Banc Of California, Inc. · NYSE:BANC
Banc Of California — Q3 2023 Earnings Presentation
27 slides from Banc Of California's earnings presentation, Oct 24, 2023
Slide 1: Investor Presentation: 2023 Third Quarter Earnings
www.bancofcal.com Investor Presentation 2023 Third Quarter Earnings
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS This presentation 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: Additional Disclaimers
ADDITIONAL DISCLAIMERS No Offer or Solicitation This presentation is not a proxy statement or solicitation or a proxy, consent or authorization with respect to any securities or in respect of the proposed transaction and shall not constitute an offer to sell or a solicitation of an offer to buy the
Slide 4: Third Quarter 2023 Results
THIRD QUARTER 2023 RESULTS ($ in Thousands Except Per Share Data) 3Q23 2Q23 3Q22 Net interest income $ 69,218 $ 69,632 $ 79,408 Net income $ 42,574 $ 17,879 $ 24,196 Earnings per diluted common share $ 0.74 $ 0.31 $ 0.40 Adjusted net income(1) $ 17,051 $ 18,383 $ 26,732 Adjusted earnings per diluted
Slide 5: Strong Deposit Base, Liquidity and Capital
STRONG DEPOSIT BASE, LIQUIDITY AND CAPITAL 3Q23 Summary Business model built for stability through the cycle, with a focus on high-touch commercial relationships and value-added services and solutions to drive noninterest-bearing deposit growth • Regulatory approval received from FRB and CA DFPI; no
Slide 6: Deposit Engine Consistently Generates New NIB Deposits From New Relationships
DEPOSIT ENGINE CONSISTENTLY GENERATES NEW NIB DEPOSITS FROM NEW RELATIONSHIPS Strong YTD growth in NIB deposits from new relationships shows success of BANC’s deposit engine ($ in millions) $92.0 1Q23 to 3Q23 $202 million $74.5 $74.8 $66.0 $59.3 $52.2 $44.4 $34.1 $22.0 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22
Slide 7: Low Cost Deposit Franchise
LOW COST DEPOSIT FRANCHISE Widening spread against Fed funds rate driven by stable NIB deposit % Highlights Average Cost of deposits Noninterest-bearing Money Market & Savings Brokered CDs 5.26% 4.99% Interest-bearing checking CDs 4.51% Average Fed Funds Rate 3.65% • Stable NIB mix, including 36% en
Slide 8: Diversified Loan Portfolio Mitigates Risk and Generates Attractive Risk-Adjusted Yields
DIVERSIFIED LOAN PORTFOLIO MITIGATES RISK AND GENERATES ATTRACTIVE RISK-ADJUSTED YIELDS 3Q23 2Q23 Change (1) (1) (1) Loan Segment $ % Avg. Yield $ % Avg. Yield $ % Avg. Yield $ in Millions C&I: Warehouse $ 648 9.3% 8.81% $ 786 11.0% 8.66% $ (138) -17.6% 0.15% C&I: All Other 1,295 18.6% 6.60% 1,214 1
Slide 9: 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 16.9% of total loans; General Office at only 3.7% of total loans Collateral Type Count Balance % of Total Loans Avg. Loan Size WA LTV (1) ($ millions) ($ millions) General Office 54 $ 256 3.7% $ 4.7
Slide 10: 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 $266 Million in Q3 2023 $1,200 9.00% 8.00% ($980) $1,000 7.00% $821 $800 ($394) 6.00% $262 ($662) 5.00% $600 ($166) $496 4.00% ($454) $441 ($450) $399 $400 ($347) 3.00% ($284) $34 $149 ($34
Slide 11: Continued TBV Per Share Growth
CONTINUED TBV PER SHARE GROWTH Growth in TBV per common share(1) driven by strong earnings, including hedge gains(2) and prudent balance sheet management, that more than offset negative AOCI marks, dividends, common stock repurchases and acquisitions of Pacific Mercantile Bank and Deepstack Technolo
Slide 12: Securities Have Short/Moderate Duration With Low Unrealized AFS and HTM Losses
SECURITIES HAVE SHORT / MODERATE DURATION WITH LOW UNREALIZED AFS AND HTM LOSSES Securities Portfolio Detail Effective Security Type QoQ ($ in millions) Duration (yrs) Unrealized Loss 3Q23 2Q23 Change 3Q23 3Q23 Gov’t & Agency (MBS, CMO, & SBA) $ 171.3 $ 180.1 $ (7.8) 4.5 $ (10.8) CLOs 483.8 482.8 1.
Slide 13: Low Unrealized Securities Losses as a % of Capital
LOW UNREALIZED SECURITIES LOSSES AS A % OF CAPITAL(1) Highlights (Dollars in millions) 3Q23 AFS (Unrealized Loss Pre-Tax) $51.9 • 3Q23 AFS unrealized HTM (Unrealized Loss Pre-Tax) $78.0 losses were 3.9% of 3Q23 CET1 Capital Total Securities Unrealized Loss Pre-Tax $129.8 Net Unrealized Loss on AFS A
Slide 14: High Level of Available Liquidity
HIGH LEVEL OF AVAILABLE LIQUIDITY Total available primary and secondary liquidity ($3.67B) is 2.1x uninsured and uncollateralized deposits ($1.76B) ($ in Millions) Current September 30, 2023 Availability Utilization Capacity Primary Liquidity Cash $ 311 AFS Securities (unpledged)* 689 Total Primary
Slide 15: Strong Capital Base
STRONG CAPITAL BASE Provides Buffer for Economic Environment Regulatory Most Recent Well- Quarter Ratios 3Q23 2Q23 1Q23 4Q22 3Q22 Capitalized in Excess of Ratios Well-Capitalized Total Risk-Based Capital Ratio(1) 14.48% 14.25% 14.22% 14.19% 13.83% 10.00% 4.48% (1) Tier 1 Risk-based Capital 12.19% 11
Slide 16: Asset Quality Remains Strong
ASSET QUALITY REMAINS STRONG NPLs, Delinquencies, and Classified Loans NPLs excluding SFR loans down 39% SFR loans have low LTVs and minimal loss exposure Delinquencies ($ in millions) Criticized and Classified Loans ($ in millions) SFR Delinquencies Delinquencies (ex-SFR) Delinquencies /Total Loans
Slide 17: Appendix
APPENDIX BANC OF CALIFORNIA
Slide 18: Banc Fast Facts
BANC FAST FACTS (Dollars in millions) 3Q23 2Q23 1Q23 4Q22 3Q22 Total assets $ 9,247 $ 9,370 $ 10,039 $ 9,197 $ 9,369 Securities available-for-sale 915 922 958 868 848 Securities held-to-maturity 328 328 329 329 329 Loans held-for-investment 6,961 7,156 7,054 7,115 7,289 Total deposits 6,641 6,871 6,
Slide 19: 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 $5,006 $4,873 <50% $ 1,472 30% 1,082 70% 72% 73% 70% 50% to 60% 1,125 23% 509 70% 60% to 70% 1,629 33% 621 70% to 80% 495 10% 311 >80% 152 3% 97
Slide 20: CLO Portfolio Has Diversified Exposure
CLO PORTFOLIO HAS DIVERSIFIED EXPOSURE Credit Enhancement Provides Significant Principal Protection CLO Industry Breakdown Highlights $484 million at September, 2023 • CLO portfolio has underlying (net of $6.1 million unrealized loss) diversified exposure • AAA and AA holdings provide principal prot
Slide 21: 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 22: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands, except per share data) 3Q23 2Q23 1Q23 4Q22 3Q22 Tangible Common Equity to Tangible Assets Ratio Total assets $ 9,247,072 $ 9,370,265 $ 10,038,901 $ 9,197,016 $ 9,368,578 Less: goodwill (114,312) (114,312) (114,312) (114,312) (114,312) Less: other intang
Slide 23: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands) 3Q23 2Q23 1Q23 4Q22 3Q22 Return on tangible common equity Average total stockholders' equity $ 977,410 $ 997,049 $ 1,004,794 $ 989,414 $ 960,806 Less: Average goodwill (114,312) (114,312) (114,312) (114,312) (98,916) Less: Average other intangible asset
Slide 24: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands) 3Q23 2Q23 1Q23 4Q22 3Q22 Adjusted Noninterest Income Total noninterest income 50,778 6,024 7,859 (1,427) 5,681 Gain on merger-related derivative instruments (46,165) - - - - Net loss on securities available for sale - - - 7,708 - Adjusted noninterest in
Slide 25: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands) 3Q23 2Q23 1Q23 4Q22 3Q22 Adjusted pre-tax pre-provision income Net interest income $ 69,218 $ 69,632 $ 73,053 $ 80,217 $ 79,408 Noninterest income 50,778 6,024 7,859 (1,427) 5,681 Total revenue 119,996 75,656 80,912 78,790 85,089 Noninterest expense 56,
Slide 26: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands, except per share data) 3Q23 2Q23 1Q23 4Q22 3Q22 Adjusted net income Net income(1)(2)(3) $ 42,574 $ 17,879 $ 20,278 $ 21,519 $ 24,196 Adjustments: Noninterest income adjustments (46,165) - - 7,708 - Noninterest expense adjustments 9,929 716 1,998 (261) 3
Slide 27: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands) 3Q23 Adjusted Common Equity Tier 1 (CET 1) capital(1,3) CET 1 capital $ 928,862 Less unrealized loss on AFS securities, net of tax (36,551) Less unrealized loss on HTM securities, net of tax (54,913) Adjusted CET 1 capital(3) $ 837,398 (2) CET 1 ratio 1