Banc Of California, Inc. · NYSE:BANC
Banc Of California — Investor Presentation (May 2019)
25 slides from Banc Of California's investor presentation, May 7, 2019
Slide 1: Investor Presentation May 2019
Investor Presentation May 2019
Slide 2: Forward-looking Statements
Forward-looking Statements When used in this presentation and in documents filed with or furnished to the Securities and Exchange Commission (the “SEC”), in press releases or other public stockholder communications, or in oral statements made with the approval of an authorized executive officer, the
Slide 3: Corporate Profile
Corporate Profile Relationship-Based Community Banking Our Franchise Highlights California Footprint Market Information1 Ticker: NYSE: BANC Market Cap: $734 million - Price Per Share: $14.44 - Dividend Yield: 3.60%/1.66% Financial Information2 Total Assets: $9.9 billion Total Deposits: $7.7 billion
Slide 4: Banking and Financing Solutions Designed to Meet the Needs of Businesses, Entrepreneurs and Individuals
Banking and Financing Solutions Designed to Meet the Needs of Businesses, Entrepreneurs and Individuals COMMERCIAL & PRIVATE BANKING BUSINESS BANKING • Sports, Art & Entertainment Banking • Business Management Banking • Business Banking • Real Estate Private Banking • Middle Market Banking • Foundat
Slide 5: Strategic Direction for BANC
Strategic Direction for BANC Accelerating the Transformation to a Relationship-Focused Community Bank Jared Wolff joined as President, CEO and a Director on March 18, 2019 New President & CEO Deep experience in California banking with PacWest Bancorp and City National Bank Eliminate non franch
Slide 6: Accelerating Balance Sheet Transformation: Assets
Accelerating Balance Sheet Transformation: Assets Strategy Shifting to Higher Yielding Interest-Earning Assets Loans and Securities Other Securities 3% Yield Ending Balance C&I 16% Q over Q ($ in thousands) 1Q19 1Q19 4Q18 22% Change Securities 4.13% $ 1,471 $ 1,993 $ (521) 10% 26% Multifamily 4.26%
Slide 7: Balance Sheet Remix: Deposit Profile
Balance Sheet Remix: Deposit Profile Reducing Reliance on Non-Core, Higher Costing Funding Sources Funding & Deposit Composition1 Q1 2019 Funding Mix2 Brokered & FHLB 26% $8,660 Funding / Deposit Type Cost³ Core Deposits 935 FHLB 2.59% 74% $1,295 Non-Brokered CDs 2.29% $1,685 Brokered CDs 2.43% Targ
Slide 8: Aligning Expenses with Company's Size and Footprint
Aligning Expenses with Company’s Size and Footprint Reducing Run-Rate Expenses by the End of 2019 Will Provide Critical Tailwinds into 2020 Non Interest Expenses1 Rationalizing expense base to align with restructured balance sheet $60.7 $59.8 $58.4 $59.9 Targeting quarterly operating expenses of
Slide 9: First Quarter 2019 Highlights
First Quarter 2019 Highlights Continued Progress Towards a Core Commercial Banking Platform Demand deposit account (“DDA”) balances increased by $114 million, including $97 million Improving Core of noninterest-bearing, with the growth occurring late in the quarter Deposit Base Released $248 mil
Slide 10: Strategic Asset Re-Mix Progress
Strategic Asset Re-Mix Progress De-emphasizing CLOs and Lower Margin Loan Products Total Assets1 Q1 Strategic Asset Re-Mix Activities $10,630 1 Driven by the following activities: ($79) 1 • $365 million in CLO sales and $19 million in calls/early redemptions • $132 million sale of the entire CMBS po
Slide 11: Expecting to Transform Deposit Base
Expecting to Transform Deposit Base Proceeds from Recent Asset Sales Expected to Reduce Future Cost of Deposits Deposit Composition1 1.67% 1.52% 1.36% 1.15% 0.96% $7,917 $7,725 $7,402 $7,110 $7,136 $1,655 $1,685 $1,512 $1,089 $1,355 $975 $686 $988 $1,543 $1,295 $2,143 $2,312 $2,126 $2,139 $2,051 $1,
Slide 12: Refocusing on Franchise Enhancing Lending
Refocusing on Franchise Enhancing Lending De-emphasizing Low Margin, non-Relationship Lending 2019 Q1 gross loan production1 of $536 million at a 5.29% average production yield HFI Loan Production Yields vs. Portfolio Yields2 5.22% 5.26% 5.29% 5.05% 4.76% 4.63% 4.70% 4.74% 31% $7,701 $7,557 $7,036 $
Slide 13: Net Interest Margin
Net Interest Margin Sale of Low Yielding Asset and Repayment of High Cost Funding Expected to Improve NIM Average Interest-Earning Assets1 Net Interest Margin Components $9.8 $9.8 4.53% 4.59% $9.7 4.43% $0.3 $0.3 $0.3 4.35% $2.2 $2.0 $1.8 4.12% $7.2 $7.4 $7.7 2.98% 3.01% 2.93% 2.88% 2.81% 3Q18 4Q18
Slide 14: Right-Sizing the Expense Base
Right-Sizing the Expense Base Simplifying Operating Model and Delivering Operational Efficiencies Non-Recurring Adjustments to Continuing Operations Expenses Noninterest Q1 non- Q1 Expense - ($ in millions) recurring Operating Continuing adjustments Expense2 Operations Salaries and employee benefits
Slide 15: Focusing on Core, Sustainable Returns
Focusing on Core, Sustainable Returns Non-recurring Items Expected to Decline by End of 2019, Simplifying Core Income Q1 Operating Earnings from Continuing Operations ($ in millions) Q1 adjustments1 Continuing Operations (reported) Normalized Tax Rate at 20%2 Net interest income $ 67.8 $ 67.8 Provis
Slide 16: Asset Quality
Asset Quality NPLs & OREO1 NPAs / Equity1 0.38% 3.0% 0.36% 2.7% 0.32% 0.33% 0.30% $28.8 2.3% 2.4% $26.0 2.2% $22.2 $23.0 $22.7 1Q18 2Q18 3Q18 4Q18 1Q19 1Q18 2Q18 3Q18 4Q18 1Q19 NPLs & OREO NPLs & OREO / Loans and Leases Receivable ALLL2 and NPL Coverage Total Delinquent Loans / Total Loans 282% 0.79
Slide 17: Capital Ratios Exceeding Basel III Guidelines
Capital Ratios Exceeding Basel III Guidelines Tier 1 Risk-Based Capital Ratio Supported by $231 Million of Preferred Equity Common Equity Tier 1 Ratio Tier 1 Risk-Based Capital Ratio 9.8% 9.9% 9.8% 9.5% 9.7% 13.7% 13.8% 13.2% 12.8% 13.0% 1Q18 2Q18 3Q18 4Q18 1Q19 1Q18 2Q18 3Q18 4Q18 1Q19 Tangible Equ
Slide 18: Appendix
Appendix
Slide 19: Securities Portfolio
Securities Portfolio Securities Portfolio Detail1 Amortized Amortized 1Q Fair Value Book Yield Duration Security Type Cost Cost Change 1Q19 1Q19 1Q19 4Q18 1Q19 Gov’t & Agency (Agency MBS) $ 463 $ 450 ($ 13) $ 435 2.62% 6.89 CLOs 1,431 1,047 (384) 1,036 4.42% 0.32 CMBS 135 0 (135) 0 n/m n/m Total Sec
Slide 20: BANC Fast Facts & Preferred Equity Capital Structure
BANC Fast Facts & Preferred Equity Capital Structure (Dollars in millions)1 1Q19 4Q18 3Q18 2Q18 1Q18 Total assets2 $ 9,887 $ 10,630 $ 10,261 $ 10,319 $ 10,329 Securities available-for-sale 1,471 1,993 2,060 2,297 2,425 Loans and leases receivable 7,557 7,701 7,253 7,036 6,931 Total deposits 7,725 7,
Slide 21: Non-GAAP Financial Information
Non-GAAP Financial Information This presentation contains certain financial measures determined by methods other than in accordance with U.S. generally accepted accounting principles (GAAP). These measures include noninterest expense from continuing operations, operating expense from continuing oper
Slide 22: Non-GAAP Reconciliation: Adjusted Efficiency Ratio
Non-GAAP Reconciliation Adjusted Efficiency Ratio Including the Pre-tax Effect of Investments in Alternative Energy Partnerships (Dollars in thousands) 1Q19 4Q18 3Q18 2Q18 1Q18 Noninterest expense $ 61,835 $ 49,578 $ 60,977 $ 62,554 $ 59,812 (Loss) gain on investments in alternative energy partnersh
Slide 23: Non-GAAP Reconciliation: Tangible Common Equity to Tangible Assets
Non-GAAP Reconciliation Tangible Common Equity to Tangible Assets and Tangible Equity to Tangible Assets (Dollars in thousands) 1Q19 4Q18 3Q18 2Q18 1Q18 Tangible common equity to tangible assets ratio Total assets $ 9,886,525 $ 10,630,067 $ 10,260,822 $ 10,319,280 $ 10,329,319 Less goodwill (37,144)
Slide 24: Non-GAAP Reconciliation: Return on Average Tangible Common Equity
Non-GAAP Reconciliation Return on Average Tangible Common Equity (Dollars in thousands) 1Q19 4Q18 3Q18 2Q18 1Q18 Return on tangible common equity Average total stockholders' equity $ 956,700 $ 960,242 $1,000,819 $1,000,856 $1,019,961 Less average preferred stock (231,128) (231,128) (260,822) (269,07
Slide 25: Non-GAAP Reconciliation: Noninterest Expense / Average Assets
Non-GAAP Reconciliation Noninterest Expense / Average Assets (in millions) 1Q19 4Q18 3Q18 2Q18 1Q18 Operating Expense (NIE) Total noninterest expense $ 61.8 $ 49.6 $ 60.9 $ 62.5 $ 59.8 Less loss on investments in alternative energy partnerships (2.0) (0.8) (2.5) (1.8) 0.0 Less non-recurring items (5
Banc of California — Investor Presentation (May 2019) on 6ix