Banc Of California, Inc. · NYSE:BANC
Banc Of California — Q4 2022 Earnings Presentation
33 slides from Banc Of California's earnings presentation, Jan 19, 2023
Slide 1: Investor Presentation: 2022 Fourth Quarter Earnings
INVESTOR PRESENTATION 2022 Fourth Quarter Earnings bancofcal.com
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: Fourth Quarter 2022 Results
FOURTH QUARTER 2022 RESULTS ($ in Thousands Except Per Share Data) 4Q22 3Q22 4Q21 Net interest income $ 80,217 $ 79,408 $ 73,039 Provision for credit losses - - $ 11,262 Net income $ 21,519 $ 24,196 $ 5,751 Net income available to common stockholders $ 21,519 $ 24,196 $ 4,024 Earnings per diluted co
Slide 4: Enhancing Franchise Value
ENHANCING FRANCHISE VALUE 4th Quarter 2022 Summary • Adjusted ROAA(1) increased to 115 bps for 4Q22 compared to 113 bps for the prior quarter and 63 bps same quarter a year ago Consistent Earnings Power • Increase in adjusted net income on a slightly smaller balance sheet • Proactive balance sheet m
Slide 5: Consistent Core Earnings Power
CONSISTENT CORE EARNINGS POWER Adjusted Pre-tax Pre-provision (PTPP) Income (1) ($ in millions) +212% 1.65% 1.55% 1.59% 1.63% 1.35% 1.39% +16% 1.25% 1.13% 1.06% 0.98% 0.83% $18.9 0.65% $16.0 $38.4 $37.7 $38.0 $35.8 $32.7 $27.7 $13.2 $24.5 $22.0 $20.6 $12.2 $18.9 $16.0 $12.2 1Q20 2Q20 3Q20 4Q20 1Q21
Slide 6: Net Income Available to Common Stockholders Reconciliation
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS RECONCILIATION ($ in millions) 1.15% Adjusted ROAA(1) ROAA 0.92% $26.8 $21.5 $5.4 $(0.6) $0.4 EPS EPS 4Q 2022 $0.36 $0.45 Net Income Available to Noninterest expense Loss on alternative Loss on Sale of Securities Adjusted Net Income Common Stockholders adj
Slide 7: TBV per Common Share Growth in a Challenging Environment
TBV PER COMMON SHARE GROWTH IN A CHALLENGING ENVIRONMENT Solid growth in TBV per common share driven by strong earnings and prudent balance sheet management that more than offset negative AOCI marks, dividends, common stock repurchases and acquisition of Deepstack Technologies Tangible Book Value /
Slide 8: Low Cost Deposit Franchise
LOW COST DEPOSIT FRANCHISE Average cost of deposits Brokered CDs Highlights Noninterest-bearing CDs 3.65% Interest-bearing checking Average Fed funds rate • 39.5% percent of Money market & savings 2.18% ending total deposits are noninterest-bearing, 0.77% up from 37.5% a year 0.08% 0.12% ago 0.79% 0
Slide 9: Deposit Engine Consistently Generates Low-Cost Commercial Deposit Relationships
DEPOSIT ENGINE CONSISTENTLY GENERATES LOW-COST COMMERCIAL DEPOSIT RELATIONSHIPS YTD Growth in Number of Accounts and Steady Commercial Noninterest-Bearing Deposits 4Q21 14,244 Includes PMB 14,292 14,300 14,541 14,497 Acquisition 11,270 11,444 11,644 10,945 $2,651 $2,592 $2,550 $2,476 9,920 $2,433 $1
Slide 10: Diversified Loan Portfolio Mitigates Risk
DIVERSIFIED LOAN PORTFOLIO MITIGATES RISK Attractive Risk-Adjusted Yields 4th Quarter 2022 3rd Quarter 2022 Change (1) (1) (1) Loan Segment $ % Avg. Yield $ % Avg. Yield $ % Avg. Yield $ in Millions C&I: Warehouse $ 603 8% 6.93% $ 766 11% 5.97% $ (164) -3% 0.96% C&I: All Other 1,243 17% 6.35% 1,227
Slide 11: Diversified Business Mix: Loan Yields on New Production
DIVERSIFIED BUSINESS MIX Loan Yields On New Production Continue To Rise ($ in millions) Total Loan Fundings of $496 Million in Q4 2022 $1,400 7.00% ($1,208) $1,200 6.00% $1,211 $968 $380 ($414) ($980) $1,000 5.00% $906 $80 ($828) $821 $800 ($780) 4.00% ($28) ($394) $290 ($662) $243 ($254) $262 $600
Slide 12: Asset Quality Remains Strong
ASSET QUALITY REMAINS STRONG NPLs, Delinquencies, and Classified Loans Decline in NPLs excluding SFR loans, which are well-secured with low average LTVs of 57%(1) Delinquencies ($ in millions) Criticized and Classified Loans ($ in millions) SFR Delinquencies Delinquencies (ex-SFR) Criticized and Cla
Slide 13: Allowance for Credit Losses Walk
ALLOWANCE FOR CREDIT LOSSES WALK ($ in millions) $98.8 $1.0 $(7.6) $91.3 $(1.1) $0.2 1.33% (1) 1.36% 1.26% (1) 1.36% 1.28% ACL (9/30/2022) Changes in Net Charge-offs Provision for RUC Portfolio Mix ACL (12/31/22) Specific Reserve • ACL includes the Allowance for Loan Losses (ALL) and Reserve for Unf
Slide 14: Interest Rate Risk Management
INTEREST RATE RISK MANAGEMENT Remain slightly asset sensitive with 20% one year positive gap ratio Interest Rate Risk Position (within 12 months) Loan & Deposit Mix HFI Loans: $7.1 billion Rate Sensitive Assets at 31% of Total Assets Loan Portfolio • $2.1 billion mature or reset within 12 months Hyb
Slide 15: Strong Capital Base
STRONG CAPITAL BASE Provides Buffer For Economic Environment 4Q22 3Q22 2Q22 1Q22 4Q21 Common Equity Tier 1 (1) 11.88% 11.43% 11.29% 11.40% 11.31% Tier 1 Risk-based Capital(1) 11.88% 11.43% 11.29% 11.40% 12.55% Leverage Ratio(1) 9.71% 9.52% 9.58% 9.72% 10.37% Tangible Equity / Tangible Assets (2) 9.2
Slide 16: 2022 Review: What Did We Say We Would Do
2022 REVIEW: What Did We Say We Would Do and How Did We Do? We delivered on what we said we would do in our Q4 2021 Investor Presentation • Achieved 40%+ cost saves Fully Realize • Compared to 2021: Synergies of PMB • 2022 adjusted efficiency ratio(1) declined from 62% to 56% Acquisition • 2022 adju
Slide 17: 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 18: Appendix
BANC OF CALIFORNIA APPENDIX bancofcal.com
Slide 19: Real Estate Loan Portfolio Has Low LTVs
REAL ESTATE LOAN PORTFOLIO HAS LOW LTVS Real Estate Loan Balances(1) Real Estate (1) LTVs $ % Count $ in millions $ in Millions $5,124 $5,114 <50% $ 1,466 29% 1,124 $4,837 $4,274 $4,424 70% 72% 50% to 60% 1,219 24% 506 65% 59% 60% to 70% 1,677 33% 635 59% 70% to 80% 701 14% 428 >80% 51 1% 38 Total $
Slide 20: California-Centric CRE and Multifamily Portfolios Have Low Weighted-Average LTV
CALIFORNIA-CENTRIC CRE AND MULTIFAMILY PORTFOLIOS HAVE LOW WEIGHTED-AVERAGE LTV CRE & Multifamily by Collateral Type Strip Center Other Single Tenant 2% Multi Tenant Health 13% Other 4% 43% Facility 6% Other 3% Mixed Use <1% Neighborhood 39% 11% 3% Shopping Center Retail Owner Occupied Office Multif
Slide 21: Diversified and Low Average Balance C&I Portfolio
DIVERSIFIED AND LOW AVERAGE BALANCE C&I PORTFOLIO All Other C&I 10% Accommodations 1% Transportation 1% Educational Services 2% Food Services 2% Management of Companies and Enterprises 2% ~51% C&I Concentration toward Whole Sale Trade 2% Businesses focused on Finance Professional Services 2% (includ
Slide 22: Stable, Low Cost Deposit Grows Net Interest Margin in Rising Rates
STABLE, LOW COST DEPOSIT GROWS NET INTEREST MARGIN IN RISING RATES Net Interest Margin Drivers 4.79% 4.27% 4.33% 4.06% 4.04% 4.04% 3.86% 3.78% 3.81% 3.87% 3.73% 3.66% 3.69% 3.51% 3.58% 3.58% 3.38% 3.28% 3.28% 3.19% 3.27% 3.09% 3.09% 3.65% 2.97% 2.18% 1.71% 1.81% 1.25% 1.29% 1.20% 1.02% 0.89% 0.83% 0
Slide 23: Strong Allowance Coverage Ratio
STRONG ALLOWANCE COVERAGE RATIO Allocation Of Reserve By Loan Type ACL Composition 12/31/2022 9/30/2022 ($ in thousands) Amount % of Loans Amount % of Loans Commercial real estate $ 15,977 1.27% $ 16,836 1.36% Multifamily 14,696 0.87% 15,953 0.94% Construction 5,850 2.40% 5,423 2.29% Commercial and
Slide 24: Securities Portfolio
SECURITIES PORTFOLIO Strong Expansion Of Securities Yield Securities Portfolio Detail(1) Effective Security Type QoQ ($ in millions) Duration (Years) 4Q22 3Q22 Change 4Q22 Gov’t & Agency (MBS, CMO, & SBA) $ 144.6 $ 164.0 $ (19.4) 2.8 CLOs 476.6 472.7 3.9 0.1 Corporate Securities 166.6 169.4 (2.8) 2.
Slide 25: CLO Portfolio Has Diversified Exposure
CLO PORTFOLIO HAS DIVERSIFIED EXPOSURE Credit Enhancement Provides Significant Principal Protection CLO Industry Breakdown $477 million at December 31, 2022 (net of $15.6 million unrealized loss) • CLO portfolio has underlying diversified exposure with largest segment in Healthcare & Pharmaceuticals
Slide 26: BANC Fast Facts
BANC FAST FACTS (Dollars in millions) 4Q22 3Q22 2Q22 1Q22 4Q21 Total assets $ 9,197 $ 9,369 $ 9,502 $ 9,584 $ 9,394 Securities available-for-sale 868 848 865 899 1,316 Securities held-to-maturity 329 329 329 329 - Loans held-for-investment 7,115 7,289 7,451 7,452 7,251 Total deposits 7,121 7,280 7,5
Slide 27: Non-GAAP Financial Information
NON-GAAP FINANCIAL INFORMATION This presentation contains certain financial measures annualized PTPP income by average assets. Adjusted PTPP determined by methods other than in accordance with U.S. income ROAA is computed by dividing annualized adjusted generally accepted accounting principles (GAAP
Slide 28: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands) 4Q22 3Q22 2Q22 1Q22 4Q21 Net interest income $ 80,217 $ 79,408 $ 78,299 $ 76,441 $ 73,039 Noninterest income (1,427) 5,681 7,186 5,910 5,605 Total revenue 78,790 85,089 85,485 82,351 78,644 Noninterest expense 48,203 50,962 48,612 46,596 58,872 Pre-tax
Slide 29: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands) 4Q22 3Q22 2Q22 1Q22 4Q21 Adjusted Noninterest Income Total noninterest income (1,427) 5,681 7,186 5,910 5,605 Net (gain) on securities available for sale 7,708 - - (16) - Adjusted noninterest income(1) $ 6,281 $ 5,681 $ 7,186 $ 5,894 $ 5,605 Adjusted No
Slide 30: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands) 4Q22 3Q22 2Q22 1Q22 4Q21 Tangible Common Equity to Tangible Assets Ratio Total assets $ 9,197,016 $ 9,368,578 $ 9,502,113 $ 9,583,540 $ 9,393,743 Less: goodwill (114,312) (114,312) (95,127) (95,127) (94,301) Less: other intangible assets (7,526) (8,081)
Slide 31: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands) 4Q22 3Q22 2Q22 1Q22 4Q21 Return on tangible common equity Average total stockholders' equity $ 989,414 $ 960,806 $ 969,885 $ 1,049,912 $ 1,035,782 Less: Average preferred stock - - - (75,965) (94,956) Average common stockholders' equity 989,414 960,806
Slide 32: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands, except per share data) 4Q22 3Q22 2Q22 1Q22 4Q21 Adjusted net income Net income(1)(2)(3) $ 21,519 $ 24,196 $ 26,712 $ 48,512 $ 5,751 Adjustments: Noninterest income adjustments 7,708 - - (16) - Noninterest expense adjustments (261) 3,601 1,498 52 12,891
Slide 33: bancofcal.com
bancofcal.com 33