Banc Of California, Inc. · NYSE:BANC
Banc Of California — Q4 2020 Earnings Presentation
37 slides from Banc Of California's earnings presentation, Jan 21, 2021
Slide 1: Banc of California Investor Presentation: 2020 Fourth Quarter Earnings
BANC OF CALIFORNIA INVESTOR PRESENTATION 2020 Fourth Quarter Earnings bancofcal.com
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS When used in this presentation and in documents filed with or fumished to the Secutities 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: Fourth Quarter 2020 Results
FOURTH QUARTER 2020 RESULTS (Been ————— a ($ in Thousands Except EPS) 4Q20 Net interest income $ 61,563 $ 55,855 §$ 56,660 Provision for credit losses $ 991 §$ 1,141 $ (2,976) Net income $ 21,703 $ 15,913 $ 14,272 Net income available to common stockholders $ 17,706 $ 12,084 $ 10,415 Pre-tax pre-pro
Slide 4: Delivering Profitable Growth and Quality Earnings
BANC OF CALIFORNIA DELIVERING PROFITABLE GROWTH AND C QUALITY EARNINGS (1) Denotes a non-GAAP financial measure; see “Non-GAAP Reconciliation” slides at end of presentation Significant Increase in Profitability Lower Deposit Costs and Favorable Shift in Earning Assets Drives Strong NIM Expansion Rea
Slide 5: 2020 Goals Accomplished
2020 GOALS ACCOMPLISHED Gey, Improve Deposit Mix, Reduce Cost of Deposits, and Expand NIM Manage Credit Quality and Strengthen Reserves During Pandemic Remix Balance Sheet and Increase Loan Production Execute on Strategic Initiatives to Enhance Long-Term Performance Non-maturity deposits increased t
Slide 6: Industry Leading Performance
INDUSTRY LEADING PERFORMANCE e) BANC OF BANC OF CALIFORNIA CALIFORNIA Measuring Performance against Industry from 1Q19 through 3Q201 Change in Net Interest Margin (Rank 5 out of 171)(2) 0.28% + Expanded NIM through a lower interest rate environment and during a global pandemic + Managed overall loan
Slide 7: Growing Net Earnings
GROWING NET EARNINGS ($ in millions) ROAA: 1 fo $21.7 4Q20 Net Income Adjusted Expense — Gain on alternative Gain on sale of loans energy partnerships ROAA: 0.8: $15.9 i =i) _a)— 4Q20 Effective Tax Rate: 24.1% ROAA: 0.92% 4Q20 Adjusted Net Income (1) 3Q20 Effective Tax Rate: 12.1% ROAA: 0.80% $15.4
Slide 8: Proven Earnings Growth Trajectory
PROVEN EARNINGS GROWTH TRAJECTORY Oren Adjusted Pre-tax Pre-provision (PTPP) Income (1) 1.25% 1Q20 2Q20 3Q20 4Q20 BB Adjusted PTPP Income =®= Adjusted PTPP Income / Avg. Assets (1) Denotes a non-GAAP financial measure; see “Non-GAAP Reconciliation” slides at end of presentation
Slide 9: Growing PTPP Earnings
GROWING PTPP EARNINGS in millions s ) 4Q20 Adjusted PTPP ROAA: 1.25% 4Q20 PTPP Income Adjusted expense Gain on alternative —_ Gain on sale of loans 4Q20 Adjusted energy partnerships PTPP Income (1) 3Q20 Adjusted PTPP ROAA: 0.98% 3Q20 PTPP Income Adjusted expense Gain onalternative Gain on sale ofloa
Slide 10: Rapidly Improving Deposit Franchise
RAPIDLY IMPROVING DEPOSIT FRANCHISE $108.5 million quarterly increase in noninterest- bearing deposits Large percentage of noninterest-bearing and low-cost deposits Targeted deposit strategy has transformed deposit mix and shifted bank to asset sensitive profile Spot rate at December 31, 2020 was 29
Slide 11: All Business Units Generating Solid Deposit Growth
ALL BUSINESS UNITS GENERATING SOLID 6) BANC OF DEPOSIT GROWTH CALIFORNIA Period end balances ($ in millions) 4Q19 1Q20 2Q20 3Q20 4Q20 ‘Community & Business Banking [ll] Commercial Real Estate & Banking Ml Private & Specialty Banking Other
Slide 12: Diversified Loan Portfolio Mitigates Risk and Generates Stable Yield
DIVERSIFIED LOAN PORTFOLIO MITIGATES RISK AND ¢ BANC OF GENERATES STABLE, ATTRACTIVE RISK-ADJUSTED YIELD CAL EOE NIS Loan Segment $ in Millions cal $ 2,088 35% 4.26%) $ 1,587 28% 443%) $ 501 7% -0.17%} Multifamily 1,290 22% 4.70% 1,477 26% 472% (187) 4% -0.02% CRE 807 14% 4.98% 827 15% 4.69% (19) 1%
Slide 13: Forbearance and Deferments Decline
FORBEARANCE AND DEFERMENTS DECLINE Oren {$ in millions) Deferrals by Loan Type as of 12/31/20") Approved or Booked Under Review”) Total Deferrals a % of Change in = | eee || See [eee 1-4 Family Residential 80 $ 1,230 7% Multifamily 1 1,290 <1% CRE 12 807 7% Construction & Development 176 0% Commerci
Slide 14: Asset Quality
ASSET QUALITY re) BANGOR Strong Declines in NPLs, Delinquencies, and Classified Loans CAMTORNA Delinquencies ($ in millions) Criticized and Classified Loans ($ in millions) I SFR Delinquencies I Criticized Loans Il Delinquencies (ex-SFR) =@ Classified Loans =@ Delinquencies /Total Loans 1.69% (ia 2.
Slide 15: Top Relationships
TOP 10 RELATIONSHIPS re) BANC OF Non-performing & delinquent loans rollforward coabaial Non-performing Loans ($ in thousands) 4Q 4Q Loan Category Accrual Delinquency , 3% Status Status pecs See 1 $ 7,502 $ 9,639 $ (2,137) C&I/CRE — Non-Accrual Current Non-Accrual , 2 4,045 : 4,045 cal Non-Accrual Cu
Slide 16: Allowance for Credit Losses Walk
ALLOWANCE FOR CREDIT LOSSES WALK Oren s100.9 , (Sin millions) $95.0 $94.1 —— ($0.7) $90.0 $84.2 $85.0 $0.3 $80.0 ($10.9) $75.0 $70.0 ACL Portfolio Charge-offs Specific ACL (9/30/20) Mix (net of Recoveries) Reserves (12/31/20) 4Q20: The ACL reserve decreased $9.9 million due to (1) charge-off of a le
Slide 17: Continued Focus on Expense Management
CONTINUED FOCUS ON EXPENSE MANAGEMENT O CALIFORI CALIFORNIA Noninterest Expense to Average Assets Adjusted Noninterest Expense to Average Assets ($ millions) ($ millions) 3.78% e 241% 237% 250% rag 2.09% 2.00% 75M 2.22% 219% 2.26% e e e e e ¢ $37.5 cre $40.4 $39.0 9% $48.4 $44.0 $48 43, $30.0 $40.7
Slide 18: Strong Capital Base
4Q20 3Q20 STRONG CAPITAL BASE Common Equity Tier 1 11.19% Tier 1 Risk-based Capital 14.35% Leverage Ratio 10.90% Tangible Equity / Tangible Assets‘? 10.94% Tangible Common Equity / Tangible / Assets"? = 11.59% 14.94% 10.79% 10.84% 8.43% 2020 11.68% 15.10% 10.56% 10.43% 8.04% BANC OF CALIFORNIA 11.58
Slide 19: 2021 Strategic Objectives
2021 STRATEGIC OBJECTIVES Gey, Maintain Credit and Capital Discipline Strategic Growth in Earning Assets Manage Expenses and Realize Additional Operating Leverage Optimize Use of Capital Well-underwritten loan portfolio mainly secured by CA-based real estate with relatively low LTVs continues to pro
Slide 20: Appendix
“SS BANC OF C CALIFORNIA APPENDIX bancofcal.com
Slide 21: Loan Portfolio Characteristics
LOAN PORTFOLIO CHARACTERISTICS (Been Loan Portfolio by Segment Loan Portfolio by Geography $ in millions $ in millions Construction SBA® Consumer Nettheast MiCiest Northern California ry 4% 2% _ 7 $434 10% So TH oa, $206 Other West 4% $291 5% \ Southern California \ $4,062 69% 80% in California 94%
Slide 22: Real Estate Loan Portfolio Has Low LTVs
REAL ESTATE LOAN PORTFOLIO HAS LOW LTVS Oren Real Estate Loan Balances”) RealEstate’LTVs] $ | % | Count | $inmitions $in Millions $4,135 <50% $ 1,015 29% 887 $3,971 $3,841 $3,736 50% to 60% 934 27% 523 60% to 70% 1,244 36% 576 70% to 80% 265 8% 177 >80% 44 1% 39 Total $ 3,503 100% 2,202 + ~91% of al
Slide 23: California-Centric CRE and Multifamily Portfolios Have Low Weighted-Average LTV
CALIFORNIA-CENTRIC CRE AND MULTIFAMILY e) BANC OF PORTFOLIOS HAVE LOW WEIGHTED-AVERAGE LTV Sealab CRE & Multifamily by Collateral Type Strip Cent Otber ip Center 49 8% 2% Multi Tenant _. Other Single Tenant AT% Industrial 10% 171% 3% ; Hospitality Mixed Use 0% 2.7% Neighborhood a Shopping Center 26%
Slide 24: Diversified and Low Average Balance C&I Portfolio
DIVERSIFIED AND LOW AVERAGE BALANCE C&l PORTFOLIO Food Services Professional Services Transportation ‘Accomodations 1% 1% — 0.1% Television / Motion Pictures 2% Other Retail Trade 1% Whole Sale Trade es Finance (including Warehouse) NAICS Industry Cou Finance (including Warehouse) $ 1,397,281 $ Real
Slide 25: Strong Allowance Coverage Ratio; Allocation of Reserve by Loan Type
STRONG ALLOWANCE COVERAGE RATIO; ‘e) BANG OF ALLOCATION OF RESERVE BY LOAN TYPE CALIFORNIM ACL Composition 4Q20 At CECL Adoption 4Q19 (Sin thousands) Amo of Loa Amount _%ofLoans| Amount _% of Loans Commercial real estate $ 19,074 2.36%] $ 19,373 2.34%] $ 10,788 1.32%] $ 5,941 0.73% Multifamily 22,51
Slide 26: Securities Portfolio
SECURITIES PORTFOLIO @) BANC OF 7 CALIFORNIA Securities Portfolio Detail Fair Value Fair Value Security Type 3020 4020 ($in Millions) Gov't & Agency (MBS, CMO,& SBA) §$ 344. $ 336 $ CLOs 686 678 Municipal 69 69 Corporate Securities 147 149 Total Securities $ 1,246 $ 1,231 $ * The quarter over quarte
Slide 27: CLO Portfolio Has Diversified Exposure
CLO PORTFOLIO HAS DIVERSIFIED EXPOSURE CREDIT ENHANCEMENT PROVIDES SIGNIFICANT PRINCIPAL PROTECTION CLO Industry Breakdown $678 million at December 31, 2020 (net of $9.7 million unrealized loss) Aerospace & Defense 3% Healthcare & Pharmaceuticals is 13% Containers, Packaging & Glass 3% Construction
Slide 28: Active Management of Deposit Costs Is Driving Down Cost of Funds
ACTIVE MANAGEMENT OF DEPOSIT COSTS re) BANC OF IS DRIVING DOWN COST OF FUNDS") sae a Cost of Funds Drivers 2.10% 4Q19 1Q20 2Q20 3Q20 4Q20 — @ — Cost of Interest-bearing deposits = ® = LT FHLB borrowings ——®—— Cost of funds “elle ST FHLB borrowings —®— Cost of total deposits (1) Cost of funds include
Slide 29: Declining Deposit Costs Protect Net Interest Margin
DECLINING DEPOSIT COSTS PROTECT e. aes NET INTEREST MARGIN CALIFORNIA Net Interest Margin Drivers 4Q19 1Q20 2Q20 3Q20 4Q20 — ® — Earning Asset Yield ===" Net Interest Margin = ® = Fed Funds Rate —-®— Interest-Bearing Liabilities
Slide 30: Interest Rate Risk Management
INTEREST RATE RISK MANAGEMENT — e. —— EARNING ASSETS ANALYSIS CALIFORNIA Assets Repricing/Maturing Repricing/Maturity by by Duration (¢ millions) Product Type ($ millions) $1,600 $1,400 $1,200 $1,000 $800 $600 $400 -seiiagl ff & ss ¥ ¥ Ss e = = Variable Rate Loan Floors & Assets ... sf m<1Year @ 1-2
Slide 31: BANC Fast Facts
BANC FAST FACTS C CALIFORNIA (Dollars in millions) 4Q20 3Q20 2Q20 Total assets $ 7,877 $ 7,738 $ 7,770 $ Securities available-for-sale 1,231 1,246 1,176 Loans receivable 5,898 5,678 5,628 Total deposits 6,086 6,032 6,037 Net interest income 61.6 55.9 55.3 Total noninterest income Total revenue Nonin
Slide 32: 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 to average assets, pre-tax pre-provision income, pre-tax pre-provi
Slide 33: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Been (Dollars in thousands) 420 3Q20 2020 4a | Tangible Common Equity to Tangible Assets Ratio Total assets $ 7,877,334 $ 7,738,106 $ 7,770,138 $ 7,662,607 $ 7,828,410 Less: goodwill (37,144) (37,144) (37,144) (37,144) (37,144) Less: other intangible assets Tangible assets $
Slide 34: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands) Return on tangible common equity Average total stockholders' equity Less: Average preferred stock Less: Average goodwill Less: Average other intangible assets Average tangible common equity Net income (loss) Less: Preferred stock dividends and impact of
Slide 35: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands) Adjusted Noninterest Income and Expense Total noninterest income Noninterest income adjustments: Net (gain) loss on securities available for sale Net (gain) loss on sale of legacy SFR loans held for sale Fair Value adjustment on legacy SFR loans held fo
Slide 36: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION Gey, (Dollars in thousands) 4Q20 3Q20 2Q20 Net interest income Noninterest income Total revenue Noninterest expense Pre-tax pre-provision income Total revenue Total noninterest income adjustments Adjusted total revenue Noninterest expense Total noninterest expense adjustments
Slide 37: bancofcal.com
bancofcal.com