Banc Of California, Inc. · NYSE:BANC
Banc Of California — Q1 2023 Earnings Presentation
30 slides from Banc Of California's earnings presentation, Apr 20, 2023
Slide 1: Investor Presentation: 2023 First Quarter Earnings
www.bancofcal.com Investor Presentation 2023 First Quarter Earnings
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: First Quarter 2023 Results
FIRST QUARTER 2023 RESULTS ($ in Thousands Except Per Share Data) 1Q23 4Q22 1Q22 Net interest income $ 73,053 $ 80,217 $ 76,441 Provision for (reversal of) credit losses $ 2,000 - $ (31,542) Net income $ 20,278 $ 21,519 $ 48,512 Net income available to common stockholders $ 20,278 $ 21,519 $ 43,345
Slide 4: Strong Deposit Base, Liquidity and Capital
STRONG DEPOSIT BASE, LIQUIDITY AND CAPITAL 1Q23 Summary Business model built for all cycles, with a focus on high-touch commercial relationships and value-added services and solutions to drive noninterest-bearing deposit growth • Average noninterest-bearing (NIB) deposit ratio at 38% of total deposi
Slide 5: Deposit Engine Consistently Generates New Low-Cost Commercial Deposit Relationships
DEPOSIT ENGINE CONSISTENTLY GENERATES NEW LOW-COST COMMERCIAL DEPOSIT RELATIONSHIPS Continued growth in number of commercial deposit accounts and new relationships 4Q21 14,541 14,580 14,835 Includes PMB 14,244 14,292 14,300 Acquisition 11,644 11,270 11,444 10,945 $2,570 $2,516 $2,431 $2,506 $2,455 9
Slide 6: Low Cost Deposit Franchise
LOW COST DEPOSIT FRANCHISE Widening spread against Fed funds rate Average Cost of deposits Money Market & Savings Noninterest-bearing Brokered CDs 4.51% Highlights Interest-bearing checking CDs 3.65% Average Fed Funds Rate 2.18% • Solid NIB mix, including 0.77% 38% average and 36% 0.12% percent of e
Slide 7: High Level of Available Liquidity
HIGH LEVEL OF AVAILABLE LIQUIDITY Total available primary and secondary liquidity ($4.03B) exceeds uninsured and uncollateralized deposits ($1.87B) by 2.2x ($ in millions) Current March 31, 2023 Availability Utilization Capacity Primary Liquidity Cash* $ 1,010 AFS Securities (unpledged) 724 Total Pr
Slide 8: Strong Capital Base
STRONG CAPITAL BASE Provides Buffer for Economic Environment Regulatory 1Q23 Ratios Well- in Excess of 1Q23 4Q22 3Q22 2Q22 1Q22 Capitalized Well- Ratios Capitalized Total Risk-Based Capital Ratio (1) 14.06% 14.21% 13.86% 13.69% 13.79% 10.00% 4.06% Tier 1 Risk-based Capital(1) 11.66% 11.80% 11.43% 11
Slide 9: Securities Have Short / Moderate Duration with Low Unrealized AFS and HTM Losses
SECURITIES HAVE SHORT / MODERATE DURATION WITH LOW UNREALIZED AFS AND HTM LOSSES Securities Portfolio Detail(1) Effective Security Type QoQ ($ in millions) Duration (yrs) Unrealized Loss 1Q23 4Q22 Change 1Q23 1Q23 Gov’t & Agency (MBS, CMO, & SBA) $ 187.4 $ 144.6 $ 42.8 2.8 $ (5.2) CLOs 479.6 476.6 3
Slide 10: Low Unrealized Securities Losses as a % of Capital
LOW UNREALIZED SECURITIES LOSSES AS A % OF CAPITAL(1) Highlights (Dollars in thousands) 1Q23 AFS (Unrealized Loss Pre-Tax) $ 46,788 HTM (Unrealized Loss Pre-Tax) 55,605 • AFS unrealized losses were 3.8% of CET1 Total Securities Unrealized Loss Pre-Tax $ 102,393 Capital at 1Q23 Net Unrealized Loss on
Slide 11: Continued TBV Per Share Growth
CONTINUED TBV PER SHARE GROWTH Growth in TBV per common(1) share driven by strong earnings and prudent balance sheet management that more than offset negative AOCI marks, dividends, common stock repurchases and acquisitions of PMB and Deepstack Technologies Tangible common equity per common share(1)
Slide 12: Diversified Loan Portfolio Mitigates Risk and Generates Attractive Risk-Adjusted Yields
DIVERSIFIED LOAN PORTFOLIO MITIGATES RISK AND GENERATES ATTRACTIVE RISK-ADJUSTED YIELDS 1Q23 4Q22 Change (1) (1) (1) Loan Segment $ % Avg. Yield $ % Avg. Yield $ % Avg. Yield $ in Millions C&I: Warehouse $ 637 9% 8.15% $ 603 8% 6.93% $ 34 1% 1.21% C&I: All Other 1,150 16% 6.22% 1,243 17% 6.35% (93)
Slide 13: California-Centric CRE Portfolio Has Low Weighted-Average LTV and Solid Credit Quality
CALIFORNIA-CENTRIC CRE PORTFOLIO HAS LOW WEIGHTED-AVERAGE LTV AND SOLID CREDIT QUALITY CRE comprises 18.5% of total loans; General Office at only 3.9% of total loans Collateral Type Count Balance % of Total Loans Avg. Loan Size WA LTV ($ millions) ($ millions) General Office 62 $ 274 3.9% $ 4.6 54%
Slide 14: Diversified Business Mix: Loan Yields on New Production Continue to Rise
DIVERSIFIED BUSINESS MIX LOAN YIELDS ON NEW PRODUCTION CONTINUE TO RISE ($ in millions) Total Loan Fundings of $399 Million in Q1 2023 $1,400 8.00% $1,211($1,208) $1,200 7.00% ($980) 6.00% $1,000 $968 ($414) $380 $821 5.00% $800 $290 ($780) ($28) ($394) $262 ($662) 4.00% $600 ($334) ($317) ($166) $4
Slide 15: Allowance for Credit Losses Walk
ALLOWANCE FOR CREDIT LOSSES WALK General reserve increase of $2.0 million due to macroeconomic outlook ($ in millions) Total Net Charge Offs $3.9 million $91.3 $3.2 $(0.8) $89.4 $(3.1) $(0.5) $2.5 $(3.2) 1.33% (1) 1.36% 1.28% 1.27% ACL (12/31/2022) Changes in Charge-offs of Net Charge-offs (Excl. Pr
Slide 16: Asset Quality Remains Strong
ASSET QUALITY REMAINS STRONG NPLs, Delinquencies, and Classified Loans Positive trends across credit metrics: Decline in delinquencies, criticized and classified, and NPLs excluding SFR loans Delinquencies ($ in millions) Criticized and Classified Loans ($ in millions) SFR Delinquencies Delinquencie
Slide 17: Interest Rate Risk Management
INTEREST RATE RISK MANAGEMENT Positioned for future rate cycles with a neutral balance sheet Interest Rate Risk Position (within 12 months) Loan & Deposit Mix HFI Loans: $7.1 billion Rate Sensitive Assets at 37% of Total Assets Loan Portfolio • $2.2 billion mature or reset within 12 months Hybrid Va
Slide 18: 2023 Strategic Objectives
2023 STRATEGIC OBJECTIVES Well-Positioned to Grow Franchise Value Protect The Balance Sheet • Continued focus on noninterest-bearing deposits, credit quality, robust capital and tangible book value growth Proactively Manage Asset- • Balance asset sensitivity while also proactively taking advantage o
Slide 19: Appendix
APPENDIX BANC OF CALIFORNIA
Slide 20: Banc Fast Facts
BANC FAST FACTS (Dollars in millions) 1Q23 4Q22 3Q22 2Q22 1Q22 Total assets $ 10,039 $ 9,197 $ 9,369 $ 9,502 $ 9,584 Securities available-for-sale 958 868 848 865 899 Securities held-to-maturity 329 329 329 329 329 Loans held-for-investment 7,054 7,115 7,289 7,451 7,452 Total deposits 6,952 7,121 7,
Slide 21: Diversified and Low LTV Real Estate Portfolio
DIVERSIFIED AND LOW LTV REAL ESTATE PORTFOLIO Real Estate Loan Balances(1) Real Estate (1) LTVs $ % Count $ in millions $ in Millions $5,124 $5,114 $5,118 <50% $ 1,482 29% 1,073 $4,837 $4,424 70% 72% 73% 50% to 60% 1,123 22% 511 65% 59% 60% to 70% 1,643 32% 631 70% to 80% 790 15% 472 >80% 80 2% 71 T
Slide 22: Strong Allowance Coverage Ratio: Reserve by Loan Type
STRONG ALLOWANCE COVERAGE RATIO RESERVE BY LOAN TYPE ACL Composition 3/31/2023 12/31/2022 ($ in thousands) Amount % of Loans Amount % of Loans Commercial real estate $ 16,119 1.24% $ 15,977 1.27% Multifamily 15,038 0.90% 14,696 0.87% Construction 6,425 2.47% 5,850 2.40% Commercial and industrial 30,
Slide 23: CLO Portfolio Has Diversified Exposure
CLO PORTFOLIO HAS DIVERSIFIED EXPOSURE Credit Enhancement Provides Significant Principal Protection CLO Industry Breakdown Highlights $480 million at March 31, 2023 • CLO portfolio has underlying (net of $11.2 million unrealized loss) diversified exposure • AAA and AA holdings provide principal Heal
Slide 24: Non-GAAP Financial Information
NON-GAAP FINANCIAL INFORMATION Tangible assets, tangible equity, tangible common equity, tangible Adjusted net income is calculated by adjusting net income for tax-effected common equity to tangible assets, tangible common equity per share, noninterest income and noninterest expense adjustments and
Slide 25: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands) 1Q23 4Q22 3Q22 2Q22 1Q22 Tangible Common Equity to Tangible Assets Ratio Total assets $ 10,038,901 $ 9,197,016 $ 9,368,578 $ 9,502,113 $ 9,583,540 Less: goodwill (114,312) (114,312) (114,312) (95,127) (95,127) Less: other intangible assets (7,065) (7,52
Slide 26: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands) 1Q23 4Q22 3Q22 2Q22 1Q22 Return on tangible common equity Average total stockholders' equity $ 1,004,794 $ 989,414 $ 960,806 $ 969,885 $ 1,049,912 Less: Average preferred stock - - - - (75,965) Average common stockholders' equity 1,004,794 989,414 960,8
Slide 27: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands) 1Q23 4Q22 3Q22 2Q22 1Q22 Adjusted Noninterest Income Total noninterest income 7,859 (1,427) 5,681 7,186 5,910 Net (gain) on securities available for sale - 7,708 - - (16) Adjusted noninterest income(1) $ 7,859 $ 6,281 $ 5,681 $ 7,186 $ 5,894 Adjusted No
Slide 28: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands) 1Q23 4Q22 3Q22 2Q22 1Q22 Adjusted pre-tax pre-provision income Net interest income $ 73,053 $ 80,217 $ 79,408 $ 78,299 $ 76,441 Noninterest income 7,859 (1,427) 5,681 7,186 5,910 Total revenue 80,912 78,790 85,089 85,485 82,351 Noninterest expense 51,23
Slide 29: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands, except per share data) 1Q23 4Q22 3Q22 2Q22 1Q22 Adjusted net income Net income(1)(2)(3) $ 20,278 $ 21,519 $ 24,196 $ 26,712 $ 48,512 Adjustments: Noninterest income adjustments - 7,708 - - (16) Noninterest expense adjustments 1,998 (261) 3,601 1,498 52
Slide 30: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands) 1Q23 Adjusted Common Equity Tier 1 (CET 1) capital(1) CET 1 capital (2) $ 893,648 Less unrealized loss on AFS securities, net of tax (33,687) Less unrealized loss on HTM securities, net of tax (40,036) Adjusted CET 1 capital (3) $ 819,925 Total risk-wei