Banc Of California, Inc. · NYSE:BANC
Banc Of California — Q2 2022 Earnings Presentation
33 slides from Banc Of California's earnings presentation, Jul 21, 2022
Slide 1: Investor Presentation: 2022 Second Quarter Earnings
INVESTOR PRESENTATION 2022 Second 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: Second Quarter 2022 Results
SECOND QUARTER 2022 RESULTS ($ in Thousands Except Per Share Data) 2Q22 1Q22 2Q21 Net interest income $ 78,299 $ 76,441 $ 59,847 (Reversal of) provision for credit losses - $ (31,542) $ (2,154) Net income $ 26,712 $ 48,512 $ 19,050 Net income available to common stockholders $ 26,712 $ 43,345 $ 17,3
Slide 4: Enhancing Franchise Value: 2nd Quarter 2022 Summary
ENHANCING FRANCHISE VALUE 2nd Quarter 2022 Summary • NIM expansion and continued strong execution on growth strategies resulted in sequential quarter improvement in: Continued Adjusted Pre-Tax Pre-Provision Income(1) Profitable Growth EPS and Return on Average Tangible Common Equity (excluding i
Slide 5: Growing Core Earnings Power
GROWING CORE EARNINGS POWER ($ in millions) 2Q 2022 Highlights $36.9 $38.4 $0.5 $1.0 Adjusted PTPP PTPP ROAA ROAA 1.58% 1.65% • Adjusted sequential pre-tax pre- provision income increased $2.6 Pre-tax, pre- Noninterest expense Loss on alternative Adjusted pre-tax, pre- million, or 7% provision incom
Slide 6: Escalating Adjusted Pre-Tax Pre-Provision Income Trend
ESCALATING ADJUSTED PRE-TAX PRE-PROVISION INCOME TREND Adjusted Pre-tax Pre-provision (PTPP) Income (1) ($ in millions) +215% 1.65% 1.55% 1.35% 1.39% 1.25% +38% 1.13% 1.06% 0.98% 0.83% $18.9 0.65% $16.0 $38.4 $35.8 $32.7 $27.7 $13.2 $24.5 $12.2 $20.6 $22.0 $18.9 $16.0 $12.2 1Q20 2Q20 3Q20 4Q20 1Q21
Slide 7: Net Income Available to Common Stockholders Reconciliation
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS RECONCILIATION ($ in millions) $26.7 $27.8 $0.3 $0.7 $-0 2Q 2022 EPS EPS $0.43 $0.45 Net Income Available to Noninterest expense Loss on alternative Preferred Redemption Adjusted Net Income Common Stockholders adjustments energy partnerships Adjustments Av
Slide 8: Low Cost Deposit Franchise
Low Cost DEPOSIT FRANCHISE Highlights Average Cost of deposits Money Market & Savings Noninterest-bearing Brokered CDs • YTD increase in Interest-bearing checking CDs noninterest-bearing deposits compared to Spot Rate 4Q21 0.21% • 69% percent of 0.23% 0.15% 0.17% deposits are 0.11% 0.08% noninterest
Slide 9: Diversified Loan Portfolio Mitigates Risk and Generates Attractive Risk-Adjusted Yield
DIVERSIFIED LOAN PORTFOLIO MITIGATES RISK AND GENERATES ATTRACTIVE RISK-ADJUSTED YIELD 2nd Quarter 2022 1st Quarter 2022 Change (1) (1) (1) Loan Segment $ % Avg. Yield $ % Avg. Yield $ % Avg. Yield $ in Millions C&I: Warehouse $ 1,160 16% 4.83% $ 1,575 21% 4.26% $ (414) -5% 0.57% C&I: All Other 1,27
Slide 10: Diversified Business Mix Producing Consistently Strong Loan Fundings
DIVERSIFIED BUSINESS MIX PRODUCING CONSISTENTLY STRONG LOAN FUNDINGS ($ in millions) Total Loan Fundings of $1.21 Billion in 2Q22 $1,400 5.00% $1,211($1,208) 4.50% $1,200 4.00% $1,000 $968 $380 ($414) $906 3.50% $847 ($828) $80 3.00% $800 $763 $290 ($780) ($28) $227 ($634) $243 ($254) 2.50% $178 $60
Slide 11: Asset Quality Remains Strong
ASSET QUALITY REMAINS STRONG NPLs, Delinquencies, and Classified Loans Delinquencies ($ in millions) Criticized and Classified Loans ($ in millions) SFR Delinquencies Delinquencies (ex-SFR) Criticized and Classified Loans PMBC Acquired Delinquencies Delinquencies /Total Loans PMB Acquired Criticized
Slide 12: Top Relationships: Non-performing & Delinquent Loans Rollforward
TOP 10 RELATIONSHIPS Non-performing & delinquent loans rollforward Non-performing Loans ($ in thousands) 2Q 2Q 1Q # 2Q22 1Q22 Delta Loan Category Accrual Delinquency Accrual Status Status Status Non-performing loans 1 $ 12,350 $ 12,599 $ (249) C&I Non-Accrual Current Non-Accrual 2 6,617 6,617 - C&I
Slide 13: Allowance for Credit Losses Walk
ALLOWANCE FOR CREDIT LOSSES WALK ($ in millions) $98.6 $99.7 $1.1 $0.5 $(0.5) 1.32% 1.34% ACL (3/31/22) Recoveries (net of Charge-offs) Specific Reserve Portfolio Mix ACL (6/30/22) The $1.1 million increase in the ACL was due primarily to: (i) net recoveries of $1.1 million, (ii) higher specific res
Slide 14: Continued Focus on Expense Management
CONTINUED FOCUS ON EXPENSE MANAGEMENT Noninterest Expense to Average Assets Adjusted Noninterest Expense(1) to Average Assets ($ millions) ($ millions) 2.50% 2.11% 2.01% 2.02% 2.04% 2.01% 2.09% 1.99% 1.95% 1.84% $58.9 $46.6 $48.6 $39.8 $37.8 $46.0 $41.2 $46.5 $47.1 $41.2 $40.7 $46.0 $46.5 $47.1 $40.
Slide 15: Interest Rate Risk Management
INTEREST RATE RISK MANAGEMENT Well positioned for higher rates with a One Year Positive Gap Ratio of 30% Interest Rate Risk Position (within 12 months) Loan & Deposit Mix HFI Loans: $7.5 billion Rate Sensitive Assets at 37% of Total Assets Loan Portfolio • $2.7 Billion mature or reset within 12 mont
Slide 16: Strong Capital Base
STRONG CAPITAL BASE Provides buffer to deploy for stockholders’ benefit 2Q22 1Q22 4Q21 3Q21 2Q21 Common Equity Tier 1(1) 11.28% 11.40% 11.31% 10.86% 11.14% Tier 1 Risk-based Capital(1) 11.28% 11.40% 12.55% 12.35% 12.71% Leverage Ratio(1) 9.59% 9.72% 10.37% 9.80% 9.89% Tangible Equity / Tangible Asse
Slide 17: 2022 Strategic Objectives
2022 STRATEGIC OBJECTIVES Continued Balance Sheet Growth and Expanding Profitability Fully Realize Synergies of • Achieve greater than 40% cost savings during first half of 2022 (achieved) PMB Acquisition • Identify additional opportunities for cost savings from larger organization • Expand relation
Slide 18: Appendix
BANC OF CALIFORNIA APPENDIX bancofcal.com 18
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 $4,837 <50% $ 1,326 27% 1,098 $4,274 $4,424 $3,727 50% to 60% 1,146 24% 502 $3,636 65% 59% 59% 60% to 70% 1,565 32% 574 61% 60% 70% to 80% 746 15% 443 >80% 55 1% 23 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 Other Strip Center 1% 7% Single Tenant Multi Tenant Health 18% 40% Facility 3% Other Mixed Use Other 7% 2.8% 0.7% Neighborhood Retail Shopping Center 12% 34% Owner Occupied 11% Office
Slide 21: Diversified and Low Average Balance C&I Portfolio
DIVERSIFIED AND LOW AVERAGE BALANCE C&I PORTFOLIO All Other C&I 5% Accommodations 0.5% Transportation 1% Educational Services 1% Food Services 1% ~64% C&I Concentration toward Management of Companies & Enterprises 2% Businesses focused on Finance (including Wholesale Trade 2% Warehouse), and Real Es
Slide 22: Stable, Low Cost Deposit Base Protects Net Interest Margin
STABLE, LOW COST DEPOSIT BASE PROTECTS NET INTEREST MARGIN Net Interest Margin Drivers 4.27% 4.06% 4.04% 4.04% 3.86% 3.81% 3.87% 3.78% 3.73% 3.66% 3.51% 3.58% 3.38% 3.27% 3.28% 3.28% 3.19% 2.97% 3.09% 3.09% 1.71% 1.58% 1.29% 1.11% 1.02% 0.89% 0.83% 0.71% 0.77% 0.74% 0.67% 0.61% 0.51% 0.58% 0.36% 0.2
Slide 23: Strong Allowance Coverage Ratio; Allocation of Reserve by Loan Type
STRONG ALLOWANCE COVERAGE RATIO; ALLOCATION OF RESERVE BY LOAN TYPE ACL Composition 6/30/2022 3/31/2022 ($ in thousands) Amount % of Loans Amount % of Loans Commercial real estate $ 15,742 1.31% $ 16,490 1.42% Multifamily 15,678 1.00% 15,337 1.10% Construction 4,255 1.86% 6,268 2.78% Commercial and
Slide 24: Securities Portfolio
SECURITIES PORTFOLIO Securities Portfolio Detail(1) Security Type QoQ Duration (yrs) ($ in millions) 2Q22 1Q22 Change 2Q22 Gov’t & Agency (MBS, CMO, & SBA) $ 178 $ 192 $ (13) 2.5 CLOs 478 488 (10) 0.1 Corporate Securities 163 169 (5) 3.0 Private Label RMBS 45 50 (5) 8.1 AFS $ 865 $ 899 $ (33) 1.5 Go
Slide 25: CLO Portfolio Has Diversified Exposure
CLO PORTFOLIO HAS DIVERSIFIED EXPOSURE CREDIT ENHANCEMENT PROVIDES SIGNIFICANT PRINCIPAL PROTECTION CLO Industry Breakdown $478 million at June 30, 2022 • CLO portfolio has underlying diversified (net of $14.6 million unrealized loss) exposure with largest segment in Healthcare & Pharmaceuticals at
Slide 26: BANC Fast Facts
BANC FAST FACTS (Dollars in millions) 2Q22 1Q22 4Q21 3Q21 2Q21 Total assets $ 9,502 $ 9,584 $ 9,394 $ 8,279 $ 8,027 Securities available-for-sale 865 899 1,316 1,303 1,353 Securities held-to-maturity 329 329 - - - Loans held-for-investment 7,451 7,452 7,251 6,229 5,985 Total deposits 7,559 7,480 7,4
Slide 27: Non-GAAP Financial Information
NON-GAAP FINANCIAL INFORMATION This presentation contains certain financial measures income by average assets. Adjusted PTPP income ROAA is determined by methods other than in accordance with U.S. computed by dividing annualized adjusted PTPP income by generally accepted accounting principles (GAAP)
Slide 28: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands) 2Q22 1Q22 4Q21 3Q21 2Q21 Net interest income $ 78,299 $ 76,441 $ 73,039 $ 62,976 $ 59,847 Noninterest income 7,186 5,910 5,605 5,519 3,443 Total revenue 85,485 82,351 78,644 68,495 63,290 Noninterest expense 48,612 46,596 58,872 37,811 39,832 Pre-tax pr
Slide 29: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands) 2Q22 1Q22 4Q21 3Q21 2Q21 Adjusted Noninterest Expense Total noninterest income $ 7,186 $ 5,910 $ 5,605 $ 5,519 $ 3,443 Total noninterest expense $ 48,612 $ 46,596 $ 58,872 $ 37,811 $ 39,832 Noninterest expense adjustments: Professional recoveries (fees)
Slide 30: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands) 2Q22 1Q22 4Q21 3Q21 2Q21 Tangible Common Equity to Tangible Assets Ratio Total assets $ 9,502,113 $ 9,583,540 $ 9,393,743 $ 8,278,741 $ 8,027,413 Less: goodwill (95,127) (95,127) (94,301) (37,144) (37,144) Less: other intangible assets (4,677) (4,990) (
Slide 31: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands) 2Q22 1Q22 4Q21 3Q21 2Q21 Return on tangible common equity Average total stockholders' equity $ 969,885 $ 1,049,912 $ 1,035,782 $ 847,941 $ 814,973 Less: Average preferred stock - (75,965) (94,956) (94,956) (94,956) Average common stockholders' equity 96
Slide 32: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands, except per share data) 2Q22 1Q22 4Q21 3Q21 2Q21 Adjusted net income Net income(1)(2) $ 26,712 $ 48,512 $ 5,751 $ 23,170 $ 19,050 Adjustments: Noninterest expense adjustments 1,498 52 12,891 (2,937) (1,413) (3) Tax impact of adjustments above (443) (15)
Slide 33: bancofcal.com
bancofcal.com 33