Banc Of California, Inc. · NYSE:BANC
Banc Of California — Q1 2021 Earnings Presentation
37 slides from Banc Of California's earnings presentation, Apr 22, 2021
Slide 1: Investor Presentation: 2021 First Quarter Earnings
BANC OF CALIFORNIA INVESTOR PRESENTATION 2021 First Quarter Earnings bancofcal.com
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS {ae expected to, “wil continue, “is anticipated, “estimate” “project lane! of sitar expressore ate intended to dently ‘orwardlooking satements: witin The metning othe Sate Harbor provotons ofthe Private Secures Litgaton Reform Act of 1995. You are cautioned not to place un
Slide 3: First Quarter 2021 Results
FIRST QUARTER 2021 RESULTS C BANC OF CALIFORNIA Net interest income $ 57,916 §$ 61,563 §$ 51,861 (Reversal of) provision for credit losses $ (1,107) $ 991 $ 15,761 Net income (loss) $ 14,375 $ 21,703 $ (6,593) Net income (loss) available to common stockholders $ 7,825 $ 17,706 $ (9,694) Earnings (lo
Slide 4: Enhancing Franchise Value
ENHANCING FRANCHISE VALUE ian 1st Quarter 2021 Summary + Further growth in average earning assets Continued Progress on + Improving deposit mix and reduction in cost of funds Franchise-Enhancing + Increasing fee income Initiatives + Disciplined expense control + Preferred stock redemption improves c
Slide 5: Net Income Available to Common Stockholders Reconciliation
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS RECONCILIATION ($ in millions) 1Q 2021 $12.9 $7.8 27) seam | - $1107 Net Income Noninterest Loss on Tax impact from Impact of preferred Adjusted Net Available to expense altemative energy exercise of stock stock redemption _ Income Available Common adjustm
Slide 6: Adjusted Pre-Tax Pre-Provision Income Trend
ADJUSTED PRE-TAX PRE-PROVISION INCOME TREND C) eo Adjusted Pre-tax Pre-provision (PTPP) Income (1) 1.25% 1Q20 2Q20 3Q20 4Q20 1Q21 1 Adjusted PTPP Income =®= Adjusted PTPP Income / Avg. Assets (1) Denotes a non-GAAP financial measure; see “Non-GAAP Reconciliation’ slides at end of presentation Fl
Slide 7: Rapidly Improving Deposit Franchise
RAPIDLY IMPROVING DEPOSIT FRANCHISE * $141 million quarterly increase in noninterest- bearing deposits 1.11% + Large percentage of noninterest-bearing and low-cost deposits + Targeted deposit strategy has transformed deposit mix and contributed to asset-sensitive profile + Spot rate at March 31, 202
Slide 8: Business Units Generating Solid Deposit Growth
BUSINESS UNITS GENERATING SOLID 6) BANC OF DEPOSIT GROWTH CALIFORNIA Period end balances ($ in millions) 1Q20 2Q20 3Q20 4Q20 1Q21 1) Community & Business Banking [lll Private & Specialty Banking [ll] Commercial Real Estate & Banking [fill Other 8
Slide 9: Diversified Loan Portfolio Mitigates Risk and Generates Attractive Risk-Adjusted Yield
DIVERSIFIED LOAN PORTFOLIO MITIGATES RISK AND ¢ BANC OF GENERATES ATTRACTIVE RISK-ADJUSTED YIELD CALIFORNIA Loan Segment $ in Millions cal Multifamily CRE Construction SBA SFR Consumer $ (210) -2% -0.04% Total Loans HFI 4.30% $ 5,898 Real Estate Secured with Low LTVs PPP Loan Overview . 61% of loan
Slide 10: Loan Balances Fundings and Payoffs
LOAN BALANCES FUNDINGS AND PAYOFFS Oren Total Loan Fundings and Advances of $550 Million in Q1 2021(1) (S in millions) $1,000 $966 5.00% $900 _ 4.50% $800 ($742) 4.00% $700 3.50% $600 3.00% $s00 2.50% $400 2.00% $328 ($141) $300 1.50% $487 $200 $393 1.00% ($367) ($321) $100 ($243) 0.50% $0 0.00% qi
Slide 11: Forbearance and Deferments Decline
FORBEARANCE AND DEFERMENTS DECLINE Oren ($ in millions) Deferrals by Loan Type as of 3/31/21") Approved or Booked Under Review*) Total Deferrals % of Change in Total # Portfolio Portfolio Deferral Balance Deferred from 12/31/20 Single Family Residential 47 $ 1,253 4% Multifamily 2 1,258 1% CRE 3 840
Slide 12: Asset Quality
ASSET QUALITY C BANC OF NPLs, Delinquencies, and Classified Loans CALIFORNIA Delinquencies ($ in millions) Criticized and Classified Loans ($ in millions) ll SFR Delinquencies Il Criticized and Classified Loans I Delinquencies (ex-SFR) =@ Classified Loans ‘=@> Delinquencies /Total Loans 1Q20 2Q20 3Q
Slide 13: Top Relationships
TOP 10 RELATIONSHIPS Non-performing & delinquent loans rollforward Non-performing Loans ($ in thousands) 11+ Total Delinquent Loans ($ in thousands) # 1 2 3 4 5 6 7 8 9 10 11+ Total $ 7,339 $ 3,999 3,709 3,366 3,253 2,644 2,529 2,091 1,948 4,757 23,285 $ 55,919 $ 1921 $ 4,095 $ 3,709 3,366 3,253 3,0
Slide 14: Allowance for Credit Losses Walk
ALLOWANCE FOR CREDIT LOSSES WALK (Been esp ($ in millions) $86.0 $84.2 S840 as $82.7 0) $82.0 ($1.0) ipoaj (0.1) $80.0 $78.0 $76.0 $74.0 $72.0 $70.0 ACL Portfolio Charge-offs Specific ACL (12/31/20) Mix (net of Recoveries) Reserves (3/31/21) 1Q21: The ACL reserve decreased $1.5 million due to (1) lo
Slide 15: Continued Focus on Expense Management
CONTINUED FOCUS ON EXPENSE MANAGEMENT @) CALIFORI CALIFORNIA Noninterest Expense to Average Assets Adjusted Noninterest Expense to Average Assets ($ millions) ($ millions) 3.78% e 2.30% ais 2.41% 2.22% 2.26% 9 15% 2.09% 2.00% e 2.10% - e $72.8 = ; e e e 2 e $46.9 YE g4o.4 «$39.0 $46.7 ——— senestassa
Slide 16: Strong Capital Base
1Q21 4Q20 STRONG CAPITAL BASE Common Equity Tier 1 11.50% Tier 1 Risk-based Capital 13.17% Leverage Ratio 9.62% Tangible Equity / Tangible Assets‘? 9.69% Tangible Common Equity / Tangible 9) Assets ae 11.19% 14.35% 10.90% 10.94% 8.58% 3Q20 11.59% 14.94% 10.79% 10.84% 8.43% BANC OF CALIFORNIA 11.68%
Slide 17: 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 18: Appendix
“SS BANC OF C CALIFORNIA APPENDIX bancofcal.com 18
Slide 19: Loan Portfolio Characteristics
LOAN PORTFOLIO CHARACTERISTICS (Been Loan Portfolio by Segment Loan Portfolio by Geography $ in millions $ in millions Construction SBA) ene Netaa iGo. Northern California $169 ~ <1% South "2% 2% $485 3% $524 ats, 8% — Cantal 9% = California $201 Other West 4% $291 5% \ Southern California \ $4,008
Slide 20: Real Estate Loan Portfolio Has Low LTVs
REAL ESTATE LOAN PORTFOLIO HAS LOW LTVS Oren Real Estate Loan Balances”) RealEstate’LTVs] $ | % | Count | $ inmilions $in Millions $3,971 $3,841 $3,736 gen: lees <50% $ 1,059 30% 898 : ~ 50% to 60% 964 27% 522 60% to 70% 1,198 34% 524 70% to 80% 257 T% 171 >80% 42 1% 35 Total $ 3,521 100% 2,150 + ~9
Slide 21: 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 ones ip Center 49 8% 2% Single Tenant Multi Tenant | Other 14% 45% Industrial 41% an Mixed U: Hospitali mee ee ae 2.7% Neighborhood ie Shopping Center 31%
Slide 22: Diversified and Low Average Balance C&I Portfolio
DIVERSIFIED AND LOW AVERAGE C BANC OF BALANCE C&l PORTFOLIO CALIFORNIA Food Services __ Professional Services Transportation py ery 0.3% Retewdeioes Television / Motion Pictures Other Retail co ~77T% C&l Concentration toward 1% Businesses focused on Finance (including Whole Sale Trade Warehouse), an
Slide 23: Strong Allowance Coverage Ratio; Allocation of Reserve by Loan Type
STRONG ALLOWANCE COVERAGE RATIO; ALLOCATION OF RESERVE BY LOAN TYPE ACL Composition ($ In thousands) ¢ ‘\. BANC OF 7 CALIFORNIA Commercial real estate 17,100 2.04% 19,074 2.36%| Multifamily 23,884 1.90% 22,512 1.75% Construction 5,552 3.28% 5,849 3.32% Commercial and industrial 19,703 1.05% 20,608 0
Slide 24: Securities Portfolio
SECURITIES PORTFOLIO @) BANC OF 7 CALIFORNIA Securities Portfolio Detail Fair Value Fair Value QoQ D Security Type 4Q20 1Q21 Change ($ in Millions) Gov't & Agency (MBS, CMO,& SBA) $ 336 351 $ 15 7.80 CLOs 678 684 6 0.07 Municipal 69 86 1% AYA Corporate Si 149 150 1 7.56 Total Securities 1,231 1,271
Slide 25: CLO Portfolio Has Diversified Exposure
CLO PORTFOLIO HAS DIVERSIFIED EXPOSURE re) BANC OF CREDIT ENHANCEMENT PROVIDES SIGNIFICANT PRINCIPAL PROTECTION CLO Industry Breakdown $684 million at March 31, 2021 (net of $3.6 million unrealized loss) 3% Healthcare & Pharmaceuticals 13% Containers, Packaging & Glass 3% High Tech Industries 10% Co
Slide 26: Active Management of Deposit Costs Is Driving Down Cost of Funds
ACTIVE MANAGEMENT OF DEPOSIT COSTS re) BANC OF IS DRIVING DOWN COST OF FUNDS") sae a Cost of Funds Drivers 165% 1.61% ~ _ 0.93% "8 ~ ae . 9 i ee 0.66%-e — _ __ 0.70% —¢—_____ iy g3% OI ee —— Ss 0.51% 1Q20 2Q20 3Q20 4Q20 1021 — @ — Cost of Interest-bearing deposits = ® = LT FHLB borrowings ——®—— Cost
Slide 27: Declining Deposit Costs Protect Net Interest Margin
DECLINING DEPOSIT COSTS PROTECT e. aes NET INTEREST MARGIN CALIFORNIA Net Interest Margin Drivers 4.27% “SW... 4.06% 4.04% "SSeS 396%) _ i ee = — HL 3.78% Se oe, 3.38% 1.71% 1Q20 2Q20 3Q20 4Q20 1Q21 — @ — Earning Asset Yield ===" Net Interest Margin = ® = Fed Funds Rate —-®— Interest-Bearing Liabili
Slide 28: Interest Rate Risk Management
INTEREST RATE RISK MANAGEMENT — e. —— EARNING ASSETS ANALYSIS CALIFORNIA Assets Repricing/Maturing Repricing/Maturity by by Duration (¢ millions) Product Type ($ millions) $1400 $1,200 $1,900 $00 soon se ~ Ez Ss ¢ line Ss & 8 FF FF gt s & m<1Year @1-2 Years >2 Years 100+ bps $ 51 07% + $4.12B (56%)
Slide 29: Banc Fast Facts
BANC FAST FACTS C CALIFORNIA (Dollars in millions) 1021 4020 320 1020 | Total assets $ 7,933 $ 7,877 $ 7,738 $ 7,770 $ 7,663 Securities available-for-sale 1,271 1,231 1,246 1,176 969 Loans receivable 5,764 5,898 5,678 5,628 5,667 Total deposits 6,142 6,086 6,032 6,037 5,563 Net interest income 509 6
Slide 30: Merger: Pacific Mercantile Bancorp
MERGER PACIFIC MERCANTILE BANCORP BANC OF CALIFORNIA Pro Forma ' ($7.1B) cap 3% + Expected to close in 3Q21 SFR + Acquiring a quality deposit franchise with: ms | cal (aren) + 47% noninterest-bearing deposits Co . . 5 . ped = MRQ Yield 0.27% cost of deposits on Loans: Key + Established presence in L
Slide 31: 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 tangible assets, tangible equity, tangible common equity, tangible equity to tangible
Slide 32: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Been (Dollars in thousands) 1021 4Q20 320 1020 | Tangible Common Equity to Tangible Assets Ratio Total assets $ 7,933,459 $ 7,877,334 $ 7,738,106 $ 7,770,138 $ 7,662,607 Less: goodwill (37,144) (37,144) (37,144) (37,144) (37,144) Less: other intangible assets 2,351 2,633) 2,
Slide 33: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION Oren (Dollars in thousands) 1Q21 4Q20 3Q20 1020 | Return on tangible common equity Average total stockholders’ equity $ 888,174 $ 892,565 $ 865,406 $ 854,250 $ 916,047 Less: Average preferred stock (164,895) (184,878) (184,910) (185,471) (189,607) Less: Average goodwill (37,1
Slide 34: 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 35: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION Gey, (Dollars in thousands) 1021 4020 3Q20 1020 | Net interest income $ 57,916 $ 61,563 $ 55,855 $ 55,315 $ 51,861 Noninterest income 4381 6,975 3,954 5,528 2,061 Total revenue 62,297 68,538 59,809 60,843 53,922 Noninterest expense 46.735 38,950 40.394 72,770 46.919 Pre-tax p
Slide 36: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION Gey, (Dollars in thousands, except per share data) 1Q21 4Q20 3Q20 1920 | Adjusted net income (loss) Net income (loss) $ 14,375 $ 21,703 $ 15,913 $ (18,449) $ (6,593) Adjustments, net? Noninterest income - 27 222 1,527 (1,190) Noninterest expense 3,788 (3,803) (194) 04 687 Adj
Slide 37: bancofcal.com
bancofcal.com