Banc Of California, Inc. · NYSE:BANC
Banc Of California — Q1 2022 Earnings Presentation
35 slides from Banc Of California's earnings presentation, Apr 21, 2022
Slide 1: Investor Presentation: 2022 First Quarter Earnings
INVESTOR PRESENTATION 2022 First 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: First Quarter 2022 Results
FIRST QUARTER 2022 RESULTS ($ in Thousands Except EPS) 1Q22 4Q21 1Q21 Net interest income $ 76,441 $ 73,039 $ 57,916 (Reversal of) provision for credit losses $ (31,542) $ 11,262 $ (1,107) Net income $ 48,512 $ 5,751 $ 14,375 Net income available to common stockholders $ 43,345 $ 4,024 $ 7,825 Earni
Slide 4: Enhancing Franchise Value: 1st Quarter 2022 Summary
ENHANCING FRANCHISE VALUE 1st Quarter 2022 Summary • Profitable organic growth and accretive benefits of PMB acquisition driving increase in core earnings power Increase in • Adjusted PTPP Income(1) up 10% from prior quarter and 74% year over year Core Earnings Power • Adjusted PTPP ROAA(1) improved
Slide 5: Growing Core Earnings Power
GROWING CORE EARNINGS POWER ($ in millions) 1Q 2022 Highlights $35.8 $35.8 $(0.1) $0.1 • Adjusted sequential pre-tax pre- provision income increased $3.1 Adjusted million, or 10% PTPP PTPP ROAA ROAA • Adjusted sequential PTPP ROAA 1.54% increased 16 bps to 1.55%. 1.55% • Adjusted PTPP increase due P
Slide 6: Escalating Adjusted Pre-tax Pre-provision Income Trend
ESCALATING ADJUSTED PRE-TAX PRE-PROVISION INCOME TREND Adjusted Pre-tax Pre-provision (PTPP) Income (1) ($ in millions) +194% (+$23.6) 1.55% 1.35% 1.39% 1.25% 1.13% +62% 1.06% (+$13.8) 0.98% 0.83% $18.9 0.65% $16.0 $35.8 $32.7 $27.7 $24.5 $13.2 $20.6 $22.0 $18.9 $12.2 $16.0 $12.2 1Q20 2Q20 3Q20 4Q20
Slide 7: Net Income Available to Common Stockholders Reconciliation
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS RECONCILIATION ($ in millions) $47.1 $43.3 $3.7 $(0.1) $0.1 1Q 2022 EPS EPS $0.69 $0.75 Net Income Available to Noninterest expense Loss on alternative Preferred Redemption Adjusted Net Income Common Stockholders adjustments energy partnerships Adjustments
Slide 8: Rapidly Improving Deposit Franchise
RAPIDLY IMPROVING DEPOSIT FRANCHISE Highlights Average Cost of deposits Money Market & Savings Noninterest-bearing Brokered CDs • 6% or $170 million Interest-bearing checking CDs organic quarterly increase in noninterest-bearing Spot Rate deposits 0.07% 0.28% 0.23% • 72% percent of deposits 0.15% 0.
Slide 9: Business Units Generating Solid Demand Deposit Growth
BUSINESS UNITS GENERATING SOLID DEMAND DEPOSIT(1) GROWTH Period end balances ($ in millions) +41% $5,354 $5,182 $923 $4,322 $914 $4,026 $3,789 $848 $825 $824 $3,157 $3,230 $2,872 $2,476 $2,735 $1,081 $1,171 $471 $437 $571 $18 $29 $32 $29 $30 1Q21 2Q21 3Q21 4Q21 1Q22 Community Banking Specialty & Bus
Slide 10: Diversified Loan Portfolio Mitigates Risk and Generates Attractive Risk-Adjusted Yield
DIVERSIFIED LOAN PORTFOLIO MITIGATES RISK AND GENERATES ATTRACTIVE RISK-ADJUSTED YIELD 1st Quarter 2022 4th Quarter 2021 Change (1) (1) (1) Loan Segment $ % Avg. Yield $ % Avg. Yield $ % Avg. Yield $ in Millions C&I: Warehouse $ 1,575 21% 4.26% $ 1,602 22% 4.14% $ (28) -1% 0.12% C&I: All Other 1,225
Slide 11: Diversified Business Mix Producing Consistently Strong Loan Fundings
DIVERSIFIED BUSINESS MIX PRODUCING CONSISTENTLY STRONG LOAN FUNDINGS ($ in millions) Total TotalLoan LoanFundings Fundingsofof$968 $968Million in 1Q22 Million in Q1 2022 (1) (1) $1,000 $968 5.00% $906 $900 $847 4.50% $80 ($828) $290 ($780) $800 $763 4.00% ($28) ($683) $227 $700 $243 ($254) 3.50% ($6
Slide 12: Asset Quality Remains Strong
ASSET QUALITY REMAINS STRONG NPLs, Delinquencies, and Classified Loans Delinquencies ($ 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 13: Non-performing & Delinquent Loans Rollforward
TOP 10 RELATIONSHIPS Non-performing & delinquent loans rollforward Non-performing Loans ($ in thousands) 1Q 1Q 4Q # 1Q22 4Q21 Delta Loan Category Accrual Delinquency Accrual Status Status Status Non-performing loans 1 $ 12,599 $ 12,840 $ (242) C&I Non-Accrual Current Non-Accrual 2 6,617 6,617 - C&I
Slide 14: Allowance for Credit Losses Walk
ALLOWANCE FOR CREDIT LOSSES WALK ($ in millions) $0.7 $0.6 $(0.9) $31.3 $(31.3) $98.2 $98.6 1.33% (1) 1.35% 1.32% (1) 1.26% (1) (1) ACL (12/31/21) Recovery from Specific Reserve Other Recoveries Portfolio Mix Provision reversal ACL (3/31/22) settlement of a (net of Charge-offs) from settlement of pr
Slide 15: Continued Focus on Expense Management
CONTINUED FOCUS ON EXPENSE MANAGEMENT Noninterest Expense to Average Assets Adjusted Noninterest Expense(1) to Average Assets ($ millions) ($ millions) 2.41% 2.47% 2.15% 2.15% 2.08% 2.01% 1.99% 1.92% 2.01% 1.84% $58.1 $46.7 $40.6 $46.6 $37.8 $45.2 $41.7 $46.5 $41.7 $42.0 $40.7 $45.2 $46.5 $42.0 $40.
Slide 16: Interest Rate Risk Management
INTEREST RATE RISK MANAGEMENT Well positioned for higher rates with a One Year Positive Gap Ratio of 35% Interest Rate Risk Position (within 12 months) Loan & Deposit Mix HFI Loans: $7.5 billion Total Deposits: $7.5 billion Rate Sensitive Assets at 42% of Total Assets Loan Portfolio • $3.2 Billion m
Slide 17: Strong Capital Base
STRONG CAPITAL BASE Provides buffer to deploy for stockholders’ benefit 1Q22 4Q21 3Q21 2Q21 1Q21 Common Equity Tier 1(1) 11.39% 11.31% 10.86% 11.14% 11.50% Tier 1 Risk-based Capital(1) 11.39% 12.55% 12.35% 12.71% 13.17% Leverage Ratio(1) 9.70% 10.37% 9.80% 9.89% 9.62% Tangible Equity / Tangible Asse
Slide 18: 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 PMB Acquisition • Identify additional opportunities for cost savings from larger organization • Expand relationships with
Slide 19: Appendix
BANC OF CALIFORNIA APPENDIX bancofcal.com 19
Slide 20: Loan Portfolio Characteristics
LOAN PORTFOLIO CHARACTERISTICS Loan Portfolio by Segment Loan Portfolio by Geography $ in millions $ in millions Consumer Northern California Construction SBA(1) Northeast Midwest $133 $95 $198 $129 $629 $225 2% 3% 2% 1% South 3% 8% Central $953 California 13% $234 3% Other West $399 Single Family C
Slide 21: 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 $4,274 $4,424 <50% $ 1,348 30% 1,155 $3,521 $3,636 $3,727 50% to 60% 994 22% 483 59% 59% 60% to 70% 1,403 32% 474 61% 61% 60% 70% to 80% 635 14% 323 >80% 42 1% 17 Total $ 4
Slide 22: 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 2% 7% Single Tenant Multi Tenant Health 18% 45% Facility 3% Other Mixed Use Other 7% 3.1% 0.6% Neighborhood Retail Shopping Center 12% 28% Owner Occupied 12% Multif
Slide 23: Diversified and Low Average Balance C&I Portfolio
DIVERSIFIED AND LOW AVERAGE BALANCE C&I PORTFOLIO Television / Motion Pictures Food Transportation Accomodations 1% Services 0.8% 0.4% Construction 1% 2% All Other ~66% C&I Concentration toward Professional Services C&I 2% Businesses focused on Finance (including 7% Warehouse), and Real Estate and R
Slide 24: Declining Deposit Costs Protect Net Interest Margin
DECLINING DEPOSIT COSTS PROTECT NET INTEREST MARGIN Net Interest Margin Drivers 4.50% 4.27% 4.06% 4.04% 3.86% 3.81% 3.87% 3.78% 3.73% 3.66% 3.51% 3.38% 3.27% 3.28% 3.28% 3.19% 3.04% 2.97% 3.09% 3.09% 1.85% 1.71% 1.75% 1.29% 1.11% 1.02% 1.27% 0.89% 0.83% 0.71% 0.77% 0.67% 0.61% 0.51% 0.58% 0.36% 0.28
Slide 25: Strong Allowance Coverage Ratio; Allocation of Reserve by Loan Type
STRONG ALLOWANCE COVERAGE RATIO; ALLOCATION OF RESERVE BY LOAN TYPE ACL Composition 3/31/2022 12/31/2021 ($ in thousands) Amount % of Loans Amount % of Loans Commercial real estate $ 16,490 1.42% $ 21,727 1.66% Multifamily 15,337 1.10% 17,893 1.31% Construction 6,268 2.78% 5,622 3.09% Commercial and
Slide 26: Securities Portfolio
SECURITIES PORTFOLIO Securities Portfolio Detail(1) (2) Security Type QoQ Duration (yrs) ($ in millions) 1Q22 4Q21 Change 1Q22 Gov’t & Agency (MBS, CMO, & SBA) $ 192 $ 448 $ (256) 3.5 CLOs 488 519 (31) 0.1 Municipal - 119 (119) N/A Corporate Securities 169 174 (5) 4.5 Private Label RMBS 50 56 (6) 8.
Slide 27: CLO Portfolio Has Diversified Exposure
CLO PORTFOLIO HAS DIVERSIFIED EXPOSURE CREDIT ENHANCEMENT PROVIDES SIGNIFICANT PRINCIPAL PROTECTION CLO Industry Breakdown $488 million at March 31, 2022 • CLO portfolio has underlying diversified (net of $4.8 million unrealized loss) exposure with largest segment in Healthcare & Pharmaceuticals at
Slide 28: BANC Fast Facts
BANC FAST FACTS (Dollars in millions) 1Q22 4Q21 3Q21 2Q21 1Q21 Total assets $ 9,584 $ 9,394 $ 8,279 $ 8,027 $ 7,933 Securities available-for-sale 899 1,316 1,303 1,353 1,271 Securities held-to-maturity 329 - - - - Loans held-for-investment 7,452 7,251 6,229 5,985 5,764 Total deposits 7,480 7,439 6,5
Slide 29: 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 30: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands) 1Q22 4Q21 3Q21 2Q21 1Q21 Net interest income $ 76,441 $ 73,039 $ 62,976 $ 59,847 $ 57,916 Noninterest income 5,910 4,860 5,519 4,170 4,381 Total revenue 82,351 77,899 68,495 64,017 62,297 Noninterest expense 46,596 58,127 37,811 40,559 46,735 Pre-tax pr
Slide 31: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands) 1Q22 4Q21 3Q21 2Q21 1Q21 Adjusted Noninterest Expense Total noninterest income $ 5,910 $ 4,860 $ 5,519 $ 4,170 $ 4,381 Total noninterest expense $ 46,596 $ 58,127 $ 37,811 $ 40,559 $ 46,735 Noninterest expense adjustments: Professional recoveries (fees)
Slide 32: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands) 1Q22 4Q21 3Q21 2Q21 1Q21 Tangible Common Equity to Tangible Assets Ratio Total assets $ 9,583,540 $ 9,393,743 $ 8,278,741 $ 8,027,413 $ 7,933,459 Less: goodwill (95,127) (94,301) (37,144) (37,144) (37,144) Less: other intangible assets (4,990) (6,411) (
Slide 33: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands) 1Q22 4Q21 3Q21 2Q21 1Q21 Return on tangible common equity Average total stockholders' equity $ 1,049,912 $ 1,035,782 $ 847,941 $ 814,973 $ 888,174 Less: Average preferred stock (75,965) (94,956) (94,956) (94,956) (164,895) Average common stockholders' e
Slide 34: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (Dollars in thousands, except per share data) 1Q22 4Q21 3Q21 2Q21 1Q21 Adjusted net income Net income(1)(2) $ 48,512 $ 5,751 $ 23,170 $ 19,050 $ 14,375 Adjustments: Noninterest expense adjustments 52 12,891 (2,937) (1,413) 5,051 (3) (15) (3,811) 868 418 (1,493) Tax impact of
Slide 35: bancofcal.com
bancofcal.com 35