Banc Of California, Inc. · NYSE:BANC
Banc Of California — Q4 2019 Earnings Presentation
21 slides from Banc Of California's earnings presentation, Jan 23, 2020
Slide 1: Fourth Quarter Earnings January 23, 2020
Investor Presentation 2019 Fourth Quarter Earnings January 23, 2020
Slide 2: Forward Looking Statements
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
Slide 3: Fourth Quarter 2019 Results
Fourth Quarter 2019 Results Execution in key areas of business driving strategic transformation • NIM expanded 18bps to 3.04% Expanded Net • Cost of total deposits declined 21bps to 1.27% Interest Margin • Total cost of funds improved 20bps to 1.55% • Average DDA balances increased $95 million, up 3
Slide 4: Successful Execution on Three Strategic Drivers for 2019
Successful Execution on Three Strategic Drivers for 2019 Relationship-Based Strategy Enhances Franchise Value Lower Deposit Costs through Relationship Focus • Cost of total deposits decreased 21 basis points during the fourth quarter, and 40 basis points since the first quarter, with non-interest be
Slide 5: Right-Sizing the Balance Sheet: Funding Sources
Right-Sizing the Balance Sheet: Funding Sources Portfolio Mix Shifting Towards Lower Costing, Less Transactional Deposits Reduced Reliance on Wholesale Funding 4Q18 4Q19 FHLB Demand FHLB 16% Deposit 18% Checking Demand 27% Deposit Brokered Checking CDs 40% Non-Brokered 16% CDs 18% Savings/ Non- Savi
Slide 6: Deposit Base Showing Effects of Transformation
Deposit Base Showing Effects of Transformation Relationship Based Approach Expected to Reduce Future Cost of Deposits Higher Mix of Noninterest-Bearing Deposits Driving 21bps Decrease in Cost of Deposits Deposit Composition 1.67% 1.62% 1.52% 1.48% 1.27% 20.9% 21.8% 23.5% 23.7% 22.2% 6.0% 0.9% 19.5%
Slide 7: Right-Sizing the Balance Sheet: Earning Assets
Right-Sizing the Balance Sheet: Earning Assets Shifted Balance Sheet Mix Into Higher Interest Earning Assets 4Q18 4Q19 Other loans Other loans Securities 1% 1% Securities Other 13% 20% C&I Other 6% 20% 4% C&I 24% SFR 22% CRE SFR 11% 23% CRE 14% MF MF 20% 22% $10.14 billion $7.29 billion Highlighted
Slide 8: Relationship Lending Focus Enhances Franchise Value
Relationship Lending Focus Enhances Franchise Value Emphasizing Better Margin, Relationship Lending to Drive Yield and Deposits HFI Loan Production Yields vs. Portfolio Yields1 5.26% 5.29% 5.25% 5.10% 4.82% 4.74% 4.76% 4.80% 4.75% 4.71% 2.50% 2.50% 2.50% 2.00% 1.75% $7,700 $7,558 $70 $63 $6,720 $1,0
Slide 9: Net Interest Margin Showing Continued Improvement
Net Interest Margin Showing Continued Improvement Lower Cost of Funds and Flat Earning Assets Yield Expands NIM by 18 basis points Average Interest-Earning Assets1,2 Net Interest Margin Drivers 4.59% 4.59% $9.7 $9.8 4.53% 4.50% 4.50% $0.3 $0.3 $9.0 $0.3 $2.0 $1.8 $8.0 $1.3 $0.4 $7.3 $1.1 $0.3 $0.8 3
Slide 10: Overall Asset Quality Remains Stable
Overall Asset Quality Remains Stable Relationship Banking Focus Increases Asset Underwriting Transparency NPLs & OREO1 Total Delinquent Loans / Total Loans 0.71% 0.73% 0.37% 0.43% $59.5 0.29% $56.3 $57.6 $45.2 $43.4 $52.2 $28.1 $28.8 $22.3 $40.5 0.97% 0.88% 0.79% 0.78% 0.53% 4Q18 1Q19 2Q19 3Q19 4Q19
Slide 11: Expense Control Showing Continued Progress
Expense Control Showing Continued Progress Simplifying Operating Model and Delivering Operational Efficiencies Non-Core Adjustments to Reported Operating Expenses NIE / Average Assets $61.8 Q4 '19 $49.6 $47.2 $43.6 Noninterest Non-Core Core $43.3 ($ in millions) Expenses - 1 Operating Reported Adjus
Slide 12: Developing Recurring and Sustainable Earnings Profile
Developing Recurring and Sustainable Earnings Profile Q4 Included some Non-Core Adjustments to Reported Operations ($ in millions, except for EPS) Amount Per Diluted Share Net income available to common stockholders $ 10.4 $ 0.20 Adjustments: Noninterest expense (0.9) Income tax impact at 24% normal
Slide 13: Strong Capital Base
Strong Capital Base Capital Ratios Reflective of Effective Capital Management Activities Common Equity Tier 1 Ratio1 Tier 1 Risk-Based Capital Ratio1 11.6% 10.5% 10.3% 9.5% 9.7% 14.0% 14.8% 12.8% 13.0% 13.3% 4Q18 1Q19 2Q19 3Q19 4Q19 4Q18 1Q19 2Q19 3Q19 4Q19 Tangible Equity / Tangible Assets2 Tangibl
Slide 14: Securities Portfolio Balances, Composition and Yields
Securities Portfolio Balances, Composition and Yields Portfolio Repositioned in 4Q19 Securities Portfolio Detail1 Amortized Cost Amortized Cost Book Yield Duration 4Q19 Security Type 3Q19 4Q19 4Q19 Change Fair Value 4Q19 4Q19 (years) Agency securities 40.6 129.3 88.7 128.0 2.39% 3.48 Municipal secur
Slide 15: BANC Fast Facts & Preferred Equity Capital Structure
BANC Fast Facts & Preferred Equity Capital Structure (Dollars in millions1) 4Q19 3Q19 2Q19 1Q19 4Q18 Total assets $ 7,828 $ 8,625 $ 9,360 $ 9,887 $ 10,630 Securities available-for-sale 913 776 1,168 1,471 1,993 Loans receivable 5,952 6,383 6,720 7,557 7,701 Total deposits 5,427 5,770 6,292 7,725 7,9
Slide 16: Appendix
Appendix
Slide 17: Non-GAAP Financial Information
Non-GAAP Financial Information 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 Core operations, operating expense from Core operations, noni
Slide 18: Non-GAAP Reconciliation Adjusted Efficiency Ratio
Non-GAAP Reconciliation Adjusted Efficiency Ratio Including the Pre-tax Effect of Investments in Alternative Energy Partnerships (Dollars in thousands) 4Q19 3Q19 2Q19 1Q19 4Q18 Noninterest expense $ 47,185 $ 43,307 $ 43,587 $ 61,835 $ 49,578 (Loss) gain on investments in alternative energy partnersh
Slide 19: Non-GAAP Reconciliation Tangible Common Equity to Tangible Assets
Non-GAAP Reconciliation Tangible Common Equity to Tangible Assets and Tangible Equity to Tangible Assets (Dollars in thousands) 4Q19 3Q19 2Q19 1Q19 4Q18 Tangible Common Equity to Tangible Assets Ratio Total assets $ 7,828,410 $ 8,625,337 $ 9,359,931 $ 9,886,525 $ 10,630,067 Less: goodwill (37,144) (
Slide 20: Non-GAAP Reconciliation Return on Average Tangible Common Equity
Non-GAAP Reconciliation Return on Average Tangible Common Equity (Dollars in thousands) 4Q19 3Q19 2Q19 1Q19 4Q18 Return on tangible common equity Average total stockholders' equity $ 912,749 $ 961,739 $ 962,933 $ 956,700 $ 960,242 Less: Average preferred stock (189,824) (213,619) (231,128) (231,128)
Slide 21: Non-GAAP Reconciliation Noninterest Expense / Average Assets
Non-GAAP Reconciliation Noninterest Expense / Average Assets (Dollars in millions) 4Q19 3Q19 2Q19 1Q19 4Q18 Operating Expense (NIE) Total noninterest expense $ 47.2 $ 43.3 $ 43.6 $ 61.8 $ 49.6 Less: gain/(loss) on investments in alternative energy partnerships (1.0) 0.9 0.4 (2.0) (0.8) Less: non-cor