Banc Of California, Inc. · NYSE:BANC
Banc Of California — Q1 2024 Earnings Presentation
31 slides from Banc Of California's earnings presentation, Apr 23, 2024
Slide 1: Investor Presentation First Quarter 2024 Results
Draft v4.5 1/21/24 Investor Presentation First Quarter 2024 Results May 13, 2024 Update
Slide 2: Forward Looking Statements and Other Matters
Forward Looking Statements and Other Matters This presentation includes forward-looking statements within the meaning of the “Safe-Harbor” provisions of the Private Securities Litigation Reform Act of 1995. Words or phrases such as “believe,” “will,” “should,” “will likely result,” “are expected to,
Slide 3: 1Q24 Highlights
First full quarter results post merger reflect benefits of 1Q24 Highlights balance sheet restructuring and initial progress 1Q24 results updated for a revised 1Q24 4Q23 accretion estimate (see page 5) PTPP / Adjusted PTPP(1,2) $52.4 / $57.2mm ($613.0) / ($26.0)mm EPS / Adjusted EPS(1) $0.12 / $0.15
Slide 4: First Quarter 2024 Earnings Results
Increased earnings driven by NIM expansion First Quarter 2024 and lower operating expenses Cost of funds -0.66% Earnings Results ($ in millions) 1Q24 4Q23 3Q23 3.68% Total interest income $ 479 $ 467 $ 446 3.02% Total interest expense 250 316 315 ❖ Net interest income increased $78 Net interest inco
Slide 5: Updated Accretion Estimates
Updated Accretion We revised 1Q24 results to reflect an updated loan Estimates accretion estimate ❖ We identified a data onboarding issue in ($ in millions except per share data) our loan systems that impacted our Revised Financial Metrics initial estimate for net loan discount Prior 1Q24 Revised 1Q
Slide 6: Management Outlook
Financial Targets remain unchanged, but timing is Management uncertain given environment Outlook ❖ Focused on delivering high quality franchise Assumptions ❖ We remain focused on achieving financial targets but current environment ROAA: ~1.1% • Continue to improve overall profitability through execu
Slide 7: Integration roadmap update
Integration roadmap update Strong execution and achievement of deal closing timeline creates opportunity to complete integration and realize full cost savings in 2024 Accomplished since announcement of deal Items to be completed in 2Q24 - 4Q24 Target ✓ • Closed merger with PacWest • Core systems con
Slide 8: Balance Sheet Repositioning Continues
Increased balance sheet efficiency with improved Balance Sheet deposit mix and lower wholesale funding Repositioning ($ in millions) Cash and cash equivalents $ 1Q24 3,085 $ 4Q23 5,378 $ 3Q23 6,070 Investment securities 4,708 4,761 6,787 Continues Loans held for sale Loans and leases HFI, net of def
Slide 9: Net Interest Income and Net Interest Margin Expansion
Lower funding costs and improved asset yields and mix Net Interest Income drive NII and NIM expansion and Net Interest Net Interest Income (NII) ($M) and Net Interest Margin (NIM) Margin Expansion Quarter NIM NII Month 2.66% 2.69% 2.15% 1Q 2024 Highlights 1.69% 1.45% 1.43% ❖ NIM expanded 97 bps to 2
Slide 10: Funding Cost Reduction Actions
Ongoing interest expense reduction results from focused Funding Cost strategy to improve deposit mix and reprice CDs lower Improving Funding Mix(1) Reduction Actions % of Total Funding(1) 3Q23 4Q23 1Q24 1Q24 Highlights 17.0% 23.3% 25.2% ❖ NIB and IB deposit composition trends reflects results of bal
Slide 11: Noninterest Income Composition
Noninterest income(1) (excl. nonrecurring items in 4Q23) Noninterest Income remains consistent and reflects diversified fee sources Composition ($ in millions) $45.7 $45.5 1Q 2024 Highlights $11.5 $14.5 ❖ Consistent noninterest income, $34.3 $34.0mm(3) adjusted for nonrecurring items $31.2mm(2) $4.6
Slide 12: Expense Reductions
Focus on operating expense reductions to continue Expense Reductions through 4Q24 (excludes merger-related expenses) 1Q 2024 Highlights 4Q23 ($ in millions) 4Q23 Normalized(2) 1Q24 4Q23 ❖ 4Q23 GAAP financials include only one Compensation $ 89.4 $ 114.9 $ 92.2 Normalized(2) Occupancy 15.9 18.0 18.0
Slide 13: Building a strong commercial deposit franchise
Focus on relationship banking that generates low-cost Building a strong commercial deposits Management has a track record of successful deposit strategy execution commercial ($ in millions) 3Q23 4Q23 1Q24 deposit franchise Noninterest-bearing Checking $ 5,579 $ 7,774 $ 7,834 Checking 7,039 7,809 7,8
Slide 14: NIB Deposit Growth is a Strategic Lever
Robust deposit gathering engine designed to build low- NIB Deposit cost deposit base Growth is a Consistently generate new low-cost commercial Strategic Lever deposit relationships and accounts 2,589 Highlights ❖ Enterprise-wide focus $308 ❖ Deposit incentive programs, including competitions and lea
Slide 15: Diversified Loan Portfolio
High-quality relationship-based core portfolio is well Diversified Loan diversified with strong metrics Portfolio Existing portfolios have very low historical loss rates Loan Segment HFI Percent of Wtd. Avg. NPL % DQ % ($ in millions) 4Q23 1Q24 Variance Total 1Q24 Rate 1Q24 1Q24 1Q24 Highlights Mult
Slide 16: California-Centric CRE Portfolio
High quality CRE portfolio has low weighted-average LTV California-Centric CRE is well diversified across multiple industries CRE Portfolio Highlights Property Type ($ in millions) Count 1Q24 % of Total CRE % of Total Loans Avg Loan Size WA LTV NPL % NPL $ Office 229 $ 1,084 25.3% 4.3% $ 4.7 59.5% 3
Slide 17: Asset quality ratios and trends
Healthy and increasing credit reserve levels, credit Asset quality ratios quality metrics negatively impacted by CIVIC “noise” and trends ACL / Total Loans ($M) Nonperforming Loans (NPLs) ($M) 1.22% 1.26% 0.57% Highlights 1.11% 1.15% 1.15% 0.47% 0.57% 0.34% 0.29% ❖ ACL coverage ratio increased from
Slide 18: Credit Migration
Increase in NPLs driven by four CRE loans and normally Credit Migration recurring “noise” in the discontinued CIVIC portfolio Highlights Nonperforming loans 4Q23 to 1Q24 walk ❖ CRE migration related primarily to 4 Nonpeforming Loans Net loans, 3 office and 1 retail ($ in millions) 4Q23 Change 1Q24 %
Slide 19: Allowance for Credit Losses Walk
1Q24 provision increases ACL coverage ratio Allowance for Total ACL coverage ratio strengthened from 1.22% to 1.26% Credit Losses Walk ($ in millions) $311.3 $320.1 Highlights $(1.2) $10.0 ❖ ACL increased by $8.8 million due to $10.0 million provision, partially offset by net charge-offs of $1.2 mil
Slide 20: Strong Capital Base
Focus on building capital levels for strength and flexibility Strong Capital Base 4Q23 1Q24 Regulatory Well- Excess of Well- Capitalized Ratios Capitalized Total Risk-Based Ratio 16.43% 16.40% 10.00% 6.40% Highlights Tier 1 Risk-Based Capital 12.44% 12.38% 8.00% 4.38% ❖ CET 1 ratio of 10.09% inclusi
Slide 21: Securities Portfolio Detail
High-quality securities portfolio provides upside Securities Portfolio Portfolio Profile Detail Security Type ($ in millions) (1) 4Q23 1Q24 QoQ Effective Duration Change (yrs) 1Q24 Credit Rating 3% AFS - Gov't & Agency $ 1,744 $ 1,675 $ (69) 7.1 AAA 0% 1% AFS - CLO's 108 109 1 0.1 5% AA 16% Highligh
Slide 22: High Level of Available Liquidity
Maintain high levels of primary and secondary liquidity High Level of as prudent risk management Available Liquidity ($ in Millions) Current March 31, 2024 Availability Utilization Capacity Highlights Primary Liquidity Cash $ 2,900 ❖ Total available primary liquidity of AFS Securities (unpledged) (1
Slide 23: California-based commercial bank with national reach and select specialty business lines
California-based commercial bank with national reach and select specialty business lines California Focused National Presence & Specialty Businesses ❖ HOA ❖ Fund Finance Fresno ❖ Media & Entertainment ❖ Technology & Life Sciences Tulare ❖ Mortgage Warehouse Lending ❖ Payments Solutions THE Monterey
Slide 24: Experienced management team with track record of success at leading institutions
Experienced management team with track record of success at leading institutions Jared Wolff Joe Kauder John Sotoodeh Hamid Hussain President and Chief Executive Chief Financial Officer Chief Operating Officer President of the Bank Officer 30+ years banking experience, 30+ years of banking 25+ years
Slide 25: Appendix
Appendix
Slide 26: Non-GAAP Financial Information
Non-GAAP Financial Information Tangible assets, tangible equity, tangible common equity, tangible common equity to common equity. Banking regulators also exclude goodwill and other intangible assets tangible assets, tangible book value per common share, return on average tangible from stockholders'
Slide 27: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in thousands, except per share data) 1Q24 4Q23 3Q23 1Q23 Tangible Common Equity to Tangible Assets Ratio Total stockholders' equity $ 3,394,150 $ 3,390,765 $ 2,399,277 $ 2,771,477 Less: preferred stock 498,516 498,516 498,516 498,516 Total common equity 2,895,634 2,892,249
Slide 28: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in thousands) 1Q24 4Q23 3Q23 1Q23 Return on Average Tangible Common Equity ("ROATCE") and Adjusted ROATCE Net earnings (loss) $ 30,852 $ (482,955) $ (23,344) $ (1,195,424) Earnings (loss) before income taxes $ 42,400 $ (659,989) $ (26,566) $ (1,260,340) Add: Intangible ass
Slide 29: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in thousand, except per share amounts) 1Q24 4Q23 3Q23 1Q23 Adjusted Net Earnings Net earnings (loss) $ 30,852 $ (482,955) $ (23,344) $ (1,195,424) Earnings (loss) before income taxes $ 42,400 $ (659,989) $ (26,566) $ (1,260,340) Add: FDIC special assessment 4,814 32,746 -
Slide 30: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in thousands) 1Q24 4Q23 3Q23 1Q23 Adjusted Noninterest Income and Adjusted Noninterest Expense to Average Assets Net interest income $ 239,148 $ 151,051 $ 130,729 $ 279,272 Noninterest income (loss) 33,816 (400,402) 43,808 36,391 Total revenue $ 272,964 $ (249,351) $ 174,5
Slide 31: Non-GAAP Reconciliation
Non-GAAP Reconciliation PTPP Income, Adjusted PTPP Income 1Q24 4Q23 3Q23 1Q23 ($ in thousands) Net earnings (loss) $ 30,852 $ (482,955) $ (23,344) $ (1,195,424) Net interest income $ 229,102 $ 151,051 $ 130,729 $ 279,272 Add: Noninterest income (loss) 33,816 (400,402) 43,808 36,391 Total revenue 262