Banc of California, Inc. Reports Second Quarter 2024 Financial Results

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

$0.12 Earnings Per Share

$17.23 Book Value Per Share $15.07 Tangible Book Value Per Share(1)

10.27% CET1 Ratio

27% Noninterest-Bearing Deposits

Banc of California, Inc. (NYSE: BANC) (“Banc of California”), the parent company of wholly-owned subsidiary Banc of California (the “Bank”), today reported financial results for the second quarter ended June 30, 2024. The Company recorded 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. This compares to net earnings available to common and equivalent stockholders of $20.9 million, or $0.12 per diluted common share, for the first quarter of 2024.

Second quarter highlights include:

Average noninterest-bearing deposits higher by $196.5 million, or 3%, in the second quarter.
Net interest margin of 2.80%, an increase of 14 basis points from 2.66% in the first quarter.
Average total cost of deposits decreased by 6 basis points to 2.60% for the second quarter compared to 2.66% in the first quarter and average total cost of funds decreased by 7 basis points to 2.95% for the second quarter compared to 3.02% in the first quarter.
High liquidity levels, with available on-balance sheet liquidity and unused borrowing capacity of $16.9 billion at June 30, 2024, which was 2.5 times greater than uninsured and uncollateralized deposits.
Transferred $1.95 billion of CIVIC business-purpose residential loans with a fair value of $1.91 billion to held for sale at June 30, 2024. Sale closed on July 18, 2024, resulting in immediate increases in liquidity and capital ratios.
Nonperforming assets decreased to 0.37% of total assets at June 30, 2024, compared to 0.44% at March 31, 2024, primarily due to the loans transferred to held for sale.
Strong capital ratios well above the regulatory thresholds for "well capitalized" banks at June 30, 2024, including an estimated 16.57% Total risk-based capital ratio, 12.62% Tier 1 capital ratio, 10.27% CET1 capital ratio, and 9.51% Tier 1 leverage ratio.
Book value per share increased to $17.23 and tangible book value per share(1) increased to $15.07.
Successful core systems conversion completed on July 21, 2024.

(1)

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

Subsequent to quarter-end, Banc of California closed on the sale of $1.95 billion of CIVIC loans which had been moved to held for sale during the second quarter. The loan sale generated net proceeds of $1.91 billion and is expected to increase our CET 1 capital ratio by more than 30 basis points. We intend to use the proceeds primarily to pay down higher-cost brokered deposits and borrowings.

Jared Wolff, President & CEO of Banc of California, commented, “During the second quarter, we continued to make solid progress executing on our plan, strengthening our franchise, and improving our core earnings power. We further reduced our cost of funds, expanded the net interest margin, and grew average noninterest-bearing deposits in a rate environment that has remained challenging. We are on track with respect to controllable cost savings and are focused on building a valuable franchise for the long term with an enviable deposit base and core franchise.”

Mr. Wolff continued, “This is a transformational year for our company and we will remain focused on optimizing our business to drive long-term sustainable growth and profitability. Our recently completed sale of $1.95 billion of CIVIC loans positively impacts our capital and liquidity ratios, which we will leverage to further reposition our balance sheet and optimize core earnings power. We are well-positioned to continue improving profitability through net interest margin expansion and our expense reduction initiatives. I am thrilled about the opportunities ahead of us to leverage our strong market position and deliver our exceptional customer experience and unique platform to our expanded customer base.”

Mr. Wolff added, “Thanks to the tireless efforts and dedication of our team, we successfully completed our core system conversion this past weekend. We are now operating on a single system across our entire platform and we are now able to serve our clients in all our markets as the combined Banc of California.”

INCOME STATEMENT HIGHLIGHTS

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

Summary Income Statement

2024

2023

2024

2023

(In thousands)

Total interest income

462,589

478,704

539,888

941,293

1,057,676

Total interest expense

233,101

249,602

353,812

482,703

592,328

Net interest income

229,488

229,102

186,076

458,590

465,348

Provision for credit losses

11,000

10,000

2,000

21,000

5,000

Gain (loss) on sale of loans

1,135

(448

)

(158,881

)

687

(155,919

)

Other noninterest income

28,657

34,264

30,799

62,921

64,228

Total noninterest income (loss)

29,792

33,816

(128,082

)

63,608

(91,691

)

Total revenue

259,280

262,918

57,994

522,198

373,657

Goodwill impairment

1,376,736

Acquisition, integration and reorganization costs

(12,650

)

12,394

(12,650

)

20,908

Other noninterest expense

216,293

210,518

308,043

426,811

495,796

Total noninterest expense

203,643

210,518

320,437

414,161

1,893,440

Earnings (loss) before income taxes

44,637

42,400

(264,443

)

87,037

(1,524,783

)

Income tax expense (benefit)

14,304

11,548

(67,029

)

25,852

(131,945

)

Net earnings (loss)

30,333

30,852

(197,414

)

61,185

(1,392,838

)

Preferred stock dividends

9,947

19,894

Net earnings (loss) available to common and equivalent stockholders

20,386

20,905

(207,361

)

41,291

(1,412,732

)

Net Interest Income

Q2-2024 vs Q1-2024

Net interest income increased by $0.4 million to $229.5 million for the second quarter from $229.1 million for the first 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 $1.7 billion to $32.9 billion for the second quarter due to lower cash balances which were used to pay down deposits and borrowings. The net interest margin increased by 14 basis points to 2.80% for the second quarter compared to 2.66% for the first quarter due to the average yield on interest-earning assets increasing by 9 basis points, while the average total cost of funds decreased by 7 basis points, which was positively impacted by an increase in average noninterest-bearing deposits.

The average yield on interest-earning assets increased by 9 basis points to 5.65% for the second quarter from 5.56% in the first quarter due mainly to the increase in the average yield on loans and leases.

The average yield on loans and leases increased by 10 basis points to 6.18% for the second quarter from 6.08% for the first quarter as a result of new originations being at rates higher than the existing portfolio and the change in the mix of loan product balances.

The average total cost of funds decreased by 7 basis points to 2.95% for the second quarter from 3.02% in the first quarter due mainly to decreases in interest-bearing deposits combined with an increase in average noninterest-bearing deposits. The average cost of interest-bearing liabilities increased by 1 basis point to 3.93% for the second quarter from 3.92% in the first quarter. The average total cost of deposits decreased by 6 basis points to 2.60% for the second quarter compared to 2.66% in the first quarter. Average noninterest-bearing deposits increased by $196.6 million for the second quarter compared to the first quarter and average total deposits decreased by $655.5 million.

YTD June 30, 2024 vs YTD June 30, 2023

Net interest income decreased by $6.8 million to $458.6 million for the six months ended June 30, 2024 from $465.3 million for the six months ended June 30, 2023 due to lower interest income on lower interest-earning assets and higher interest expense on deposits, offset partially by lower interest expense on borrowings.

Average interest-earning assets decreased by $6.5 billion to $33.8 billion for the first six months of 2024 due to sales of non-core loan portfolios in the second quarter of 2023 offset partially by the fourth quarter of 2023 acquisition of legacy Banc of California loans, fourth quarter of 2023 securities sales, and lower cash balances which were used to pay down higher-cost borrowings. The net interest margin increased by 39 basis points to 2.73% for the six months ended June 30, 2024 compared to 2.34% for the same period in 2023 due to the average yield on interest-earning assets increasing by 29 basis points, while the average total cost of funds decreased by 8 basis points.

The average yield on interest-earning assets increased by 29 basis points to 5.60% for the first six months of 2024 from 5.31% 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 six months ended June 30, 2024 from 69% for the six months ended June 30, 2023, the decrease in the balance of average investment securities as a percentage of average interest-earning assets to 14% for the first six months of 2024 from 18% for comparable period in 2023, and the decrease in the balance of average deposits in financial institutions as a percentage of average interest-earning assets to 11% for the six months ended June 30, 2024 from 13% for the same period in 2023.

The average yield on loans and leases increased by 2 basis points to 6.13% for the first six months of 2024 from 6.11% for the same period in 2023 as a result of changes in portfolio mix and higher net accretion of loan discounts/premiums.

The average total cost of funds decreased by 8 basis points to 2.99% for the six months ended June 30, 2024 from 3.07% for the six months ended June 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 90% for the first six months of 2024 from 76% for the comparable period in 2023, and the decrease in the balance of higher cost average borrowings as a percentage of average total funds to 8% for the six months ended June 30, 2024 from 22% for the same period in 2023. The average cost of interest-bearing liabilities increased by 6 basis points to 3.93% for the first six months of 2024 from 3.87% for the comparable period in 2023. The average total cost of deposits increased by 36 basis points to 2.63% for the six months ended June 30, 2024 compared to 2.27% for the six months ended June 30, 2023. Average noninterest-bearing deposits decreased by $305.9 million for the first six months of 2024 compared to the same period in 2023 and average total deposits decreased by $545.6 million.

Provision For Credit Losses

Q2-2024 vs Q1-2024

The provision for credit losses was $11.0 million for the second quarter compared to $10.0 million for the first quarter. 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. The $10.0 million first quarter provision was driven by an increase in qualitative reserves related to loans secured by office properties and an increase in quantitative reserves due to an increase in nonaccrual and classified loans and leases.

YTD June 30, 2024 vs YTD June 30, 2023

The provision for credit losses increased by $16.0 million to $21.0 million for the six months ended June 30, 2024 compared to $5.0 million for the six months ended June 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.

Noninterest Income

Q2-2024 vs Q1-2024

Noninterest income decreased by $4.0 million to $29.8 million for the second quarter due mainly to a decrease of $2.9 million in other income (negative fair value mark on credit-linked notes) and a decrease of $1.9 million in dividends and gains on equity investments (negative fair value mark on Small Business Investment Company (“SBIC”) investments partially offset by higher income distributions from SBIC investments), offset partially by an increase of $1.6 million in gain on sale of loans.

YTD June 30, 2024 vs YTD June 30, 2023

Noninterest income increased by $155.3 million to $63.6 million for the six months ended June 30, 2024 due almost entirely to a decrease in the loss on sale of loans and leases of $156.6 million. The Company sold $529.6 million of loans for a net gain of $0.7 million in the six months ended June 30, 2024 and $5.4 billion of loans for a net loss of $155.9 million in the six months ended June 30, 2023.

Noninterest Expense

Q2-2024 vs Q1-2024

Noninterest expense decreased by $6.9 million to $203.6 million for the second quarter due mainly to decreases of $12.7 million in acquisition, integration and reorganization costs and $6.3 million in compensation expense, offset partially by increases of $6.0 million in insurance and assessments expense and $5.1 million in other expense. The decrease in acquisition, integration and reorganization costs was due to actual amounts for certain expenses being lower than the estimated amounts accrued at merger close. The decrease in compensation expense was mostly due to a lower headcount. The increase in insurance and assessments expense was due to higher assessment rates for both the regular FDIC assessment and the special assessment. The increase in other expense was mostly due to a repurchase reserve recorded for standard representations and warranties associated with the CIVIC loan sale.

YTD June 30, 2024 vs YTD June 30, 2023

Noninterest expense decreased by $1.5 billion to $414.2 million for the six-month period ended June 30, 2024 due mainly to a $1.4 billion goodwill impairment recorded in the same period in 2023.

Income Taxes

Q2-2024 vs Q1-2024

Income tax expense of $14.3 million was recorded for the second quarter resulting in an effective tax rate of 32.0% compared to tax expense of $11.5 million for the first quarter and an effective tax rate of 27.2%. The increase is due primarily to an increase in disallowed executive compensation expense and a higher shortfall on equity compensation expense from second quarter restricted stock vesting.

YTD June 30, 2024 vs YTD June 30, 2023

Income tax expense of $25.9 million was recorded for the six-month period ended June 30, 2024 resulting in an effective tax rate of 29.7% compared to a benefit of $131.9 million for the same period in 2023 and an effective tax rate of 8.7%. Excluding goodwill impairment, the effective tax rate for the six-month period in 2023 was 22.7%. The increase is primarily due to a higher shortfall on equity compensation expense from restricted stock vesting in the second quarter of 2024.

BALANCE SHEET HIGHLIGHTS

June 30,

March 31,

June 30,

Increase (Decrease)

Selected Balance Sheet Items

2024

2023

QoQ

YoY

(In thousands)

Cash and cash equivalents

2,698,810

3,085,228

6,698,147

(386,418

)

(3,999,337

)

Securities available-for-sale

2,244,031

2,286,682

4,708,519

(42,651

)

(2,464,488

)

Securities held-to-maturity

2,296,708

2,291,984

2,278,202

4,724

18,506

Loans held for sale

1,935,455

80,752

478,146

1,854,703

1,457,309

Loan and leases held for investment, net of deferred fees

23,228,909

25,473,022

22,258,210

(2,244,113

)

970,699

Total assets

35,243,839

36,073,516

38,337,250

(829,677

)

(3,093,411

)

Noninterest-bearing deposits

7,825,007

7,833,608

6,055,358

(8,601

)

1,769,649

Total deposits

28,804,450

28,892,407

27,897,083

(87,957

)

907,367

Borrowings

1,440,875

2,139,498

6,357,338

(698,623

)

(4,916,463

)

Total liabilities

31,835,991

32,679,366

35,804,055

(843,375

)

(3,968,064

)

Total stockholders' equity

3,407,848

3,394,150

2,533,195

13,698

874,653

Securities

The balance of securities held-to-maturity (“HTM”) remained consistent through the second quarter and totaled $2.3 billion at June 30, 2024. As of June 30, 2024, HTM securities had aggregate unrealized net after-tax losses in AOCI of $169.8 million remaining from the balance established at the time of transfer on June 1, 2022.

Securities available-for-sale (“AFS”) decreased by $42.7 million during the second quarter to $2.2 billion at June 30, 2024. AFS securities had aggregate unrealized net after-tax losses in AOCI of $264.8 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:

Composition of Loans and Leases

June 30, 2024

March 31, 2024

December 31, 2023

September 30, 2023

June 30, 2023

(Dollars in thousands)

Real estate mortgage: Commercial

4,722,585

4,896,544

5,026,497

3,526,308

3,610,320

Multi-family

5,984,930

6,121,472

6,025,179

5,279,659

5,304,544

Other residential

2,866,085

4,949,383

5,060,309

5,228,524

5,373,178

Total real estate mortgage

13,573,600

15,967,399

16,111,985

14,034,491

14,288,042

Real estate construction and land: Commercial

784,166

775,021

759,585

465,266

415,997

Residential

2,573,431

2,470,333

2,399,684

2,272,271

2,049,526

Total real estate construction and land

3,357,597

3,245,354

3,159,269

2,737,537

2,465,523

Total real estate

16,931,197

19,212,753

19,271,254

16,772,028

16,753,565

Commercial: Asset-based

1,968,713

2,061,016

2,189,085

2,287,893

2,357,098

Venture capital

1,456,122

1,513,641

1,446,362

1,464,160

1,723,476

Other commercial

2,446,974

2,245,910

2,129,860

1,002,377

1,014,212

Total commercial

5,871,809

5,820,567

5,765,307

4,754,430

5,094,786

Consumer

425,903

439,702

453,126

394,488

409,859

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

23,228,909

25,473,022

25,489,687

21,920,946

22,258,210

Total unfunded loan commitments

5,256,473

5,482,672

5,578,907

5,289,221

5,845,375

Composition as % of Total Loans and Leases

June 30, 2024

March 31, 2024

December 31, 2023

September 30, 2023

June 30, 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, decreased by $2.2 billion in the second quarter and totaled $23.2 billion at June 30, 2024. The decrease in loans and leases held for investment was primarily due to $1.9 billion of CIVIC loans transferred to held for sale in the second quarter. Loan fundings were $382.5 million in the second quarter at a weighted-average interest rate of 7.80%.

Deposits and Client Investment Funds

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

Composition of Deposits

June 30, 2024

March 31, 2024

December 31, 2023

September 30, 2023

June 30, 2023

(Dollars in thousands)

Noninterest-bearing checking

7,825,007

7,833,608

7,774,254

5,579,033

6,055,358

Interest-bearing: Checking

7,309,833

7,836,097

7,808,764

7,038,808

7,112,807

Money market

4,837,025

5,020,110

6,187,889

5,424,347

5,678,323

Savings

2,040,461

2,016,398

1,997,989

1,441,700

897,277

Time deposits: Non-brokered

2,758,067

2,761,836

3,139,270

3,038,005

2,725,265

Brokered

4,034,057

3,424,358

3,493,603

4,076,788

5,428,053

Total time deposits

6,792,124

6,186,194

6,632,873

7,114,793

8,153,318

Total interest-bearing

20,979,443

21,058,799

22,627,515

21,019,648

21,841,725

Total deposits

28,804,450

28,892,407

30,401,769

26,598,681

27,897,083

Composition as % of Total Deposits

June 30, 2024

March 31, 2024

December 31, 2023

September 30, 2023

June 30, 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 $88 million during the second quarter to $28.8 billion at June 30, 2024, due primarily to decreases of $526 million in interest checking accounts and $183 million in money market accounts, partially offset by an increase of $610 million in brokered time deposits.

Average noninterest-bearing checking totaled $7.88 billion and represented 27% of total average deposits in the second quarter, compared to 26% in the first quarter.

Uninsured and uncollateralized deposits of $6.8 billion represented 24% of total deposits at June 30, 2024, compared to uninsured and uncollateralized deposits of $7.1 billion or 24% of total deposits at March 31, 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 $1.2 billion as of June 30, 2024, of which $0.7 billion was managed by BAM.

Borrowings

Borrowings decreased by approximately $700 million from $2.1 billion at March 31, 2024, to $1.4 billion at June 30, 2024 due primarily to the $1.0 billion paydown of the Bank Term Funding Program balance, offset partially by an increase of $300 million in long-term FHLB borrowings.

Equity

During the second quarter, total stockholders’ equity increased by $13.7 million to $3.4 billion and tangible common equity(1) increased by $4.7 million to $2.5 billion at June 30, 2024. The increase in total stockholders’ equity for the second quarter resulted primarily from net earnings in the second quarter, offset partially by dividends declared and paid.

At June 30, 2024, book value per common share increased to $17.23 compared to $17.13 at March 31, 2024, and tangible book value per common share(1) increased to $15.07 compared to $15.03 at March 31, 2024.

(1)

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

CAPITAL AND LIQUIDITY

Capital ratios remain strong with total risk-based capital at 16.57% and a tier 1 leverage ratio of 9.51% at June 30, 2024.

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

June 30,

March 31,

December 31,

September 30,

June 30,

Capital Ratios

2024 (1)

2024

2023

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

16.57

16.40

16.43

17.83

17.61

Tier 1 risk-based capital ratio

12.62

12.38

12.44

13.84

13.70

Common equity tier 1 capital ratio

10.27

10.09

10.14

11.23

11.16

Tier 1 leverage capital ratio

9.51

9.12

9.00

8.65

7.76

Banc of California Total risk-based capital ratio

16.19

15.88

15.75

16.37

16.07

Tier 1 risk-based capital ratio

13.77

13.34

13.27

13.72

13.48

Common equity tier 1 capital ratio

13.77

13.34

13.27

13.72

13.48

Tier 1 leverage capital ratio

10.38

9.84

9.62

8.57

7.62

____________________

(1)

Capital information for June 30, 2024 is preliminary.

At June 30, 2024, immediately available cash and cash equivalents were $2.5 billion, a decrease of $0.4 billion from March 31, 2024. Combined with total available borrowing capacity of $12.3 billion and unpledged AFS securities of $2.1 billion, total available liquidity was $16.9 billion at the end of the second quarter.

CREDIT QUALITY

Asset Quality Information and Ratios

June 30, 2024

March 31, 2024

December 31, 2023

September 30, 2023

June 30, 2023

(Dollars in thousands)

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

27,962

178,421

113,307

49,970

57,428

90+ days delinquent

55,792

57,573

30,881

77,327

62,322

Total delinquent loans and leases

83,754

235,994

144,188

127,297

119,750

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

0.36

0.93

0.57

0.58

0.54

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

117,070

145,785

62,527

125,396

104,886

90+ days delinquent loans and still accruing

11,750

Total nonperforming loans and leases ("NPLs")

117,070

145,785

74,277

125,396

104,886

Foreclosed assets, net

13,302

12,488

7,394

6,829

8,426

Total nonperforming assets ("NPAs")

130,372

158,273

81,671

132,225

113,312

Allowance for loan and lease losses

247,762

291,503

281,687

222,297

219,234

Allowance for loan and lease losses to NPLs

211.64

199.95

379.24

177.28

209.02

NPLs to loans and leases held for investment

0.50

0.57

0.29

0.57

0.47

NPAs to total assets

0.37

0.44

0.21

0.36

0.30

At June 30, 2024, total delinquent loans and leases were $83.8 million, compared to $236.0 million at March 31, 2024. The $152.2 million decrease in total delinquent loans was due in part to the CIVIC loans transferred to held for sale and included decreases in the 30 to 89 days delinquent category of $69.0 million in commercial real estate mortgage loans, $55.0 million in other residential loans, $11.7 million in asset-based loans, and $8.8 million in multi-family loans. In the 90 or more days delinquent category, there was a $20.3 million decrease in other residential loans that was more than offset by a $21.6 million increase in commercial real estate loans. Total delinquent loans and leases as a percentage of total loans and leases decreased to 0.36% at June 30, 2024, as compared to 0.93% at March 31, 2024.

At June 30, 2024, nonperforming assets were $130.4 million, or 0.37% of total assets, compared to $158.3 million, or 0.44% of total assets, as of March 31, 2024. At June 30, 2024, nonperforming assets included $13.3 million of other real estate owned, consisting entirely of single-family residences.

At June 30, 2024, nonperforming loans were $117.1 million, compared to $145.8 million at March 31, 2024. During the second quarter, nonperforming loans decreased by $28.7 million due to borrowers that became current of $1.3 million, payoffs and paydowns of $24.1 million, net charge-offs of $12.2 million, and transfers to held for sale of $19.5 million, offset partially by additions of $28.3 million.

Nonperforming loans and leases as a percentage of loans and leases held for investment decreased to 0.50% at June 30, 2024 compared to 0.57% at March 31, 2024.

ALLOWANCE FOR CREDIT LOSSES - LOANS

Three Months Ended

Six Months Ended

June 30,

March 31,

June 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

291,503

281,687

210,055

281,687

200,732

Charge-offs

(58,070

)

(5,014

)

(31,708

)

(63,084

)

(42,105

)

Recoveries

2,329

3,830

887

6,159

2,107

Net charge-offs

(55,741

)

(1,184

)

(30,821

)

(56,925

)

(39,998

)

Provision for loan losses

12,000

11,000

40,000

23,000

58,500

Balance at end of period

247,762

291,503

219,234

247,762

219,234

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

28,571

29,571

75,571

29,571

91,071

(Negative provision) provision for credit losses

(1,000

)

(1,000

)

(38,000

)

(2,000

)

(53,500

)

Balance at end of period

27,571

28,571

37,571

27,571

37,571

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

320,074

311,258

285,626

311,258

291,803

Charge-offs

(58,070

)

(5,014

)

(31,708

)

(63,084

)

(42,105

)

Recoveries

2,329

3,830

887

6,159

2,107

Net charge-offs

(55,741

)

(1,184

)

(30,821

)

(56,925

)

(39,998

)

Provision for credit losses

11,000

10,000

2,000

21,000

5,000

Balance at end of period

275,333

320,074

256,805

275,333

256,805

ALLL to loans and leases held for investment

1.07

1.14

0.98

1.07

0.98

ACL to loans and leases held for investment

1.19

1.26

1.15

1.19

1.15

ACL to NPLs

235.19

219.55

244.84

235.19

244.84

ACL to NPAs

211.19

202.23

226.64

211.19

226.64

Annualized net charge-offs to average loans and leases

0.89

0.02

0.46

0.45

0.29

The allowance for credit losses, which includes the reserve for unfunded loan commitments, totaled $275.3 million, or 1.19% of total loans and leases, at June 30, 2024, compared to $320.1 million, or 1.26% of total loans and leases, at March 31, 2024. The $44.7 million decrease in the allowance was due to net charge-offs of $55.7 million, offset partially by the $11.0 million provision. The total net charge-offs of $55.7 million included $28.7 million of CIVIC charge-offs as a result of the related $1.9 billion CIVIC loans reclassified to held for sale. The ACL coverage of nonperforming loans was 235% at June 30, 2024 compared to 220% at March 31, 2024.

Net charge-offs were 0.89% of average loans and leases (annualized) for the second quarter, compared to 0.02% for the first quarter. The increase in net charge-offs in the second quarter was attributable primarily to $28.7 million of CIVIC charge-offs and two large charge-offs of commercial real estate loans secured by office properties.

Conference Call

The Company will host a conference call to discuss its second quarter 2024 financial results at 10:00 a.m. Pacific Time (PT) on Tuesday, July 23, 2024. Interested parties are welcome to attend the conference call by dialing (888) 317-6003 and referencing event code 3283432. 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 1656401.

About Banc of California, Inc.

Banc of California, Inc. (NYSE: BANC) is a bank holding company with over $35 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 more than 90 full-service branches 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

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 Banc of California, Inc. (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.

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

June 30,

March 31,

December 31,

September 30,

June 30,

2024

2023

(Dollars in thousands)

ASSETS: Cash and due from banks

203,467

199,922

202,427

182,261

208,300

Interest-earning deposits in financial institutions

2,495,343

2,885,306

5,175,149

5,887,406

6,489,847

Total cash and cash equivalents

2,698,810

3,085,228

5,377,576

6,069,667

6,698,147

Securities available-for-sale

2,244,031

2,286,682

2,346,864

4,487,172

4,708,519

Securities held-to-maturity

2,296,708

2,291,984

2,287,291

2,282,586

2,278,202

FRB and FHLB stock

132,380

129,314

126,346

17,250

Total investment securities

4,673,119

4,707,980

4,760,501

6,787,008

7,003,971

Loans held for sale

1,935,455

80,752

122,757

188,866

478,146

Gross loans and leases held for investment

23,255,297

25,517,028

25,534,730

21,969,789

22,311,292

Deferred fees, net

(26,388

)

(44,006

)

(45,043

)

(48,843

)

(53,082

)

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

23,228,909

25,473,022

25,489,687

21,920,946

22,258,210

Allowance for loan and lease losses

(247,762

)

(291,503

)

(281,687

)

(222,297

)

(219,234

)

Total loans and leases held for investment, net

22,981,147

25,181,519

25,208,000

21,698,649

22,038,976

Equipment leased to others under operating leases

335,968

339,925

344,325

352,330

380,022

Premises and equipment, net

145,734

144,912

146,798

50,236

57,078

Bank owned life insurance

341,779

341,806

339,643

207,946

206,812

Goodwill

215,925

198,627

Intangible assets, net

148,894

157,226

165,477

24,192

26,581

Deferred tax asset, net

738,534

741,158

739,111

506,248

426,304

Other assets

1,028,474

1,094,383

1,131,249

992,691

1,021,213

Total assets

35,243,839

36,073,516

38,534,064

36,877,833

38,337,250

LIABILITIES: Noninterest-bearing deposits

7,825,007

7,833,608

7,774,254

5,579,033

6,055,358

Interest-bearing deposits

20,979,443

21,058,799

22,627,515

21,019,648

21,841,725

Total deposits

28,804,450

28,892,407

30,401,769

26,598,681

27,897,083

Borrowings

1,440,875

2,139,498

2,911,322

6,294,525

6,357,338

Subordinated debt

939,287

937,717

936,599

870,896

870,378

Accrued interest payable and other liabilities

651,379

709,744

893,609

714,454

679,256

Total liabilities

31,835,991

32,679,366

35,143,299

34,478,556

35,804,055

STOCKHOLDERS' EQUITY: Preferred stock

498,516

Common stock

1,583

1,577

1,231

1,233

Class B non-voting common stock

Non-voting common stock equivalents

101

108

Additional paid-in-capital

3,813,312

3,827,777

3,840,974

2,798,611

2,799,357

Retained (deficit) earnings

(477,010

)

(497,396

)

(518,301

)

(25,399

)

7,892

Accumulated other comprehensive loss, net

(428,659

)

(436,436

)

(432,114

)

(873,682

)

(773,803

)

Total stockholders’ equity

3,407,848

3,394,150

3,390,765

2,399,277

2,533,195

Total liabilities and stockholders’ equity

35,243,839

36,073,516

38,534,064

36,877,833

38,337,250

Common shares outstanding (1)

168,875,712

169,013,629

168,959,063

78,806,969

78,939,024

____________________

(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

Six Months Ended

June 30,

March 31,

June 30,

2024

2023

2024

2023

(In thousands, except per share amounts)

Interest income: Loans and leases

388,853

385,465

408,972

774,318

839,657

Investment securities

33,836

34,303

44,153

68,139

88,390

Deposits in financial institutions

39,900

58,936

86,763

98,836

129,629

Total interest income

462,589

478,704

539,888

941,293

1,057,676

Interest expense: Deposits

186,106

194,807

178,789

380,913

334,681

Borrowings

30,311

38,124

160,914

68,435

230,036

Subordinated debt

16,684

16,671

14,109

33,355

27,611

Total interest expense

233,101

249,602

353,812

482,703

592,328

Net interest income

229,488

229,102

186,076

458,590

465,348

Provision for credit losses

11,000

10,000

2,000

21,000

5,000

Net interest income after provision for credit losses

218,488

219,102

184,076

437,590

460,348

Noninterest income: Service charges on deposit accounts

4,540

4,705

4,315

9,245

7,888

Other commissions and fees

8,629

8,142

11,241

16,771

21,585

Leased equipment income

11,487

11,716

22,387

23,203

36,244

Gain (loss) on sale of loans and leases

1,135

(448

)

(158,881

)

687

(155,919

)

Dividends and gains on equity investments

1,166

3,068

2,658

4,234

3,756

Warrant (loss) income

(324

)

178

(124

)

(146

)

(457

)

LOCOM HFS adjustment

(38

)

330

(11,943

)

292

(11,943

)

Other income

3,197

6,125

2,265

9,322

7,155

Total noninterest income (loss)

29,792

33,816

(128,082

)

63,608

(91,691

)

Noninterest expense: Compensation

85,914

92,236

82,881

178,150

171,357

Occupancy

17,455

17,968

15,383

35,423

30,450

Information technology and data processing

15,459

15,418

12,887

30,877

25,866

Other professional services

5,183

5,075

9,973

10,258

16,046

Insurance and assessments

26,431

20,461

25,635

46,892

37,352

Intangible asset amortization

8,484

8,404

2,389

16,888

4,800

Leased equipment depreciation

7,511

7,520

9,088

15,031

18,463

Acquisition, integration and reorganization costs

(12,650

)

12,394

(12,650

)

20,908

Customer related expense

32,405

30,919

27,302

63,324

51,307

Loan expense

4,332

4,491

5,245

8,823

11,769

Goodwill impairment

1,376,736

Other expense

13,119

8,026

117,260

21,145

128,386

Total noninterest expense

203,643

210,518

320,437

414,161

1,893,440

Earnings (loss) before income taxes

44,637

42,400

(264,443

)

87,037

(1,524,783

)

Income tax expense (benefit)

14,304

11,548

(67,029

)

25,852

(131,945

)

Net earnings (loss)

30,333

30,852

(197,414

)

61,185

(1,392,838

)

Preferred stock dividends

9,947

19,894

Net earnings (loss) available to common and equivalent stockholders

20,386

20,905

(207,361

)

41,291

(1,412,732

)

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

0.12

(2.67

)

0.25

(18.21

)

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

168,432

168,143

77,682

168,287

77,576

____________________

(1)

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

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

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

Profitability and Other Ratios

2024

2023

2024

2023

Return on average assets (1)

0.34

0.33

(1.84

0.34

(6.55

Return on average equity (1)

3.59

3.66

(29.12

3.63

(83.71

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

4.14

4.30

(37.62

4.21

(11.00

Dividend payout ratio (3)

83.33

(0.37

80.00

(1.43

Average yield on loans and leases (1)

6.18

6.08

6.13

6.11

Average yield on interest-earning assets (1)

5.65

5.56

5.28

5.60

5.31

Average cost of interest-bearing deposits (1)

3.58

3.60

3.35

3.59

3.13

Average total cost of deposits (1)

2.60

2.66

2.62

2.63

2.27

Average cost of interest-bearing liabilities (1)

3.93

3.92

4.21

3.93

3.87

Average total cost of funds (1)

2.95

3.02

3.58

2.99

3.07

Net interest spread

1.72

1.64

1.07

1.67

1.44

Net interest margin (1)

2.80

2.66

1.82

2.73

2.34

Noninterest income to total revenue (4)

11.49

12.86

(220.85

12.18

(24.54

Noninterest expense to average total assets (1)

2.29

2.26

2.99

2.27

8.90

Loans to deposits ratio

87.36

88.44

81.50

87.36

81.50

Average loans and leases to average deposits

87.95

86.65

98.56

87.29

93.65

Average investment securities to average total assets

13.00

12.58

16.69

12.78

16.75

Average stockholders' equity to average total assets

9.48

9.03

6.32

9.25

7.82

____________________

(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

June 30, 2024

March 31, 2024

June 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)

25,325,578

388,853

6.18

25,518,590

385,465

6.08

26,992,283

408,972

6.08

Investment securities

4,658,690

33,836

2.92

4,721,556

34,303

2.92

7,183,986

44,153

2.47

Deposits in financial institutions

2,960,292

39,900

5.42

4,374,968

58,936

5.42

6,835,075

86,763

5.09

Total interest-earning assets

32,944,560

462,589

5.65

34,615,114

478,704

5.56

41,011,344

539,888

5.28

Other assets

2,889,907

2,925,593

2,028,985

Total assets

35,834,467

37,540,707

43,040,329

Liabilities and Stockholders' Equity: Interest checking

7,673,902

61,076

3.20

7,883,177

61,549

3.14

6,601,034

46,798

2.84

Money market

4,962,567

32,776

2.66

5,737,837

41,351

2.90

6,590,615

47,008

2.86

Savings

2,002,670

16,996

3.41

2,036,129

18,030

3.56

733,818

3,678

2.01

Time

6,274,242

75,258

4.82

6,108,321

73,877

4.86

7,492,094

81,305

4.35

Total interest-bearing deposits

20,913,381

186,106

3.58

21,765,464

194,807

3.60

21,417,561

178,789

3.35

Borrowings

2,013,600

30,311

6.05

2,892,406

38,124

5.30

11,439,742

160,914

5.64

Subordinated debt

938,367

16,684

7.15

937,005

16,671

7.16

869,419

14,109

6.51

Total interest-bearing liabilities

23,865,348

233,101

3.93

25,594,875

249,602

3.92

33,726,722

353,812

4.21

Noninterest-bearing demand deposits

7,881,620

7,685,027

5,968,625

Other liabilities

692,149

870,273

625,610

Total liabilities

32,439,117

34,150,175

40,320,957

Stockholders' equity

3,395,350

3,390,532

2,719,372

Total liabilities and stockholders' equity

35,834,467

37,540,707

43,040,329

Net interest income

229,488

229,102

186,076

Net interest spread

1.72

1.64

1.07

Net interest margin

2.80

2.66

1.82

Total deposits (2)

28,795,001

186,106

2.60

29,450,491

194,807

2.66

27,386,186

178,789

2.62

Total funds (3)

31,746,968

233,101

2.95

33,279,902

249,602

3.02

39,695,347

353,812

3.58

(1)

Includes net loan discount accretion of $21.8 million and $22.4 million for the three months ended June 30, 2024 and March 31, 2024 and net loan premium amortization of $1.6 million for the three months ended June 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)

Six Months Ended

June 30, 2024

June 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)

25,422,084

774,318

6.13

27,783,379

842,001

6.11

Investment securities

4,690,123

68,139

2.92

7,187,654

88,390

2.48

Deposits in financial institutions

3,667,630

98,836

5.42

5,267,361

129,629

4.96

Total interest-earning assets (1)

33,779,837

941,293

5.60

40,238,394

1,060,020

5.31

Other assets

2,907,750

2,666,878

Total assets

36,687,587

42,905,272

Liabilities and Stockholders' Equity:

Interest checking

7,778,540

122,625

3.17

6,843,720

102,755

3.03

Money market

5,350,202

74,127

2.79

7,754,868

103,232

2.68

Savings

2,019,399

35,026

3.49

665,929

4,277

1.30

Time

6,191,281

149,135

4.84

6,314,566

124,417

3.97

Total interest-bearing deposits

21,339,422

380,913

3.59

21,579,083

334,681

3.13

Borrowings

2,453,003

68,435

5.61

8,381,575

230,036

5.53

Subordinated debt

937,686

33,355

7.15

868,533

27,611

6.41

Total interest-bearing liabilities

24,730,111

482,703

3.93

30,829,191

592,328

3.87

Noninterest-bearing demand deposits

7,783,324

8,089,248

Other liabilities

781,211

631,338

Total liabilities

33,294,646

39,549,777

Stockholders' equity

3,392,941

3,355,495

Total liabilities and stockholders' equity

36,687,587

42,905,272

Net interest income (1)

458,590

467,692

Net interest spread (1)

1.67

1.44

Net interest margin (1)

2.73

2.34

Total deposits (4)

29,122,746

380,913

2.63

29,668,331

334,681

2.27

Total funds (5)

32,513,435

482,703

2.99

38,918,439

592,328

3.07

(1)

Tax equivalent.

(2)

Includes net loan discount accretion of $44.3 million for the six months ended June 30, 2024 and net loan premium amortization of $4.4 million for the six months ended June 30, 2023.

(3)

Includes tax-equivalent adjustments of $0.0 million and $2.3 million for the six months ended June 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, and return on average tangible common equity constitute supplemental financial information determined by methods other than in accordance with GAAP. 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. Banking regulators also exclude goodwill and other intangible assets from stockholders' equity when assessing the capital adequacy of a financial institution.

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 with financial measures defined by GAAP.

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

June 30, 2024

March 31, 2024

December 31, 2023

September 30, 2023

June 30, 2023

(Dollars in thousands, except per share amounts) Stockholders' equity

3,407,848

3,394,150

3,390,765

2,399,277

2,533,195

Less: Preferred stock

498,516

Total common equity

2,909,332

2,895,634

2,892,249

1,900,761

2,034,679

Less: Goodwill and Intangible assets

364,819

355,853

364,104

24,192

26,581

Tangible common equity

2,544,513

2,539,781

2,528,145

1,876,569

2,008,098

Total assets

35,243,839

36,073,516

38,534,064

36,877,833

38,337,250

Less: Goodwill and Intangible assets

364,819

355,853

364,104

24,192

26,581

Tangible assets

34,879,020

35,717,663

38,169,960

36,853,641

38,310,669

Total stockholders' equity to total assets

9.67

9.41

8.80

6.51

6.61

Tangible common equity to tangible assets

7.30

7.11

6.62

5.09

5.24

Book value per common share (1)

17.23

17.13

17.12

24.12

25.78

Tangible book value per common share (2)

15.07

15.03

14.96

23.81

25.44

Common shares outstanding (3)

168,875,712

169,013,629

168,959,063

78,806,969

78,939,024

____________________

(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

Six Months Ended

Return on Average Tangible

June 30,

March 31,

June 30,

Common Equity ("ROATCE")

2024

2023

2024

2023

(Dollars in thousands)

Net earnings (loss)

30,333

30,852

(197,414

)

61,185

(1,392,838

)

Earnings (loss) before income taxes

44,637

42,400

(264,443

)

87,037

(1,524,783

)

Add: Intangible asset amortization

8,484

8,404

2,389

16,888

4,800

Add: Goodwill impairment

1,376,736

Adjusted earnings (loss) before income taxes used for ROATCE

53,121

50,804

(262,054

)

103,925

(143,247

)

Adjusted income tax expense (1)

16,999

13,819

(66,300

)

30,866

(45,839

)

Adjusted net earnings (loss) for ROATCE

36,122

36,985

(195,754

)

73,059

(97,408

)

Less: Preferred stock dividends

9,947

19,894

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

26,175

27,038

(205,701

)

53,165

(117,302

)

Average stockholders' equity

3,395,350

3,390,532

2,719,372

3,392,941

3,355,495

Less: Average intangible assets

352,934

360,680

27,824

356,807

706,072

Less: Average preferred stock

498,516

Average tangible common equity

2,543,900

2,531,336

2,193,032

2,537,618

2,150,907

Return on average equity (2)

3.59

3.66

(29.12

3.63

(83.71

ROATCE (3)

4.14

4.30

(37.62

4.21

(11.00

____________________

(1)

Effective tax rates of 32.0%, 27.2%, and 25.3% used for the three months ended June 30, 2024, March 31, 2024, and June 30, 2023, respectively. Effective tax rate of 29.7% used for the six months ended June 30, 2024. Adjusted effective tax rate of 32.0% used to normalize the effect of goodwill impairment for the six months ended June 30, 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240723125107/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

Banc of California (NYSE:BANC)
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