ Roughly half of fixed rate and hybrid loans will reset or mature within the next 0% 14% 16% 18% three years and
Slide 36: Experienced management team with track record of success
Experienced management team with track record of success at leading institutions Jared Wolff Joe Kauder Chris Baron Chris Blake President and Chief Executive Chief Financial Officer President, Community Banking Vice Chairman of the Bank Officer 30+ years banking experience, 30+ years banking experie