Banc Of California, Inc. · NYSE:BANC
Banc Of California — Q1 2024 Earnings Presentation
30 slides from Banc Of California's earnings presentation, Apr 23, 2024
Slide 1: Investor Presentation First Quarter 2024 Results
Investor Presentation First Quarter 2024 Results Draft v4.5 1/21/24
Slide 2: Forward Looking Statements
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. Words or phrases such as “believe,” “will,” “should,” “will likely result,” “are expected to,” “will continue,
Slide 3: First full quarter results post merger reflect benefits of balance sheet restructuring
First full quarter results post merger reflect benefits of balance sheet restructuring and initial progress Denotes a non-GAAP financial measure; see “Non-GAAP Reconciliation” slides at end of presentation. Pre-tax Pre-provision income. Please see reconciliation tables in appendix for additionall de
Slide 4: First Quarter 2024 Earnings Results
First Quarter 2024 Earnings Results First Quarter 2024 Earnings | 4 Increased earnings driven by NIM expansion and lower operating expenses Net interest income increased $88 million, or 58%: Interest income increase due to the full-quarter impact of the combined loan portfolio Interest expense reduc
Slide 5: Management Outlook Q424
First Quarter 2024 Earnings | 5 Management Outlook Q424 4Q24 run-rate target guidance remains unchanged from 2023 year end Profitability expectations currently assume two 25 bps Fed funds rate reductions in 2024 (one in 3Q24 and one in 4Q24), subject to market volatility Execution of management stra
Slide 6: Integration roadmap update
Core systems conversions Execution on consolidation of facilities Realize full operational expense savings Continued reduction of interest expense and improvement of deposit mix Integration roadmap update Items to be completed in 2Q24 - 4Q24 Closed merger with PacWest Closed on $400mm common equity
Slide 7: Balance Sheet Repositioning Continues
Denotes a non-GAAP financial measure; see “Non-GAAP Reconciliation” slides at end of presentation. Wholesale funding defined as borrowings plus brokered time deposits. First Quarter 2024 Earnings | 7 Balance Sheet Repositioning Continues Increased balance sheet efficiency with improved deposit mix a
Slide 8: Net Interest Income and Net Interest Margin Expansion
Net Interest Income and Net Interest Margin Expansion NIM expanded 109 bps to 2.78% NII increased $88 million driven by: Borrowings costs decreased 126 bps: +$54mm Loan yields increased 41 bps: +$49mm Interest bearing deposits costs decreased 20 bps: +$13mm Securities balances decreased, partly offs
Slide 9: Funding Cost Reduction Actions
Funding Cost Reduction Actions NIB and IB deposit composition trends reflects results of balance sheet restructuring and post-merger community bank-focused strategy Lower deposit costs reflects the paydowns of higher cost brokered deposits, increased NIB % and actions taken to reduce IB deposit cost
Slide 10: Noninterest Income Composition
Excludes gain (loss) on sale of securities and loans. Excludes nonrecurring legal recovery of $14.5mm. Excludes nonrecurring legal recovery of $7.6mm and elevated CRA-related fair value gain of $3.9mm. Noninterest IncomeComposition Consistent noninterest income, adjusted for nonrecurring items inclu
Slide 11: Expense Reductions
Excludes merger and acquisition expenses. 4Q23 NIE / avg. assets ratio is calculated by dividing $251.8 million by average assets of $37.6 billion. 1Q24 NIE / avg. assets is calculated by dividing $210.5 million by average assets of $37.5 billion. Normalized expenses adjusted to include legacy BANC
Slide 12: Building a strong commercial deposit franchise
Building a strong commercial deposit franchise Focus on NIB deposits resulted in 3% annualized growth in 1Q24, and NIB deposits grew to 27.1% of total deposits Checking increased 1.4% to 27.1% of total deposits Deposit spot rate of 2.54% at 3/31/24 compared to 1Q24 average cost of deposits of 2.66%
Slide 13: NIB Deposit Growth is a Strategic Lever
NIB Deposit Growth is a Strategic Lever Enterprise-wide focus Deposit incentive programs, including competitions and leaderboards RM performance goals include specific NIB targets Ensure existing and new relationships have appropriate deposit balances with the bank Line of business-specific approach
Slide 14: Diversified Loan Portfolio
Diversified Loan Portfolio Core portfolio grew 4% annualized, offset by discontinued portfolio run-off Core portfolio comprises 86% of total loans with low NPL and DQ ratios Significant repricing opportunity in multifamily portfolio as loans mature Highlights High-quality relationship-based core por
Slide 15: California-Centric CRE Portfolio
California-Centric CRE Portfolio Over 70% of CRE portfolio located in California Low weighted average LTV of 54.5% Other includes mobile homes, self storage, gas stations, special use, school, place of worship and restaurants Highlights High quality CRE portfolio has low weighted-average LTV CRE is
Slide 16: Asset quality ratios and trends
First Quarter 2024 Earnings | 16 Asset quality ratios and trends ACL coverage ratio increased from 1.22% to 1.26% Targeted focus around office loans to ensure loans are reserved with appropriate conservatism Inflows to classified loans, nonperforming loans and delinquencies were driven primarily by
Slide 17: Credit Migration Highlights
Credit Migration Highlights First Quarter 2024 Earnings | 17 Note: CRE excludes government guaranteed CRE collateralized SBA loans. Nonperforming loans 4Q23 to 1Q24 walk Delinquent loans 4Q23 to 1Q24 walk Increase in NPLs driven by four CRE loans and normally recurring “noise” in the discontinued CI
Slide 18: 1Q24 provision increases ACL coverage ratio
1Q24 provision increases ACL coverage ratio Allowance for Credit Losses Walk ACL increased by $8.8 million due to $10.0 million provision, partially offset by net charge-offs of $1.2 million Provision increase was driven by qualitative reserves related to loans secured by office properties and quant
Slide 19: Strong Capital Base
Strong Capital Base CET 1 ratio of 10.12% inclusive of: Loss on previously executed sales of loans and securities Impact of fair value marks and merger expenses Special FDIC assessment All regulatory capital ratios in excess of minimum “well-capitalized” levels Focus on building capital levels for s
Slide 20: High-quality securities portfolio provides upside
High-quality securities portfolio provides upside Securities Portfolio Detail Average securities yield increased 20 bps quarter over quarter, driven by the impact of securities sales Stable securities portfolio with significant repricing opportunity Excess cash balance creates opportunity to build o
Slide 21: High Level of Available Liquidity
High Level of Available Liquidity Total available primary liquidity of $4.3 billion, including unpledged AFS securities of $1.4 billion Total available primary and secondary liquidity of $16.8 billion Uninsured and uncollateralized deposits of $7.1 billion, which represents only 24.5% of total depos
Slide 22: California-based commercial bank with national reach and select specialty business lines
First Quarter 2024 Earnings | 22 California-based commercial bank with national reach and select specialty business lines California Focused National Presence & Specialty Businesses Fresno Monterey Kings Tulare Kern San Luis Obispo Santa Barbara Ventura Los Angeles San Bernardino Riverside Orange Sa
Slide 23: Management team
Hamid Hussain President of the Bank 25+ years of banking experience, previously served as EVP, Real Estate Market Executive for Wells Fargo Olivia Lindsay Chief Risk Officer 20+ years of experience in regulatory processes and controls, previously spent 15 years at MUFG Union Bank Jared Wolff Preside
Slide 24: Appendix
Appendix
Slide 25: Non-GAAP Financial Information
Non-GAAP Financial Information Tangible assets, tangible equity, tangible common equity, tangible common equity to tangible assets, tangible book value per common share, return on average tangible common equity, adjusted return on average tangible common equity, adjusted noninterest income, adjusted
Slide 26: Non-GAAP Reconciliation
Non-GAAP Reconciliation Total common equity divided by common shares outstanding. Tangible common equity divided by common shares outstanding. Common shares outstanding include non-voting common equivalents that are participating securities. First Quarter 2024 Earnings | 26 Note: Periods prior to 4Q
Slide 27: Non-GAAP Reconciliation
Non-GAAP Reconciliation Effective tax rates of 27.3%, 26.8% and 12.1% used for the three months ended March 31, 2024, December 31, 2023 and September, 2023. Adjusted effective tax rate of 28.4% used to normalize the effect of goodwill impairment for the three months ended March 31, 2023. Annualized
Slide 28: Non-GAAP Reconciliation
Non-GAAP Reconciliation First Quarter 2024 Earnings | 28 Effective tax rates of 27.3%, 26.8% and 12.1% used for the three months ended March 31, 2024, December 31, 2023 and September, 2023. Adjusted effective tax rate of 28.4% used to normalize the effect of goodwill impairment for the three months
Slide 29: Non-GAAP Reconciliation
Non-GAAP Reconciliation Non-GAAP measure. Ratio presented on an annualized basis. First Quarter 2024 Earnings | 29 Note: Periods prior to 4Q23 represent PACW standalone. 4Q23 includes Oct-Dec for PACW and Dec for BANC.
Slide 30: Non-GAAP Reconciliation
Non-GAAP Reconciliation First Quarter 2024 Earnings | 30 Note: Periods prior to 4Q23 represent PACW standalone. 4Q23 includes Oct-Dec for PACW and Dec for BANC.