Banc Of California, Inc. · NYSE:BANC
Banc Of California — Q4 2017 Earnings Presentation
21 slides from Banc Of California's earnings presentation, Jan 25, 2018
Slide 1: 2017 Fourth Quarter Earnings Investor Presentation
January 25, 2018 2017 Fourth Quarter Earnings Investor Presentation Exhibit 99.2
Slide 2: Forward-looking statements
When used in this presentation 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 or phrases “believe,
Slide 3: Fourth Quarter 2017 Highlights
Strong Organic Loan Growth Continuation of Balance Sheet Re-Mix Toward Core Assets Disciplined Expense Management Held for investment loans grew by $433 million, or 7% QoQ (28% annualized) Originated HFI loans increased by $500 million, or 9% QoQ Total commercial loan balances increased by $308 mill
Slide 4: Strategic Asset Re-Mix Continues
Dollars in millions Total Assets1 Strategic Asset Re-Mix Continues Re-Mix of Balance Sheet Toward Core HFI Loans Through Reduced Securities & Cash Balances Q4 Strategic Balance Sheet Re-Mix Activities 1 2 3 Cash and other declined by $205 million due to strong loan growth Securities declined by $180
Slide 5: Originated HFI Loans Grew 9% QoQ, 21% YoY
Dollars in billions Dollars in millions, CRE includes Construction Gross loan yield for 4Q17 = 4.42%. HFI Loan yield = 4.49%, excludes loans held for sale , primarily representing Ginnie Mae loans. 4 Gross loan commitment production. Originated HFI Loans Grew 9% QoQ, 21% YoY Loan Production Yields H
Slide 6: Loan Balances Increasingly Driven by Commercial Lending
Loan Balances Increasingly Driven by Commercial Lending Change in Loan Mix Driving Higher Quality Revenue Stream Dollars in billions Includes Construction Re-mixing Loan Portfolio Toward Increased Commercial Loan Balances Loans Held for Investment1 Total Commercial Loan Balances1 +18% 2
Slide 7: Continued Reduction of High Rate, High Volatility Deposits
Dollars in millions Deposit Composition1 Continued Reduction of High Rate, High Volatility Deposits Core Deposit Production Added $290 Million of Non-Brokered, Non-Institutional Balances in Q4 $603 Expected run-off of high rate, high volatility deposits accelerated remix of total deposit base toward
Slide 8: Net Interest Margin Contracted Due Mainly to Upward Pressure on Deposit Rates
Average Interest Earning Assets End Quarterly Down Trend Net Interest Margin Contracted Due Mainly to Upward Pressure on Deposit Rates Net Interest Margin Components Average Interest Earning Assets1 Dollars in billions
Slide 9: Average Loan Balances Lagging Period End Balances
Dollars in millions, consolidated operations Includes other interest earning assets Average Loan Balances Lagging Period End Balances Driving Slower Build of Interest Income Interest Income1 Commercial Loan Portfolios Driving 52% of Interest Income Commercial Loan Interest Income Increased 19% YoY I
Slide 10: Continued Efforts to Right-Size Expense Structure
Continued Efforts to Right-Size Expense Structure Select Non-Recurring Expenses Remain Elevated, Including Legal and Professional Fees Dollars in millions, Continuing operations, noninterest expense excluding loss on investments in alternative energy partnerships,. Loss on investments in alternative
Slide 11: Operating Earnings for Continuing Operations
($ in millions) Continuing Operations (reported) Q4 non-recurring adjustments1 Deferred Tax Re-Measurement Q4 Operating Earnings for Continuing Operations2 Net interest income $ 73.2 $ 73.2 Provision for loan and lease losses 5.1 5.1 Total noninterest income 5.7 4.4 10.1 Total noninterest expense (e
Slide 12: Asset Quality Remains Strong and Stable
Nonperforming Assets1 Asset Quality Remains Strong and Stable Disciplined Credit Culture Continues to Drive Strong Asset Quality Dollars in millions NPAs/Equity ALLL and NPL Coverage Total Delinquent Loans/Total Loans -39%
Slide 13: Solid Capital Ratios Exceeding Basel III Guidelines
Tangible Equity / Tangible Assets1 +11% Solid Capital Ratios Exceeding Basel III Guidelines Tier 1 Risk-Based Capital Ratio Supported by $269 Million of Preferred Equity Common Equity Tier 1 Ratio (CET1) +5% Tangible Common Equity / Tangible Assets1 +13% Tier 1 Risk-Based Capital Ratio +4% Basel III
Slide 14: BANC's Journey of Transformation
Strengthening Management Team & Bolstering Talent and Bench Strength De-Risking and Re-Mixing Balance Sheet BANC's Journey of Transformation Significant Improvement and Events Since Q4 2016 Sold Commercial Equipment Finance Division ($243mm) Sold $604mm of Seasoned SFR Loan Pools Sold Banc Home Loan
Slide 15: BANC Core Foundation
BANC Core Foundation Foundation in Place to Support Franchise Growth Drive Disciplined Growth: Increase loans and deposits, grow asset base Go Forward Strategy 1 2 3 Sustainable Strategy: Building a bank with a more reliable, repeatable earnings profile Lowered Cost of Funds: Become a premier deposi
Slide 16: Appendix
Appendix
Slide 17: Securities Portfolio
Securities Portfolio Dollars in millions Based on book value balances of rated securities, data at each quarter end Dollars in billions Securities Portfolio Detail1 Security Type Book Value 3Q17 Book Value 4Q17 Q4 Change Fair Value 4Q17 Book Yield 4Q17 Duration 4Q17 Gov’t & Agency (Agency MBS) $ 504
Slide 18: Quarterly financial summary
All figures from Continuing Operations unless noted; dollars in millions unless noted per share or percentage. Consolidated operations; Efficiency ratio adjusted for including the pre-tax effect of investments in alternative energy partnerships . Excluding loss on investments in alternative energy p
Slide 19: Non-GAAP financial measures
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 from continuing operations and operating expense from continuing operations, each excluding loss
Slide 20: Non-GAAP reconciliation: noninterest expense and revenue
(in thousands) 4Q17 3Q17 2Q17 1Q17 4Q16 Noninterest expense $ 66,424 $ 79,008 $ 98,216 $ 124,615 $ 129,239 Loss on investments in alternative energy partnerships, net (3,995) (8,348) (9,761) (8,682) (13,850) Adjusted noninterest expense $ 62,429 $ 70,660 $ 88,455 $ 115,933 $ 115,389 Net interest inc
Slide 21: Tangible common equity to tangible assets reconciliation
(in thousands) 4Q17 3Q17 2Q17 1Q17 4Q16 Tangible common equity to tangible assets ratio Total assets $ 10,327,852 $ 10,280,028 $ 10,365,768 $ 11,052,085 $ 11,029,853 Less goodwill (37,144) (37,144) (37,144) (37,144) (39,244) Less other intangible assets (9,353) (10,219) (11,135) (12,191) (13,617) Ta