Banc of California, Inc. Reports Third Quarter 2024 Financial Results Which Include Balance Sheet Repositioning

Banc of California, Inc. (NYSE: BANC):

$(0.01) Loss Per Share $0.25 Adjusted Earnings Per Share(1)

$17.75 Book Value Per Share $15.63 Tangible Book Value Per Share(1)

10.45% CET1 Ratio

28% Average Noninterest-Bearing Deposits to Average Total Deposits

Banc of California, Inc. (NYSE: BANC) (“Banc of California” or the “Company”), the parent company of wholly-owned subsidiary Banc of California (the “Bank”), today reported financial results for the third quarter ended September 30, 2024. The Company reported a net loss available to common and equivalent stockholders of $1.2 million, or a loss of $0.01 per diluted common share, for the third quarter of 2024. On an adjusted basis, net earnings available to common and equivalent stockholders were $41.4 million, or $0.25 per diluted common share.(1) This compares to net earnings available to common and equivalent stockholders of $20.4 million, or $0.12 per diluted common share, for the second quarter of 2024. The third quarter of 2024 includes $60 million of pre-tax losses from repositioning a portion of the securities portfolio.

Third quarter highlights include:

Closed the sale of $1.95 billion of Civic loans in July which generated net proceeds of $1.91 billion. This sale increased our capital ratios and liquidity and allowed us to reposition a portion of our securities portfolio in Q3 and pay down higher-cost brokered deposits and borrowings.
Repositioned $742 million of available-for-sale securities resulting in a pre-tax loss of $60 million. Sold $742 million of securities with a weighted average yield of 2.94% and purchased $724 million of securities with a weighted average yield of 5.65%. Expected to increase interest income by approximately $4.8 million per quarter.
Net interest margin of 2.93%, an increase of 13 basis points from 2.80% in the second quarter, driven mainly by lower funding costs.
Average total cost of deposits and average total cost of funds decreased by 6 basis points and 13 basis points, respectively, to 2.54% and 2.82%. The declines in deposit and funding costs were driven mainly by the maturity of brokered time deposits (which decreased by $2.0 billion in the third quarter), while the $545 million payoff of Bank Term Funding Program borrowings also contributed to the decline in funding costs.
Average noninterest-bearing deposits increased to 28% of average total deposits for the third quarter, up from 27% in the second quarter.
Achieved Q4 2024 cost targets ahead of schedule with total noninterest expense of $196.2 million for the third quarter, down $7.4 million, or 4%, from the second quarter.
Strong capital ratios well above the regulatory "well capitalized" thresholds at September 30, 2024, including an estimated 16.98% Total risk-based capital ratio, 12.87% Tier 1 capital ratio, 10.45% CET1 capital ratio, and 9.83% Tier 1 leverage ratio.
Book value per share increased to $17.75 and tangible book value per share(1) increased to $15.63.

(1)

Non-GAAP measure; refer to section 'Non-GAAP Measures'

Jared Wolff, President & CEO of Banc of California, commented, “During the third quarter, we made significant progress growing our core earnings and we achieved our year-end targets for net interest margin, noninterest expenses, and balance sheet metrics a quarter early. We strengthened our franchise through several strategic balance sheet repositioning actions including completing the sale of $1.95 billion of Civic loans, which had a positive impact on our capital and liquidity. We leveraged the proceeds and capital to reposition a portion of our securities portfolio and significantly reduce higher cost funding, which resulted in strong net interest margin expansion and increased our tangible book value per share and capital position. Furthermore, we continued to make solid progress reducing noninterest expenses, completed our core system conversion successfully, and consolidated 12 branches during the quarter.”

Mr. Wolff continued, “With these major balance sheet and operational initiatives behind us, Banc of California is now at an inflection point, shifting our focus from transforming our internal infrastructure to external growth. We are capitalizing on the strength of the franchise and balance sheet we have built and the exceptional customer experience we can offer to expand existing relationships and add attractive new client relationships. As economic conditions improve, we believe we are well positioned to increase our market share, expand our client roster, generate profitable growth and continue to enhance the long-term value of our franchise.”

INCOME STATEMENT HIGHLIGHTS

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

Summary Income Statement

2024

2023

2024

2023

(In thousands)

Total interest income

446,893

462,589

446,084

1,388,186

1,503,760

Total interest expense

214,718

233,101

315,355

697,421

907,683

Net interest income

232,175

229,488

130,729

690,765

596,077

Provision for credit losses

9,000

11,000

30,000

5,000

(Loss) gain on sale of loans

(62

)

1,135

(1,901

)

625

(157,820

)

Loss on sale of securities

(59,946

)

(59,946

)

Other noninterest income

44,556

28,657

45,709

107,477

109,937

Total noninterest (loss) income

(15,452

)

29,792

43,808

48,156

(47,883

)

Total revenue

216,723

259,280

174,537

738,921

548,194

Goodwill impairment

1,376,736

Acquisition, integration and reorganization costs

(510

)

(12,650

)

9,925

(13,160

)

30,833

Other noninterest expense

196,719

216,293

191,178

623,530

686,974

Total noninterest expense

196,209

203,643

201,103

610,370

2,094,543

Earnings (loss) before income taxes

11,514

44,637

(26,566

)

98,551

(1,551,349

)

Income tax expense (benefit)

2,730

14,304

(3,222

)

28,582

(135,167

)

Net earnings (loss)

8,784

30,333

(23,344

)

69,969

(1,416,182

)

Preferred stock dividends

9,947

29,841

Net (loss) earnings available to common and equivalent stockholders

(1,163

)

20,386

(33,291

)

40,128

(1,446,023

)

Net Interest Income

Q3-2024 vs Q2-2024

Net interest income increased by $2.7 million to $232.2 million for the third quarter from $229.5 million for the second quarter due to lower interest expense on interest-bearing liabilities, offset partially by lower interest income on interest-earning assets.

Average interest-earning assets decreased by $1.4 billion to $31.6 billion for the third quarter due mainly to the sale in July 2024 of $1.95 billion of Civic loans which had been moved to held for sale during the second quarter of 2024. The proceeds of the sale were used primarily to pay down higher-cost brokered deposits and borrowings. The net interest margin increased by 13 basis points to 2.93% for the third quarter compared to 2.80% for the second quarter due to a 2 basis point decrease in the average yield on interest-earning assets being more than offset by a 13 basis point decrease in the average total cost of funds, which was positively impacted by a decrease in average borrowings.

The average yield on interest-earning assets decreased by 2 basis points to 5.63% for the third quarter from 5.65% in the second quarter due mainly to the average yield on deposits in financial institutions decreasing by 3 basis points and the average yield on loans and leases being flat.

The average yield on loans and leases was unchanged at 6.18% for the third quarter compared to the second quarter as a result of new originations being at rates higher than the existing portfolio, slightly higher loan discount accretion, and the change in the mix of loan product balances including the impact of the sale of the $1.95 billion Civic loan portfolio.

The average total cost of funds decreased by 13 basis points to 2.82% for the third quarter from 2.95% in the second quarter due mainly to lower market interest rates and reduced average borrowings. The average cost of interest-bearing liabilities decreased by 13 basis points to 3.80% for the third quarter from 3.93% in the second quarter. The average total cost of deposits decreased by 6 basis points to 2.54% for the third quarter compared to 2.60% in the second quarter. Average noninterest-bearing deposits decreased by $35.0 million for the third quarter compared to the second quarter, average total deposits decreased by $474.2 million, and average borrowings decreased by $950.1 million.

YTD September 30, 2024 vs YTD September 30, 2023

Net interest income increased by $94.7 million to $690.8 million for the nine months ended September 30, 2024 from $596.1 million for the nine months ended September 30, 2023 due to lower interest expense on interest-bearing liabilities, offset partially by lower interest income on interest-earning assets.

Average interest-earning assets decreased by $5.7 billion to $33.0 billion for the first nine months of 2024 due to lower average balances in loans and leases, investments securities, and deposits in financial institutions. Average loans and leases decreased by $1.0 billion primarily due to the sale in July 2024 of $1.95 billion of Civic loans which had been moved to held for sale during the second quarter of 2024 and the sales of non-core loan portfolios in the second quarter of 2023, offset partially by the acquisition of legacy Banc of California loans completed in the fourth quarter of 2023. Average investment securities decreased by $2.4 billion mostly due to securities sales completed in the fourth quarter of 2023. Average deposits in financial institutions decreased by $2.3 billion due to lower cash balances which were used to pay down higher-cost borrowings. The net interest margin increased by 72 basis points to 2.79% for the nine months ended September 30, 2024 compared to 2.07% for the same period in 2023 due to the average yield on interest-earning assets increasing by 41 basis points, while the average total cost of funds decreased by 31 basis points.

The average yield on interest-earning assets increased by 41 basis points to 5.61% for the first nine months of 2024 from 5.20% for the same period in 2023 due mainly to the change in the interest-earning asset mix. This was driven by the increase in the balance of average loans and leases as a percentage of average interest-earning assets to 75% for the nine months ended September 30, 2024 from 67% for the nine months ended September 30, 2023, the decrease in the balance of average investment securities as a percentage of average interest-earning assets to 14% for the first nine months of 2024 from 18% for the same period in 2023, and the decrease in the balance of average deposits in financial institutions as a percentage of average interest-earning assets to 10% for the nine months ended September 30, 2024 from 15% for the same period in 2023.

The average yield on loans and leases increased by 19 basis points to 6.14% for the first nine months of 2024 from 5.95% for the same period in 2023 as a result of changes in portfolio mix and higher net accretion of loan discounts.

The average total cost of funds decreased by 31 basis points to 2.93% for the nine months ended September 30, 2024 from 3.24% for the nine months ended September 30, 2023 due mainly to changes in the total funds mix. This was driven by the increase in the balance of lower-cost average total deposits as a percentage of average total funds to 91% for the first nine months of 2024 from 77% for the same period in 2023, and the decrease in the balance of higher cost average borrowings as a percentage of average total funds to 6% for the nine months ended September 30, 2024 from 21% for the same period in 2023. The average cost of interest-bearing liabilities decreased by 14 basis points to 3.89% for the first nine months of 2024 from 4.03% for the same period in 2023. The average total cost of deposits increased by 10 basis points to 2.60% for the nine months ended September 30, 2024 compared to 2.50% for the nine months ended September 30, 2023. Average noninterest-bearing deposits increased by $480.9 million for the first nine months of 2024 compared to the same period in 2023 and average total deposits decreased by $60.3 million.

Provision For Credit Losses

Q3-2024 vs Q2-2024

The provision for credit losses was $9.0 million for the third quarter compared to $11.0 million for the second quarter. The $9.0 million third quarter provision was driven primarily by increases in qualitative reserves, for loans secured by office properties and concentrations of credit, and specific reserves for nonperforming loan downgrades. The $11.0 million second quarter provision was driven by higher net charge-offs and higher qualitative reserves for office loans and other concentrations of credit, offset partially by the reserves released for the Civic loans transferred to held for sale.

YTD September 30, 2024 vs YTD September 30, 2023

The provision for credit losses increased by $25.0 million to $30.0 million for the nine months ended September 30, 2024 compared to $5.0 million for the nine months ended September 30, 2023. The higher provision in the 2024 period was generally due to higher net charge-offs and higher qualitative reserves, offset partially by the reserves released for the Civic loans transferred to held for sale in the second quarter of 2024 and sold in the third quarter of 2024.

Noninterest Income

Q3-2024 vs Q2-2024

Noninterest income decreased by $45.2 million to a loss of $15.5 million for the third quarter due mainly to a $60 million loss on the sale of $742 million of securities in the third quarter of 2024, offset partially by a $7.5 million increase in other income and a $5.7 million increase in leased equipment income. The increase in other income was due primarily to a $6.8 million increase in the positive fair value mark on the credit-linked notes. The increase in leased equipment income was due mostly to higher gains from early lease terminations and sale of leased assets.

YTD September 30, 2024 vs YTD September 30, 2023

Noninterest income increased by $96.0 million to $48.2 million for the nine months ended September 30, 2024 due mostly to a decrease in the loss on sale of loans and leases of $158.4 million, offset partially by a $60 million loss on the sale of $742 million of securities in the third quarter of 2024. The Company sold $2.5 billion of loans for a net gain of $0.6 million in the nine months ended September 30, 2024 and $6.1 billion of loans for a net loss of $157.8 million in the nine months ended September 30, 2023.

Noninterest Expense

Q3-2024 vs Q2-2024

Noninterest expense decreased by $7.4 million to $196.2 million for the third quarter due mainly to decreases of $13.7 million in insurance and assessments expense and $5.8 million in other expense, offset partially by a $12.1 million increase in acquisition, integration and reorganization costs. The decrease in insurance and assessments expense was due to lower assessment rates for both the regular FDIC assessment and the special assessment. The decrease in other expense was mostly due to a repurchase reserve recorded in the second quarter of 2024 for standard representations and warranties associated with the Civic loan sale. The increase in acquisition, integration and reorganization costs was due mainly to an adjustment of $12.7 million in the second quarter of 2024 due to actual amounts for certain expenses being lower than the estimated amounts accrued at merger close.

YTD September 30, 2024 vs YTD September 30, 2023

Noninterest expense decreased by $1.5 billion to $610.4 million for the nine-month period ended September 30, 2024 due mainly to a $1.4 billion goodwill impairment recorded in the same period in 2023.

Income Taxes

Q3-2024 vs Q2-2024

Income tax expense of $2.7 million was recorded for the third quarter resulting in an effective tax rate of 23.7% compared to income tax expense of $14.3 million for the second quarter and an effective tax rate of 32.0%. The lower third quarter effective tax rate was due primarily to a true-up to the full year tax rate, offset partially by an increase in disallowed executive compensation expense and loss of tax benefits with respect to restricted stock vested during the second quarter.

YTD September 30, 2024 vs YTD September 30, 2023

Income tax expense of $28.6 million was recorded for the nine-month period ended September 30, 2024 resulting in an effective tax rate of 29.0% compared to an income tax benefit of $135.2 million for the same period in 2023 and an effective tax rate of 8.7%. Excluding goodwill impairment, the effective tax rate for the nine-month period in 2023 was 21.7%. The lower effective tax rate in 2023 was due primarily to higher FDIC insurance premiums in relation to the reported net loss for 2023.

BALANCE SHEET HIGHLIGHTS

September 30,

June 30,

September 30,

Increase (Decrease)

Selected Balance Sheet Items

2024

2023

QoQ

YoY

(In thousands)

Cash and cash equivalents

2,554,227

2,698,810

6,069,667

(144,583

)

(3,515,440

)

Securities available-for-sale

2,300,284

2,244,031

4,487,172

56,253

(2,186,888

)

Securities held-to-maturity

2,301,263

2,296,708

2,282,586

4,555

18,677

Loans held for sale

28,639

1,935,455

188,866

(1,906,816

)

(160,227

)

Loans and leases held for investment, net of deferred fees

23,527,777

23,228,909

21,920,946

298,868

1,606,831

Total assets

33,432,613

35,243,839

36,877,833

(1,811,226

)

(3,445,220

)

Noninterest-bearing deposits

7,811,796

7,825,007

5,579,033

(13,211

)

2,232,763

Total deposits

26,828,269

28,804,450

26,598,681

(1,976,181

)

229,588

Borrowings

1,591,833

1,440,875

6,294,525

150,958

(4,702,692

)

Total liabilities

29,936,415

31,835,991

34,478,556

(1,899,576

)

(4,542,141

)

Total stockholders' equity

3,496,198

3,407,848

2,399,277

88,350

1,096,921

Securities

The balance of securities held-to-maturity (“HTM”) remained consistent through the third quarter and totaled $2.3 billion at September 30, 2024. As of September 30, 2024, HTM securities had aggregate unrealized net after-tax losses in accumulated other comprehensive income (loss) (“AOCI”) of $163.9 million remaining from the balance established at the time of transfer on June 1, 2022.

Securities available-for-sale (“AFS”) increased by $56.3 million during the third quarter to $2.3 billion at September 30, 2024. AFS securities had aggregate unrealized net after-tax losses in AOCI of $161.7 million. These AFS unrealized net losses related primarily to changes in overall interest rates and spreads and the resulting impact on valuations.

Loans and Leases

The following table sets forth the composition, by loan category, of our loan and lease portfolio held for investment, net of deferred fees, as of the dates indicated:

September 30,

June 30,

March 31,

December 31,

September 30,

Composition of Loans and Leases

2024

2023

(Dollars in thousands)

Real estate mortgage: Commercial

4,557,939

4,722,585

4,896,544

5,026,497

3,526,308

Multi-family

6,009,280

5,984,930

6,121,472

6,025,179

5,279,659

Other residential

2,767,187

2,866,085

4,949,383

5,060,309

5,228,524

Total real estate mortgage

13,334,406

13,573,600

15,967,399

16,111,985

14,034,491

Real estate construction and land: Commercial

836,902

784,166

775,021

759,585

465,266

Residential

2,622,507

2,573,431

2,470,333

2,399,684

2,272,271

Total real estate construction and land

3,459,409

3,357,597

3,245,354

3,159,269

2,737,537

Total real estate

16,793,815

16,931,197

19,212,753

19,271,254

16,772,028

Commercial: Asset-based

2,115,311

1,968,713

2,061,016

2,189,085

2,287,893

Venture capital

1,353,626

1,456,122

1,513,641

1,446,362

1,464,160

Other commercial

2,850,535

2,446,974

2,245,910

2,129,860

1,002,377

Total commercial

6,319,472

5,871,809

5,820,567

5,765,307

4,754,430

Consumer

414,490

425,903

439,702

453,126

394,488

Total loans and leases held for investment, net of deferred fees

23,527,777

23,228,909

25,473,022

25,489,687

21,920,946

Total unfunded loan commitments

5,008,449

5,256,473

5,482,672

5,578,907

5,289,221

Composition as % of Total

September 30,

June 30,

March 31,

December 31,

September 30,

Loans and Leases

2024

2023

Real estate mortgage: Commercial

Multi-family

Other residential

Total real estate mortgage

Real estate construction and land: Commercial

Residential

Total real estate construction and land

Total real estate

Commercial: Asset-based

Venture capital

Other commercial

Total commercial

Consumer

Total loans and leases held for investment, net of deferred fees

100

Total loans and leases held for investment, net of deferred fees, increased by $298.9 million in the third quarter and totaled $23.5 billion at September 30, 2024. The increase in loans and leases held for investment was due primarily to increased balances in the lender finance, warehouse lending, and real estate construction portfolios. Loan fundings were $699.6 million in the third quarter at a weighted average interest rate of 8.29%.

Credit Quality

September 30,

June 30,

March 31,

December 31,

September 30,

Asset Quality Information and Ratios

2024

2023

(Dollars in thousands)

Delinquent loans and leases held for investment: 30 to 89 days delinquent

52,927

27,962

178,421

113,307

49,970

90+ days delinquent

72,037

55,792

57,573

30,881

77,327

Total delinquent loans and leases

124,964

83,754

235,994

144,188

127,297

Total delinquent loans and leases to loans and leases held for investment

0.53

0.36

0.93

0.57

0.58

Nonperforming assets, excluding loans held for sale: Nonaccrual loans and leases

168,341

117,070

145,785

62,527

125,396

90+ days delinquent loans and still accruing

11,750

Total nonperforming loans and leases ("NPLs")

168,341

117,070

145,785

74,277

125,396

Foreclosed assets, net

8,661

13,302

12,488

7,394

6,829

Total nonperforming assets ("NPAs")

177,002

130,372

158,273

81,671

132,225

Classified loans and leases held for investment

533,591

415,498

366,729

228,417

211,095

Allowance for loan and lease losses

254,345

247,762

291,503

281,687

222,297

Allowance for loan and lease losses to NPLs

151.09

211.64

199.95

379.24

177.28

NPLs to loans and leases held for investment

0.72

0.50

0.57

0.29

0.57

NPAs to total assets

0.53

0.37

0.44

0.21

0.36

Classified loans and leases to loans and leases held for investment

2.27

1.79

1.44

0.90

0.96

During the third quarter, we continued to remain conservative on risk rating of loans and leases. Increases to classified loans and leases that remained on accrual status resulted from downward migration for groups of loans and leases where performance deteriorated or increased borrower financial information was determined to be necessary. Nonaccrual loans and leases increased in the quarter primarily due to two commercial loans and one legacy Civic loan that migrated to nonperforming status. Delinquencies were also impacted by the aforementioned nonperforming loans. Our overall loan portfolio continues to benefit from strong underwriting, borrower strength and good credit metrics.

At September 30, 2024, total delinquent loans and leases were $125.0 million, compared to $83.8 million at June 30, 2024. The $41.2 million increase in total delinquent loans was due mainly to increases in the 30 to 89 days delinquent category of $17.1 million in commercial real estate mortgage loans and $9.1 million in other commercial loans. In the 90 or more days delinquent category, there was a $20.5 million increase in other residential real estate mortgage loans, offset partially by a $3.3 million decrease in other commercial loans. Total delinquent loans and leases as a percentage of total loans and leases increased to 0.53% at September 30, 2024, as compared to 0.36% at June 30, 2024.

At September 30, 2024, nonperforming assets were $177.0 million, or 0.53% of total assets, compared to $130.4 million, or 0.37% of total assets, as of June 30, 2024. At September 30, 2024, nonperforming assets included $8.7 million of foreclosed assets, consisting entirely of single-family residences.

At September 30, 2024, nonperforming loans were $168.3 million, compared to $117.1 million at June 30, 2024. During the third quarter, nonperforming loans increased by $51.3 million due to additions of $69.5 million, offset partially by borrowers that became current of $1.2 million, charge-offs of $1.1 million, and payoffs and paydowns of $15.9 million. The additions were driven primarily by two commercial loans and one Civic loan.

Nonperforming loans and leases as a percentage of loans and leases held for investment increased to 0.72% at September 30, 2024 compared to 0.50% at June 30, 2024.

Allowance for Credit Losses – Loans

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

Allowance for Credit Losses - Loans

2024

2023

2024

2023

(Dollars in thousands)

Allowance for loan and lease losses ("ALLL"): Balance at beginning of period

247,762

291,503

219,234

281,687

200,732

Charge-offs

(4,163

)

(58,070

)

(6,695

)

(67,247

)

(48,800

)

Recoveries

1,746

2,329

1,758

7,905

3,865

Net charge-offs

(2,417

)

(55,741

)

(4,937

)

(59,342

)

(44,935

)

Provision for loan losses

9,000

12,000

8,000

32,000

66,500

Balance at end of period

254,345

247,762

222,297

254,345

222,297

Reserve for unfunded loan commitments ("RUC"): Balance at beginning of period

27,571

28,571

37,571

29,571

91,071

(Negative provision) provision for credit losses

(1,000

)

(8,000

)

(2,000

)

(61,500

)

Balance at end of period

27,571

29,571

27,571

29,571

Allowance for credit losses ("ACL") - Loans: Balance at beginning of period

275,333

320,074

256,805

311,258

291,803

Charge-offs

(4,163

)

(58,070

)

(6,695

)

(67,247

)

(48,800

)

Recoveries

1,746

2,329

1,758

7,905

3,865

Net charge-offs

(2,417

)

(55,741

)

(4,937

)

(59,342

)

(44,935

)

Provision for credit losses

9,000

11,000

30,000

5,000

Balance at end of period

281,916

275,333

251,868

281,916

251,868

ALLL to loans and leases held for investment

1.08

1.07

1.01

1.08

1.01

ACL to loans and leases held for investment

1.20

1.19

1.15

1.20

1.15

ACL to NPLs

167.47

235.19

200.86

167.47

200.86

ACL to NPAs

159.27

211.19

190.48

159.27

190.48

Annualized net charge-offs to average loans and leases

0.04

0.89

0.09

0.32

0.23

The allowance for credit losses, which includes the reserve for unfunded loan commitments, totaled $281.9 million, or 1.20% of total loans and leases, at September 30, 2024, compared to $275.3 million, or 1.19% of total loans and leases, at June 30, 2024. The $6.6 million increase in the allowance was due to the $9.0 million provision, offset partially by net charge-offs of $2.4 million. The ACL coverage of nonperforming loans was 167% at September 30, 2024 compared to 235% at June 30, 2024.

Net charge-offs were 0.04% of average loans and leases (annualized) for the third quarter, compared to 0.89% for the second quarter. The decrease in net charge-offs in the third quarter was attributable primarily to the second quarter $28.7 million of Civic charge-offs as a result of the related $1.9 billion of Civic loans reclassified to held for sale and two large charge-offs of commercial real estate loans secured by office properties.

Deposits and Client Investment Funds

The following table sets forth the composition of our deposits at the dates indicated:

September 30,

June 30,

March 31,

December 31,

September 30,

Composition of Deposits

2024

2023

(Dollars in thousands)

Noninterest-bearing checking

7,811,796

7,825,007

7,833,608

7,774,254

5,579,033

Interest-bearing: Checking

7,539,899

7,309,833

7,836,097

7,808,764

7,038,808

Money market

5,039,607

4,837,025

5,020,110

6,187,889

5,424,347

Savings

1,992,364

2,040,461

2,016,398

1,997,989

1,441,700

Time deposits: Non-brokered

2,451,340

2,758,067

2,761,836

3,139,270

3,038,005

Brokered

1,993,263

4,034,057

3,424,358

3,493,603

4,076,788

Total time deposits

4,444,603

6,792,124

6,186,194

6,632,873

7,114,793

Total interest-bearing

19,016,473

20,979,443

21,058,799

22,627,515

21,019,648

Total deposits

26,828,269

28,804,450

28,892,407

30,401,769

26,598,681

September 30,

June 30,

March 31,

December 31,

September 30,

Composition as % of Total Deposits

2024

2023

Noninterest-bearing checking

Interest-bearing: Checking

Money market

Savings

Time deposits: Non-brokered

Brokered

Total time deposits

Total interest-bearing

Total deposits

100

Total deposits decreased by $2.0 billion during the third quarter to $26.8 billion at September 30, 2024, due primarily to a decrease in brokered time deposits.

Noninterest-bearing checking totaled $7.81 billion and represented 29% of total deposits at September 30, 2024, compared to $7.83 billion, or 27% of total deposits, at June 30, 2024.

Uninsured and uncollateralized deposits of $6.7 billion represented 25% of total deposits at September 30, 2024 compared to uninsured and uncollateralized deposits of $6.8 billion or 24% of total deposits at June 30, 2024.

In addition to deposit products, we also offer alternative, non-depository corporate treasury solutions for select clients to invest excess liquidity. These alternative options include investments managed by BofCal Asset Management Inc. (“BAM”), our registered investment advisor subsidiary, and third-party sweep products. Total off-balance sheet client investment funds were $1.3 billion as of September 30, 2024, of which $0.6 billion was managed by BAM.

Borrowings

Borrowings increased by approximately $151 million to $1.6 billion at September 30, 2024 from $1.4 billion at June 30, 2024. Higher borrowings included the addition of a $500 million long-term Federal Home Loan Bank (“FHLB”) advance (maturing in 10 years but callable by the FHLB after 2 years) offset partially by the $545 million payoff of the Bank Term Funding Program balance.

Equity

During the third quarter, total stockholders’ equity increased by $88.4 million to $3.5 billion and tangible common equity(1) increased by $95.8 million to $2.6 billion at September 30, 2024. The increase in total stockholders’ equity for the third quarter resulted primarily from a decrease in the unrealized after-tax net loss in AOCI for AFS securities of $103.0 million and net earnings of $8.8 million, partially offset by common and preferred stock dividends of $26.3 million.

At September 30, 2024, book value per common share increased to $17.75 compared to $17.23 at June 30, 2024, and tangible book value per common share(1) increased to $15.63 compared to $15.07 at June 30, 2024.

(1)

Non-GAAP measures; refer to section 'Non-GAAP Measures'

CAPITAL AND LIQUIDITY

Capital ratios remain strong with total risk-based capital at 16.98% and a tier 1 leverage ratio of 9.83% at September 30, 2024.

The following table sets forth our regulatory capital ratios as of the dates indicated:

September 30,

June 30,

March 31,

December 31,

September 30,

Capital Ratios

2024 (1)

2024

2023

Banc of California, Inc. Total risk-based capital ratio

16.98

16.57

16.40

16.43

17.83

Tier 1 risk-based capital ratio

12.87

12.62

12.38

12.44

13.84

Common equity tier 1 capital ratio

10.45

10.27

10.09

10.14

11.23

Tier 1 leverage capital ratio

9.83

9.51

9.12

9.00

8.65

Banc of California Total risk-based capital ratio

16.59

16.19

15.88

15.75

16.37

Tier 1 risk-based capital ratio

14.07

13.77

13.34

13.27

13.72

Common equity tier 1 capital ratio

14.07

13.77

13.34

13.27

13.72

Tier 1 leverage capital ratio

10.74

10.38

9.84

9.62

8.57

____________________

(1)

Capital information for September 30, 2024 is preliminary.

At September 30, 2024, immediately available cash and cash equivalents were $2.4 billion, a decrease of $143.9 million from June 30, 2024. Combined with total available borrowing capacity of $11.7 billion and unpledged AFS securities of $2.1 billion, total available liquidity was $16.2 billion at the end of the third quarter.

Conference Call

The Company will host a conference call to discuss its third quarter 2024 financial results at 10:00 a.m. Pacific Time (PT) on Tuesday, October 22, 2024. Interested parties are welcome to attend the conference call by dialing (888) 317-6003 and referencing event code 6084667. A live audio webcast will also be available, and the webcast link will be posted on the Company’s Investor Relations website at www.bancofcal.com/investor. The slide presentation for the call will also be available on the Company's Investor Relations website prior to the call. A replay of the call will be made available approximately one hour after the call has ended on the Company’s Investor Relations website at www.bancofcal.com/investor or by dialing (877) 344-7529 and referencing event code 8866602.

About Banc of California, Inc.

Banc of California, Inc. (NYSE: BANC) is a bank holding company with over $33 billion in assets and the parent company of Banc of California. Banc of California is one of the nation’s premier relationship-based business banks, providing banking and treasury management services to small-, middle-market, and venture-backed businesses. Banc of California is the third largest bank headquartered in California and offers a broad range of loan and deposit products and services through 80 full-service branches located throughout California and in Denver, Colorado, and Durham, North Carolina, as well as through regional offices nationwide. The bank also provides full-stack payment processing solutions through its subsidiary, Deepstack Technologies, and serves the Community Association Management industry nationwide with its technology-forward platform, SmartStreet™. The bank is committed to its local communities by supporting organizations that provide financial literacy and job training, small business support, affordable housing, and more. For more information, please visit us at www.bancofcal.com.

Forward-Looking Statements and Other Matters

This press release includes forward-looking statements within the meaning of the “Safe-Harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements related to our expectations regarding the performance of our business, liquidity and capital ratios and other non-historical statements. Words or phrases such as “believe,” “will,” “should,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “plans,” “strategy,” or similar expressions are intended to identify these forward-looking statements. You are cautioned not to place undue reliance on any forward-looking statements. These statements are necessarily subject to risk and uncertainty and actual results could differ materially from those anticipated due to various factors, including those set forth from time to time in the documents filed or furnished by the Company with the Securities and Exchange Commission (“SEC”). The Company undertakes no obligation to revise or publicly release any revision or update to these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made, except as required by law.

Factors that could cause actual results to differ materially from the results anticipated or projected include, but are not limited to: (i) changes in general economic conditions, either nationally or in our market areas, including the impact of supply chain disruptions, and the risk of recession or an economic downturn; (ii) changes in the interest rate environment, including the recent and potential future changes in the FRB benchmark rate, which could adversely affect our revenue and expenses, the value of assets and obligations, the realization of deferred tax assets, the availability and cost of capital and liquidity, and the impacts of continuing inflation; (iii) the credit risks of lending activities, which may be affected by deterioration in real estate markets and the financial condition of borrowers, and the operational risk of lending activities, including the effectiveness of our underwriting practices and the risk of fraud, any of which may lead to increased loan delinquencies, losses, and non-performing assets, and may result in our allowance for credit losses not being adequate; (iv) fluctuations in the demand for loans, and fluctuations in commercial and residential real estate values in our market area; (v) the quality and composition of our securities portfolio; (vi) our ability to develop and maintain a strong core deposit base, including among our venture banking clients, or other low cost funding sources necessary to fund our activities particularly in a rising or high interest rate environment; (vii) the rapid withdrawal of a significant amount of demand deposits over a short period of time; (viii) the costs and effects of litigation; (ix) risks related to the Company’s acquisitions, including disruption to current plans and operations; difficulties in customer and employee retention; fees, expenses and charges related to these transactions being significantly higher than anticipated; and our inability to achieve expected revenues, cost savings, synergies, and other benefits; and in the case of our recent acquisition of PacWest Bancorp (“PacWest”), reputational risk, regulatory risk and potential adverse reactions of the Company's or PacWest's customers, suppliers, vendors, employees or other business partners; (x) results of examinations by regulatory authorities of the Company and the possibility that any such regulatory authority may, among other things, limit our business activities, restrict our ability to invest in certain assets, refrain from issuing an approval or non-objection to certain capital or other actions, increase our allowance for credit losses, result in write-downs of asset values, restrict our ability or that of our bank subsidiary to pay dividends, or impose fines, penalties or sanctions; (xi) legislative or regulatory changes that adversely affect our business, including changes in tax laws and policies, accounting policies and practices, privacy laws, and regulatory capital or other rules; (xii) the risk that our enterprise risk management framework may not be effective in mitigating risk and reducing the potential for losses; (xiii) errors in estimates of the fair values of certain of our assets and liabilities, which may result in significant changes in valuation; (xiv) failures or security breaches with respect to the network, applications, vendors and computer systems on which we depend, including due to cybersecurity threats; (xv) our ability to attract and retain key members of our senior management team; (xvi) the effects of climate change, severe weather events, natural disasters, pandemics, epidemics and other public health crises, acts of war or terrorism, and other external events on our business; (xvii) the impact of bank failures or other adverse developments at other banks on general depositor and investor sentiment regarding the stability and liquidity of banks; (xviii) the possibility that our recorded goodwill could become impaired, which may have an adverse impact on our earnings and capital; (xix) our existing indebtedness, together with any future incurrence of additional indebtedness, could adversely affect our ability to raise additional capital and to meet our debt obligations; (xx) the risk that we may incur significant losses on future asset sales; and (xxi) other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services and the other risks described in this press release and from time to time in other documents that we file with or furnish to the SEC.

Non-GAAP Financial Measures

Included in this press release are certain non-GAAP financial measures, such as tangible assets, tangible equity to tangible assets, tangible book value per common share, adjusted net earnings (loss), return on average tangible common equity, and adjusted return on average tangible common equity, designed to complement the financial information presented in accordance with U.S. GAAP because management believes such measures are useful to investors. These non-GAAP financial measures should be considered only as supplemental to, and not superior to, financial measures provided in accordance with GAAP. Please refer to the “Non-GAAP Measures” section of this release for additional detail including reconciliations of the non-GAAP financial measures included in this press release to the most directly comparable financial measures prepared in accordance with GAAP.

BANC OF CALIFORNIA, INC. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)

September 30,

June 30,

March 31,

December 31,

September 30,

2024

2023

(Dollars in thousands)

ASSETS: Cash and due from banks

251,869

203,467

199,922

202,427

182,261

Interest-earning deposits in financial institutions

2,302,358

2,495,343

2,885,306

5,175,149

5,887,406

Total cash and cash equivalents

2,554,227

2,698,810

3,085,228

5,377,576

6,069,667

Securities available-for-sale

2,300,284

2,244,031

2,286,682

2,346,864

4,487,172

Securities held-to-maturity

2,301,263

2,296,708

2,291,984

2,287,291

2,282,586

FRB and FHLB stock

145,123

132,380

129,314

126,346

17,250

Total investment securities

4,746,670

4,673,119

4,707,980

4,760,501

6,787,008

Loans held for sale

28,639

1,935,455

80,752

122,757

188,866

Gross loans and leases held for investment

23,553,534

23,255,297

25,517,028

25,534,730

21,969,789

Deferred fees, net

(25,757

)

(26,388

)

(44,006

)

(45,043

)

(48,843

)

Total loans and leases held for investment, net of deferred fees

23,527,777

23,228,909

25,473,022

25,489,687

21,920,946

Allowance for loan and lease losses

(254,345

)

(247,762

)

(291,503

)

(281,687

)

(222,297

)

Total loans and leases held for investment, net

23,273,432

22,981,147

25,181,519

25,208,000

21,698,649

Equipment leased to others under operating leases

314,998

335,968

339,925

344,325

352,330

Premises and equipment, net

143,200

145,734

144,912

146,798

50,236

Bank owned life insurance

343,212

341,779

341,806

339,643

207,946

Goodwill

216,770

215,925

198,627

Intangible assets, net

140,562

148,894

157,226

165,477

24,192

Deferred tax asset, net

706,849

738,534

741,158

739,111

506,248

Other assets

964,054

1,028,474

1,094,383

1,131,249

992,691

Total assets

33,432,613

35,243,839

36,073,516

38,534,064

36,877,833

LIABILITIES: Noninterest-bearing deposits

7,811,796

7,825,007

7,833,608

7,774,254

5,579,033

Interest-bearing deposits

19,016,473

20,979,443

21,058,799

22,627,515

21,019,648

Total deposits

26,828,269

28,804,450

28,892,407

30,401,769

26,598,681

Borrowings

1,591,833

1,440,875

2,139,498

2,911,322

6,294,525

Subordinated debt

942,151

939,287

937,717

936,599

870,896

Accrued interest payable and other liabilities

574,162

651,379

709,744

893,609

714,454

Total liabilities

29,936,415

31,835,991

32,679,366

35,143,299

34,478,556

STOCKHOLDERS' EQUITY: Preferred stock

498,516

Common stock

1,586

1,583

1,577

1,231

Class B non-voting common stock

Non-voting common stock equivalents

101

108

Additional paid-in-capital

3,802,314

3,813,312

3,827,777

3,840,974

2,798,611

Retained deficit

(478,173

)

(477,010

)

(497,396

)

(518,301

)

(25,399

)

Accumulated other comprehensive loss, net

(328,148

)

(428,659

)

(436,436

)

(432,114

)

(873,682

)

Total stockholders’ equity

3,496,198

3,407,848

3,394,150

3,390,765

2,399,277

Total liabilities and stockholders’ equity

33,432,613

35,243,839

36,073,516

38,534,064

36,877,833

Common shares outstanding (1)

168,879,566

168,875,712

169,013,629

168,959,063

78,806,969

____________________

(1)

Common shares outstanding include non-voting common equivalents that are participating securities.

BANC OF CALIFORNIA, INC. CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) (UNAUDITED)

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

2024

2023

2024

2023

(In thousands, except per share amounts)

Interest income: Loans and leases

369,913

388,853

310,392

1,144,231

1,150,049

Investment securities

34,912

33,836

45,326

103,051

133,716

Deposits in financial institutions

42,068

39,900

90,366

140,904

219,995

Total interest income

446,893

462,589

446,084

1,388,186

1,503,760

Interest expense: Deposits

180,986

186,106

205,982

561,899

540,663

Borrowings

16,970

30,311

94,234

85,405

324,270

Subordinated debt

16,762

16,684

15,139

50,117

42,750

Total interest expense

214,718

233,101

315,355

697,421

907,683

Net interest income

232,175

229,488

130,729

690,765

596,077

Provision for credit losses

9,000

11,000

30,000

5,000

Net interest income after provision for credit losses

223,175

218,488

130,729

660,765

591,077

Noninterest income: Service charges on deposit accounts

4,568

4,540

4,018

13,813

11,906

Other commissions and fees

8,256

8,629

7,641

25,027

29,226

Leased equipment income

17,176

11,487

14,554

40,379

50,798

(Loss) gain on sale of loans and leases

(62

)

1,135

(1,901

)

625

(157,820

)

Loss on sale of securities

(59,946

)

(59,946

)

Dividends and gains on equity investments

3,730

1,166

3,837

7,964

7,593

Warrant income (loss)

211

(324

)

(88

)

(545

)

LOCOM HFS adjustment

(74

)

(38

)

307

218

(11,636

)

Other income

10,689

3,197

15,440

20,011

22,595

Total noninterest (loss) income

(15,452

)

29,792

43,808

48,156

(47,883

)

Noninterest expense: Compensation

85,585

85,914

71,642

263,735

242,999

Occupancy

16,892

17,455

15,293

52,315

45,743

Information technology and data processing

14,995

15,459

12,840

45,872

38,706

Other professional services

5,101

5,183

5,597

15,359

21,643

Insurance and assessments

12,708

26,431

38,298

59,600

75,650

Intangible asset amortization

8,485

8,484

2,389

25,373

7,189

Leased equipment depreciation

7,144

7,511

8,333

22,175

26,796

Acquisition, integration and reorganization costs

(510

)

(12,650

)

9,925

(13,160

)

30,833

Customer related expense

34,475

32,405

26,971

97,799

78,278

Loan expense

3,994

4,332

4,243

12,817

16,012

Goodwill impairment

1,376,736

Other expense

7,340

13,119

5,572

28,485

133,958

Total noninterest expense

196,209

203,643

201,103

610,370

2,094,543

Earnings (loss) before income taxes

11,514

44,637

(26,566

)

98,551

(1,551,349

)

Income tax expense (benefit)

2,730

14,304

(3,222

)

28,582

(135,167

)

Net earnings (loss)

8,784

30,333

(23,344

)

69,969

(1,416,182

)

Preferred stock dividends

9,947

29,841

Net (loss) earnings available to common and equivalent stockholders

(1,163

)

20,386

(33,291

)

40,128

(1,446,023

)

Basic and diluted (loss) earnings per common share (1)

(0.01

)

0.12

(0.42

)

0.24

(18.61

)

Basic and diluted weighted average number of common shares outstanding (1)

168,583

168,432

77,881

168,386

77,678

____________________

(1)

Common shares include non-voting common equivalents that are participating securities.

BANC OF CALIFORNIA, INC. SELECTED FINANCIAL DATA (UNAUDITED)

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

Profitability and Other Ratios

2024

2023

2024

2023

Return on average assets (1)

0.10

0.34

(0.24

0.26

(4.60

Adjusted ROAA (1)(2)

0.59

0.34

(0.16

0.41

0.40

Return on average equity (1)

1.01

3.59

(3.73

2.74

(61.86

Return on average tangible common equity (1)(2)

0.70

4.42

(6.47

3.13

(11.66

Adjusted return on average tangible common equity (1)(2)

7.30

4.42

(4.64

5.12

6.31

Dividend payout ratio (3)

(1000.00

83.33

(2.38

125.00

(1.45

Average yield on loans and leases (1)

6.18

5.54

6.14

5.95

Average yield on interest-earning assets (1)

5.63

5.65

4.94

5.61

5.20

Average cost of interest-bearing deposits (1)

3.52

3.58

3.78

3.57

3.35

Average total cost of deposits (1)

2.54

2.60

2.98

2.60

2.50

Average cost of interest-bearing liabilities (1)

3.80

3.93

4.34

3.89

4.03

Average total cost of funds (1)

2.82

2.95

3.61

2.93

3.24

Net interest spread

1.83

1.72

0.60

1.72

1.17

Net interest margin (1)

2.93

2.80

1.45

2.79

2.07

Noninterest income to total revenue (4)

(7.13

11.49

25.10

6.52

(8.73

Noninterest expense to average total assets (1)

2.27

2.29

2.11

2.27

6.80

Loans to deposits ratio

87.80

87.36

83.12

87.80

83.12

Average loans and leases to average deposits

84.05

87.95

81.03

86.22

89.61

Average investment securities to average total assets

13.55

13.00

18.30

13.03

17.23

Average stockholders' equity to average total assets

10.03

9.48

6.56

9.50

7.43

____________________

(1)

Annualized.

(2)

Non-GAAP measure.

(3)

Ratio calculated by dividing dividends declared per common and equivalent share by basic earnings per common and equivalent share.

(4)

Total revenue equals the sum of net interest income and noninterest income.

BANC OF CALIFORNIA, INC. AVERAGE BALANCE, AVERAGE YIELD EARNED, AND AVERAGE COST PAID (UNAUDITED)

Three Months Ended

September 30, 2024

June 30, 2024

September 30, 2023

Interest

Average

Interest

Average

Interest

Average

Income/

Yield/

Average

Income/

Yield/

Average

Income/

Yield/

Balance

Expense

Cost

Balance

Expense

Cost

Balance

Expense

Cost

(Dollars in thousands)

Assets: Loans and leases (1)

23,803,691

369,913

6.18

25,325,578

388,853

6.18

22,226,390

310,392

5.54

Investment securities

4,665,549

34,912

2.98

4,658,690

33,836

2.92

6,919,948

45,326

2.60

Deposits in financial institutions

3,106,227

42,068

5.39

2,960,292

39,900

5.42

6,645,335

90,366

5.40

Total interest-earning assets

31,575,467

446,893

5.63

32,944,560

462,589

5.65

35,791,673

446,084

4.94

Other assets

2,850,718

2,889,907

2,016,085

Total assets

34,426,185

35,834,467

37,807,758

Liabilities and Stockholders' Equity: Interest checking

7,644,515

61,880

3.22

7,673,902

61,076

3.20

6,983,013

57,237

3.25

Money market

4,958,777

32,361

2.60

4,962,567

32,776

2.66

5,662,980

42,516

2.98

Savings

2,028,931

17,140

3.36

2,002,670

16,996

3.41

1,163,827

10,255

3.50

Time

5,841,965

69,605

4.74

6,274,242

75,258

4.82

7,801,880

95,974

4.88

Total interest-bearing deposits

20,474,188

180,986

3.52

20,913,381

186,106

3.58

21,611,700

205,982

3.78

Borrowings

1,063,541

16,970

6.35

2,013,600

30,311

6.05

6,325,537

94,234

5.91

Subordinated debt

940,480

16,762

7.09

938,367

16,684

7.15

870,968

15,139

6.90

Total interest-bearing liabilities

22,478,209

214,718

3.80

23,865,348

233,101

3.93

28,808,205

315,355

4.34

Noninterest-bearing demand deposits

7,846,641

7,881,620

5,817,488

Other liabilities

648,760

692,149

701,355

Total liabilities

30,973,610

32,439,117

35,327,048

Stockholders' equity

3,452,575

3,395,350

2,480,710

Total liabilities and stockholders' equity

34,426,185

35,834,467

37,807,758

Net interest income (1)

232,175

229,488

130,729

Net interest spread

1.83

1.72

0.60

Net interest margin

2.93

2.80

1.45

Total deposits (2)

28,320,829

180,986

2.54

28,795,001

186,106

2.60

27,429,188

205,982

2.98

Total funds (3)

30,324,850

214,718

2.82

31,746,968

233,101

2.95

34,625,693

315,355

3.61

____________________

(1)

Includes net loan discount accretion of $23.0 million and $21.8 million for the three months ended September 30, 2024 and June 30, 2024 and net loan premium amortization of $1.7 million for the three months ended September 30, 2023.

(2)

Total deposits is the sum of total interest-bearing deposits and noninterest-bearing demand deposits. The cost of total deposits is calculated as annualized interest expense on total deposits divided by average total deposits.

(3)

Total funds is the sum of total interest-bearing liabilities and noninterest-bearing demand deposits. The cost of total funds is calculated as annualized total interest expense divided by average total funds.

BANC OF CALIFORNIA, INC. AVERAGE BALANCE, AVERAGE YIELD EARNED, AND AVERAGE COST PAID (UNAUDITED)

Nine Months Ended

September 30, 2024

September 30, 2023

Interest

Average

Interest

Average

Income/

Yield/

Average

Income/

Yield/

Balance

Expense

Cost

Balance

Expense

Cost

(Dollars in thousands)

Assets: Loans and leases (1)(2)(3)

24,878,682

1,144,231

6.14

25,910,694

1,152,393

5.95

Investment securities

4,681,872

103,051

2.94

7,097,438

133,716

2.52

Deposits in financial institutions

3,479,130

140,904

5.41

5,731,733

219,995

5.13

Total interest-earning assets (1)

33,039,684

1,388,186

5.61

38,739,865

1,506,104

5.20

Other assets

2,888,600

2,447,563

Total assets

35,928,284

41,187,428

Liabilities and Stockholders' Equity: Interest checking

7,733,588

184,505

3.19

6,890,661

159,992

3.10

Money market

5,218,774

106,488

2.73

7,049,910

145,748

2.76

Savings

2,022,600

52,166

3.45

833,719

14,532

2.33

Time

6,073,993

218,740

4.81

6,815,786

220,391

4.32

Total interest-bearing deposits

21,048,955

561,899

3.57

21,590,076

540,663

3.35

Borrowings

1,986,468

85,405

5.74

7,688,698

324,270

5.64

Subordinated debt

938,624

50,117

7.13

869,353

42,750

6.57

Total interest-bearing liabilities

23,974,047

697,421

3.89

30,148,127

907,683

4.03

Noninterest-bearing demand deposits

7,804,534

7,323,673

Other liabilities

736,739

654,932

Total liabilities

32,515,320

38,126,732

Stockholders' equity

3,412,964

3,060,696

Total liabilities and stockholders' equity

35,928,284

41,187,428

Net interest income (1)(2)

690,765

598,421

Net interest spread (1)

1.72

1.17

Net interest margin (1)

2.79

2.07

Total deposits (4)

28,853,489

561,899

2.60

28,913,749

540,663

2.50

Total funds (5)

31,778,581

697,421

2.93

37,471,800

907,683

3.24

____________________

(1)

Tax equivalent.

(2)

Includes net loan discount accretion of $67.3 million for the nine months ended September 30, 2024 and net loan premium amortization of $6.0 million for the nine months ended September 30, 2023.

(3)

Includes tax-equivalent adjustments of $0.0 million and $2.3 million for the nine months ended September 30, 2024 and 2023 related to tax-exempt income on loans.

The federal statutory tax rate utilized was 21%.

(4)

Total deposits is the sum of total interest-bearing deposits and noninterest-bearing demand deposits.

The cost of total deposits is calculated as annualized interest expense on total deposits divided by average total deposits.

(5)

Total funds is the sum of total interest-bearing liabilities and noninterest-bearing demand deposits.

The cost of total funds is calculated as annualized total interest expense divided by average total funds.

BANC OF CALIFORNIA, INC.

NON-GAAP MEASURES

We refer to certain financial measures that are not recognized under U.S. generally accepted accounting principles (“GAAP”) in this press release, including: tangible assets, tangible common equity, tangible common equity to tangible assets, tangible book value per common share, return on average tangible common equity and adjusted net earnings (loss). These non-GAAP measures are used by management in its analysis of the Company's performance.

Tangible assets is calculated by subtracting goodwill and other intangible assets from total assets. Tangible common equity is calculated by subtracting preferred stock, as applicable, from tangible equity. Return on average tangible common equity is calculated by dividing net earnings available to common stockholders, after adjustment for amortization of intangible assets and goodwill impairment, by average tangible common equity. Adjusted return on average tangible common equity is calculated by dividing adjusted net earnings available to common stockholders, after adjustment for amortization of intangible assets, goodwill impairment, and any unusual one-time items, by average tangible common equity. Banking regulators also exclude goodwill and other intangible assets from stockholders' equity when assessing the capital adequacy of a financial institution.

Adjusted net earnings (loss) is calculated by adjusting net earnings (loss) by unusual, one-time items. ROAA is calculated by dividing annualized net earnings (loss) by average assets. Adjusted ROAA is calculated by dividing annualized adjusted net earnings (loss) by average assets.

Management believes the presentation of these financial measures adjusting the impact of these items provides useful supplemental information that is essential to a proper understanding of the financial results and operating performance of the Company. This disclosure should not be viewed as a substitute for results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.

The following tables provide reconciliations of the non-GAAP measures to financial measures defined by GAAP.

BANC OF CALIFORNIA, INC. NON-GAAP MEASURES (UNAUDITED) Tangible Common Equity to Tangible Assets and Tangible

September 30,

June 30,

March 31,

December 31,

September 30,

Book Value Per Common Share

2024

2023

(Dollars in thousands, except per share amounts)

Stockholders' equity

3,496,198

3,407,848

3,394,150

3,390,765

2,399,277

Less: Preferred stock

498,516

Total common equity

2,997,682

2,909,332

2,895,634

2,892,249

1,900,761

Less: Goodwill and Intangible assets

357,332

364,819

355,853

364,104

24,192

Tangible common equity

2,640,350

2,544,513

2,539,781

2,528,145

1,876,569

Total assets

33,432,613

35,243,839

36,073,516

38,534,064

36,877,833

Less: Goodwill and Intangible assets

357,332

364,819

355,853

364,104

24,192

Tangible assets

33,075,281

34,879,020

35,717,663

38,169,960

36,853,641

Total stockholders' equity to total assets

10.46

9.67

9.41

8.80

6.51

Tangible common equity to tangible assets

7.98

7.30

7.11

6.62

5.09

Book value per common share (1)

17.75

17.23

17.13

17.12

24.12

Tangible book value per common share (2)

15.63

15.07

15.03

14.96

23.81

Common shares outstanding (3)

168,879,566

168,875,712

169,013,629

168,959,063

78,806,969

____________________

(1)

Total common equity divided by common shares outstanding.

(2)

Tangible common equity divided by common shares outstanding.

(3)

Common shares outstanding include non-voting common equivalents that are participating securities.

BANC OF CALIFORNIA, INC. NON-GAAP MEASURES (UNAUDITED)

Three Months Ended

Nine Months Ended

Return on Average Tangible

September 30,

June 30,

September 30,

Common Equity ("ROATCE")

2024

2023

2024

2023

(Dollars in thousands)

Net earnings (loss)

8,784

30,333

(23,344

)

69,969

(1,416,182

)

Earnings (loss) before income taxes

11,514

44,637

(26,566

)

98,551

(1,551,349

)

Add: Intangible asset amortization

8,485

8,484

2,389

25,373

7,189

Add: Goodwill impairment

1,376,736

Adjusted earnings (loss) before income taxes used for ROATCE

19,999

53,121

(24,177

)

123,924

(167,424

)

Adjusted income tax expense (benefit) (1)

5,522

15,203

(2,212

)

34,215

(15,319

)

Adjusted net earnings (loss) for ROATCE

14,477

37,918

(21,965

)

89,709

(152,105

)

Less: Preferred stock dividends

9,947

29,841

Adjusted net earnings (loss) available to common and equivalent stockholders for ROATCE

4,530

27,971

(31,912

)

59,868

(181,946

)

Average stockholders' equity

3,452,575

3,395,350

2,480,710

3,412,964

3,060,696

Less: Average goodwill and intangible assets

361,316

352,934

25,499

358,321

476,721

Less: Average preferred stock

498,516

Average tangible common equity

2,592,743

2,543,900

1,956,695

2,556,127

2,085,459

Return on average equity (2)

1.01

3.59

(3.73

2.74

(61.86

ROATCE (3)

0.70

4.42

(6.47

3.13

(11.66

____________________

(1)

Effective tax rates of 27.61%, 28.62%, and 9.15% used for the three months ended September 30, 2024, June 30, 2024, and September 30, 2023, respectively. Effective tax rates of 27.61% and 9.15% used for the nine months ended September 30, 2024 and 2023.

(2)

Annualized net earnings (loss) divided by average stockholders' equity.

(3)

Annualized adjusted net earnings (loss) available to common and equivalent stockholders for ROATCE divided by average tangible common equity.

(4)

Annualized adjusted net earnings available to common and equivalent stockholders for adjusted ROATCE divided by average tangible common equity.

BANC OF CALIFORNIA, INC. NON-GAAP MEASURES (UNAUDITED)

Three Months Ended

Nine Months Ended

Adjusted Return on Average

September 30,

Tangible Common Equity ("ROATCE")

2024

2023

2024

2023

(Dollars in thousands)

Net earnings (loss)

8,784

(23,344

)

69,969

(1,416,182

)

Earnings (loss) before income taxes

11,514

(26,566

)

98,551

(1,551,349

)

Add: Intangible asset amortization

8,485

2,389

25,373

7,189

Add: Goodwill impairment

1,376,736

Add: FDIC special assessment

5,816

Add: Loss on sale of securities

59,946

Less: Acquisition, integration, and reorganization costs

(510

)

9,925

(13,160

)

30,833

Add: Loan fair value loss adjustments

170,971

Add: Unfunded commitments fair value loss adjustments

106,767

Adjusted earnings before income taxes used for adjusted ROATCE

79,435

(14,252

)

176,526

141,147

Adjusted income tax expense (1)

21,932

(1,304

)

48,739

12,915

Adjusted net earnings for adjusted ROATCE

57,503

(12,948

)

127,787

128,232

Less: Preferred stock dividends

9,947

29,841

Adjusted net earnings available to common and equivalent stockholders for adjusted ROATCE

47,556

(22,895

)

97,946

98,391

Average stockholders' equity

3,452,575

2,480,710

3,412,964

3,060,696

Less: Average goodwill and intangible assets

361,316

25,499

358,321

476,721

Less: Average preferred stock

498,516

Average tangible common equity

2,592,743

1,956,695

2,556,127

2,085,459

Adjusted ROATCE (2)

7.30

(4.64

5.12

6.31

____________________

(1)

Effective tax rates of 27.61% used for the 2024 periods and 9.15% for the 2023 periods.

(2)

Annualized adjusted net earnings available to common and equivalent stockholders for adjusted ROATCE divided by average tangible common equity.

BANC OF CALIFORNIA, INC. NON-GAAP MEASURES (UNAUDITED) Adjusted Net Earnings, Net Earnings

Three Months Ended

Nine Months Ended

Available to Common and Equivalent

September 30,

Stockholders, Diluted EPS, and ROAA

2024

2023

2024

2023

(In thousands, except per share amounts)

Net earnings (loss)

8,784

(23,344

)

69,969

(1,416,182

)

Earnings (loss) before income taxes

11,514

(26,566

)

98,551

(1,551,349

)

Add: FDIC special assessment

5,816

Add: Loss on sale of securities

59,946

Less: Acquisition, integration, and reorganization costs

(510

)

9,925

(13,160

)

30,833

Add: Loan fair value loss adjustments

170,971

Add: Unfunded commitments fair value loss adjustments

106,767

Add: Goodwill impairment

1,376,736

Adjusted earnings (loss) before income taxes

70,950

(16,641

)

151,153

133,958

Adjusted income tax expense (benefit) (1)

19,589

(1,523

)

41,733

12,257

Adjusted net earnings (loss)

51,361

(15,118

)

109,420

121,701

Less: Preferred stock dividends

(9,947

)

(9,947

)

(29,841

)

(29,841

)

Adjusted net earnings (loss) available to common and equivalent stockholders

41,414

(25,065

)

79,579

91,860

Weighted average common shares outstanding

168,583

77,881

168,386

77,678

Diluted (loss) earnings per common share

(0.01

)

(0.42

)

0.24

(18.61

)

Adjusted diluted earnings per common share (2)

0.25

(0.32

)

0.47

1.18

Average total assets

34,426,185

37,807,758

35,928,284

41,187,428

Return on average assets ("ROAA") (3)

0.10

(0.24

0.26

(4.60

Adjusted ROAA (4)

0.59

(0.16

0.41

0.40

____________________

(1)

Effective tax rates of 27.61% used for the 2024 periods and 9.15% for the 2023 periods.

(2)

Adjusted net earnings (loss) available to common and equivalent stockholders divided by weighted average common shares outstanding.

(3)

Annualized net earnings (loss) divided by average assets.

(4)

Annualized adjusted net earnings (loss) divided by average assets.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241022100943/en/

Investor Relations Inquiries: Banc of California, Inc. (855) 361-2262 Jared Wolff, (310) 424-1230 Joe Kauder, (310) 844-5224 Ann DeVries, (646) 376-7011 Media Contact: Debora Vrana, Banc of California (213) 533-3122 Deb.Vrana@bancofcal.com

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