Banc Of California, Inc. · NYSE:BANC
Banc Of California — Q4 2018 Earnings Presentation
22 slides from Banc Of California's earnings presentation, Jan 24, 2019
Slide 1: 2018 Fourth Quarter Earnings Investor Presentation
January 24, 2019 2018 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 2018 Highlights
Strong Organic Loan Growth Continuation of Balance Sheet Re-Mix Disciplined Expense Management Held for investment loans grew by $448 million, or 6% QoQ (25% annualized) – Gross loan commitment originations of $1 billion at an average production yield of 5.26% – C&I portfolio grew by $268 million on
Slide 4: Strategic Asset Re-Mix Continues
Dollars in millions. Q4 Strategic Asset Sheet Re-Mix Activities 1 2 Total Assets1 2 1 Strategic Asset Re-Mix Continues Re-Mix of Balance Sheet Toward Core Held for Investment (“HFI”) Loans Through Reduced Securities Securities declined by $67 million in Q4 primarily due to $129 million in CLO call a
Slide 5: BANC Strategic Roadmap: Scorecard
BANC Strategic Roadmap: Scorecard Building Core Earnings Power for Sustainable Growth and Returns Over the Long Term Strategy Components Tracking Guideposts FY 2018 Results Build Core Deposits Core Deposit Balance Growth Core deposits increased $579 million (10%) In Q1, completed the run-off of $207
Slide 6: Build Core Deposits: Stabilization of Core Deposit Base
Dollars in millions. Core deposits defined as non-brokered deposits. Deposit Composition1 Build Core Deposits: Stabilization of Core Deposit Base Core Deposits Stable from prior quarter BANC 2
Slide 7: Amplify Lending: Growing Loan Balances
Gross loan commitment originations. Dollars in thousands. CRE includes Construction. 2018 gross loan production1 of $3.55 billion at 5.14% average production yield HFI Loan Production Yields vs. Portfolio Yields2 14% 28% Amplify Lending: Growing Loan Balances Higher average production Yields driven
Slide 8: Net Interest Margin
Net Interest Margin Re-mix of Assets, Liability Funding and Deposit Strategy In Process Net Interest Margin Components Interest Earning Assets1 Average, dollars in billions. Includes loans held for sale and other interest-earning assets. Dollars in millions, consolidated operations. Interest Income3
Slide 9: Normalize Expenses: Leveraging Expenses Efficiently
Loss on investments in alternative energy partnerships create tax credits to offset expense incurred. Continuing operations operating expense less non-recurring adjustments. Non-GAAP measure: Reconciliation table above. Continuing operations noninterest expense excluding loss on investments in alter
Slide 10: Focusing on Core, Sustainable Returns
Includes non-recurring items, loss on investments in alternative energy partnerships, and income tax expense required to reach a normalized rate of 20%. Non-GAAP measure: Reconciliation table above. Loss on investments in alternative energy partnerships create tax credits to offset expense incurred.
Slide 11: Long-Term Strategic Operating Targets
Financial Metric Long-Term Strategic Operating Targets FY 2018 Plan Tracking Comments Growth / Balance Sheet: - Loan Growth (HFI)¹ Mid-Teens +16% Fourth quarter realized an annualized growth rate of 25% - Deposit Growth (ex-brokered)2 Low-to-Mid Teens +10% Early Innings of Deposit & Treasury Managem
Slide 12: Asset Quality Remains Strong
NPLs & REO1 Asset Quality Remains Strong Disciplined Credit Culture Continues to Drive Strong Asset Quality NPL: Non-performing loans and leases. OREO: Other real estate owned. Dollars in millions, held for investment. ALLL: Allowance for loan and lease losses. NPAs / Equity ALLL2 and NPL Coverage T
Slide 13: Capital Ratios Exceeding Basel III Guidelines
Tangible Equity / Tangible Assets1 Capital Ratios Exceeding Basel III Guidelines Tier 1 Risk-Based Capital Ratio Supported by $231 Million of Preferred Equity Common Equity Tier 1 Ratio (“CET1”) Tangible Common Equity / Tangible Assets1 Tier 1 Risk-Based Capital Ratio Non-GAAP measure. Reconciliatio
Slide 14: Appendix
Appendix
Slide 15: Securities Portfolio
Securities Portfolio Dollars in millions. 2 Based on par value balances of rated securities, data at December 31, 2018. 3 Sold remaining $132 million portfolio of CMBS in early January 2019 and recognized a $3.3 million OTTI in 2018 Q4. 4 Dollars in billions. 5 BBB less than 0.05% but greater than 0
Slide 16: Collateralized Loan Obligation (CLO) Portfolio Composition
Collateralized Loan Obligation ("CLO") Portfolio Composition Diversified, Highly Rated Portfolio with Historically Low Credit Risk Data as of December 31, 2018 From 4,322 S&P rates US “1.0” CLO tranches from 1994-2009. S&P has also rated over 5,700 US CLO tranches since 2009, with zero defaults. Sou
Slide 17: BANC Fast Facts & Preferred Equity Capital Structure
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 pa
Slide 18: 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, operating expense from continuing operations, non-interest expense to
Slide 19: Non-GAAP Reconciliation: Adjusted Efficiency Ratio
Non-GAAP Reconciliation Adjusted Efficiency Ratio Including the Pre-tax Effect of Investments in Alternative Energy Partnerships
Slide 20: Non-GAAP Reconciliation: Tangible Common Equity to Tangible Assets
Non-GAAP Reconciliation Tangible Common Equity to Tangible Assets and Tangible Equity to Tangible Assets
Slide 21: Non-GAAP Reconciliation: Return on Average Tangible Common Equity
Non-GAAP Reconciliation Return on Average Tangible Common Equity
Slide 22: Non-GAAP Reconciliation: Non-Interest Expense / Average Assets
Non-GAAP Reconciliation Non-Interest Expense / Average Assets 1. Continuing operations noninterest expenses excluding loss on investments in alternative energy partnerships, annualized, over average consolidated assets.