Banc Of California, Inc. · NYSE:BANC
Banc Of California — Q3 2022 Earnings Presentation
35 slides from Banc Of California's earnings presentation, Oct 20, 2022
Slide 1: Investor Presentation: 2022 Third Quarter Earnings
INVESTOR PRESENTATION 2022 Third Quarter Earnings bancofcal.com
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS When used in this report 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 words
Slide 3: Third Quarter 2022 Results
THIRD QUARTER 2022 RESULTS ($ in Thousands Except Per Share Data) 3Q22 2Q22 3Q21 Net interest income $ 79,408 $ 78,299 $ 62,976 (Reversal of) provision for credit losses - - $ (1,147) Net income $ 24,196 $ 26,712 $ 23,170 Net income available to common stockholders $ 24,196 $ 26,712 $ 21,443 Earning
Slide 4: Enhancing Franchise Value: 3rd Quarter 2022 Summary
ENHANCING FRANCHISE VALUE 3rd Quarter 2022 Summary • Strong adjusted net income and EPS in a more challenging operating environment • Loan production rate increase and large noninterest-bearing deposit base improves ability Growing Earnings Power to realize more NIM expansion and earnings growth • E
Slide 5: Consistent Core Earnings Power
CONSISTENT CORE EARNINGS POWER Adjusted Pre-tax Pre-provision (PTPP) Income (1) ($ in millions) +209% 1.65% 1.55% 1.59% 1.35% 1.39% +16% 1.25% 1.13% 1.06% 0.98% 0.83% $18.9 0.65% $16.0 $35.8 $38.4 $37.7 $32.7 $27.7 $13.2 $24.5 $18.9 $12.2 $22.0 $20.6 $16.0 $12.2 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q
Slide 6: Net Income Available to Common Stockholders Reconciliation
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS RECONCILIATION ($ in millions) $26.7 $24.2 $2.2 $0.4 EPS EPS 3Q 2022 $0.40 $0.44 Net Income Available to Noninterest expense Loss on alternative Adjusted Net Income Common Stockholders adjustments energy partnerships Available to Common Stockholders (1)(2)
Slide 7: Low Cost Deposit Franchise
LOW COST DEPOSIT FRANCHISE Highlights Average Cost of deposits Money Market & Savings Noninterest-bearing Brokered CDs Interest-bearing checking CDs • 6% YTD increase in noninterest-bearing 9/30 Spot 0.47% deposits Rate 0.15% 0.11% 0.08% 0.17% 0.56% • 40% percent of deposits are noninterest-bearing,
Slide 8: Deposit Engine Generates New Low-Cost Commercial Deposit Relationships
DEPOSIT ENGINE CONSISTENTLY GENERATES NEW LOW-COST COMMERCIAL DEPOSIT RELATIONSHIPS Commercial Noninterest-Bearing Deposits (NIB) and Number of Accounts 4Q21 Includes PMB Acquisition 14,244 14,292 14,300 14,541 11,644 11,270 11,444 $2,651 10,945 $2,550 $2,592 $2,476 9,920 $1,920 $1,519 $1,605 $1,339
Slide 9: Diversified Loan Portfolio Mitigates Risk and Generates Attractive Yield
DIVERSIFIED LOAN PORTFOLIO MITIGATES RISK AND GENERATES ATTRACTIVE RISK-ADJUSTED YIELD 3rd Quarter 2022 2nd Quarter 2022 Change (1) (1) (1) Loan Segment $ % Avg. Yield $ % Avg. Yield $ % Avg. Yield $ in Millions C&I: Warehouse $ 766 11% 5.97% $ 1,160 16% 4.83% $ (394) -5% 1.14% C&I: All Other 1,227
Slide 10: Diversified Business Mix: Loan Fundings and Rate on Production
DIVERSIFIED BUSINESS MIX YoY GROWTH IN LOAN FUNDINGS, RATE ON PRODUCTION ($ in millions) Total Loan Fundings of $821 Million in Q3 2022 $1,400 6.00% $1,211($1,208) $1,200 5.00% $380 $968 ($980) $1,000 ($414) $906 4.00% ($828) $80 $821 $800 $763 $290 ($780) ($28) ($394) $243 ($254) $262 3.00% $178 $6
Slide 11: Asset Quality Remains Strong
ASSET QUALITY REMAINS STRONG NPLs, Delinquencies, and Classified Loans Delinquencies ($ in millions) Criticized and Classified Loans ($ in millions) SFR Delinquencies Delinquencies (ex-SFR) Criticized and Classified Loans PMBC Acquired Delinquencies Delinquencies /Total Loans PMB Acquired Criticized
Slide 12: Top Relationships: Non-performing & Delinquent Loans Rollforward
TOP 10 RELATIONSHIPS Non-performing & delinquent loans rollforward Non-performing Loans ($ in thousands) 3Q 3Q 2Q Non-performing loans # 3Q22 2Q22 Delta Loan Category Accrual Delinquency Accrual Status Status Status • Non-performing loans 1 $ 11,364 $ 12,350 $ (986) C&I Non-Accrual Current Non-Accru
Slide 13: Allowance for Credit Losses Walk
ALLOWANCE FOR CREDIT LOSSES WALK ($ in millions) $99.7 $98.9 $(0.6) $(0.8) $0.5 $0.1 1.33% (1) 1.36% 1.34% 1.26% 1.36% (1) ACL (6/30/22) Specific Reserve Net Charge-offs Provision for RUC Portfolio Mix ACL (9/30/22) ACL includes the Allowance for Loan Losses (ALL) and Reserve for Unfunded Loan Commi
Slide 14: Continued Focus on Expense Management
CONTINUED FOCUS ON EXPENSE MANAGEMENT Noninterest Expense to Average Assets Adjusted Noninterest Expense(1) to Average Assets ($ millions) ($ millions) 2.50% 1.99% 1.95% 2.01% 2.02% 2.00% 1.84% 2.01% 2.09% 2.15% $58.9 $46.6 $48.6 $51.0 $37.8 $46.0 $46.5 $47.1 $47.4 $46.0 $46.5 $47.1 $47.4 $40.7 $40.
Slide 15: Interest Rate Risk Management
INTEREST RATE RISK MANAGEMENT Well positioned for higher rates with a One Year Positive Gap Ratio of 24% Interest Rate Risk Position (within 12 months) Loan & Deposit Mix HFI Loans: $7.3 billion Rate Sensitive Assets at 33% of Total Assets Loan Portfolio • $2.3 Billion mature or reset within 12 mont
Slide 16: Strong Capital Base
STRONG CAPITAL BASE Provides buffer for economic environment 3Q22 2Q22 1Q22 4Q21 3Q21 Common Equity Tier 1(1) 11.39% 11.29% 11.40% 11.31% 10.86% Tier 1 Risk-based Capital(1) 11.39% 11.29% 11.40% 12.55% 12.35% Leverage Ratio(1) 9.53% 9.58% 9.72% 10.37% 9.80% Tangible Equity / Tangible Assets (2) 8.97
Slide 17: 2022 Strategic Objectives
2022 STRATEGIC OBJECTIVES Continued Balance Sheet Growth and Expanding Profitability Fully Realize Synergies of • Achieve greater than 40% cost savings during first half of 2022 (achieved) PMB Acquisition • Identify additional opportunities for cost savings from larger organization • Expand relation
Slide 18: Deepstack Technologies: Overview of Transaction
DEEPSTACK TECHNOLOGIES Overview of Transaction Offices: Southern, CA and Jupiter, FL CEO: Jayme Amirie ➢ Software-led and e-commerce payments platform that provides clients with payment solutions, including merchant processing, ➢ Founded: 2010 payments acceptance and disbursements, ➢ 11 Employees, w
Slide 19: Deepstack Technologies: Differentiated Tech & Full Suite of Payment Products
DEEPSTACK TECHNOLOGIES Differentiated Tech & Full Suite of Payment Products Owning the technology that powers payment processing offers clients same day visibility into their receivables when they have their merchant settlement account at BANC, providing BANC with another source of NIB deposits Stra
Slide 20: Appendix
BANC OF CALIFORNIA APPENDIX bancofcal.com
Slide 21: Real Estate Loan Portfolio Has Low LTVs
REAL ESTATE LOAN PORTFOLIO HAS LOW LTVS Real Estate Loan Balances(1) Real Estate (1) LTVs $ % Count $ in millions $ in Millions $5,124 <50% $ 1,502 29% 1,161 $4,837 $4,274 $4,424 70% 50% to 60% 1,200 23% 501 $3,727 65% 59% 60% to 70% 1,685 33% 635 59% 60% 70% to 80% 660 13% 432 >80% 76 1% 40 Total $
Slide 22: California-Centric CRE and Multifamily Portfolios Have Low Weighted-Average LTV
CALIFORNIA-CENTRIC CRE AND MULTIFAMILY PORTFOLIOS HAVE LOW WEIGHTED-AVERAGE LTV CRE & Multifamily by Collateral Type Strip Center Other Single Tenant Multi Tenant 9% Health Other 4% 41% Facility 2% 6% Other 4% Mixed Use <1% Neighborhood 44% 11% 3% Shopping Center Retail Owner Occupied Office Multifa
Slide 23: Diversified and Low Average Balance C&I Portfolio
DIVERSIFIED AND LOW AVERAGE BALANCE C&I PORTFOLIO All Other C&I 9% Accommodations 0% Transportation 1% Food Services 2% Educational Services 2% Management of Companies and Enterprises 2% Whole Sale Trade 2% ~54% C&I Concentration toward Professional Services 2% Businesses focused on Finance (includi
Slide 24: Stable, Low Cost Deposit Base Protects Net Interest Margin
STABLE, LOW COST DEPOSIT BASE PROTECTS NET INTEREST MARGIN Net Interest Margin Drivers 4.27% 4.33% 4.06% 4.04% 4.04% 3.86% 3.81% 3.87% 3.78% 3.73% 3.66% 3.51% 3.58% 3.58% 3.38% 3.08% 3.27% 3.28% 3.28% 3.19% 2.97% 3.09% 3.09% 1.71% 1.29% 1.58% 1.20% 1.11% 1.02% 0.89% 0.83% 0.71% 0.77% 0.74% 0.67% 0.6
Slide 25: Strong Allowance Coverage Ratio; Allocation of Reserve by Loan Type
STRONG ALLOWANCE COVERAGE RATIO; ALLOCATION OF RESERVE BY LOAN TYPE ACL Composition 9/30/2022 6/30/2022 ($ in thousands) Amount % of Loans Amount % of Loans Commercial real estate $ 16,836 1.36% $ 15,742 1.31% Multifamily 15,953 0.94% 15,678 1.00% Construction 5,423 2.29% 4,255 1.86% Commercial and
Slide 26: Securities Portfolio
SECURITIES PORTFOLIO Securities Portfolio Detail(1) Security Type QoQ Duration (yrs) ($ in millions) 3Q22 2Q22 Change 3Q22 Gov’t & Agency (MBS, CMO, & SBA) $ 164.0 $ 178.5 $ (14.5) 2.4 CLOs 472.7 478.2 (5.5) 0.1 Corporate Securities 169.4 163.3 6.1 2.9 Private Label RMBS 41.5 45.5 (4.0) 8.6 AFS $ 84
Slide 27: CLO Portfolio Has Diversified Exposure
CLO PORTFOLIO HAS DIVERSIFIED EXPOSURE CREDIT ENHANCEMENT PROVIDES SIGNIFICANT PRINCIPAL PROTECTION CLO Industry Breakdown $473 million at September 30, 2022 • CLO portfolio has underlying (net of $20 million unrealized loss) diversified exposure with largest segment in Healthcare & Pharmaceuticals
Slide 28: BANC Fast Facts
BANC FAST FACTS (Dollars in millions) 3Q22 2Q22 1Q22 4Q21 3Q21 Total assets $ 9,369 $ 9,502 $ 9,584 $ 9,394 $ 8,279 Securities available-for-sale 848 865 899 1,316 1,303 Securities held-to-maturity 329 329 329 - - Loans held-for-investment 7,289 7,451 7,452 7,251 6,229 Total deposits 7,280 7,559 7,4
Slide 29: Non-GAAP Financial Information
NON-GAAP FINANCIAL INFORMATION This presentation contains certain financial measures income by average assets. Adjusted PTPP income ROAA is determined by methods other than in accordance with U.S. computed by dividing annualized adjusted PTPP income by generally accepted accounting principles (GAAP)
Slide 30: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands) 3Q22 2Q22 1Q22 4Q21 3Q21 Net interest income $ 79,408 $ 78,299 $ 76,441 $ 73,039 $ 62,976 Noninterest income 5,681 7,186 5,910 5,605 5,519 Total revenue 85,089 85,485 82,351 78,644 68,495 Noninterest expense 50,962 48,612 46,596 58,872 37,811 Pre-tax pr
Slide 31: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands) 3Q22 2Q22 1Q22 4Q21 3Q21 Adjusted Noninterest Expense Total noninterest income $ 5,681 $ 7,186 $ 5,910 $ 5,605 $ 5,519 Total noninterest expense $ 50,962 $ 48,612 $ 46,596 $ 58,872 $ 37,811 Noninterest expense adjustments: Professional recoveries (fees)
Slide 32: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands) 3Q22 2Q22 1Q22 4Q21 3Q21 Tangible Common Equity to Tangible Assets Ratio Total assets $ 9,368,578 $ 9,502,113 $ 9,583,540 $ 9,393,743 $ 8,278,741 Less: goodwill (114,312) (95,127) (95,127) (94,301) (37,144) Less: other intangible assets (8,081) (4,677)
Slide 33: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands) 3Q22 2Q22 1Q22 4Q21 3Q21 Return on tangible common equity Average total stockholders' equity $ 960,806 $ 969,885 $ 1,049,912 $ 1,035,782 $ 847,941 Less: Average preferred stock - - (75,965) (94,956) (94,956) Average common stockholders' equity 960,806 9
Slide 34: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands, except per share data) 3Q22 2Q22 1Q22 4Q21 3Q21 Adjusted net income Net income(1)(2) $ 24,196 $ 26,712 $ 48,512 $ 5,751 $ 23,170 Adjustments: Noninterest expense adjustments 3,601 1,498 52 12,891 (2,937) (3) (1,065) (443) (15) (3,811) 868 Tax impact of
Slide 35: bancofcal.com
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