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

Rhea-AI Summary

Banc of California (NYSE: BANC) reported its Q2 2024 financial results with net earnings of $20.4 million or $0.12 per share, consistent with Q1 2024 earnings. Key highlights include a 3% increase in average noninterest-bearing deposits, a net interest margin of 2.80% (up by 14 basis points), and a reduction in the average total cost of deposits to 2.60%. Liquidity and capital ratios improved significantly following the sale of $1.95 billion CIVIC loans. The CET1 ratio increased to 10.27%, and book value per share rose to $17.23.

Key financial metrics include total revenue of $259.3 million and net interest income of $229.5 million. Noninterest income decreased to $29.8 million while noninterest expense dropped to $203.6 million. The provision for credit losses increased to $11.0 million. The company's strong capital position is reflected in a total risk-based capital ratio of 16.57%.

Positive

• Net earnings of $20.4 million or $0.12 per share.
• Average noninterest-bearing deposits increased by 3%.
• Net interest margin increased by 14 basis points to 2.80%.
• Book value per share increased to $17.23.
• High liquidity with available $16.9 billion.
• Total risk-based capital ratio of 16.57%.

Negative

• Noninterest income decreased by $4.0 million to $29.8 million.
• Provision for credit losses increased to $11.0 million.
• Total revenue decreased slightly compared to the previous quarter.

Insights

Financial Analyst

Banc of California has reported steady earnings per diluted share of $0.12 and net earnings of $20.4 million for Q2 2024, consistent with Q1 2024. While there hasn't been a dramatic increase in earnings, several key metrics indicate financial health and potential for future growth. Notably, the net interest margin expanded to 2.80%, an improvement from 2.66% in the previous quarter. This suggests effective management of interest-earning assets and liabilities, important in a challenging rate environment.

The decrease in nonperforming assets to 0.37% of total assets and the significant loan sale improving liquidity and capital ratios underscore the bank's proactive risk management. The CET1 ratio at 10.27% and strong liquidity position further reinforce the bank's stability. These factors, coupled with a book value per share increase to $17.23, signal a robust financial standing, making the stock a stable choice for long-term investors.

Market Research Analyst

The market response to Banc of California's Q2 2024 results is likely to be cautiously optimistic. The 3% increase in noninterest-bearing deposits signals growing customer trust and a healthy deposit base. The strategic sale of $1.95 billion in CIVIC loans reflects a focus on capital optimization, likely enhancing the company's market competitiveness. Moreover, reducing the total cost of deposits and funds while increasing the net interest margin shows effective cost management strategies, which could drive future profitability.

However, the slight decline in total deposits by $88 million from Q1 to Q2 2024 might raise some concerns. Despite this, the increase in brokered time deposits helps mitigate the impact. Investors may view these moves as part of a broader strategy to stabilize and maximize returns in a fluctuating market. Overall, these financial maneuvers position Banc of California well in the competitive banking landscape.

Banking Industry Expert

Banc of California's ability to maintain strong capital ratios, such as a Total risk-based capital ratio of 16.57% and a Tier 1 leverage ratio of 9.51%, is commendable. These figures are well above regulatory requirements, indicating the bank's solid capital base and prudent risk management. The successful completion of the core systems conversion further enhances operational efficiencies across the platform, potentially reducing long-term costs and improving customer service.

The strategic divestment of non-core CIVIC loans and the subsequent liquidity boost highlights a focused approach to balance sheet management. This move is likely to free up resources for more profitable ventures while maintaining stringent asset quality controls. The ongoing focus on optimizing the business for sustainable growth aligns with industry trends towards consolidation and efficiency.

Overall, Banc of California's latest financial results and strategic initiatives paint a picture of a well-managed institution poised for steady growth amidst a challenging economic environment.

LOS ANGELES--(BUSINESS WIRE)-- 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,				June 30,
Summary Income Statement		2024				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				9,947				9,947				19,894				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				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			20	%			19	%			20	%			16	%			16	%
Multi-family			26	%			24	%			23	%			24	%			24	%
Other residential			12	%			19	%			20	%			24	%			24	%
Total real estate mortgage			58	%			62	%			63	%			64	%			64	%
Real estate construction and land:
Commercial			4	%			3	%			3	%			2	%			2	%
Residential			11	%			10	%			9	%			10	%			9	%
Total real estate construction and land			15	%			13	%			12	%			12	%			11	%
Total real estate			73	%			75	%			75	%			76	%			75	%
Commercial:
Asset-based			8	%			8	%			9	%			10	%			11	%
Venture capital			6	%			6	%			6	%			7	%			8	%
Other commercial			11	%			9	%			8	%			5	%			4	%
Total commercial			25	%			23	%			23	%			22	%			23	%
Consumer			2	%			2	%			2	%			2	%			2	%
Total loans and leases held for investment, net of deferred fees			100	%			100	%			100	%			100	%			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			27	%			27	%			26	%			21	%			22	%
Interest-bearing:
Checking			25	%			27	%			26	%			27	%			26	%
Money market			17	%			17	%			20	%			20	%			20	%
Savings			7	%			7	%			6	%			5	%			3	%
Time deposits:
Non-brokered			10	%			10	%			10	%			12	%			10	%
Brokered			14	%			12	%			12	%			15	%			19	%
Total time deposits			24	%			22	%			22	%			27	%			29	%
Total interest-bearing			73	%			73	%			74	%			79	%			78	%
Total deposits			100	%			100	%			100	%			100	%			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			2023			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,				June 30,
Allowance for Credit Losses - Loans		2024				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				2024				2023				2023				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				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				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				498,516				498,516				498,516				498,516
Common stock			1,583				1,583				1,577				1,231				1,233
Class B non-voting common stock			5				5				5				-				-
Non-voting common stock equivalents			101				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,				June 30,
		2024				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				9,947				9,947				19,894				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			$	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,			June 30,
Profitability and Other Ratios		2024			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	%		83.33	%		(0.37	)%		80.00	%		(1.43	)%
Average yield on loans and leases (1)		6.18	%		6.08	%		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
		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
		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				498,516				498,516				498,516				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,				June 30,
Common Equity ("ROATCE")		2024				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				9,947				9,947				19,894				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				498,516				498,516				498,516				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

Source: Banc of California, Inc.

FAQ

What were Banc of California's earnings per share for Q2 2024?

Banc of California reported earnings per share of $0.12 for Q2 2024.

Did Banc of California's net interest margin improve in Q2 2024?

Yes, Banc of California's net interest margin improved to 2.80%, up by 14 basis points from the previous quarter.

How did Banc of California's average noninterest-bearing deposits change in Q2 2024?

The average noninterest-bearing deposits increased by $196.5 million, or 3%, in Q2 2024.

What was Banc of California's book value per share at the end of Q2 2024?

The book value per share was $17.23 at the end of Q2 2024.

What impact did the sale of CIVIC loans have on Banc of California's liquidity in Q2 2024?

The sale of $1.95 billion CIVIC loans significantly increased liquidity and improved capital ratios.