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

Rhea-AI Summary

Banc of California (NYSE: BANC) reported a net loss of $1.2 million, or $0.01 per diluted share, for Q3 2024. Adjusted earnings were $41.4 million, or $0.25 per diluted share. Key highlights include:

- Closed sale of $1.95 billion Civic loans, generating $1.91 billion in net proceeds
- Repositioned $742 million of securities, resulting in a $60 million pre-tax loss
- Net interest margin increased to 2.93%, up 13 basis points from Q2
- Average noninterest-bearing deposits increased to 28% of total deposits
- Achieved Q4 2024 cost targets early, with noninterest expenses down 4% to $196.2 million
- Strong capital ratios, including 10.45% CET1 ratio
- Book value per share increased to $17.75

The company is now focusing on external growth after completing major balance sheet and operational initiatives.

Positive

• Net interest margin increased to 2.93%, up 13 basis points from Q2
• Average noninterest-bearing deposits increased to 28% of total deposits
• Achieved Q4 2024 cost targets early, with noninterest expenses down 4% to $196.2 million
• Strong capital ratios, including 10.45% CET1 ratio
• Book value per share increased to $17.75
• Completed sale of $1.95 billion Civic loans, improving capital and liquidity

Negative

• Reported net loss of $1.2 million, or $0.01 per diluted share
• Incurred $60 million pre-tax loss from repositioning $742 million of securities

Insights

Financial Analyst

Banc of California's Q3 2024 results reflect significant balance sheet repositioning efforts. The $0.01 loss per share was primarily due to a $60 million pre-tax loss from securities portfolio restructuring. However, adjusted earnings of $0.25 per share show underlying strength.

Key positives include:

• Net interest margin improvement to 2.93%, up 13 basis points quarter-over-quarter
• Reduction in deposit and funding costs
• Increase in noninterest-bearing deposits to 28% of total deposits
• Strong capital ratios, with CET1 at 10.45%

The sale of $1.95 billion Civic loans and securities repositioning should improve future interest income. However, the $60 million loss on securities sales is a short-term hit to profitability.

Overall, these actions position the bank for improved profitability going forward, but investors should monitor loan growth and credit quality in coming quarters.

Banking Industry Specialist

Banc of California's Q3 results showcase a strategic pivot towards optimizing its balance sheet and operational efficiency. The completion of major initiatives like the Civic loan sale, securities portfolio restructuring and branch consolidation signals a shift from internal transformation to a growth-focused strategy.

Notable developments include:

• Successful reduction of higher-cost funding sources
• Early achievement of Q4 2024 cost targets
• Completion of core system conversion
• Consolidation of 12 branches

The bank's focus on expanding client relationships and increasing market share in an improving economic environment could drive future growth. However, the effectiveness of this strategy and the bank's ability to capitalize on its strengthened position remain to be seen.

Investors should closely monitor the bank's ability to translate these structural improvements into sustained earnings growth and market share gains in upcoming quarters.

LOS ANGELES--(BUSINESS WIRE)-- Banc of California, Inc. (NYSE: BANC):

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

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

10.45% CET1 Ratio

28% Average Noninterest-Bearing Deposits to Average Total Deposits

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

Third quarter highlights include:

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

(1)

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

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

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

INCOME STATEMENT HIGHLIGHTS

		Three Months Ended												Nine Months Ended
		September 30,				June 30,				September 30,				September 30,
Summary Income Statement		2024				2024				2023				2024				2023
		(In thousands)
Total interest income		$	446,893			$	462,589			$	446,084			$	1,388,186			$	1,503,760
Total interest expense			214,718				233,101				315,355				697,421				907,683
Net interest income			232,175				229,488				130,729				690,765				596,077
Provision for credit losses			9,000				11,000				-				30,000				5,000
(Loss) gain on sale of loans			(62	)			1,135				(1,901	)			625				(157,820	)
Loss on sale of securities			(59,946	)			-				-				(59,946	)			-
Other noninterest income			44,556				28,657				45,709				107,477				109,937
Total noninterest (loss) income			(15,452	)			29,792				43,808				48,156				(47,883	)
Total revenue			216,723				259,280				174,537				738,921				548,194
Goodwill impairment			-				-				-				-				1,376,736
Acquisition, integration and reorganization costs			(510	)			(12,650	)			9,925				(13,160	)			30,833
Other noninterest expense			196,719				216,293				191,178				623,530				686,974
Total noninterest expense			196,209				203,643				201,103				610,370				2,094,543
Earnings (loss) before income taxes			11,514				44,637				(26,566	)			98,551				(1,551,349	)
Income tax expense (benefit)			2,730				14,304				(3,222	)			28,582				(135,167	)
Net earnings (loss)			8,784				30,333				(23,344	)			69,969				(1,416,182	)
Preferred stock dividends			9,947				9,947				9,947				29,841				29,841
Net (loss) earnings available to common and equivalent stockholders		$	(1,163	)		$	20,386			$	(33,291	)		$	40,128			$	(1,446,023	)

Net Interest Income

Q3-2024 vs Q2-2024

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

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

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

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

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

YTD September 30, 2024 vs YTD September 30, 2023

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

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

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

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

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

Provision For Credit Losses

Q3-2024 vs Q2-2024

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

YTD September 30, 2024 vs YTD September 30, 2023

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

Noninterest Income

Q3-2024 vs Q2-2024

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

YTD September 30, 2024 vs YTD September 30, 2023

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

Noninterest Expense

Q3-2024 vs Q2-2024

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

YTD September 30, 2024 vs YTD September 30, 2023

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

Income Taxes

Q3-2024 vs Q2-2024

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

YTD September 30, 2024 vs YTD September 30, 2023

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

BALANCE SHEET HIGHLIGHTS

		September 30,				June 30,				September 30,				Increase (Decrease)
Selected Balance Sheet Items		2024				2024				2023				QoQ				YoY
		(In thousands)
Cash and cash equivalents		$	2,554,227			$	2,698,810			$	6,069,667			$	(144,583	)		$	(3,515,440	)
Securities available-for-sale			2,300,284				2,244,031				4,487,172				56,253				(2,186,888	)
Securities held-to-maturity			2,301,263				2,296,708				2,282,586				4,555				18,677
Loans held for sale			28,639				1,935,455				188,866				(1,906,816	)			(160,227	)
Loans and leases held for investment, net of deferred fees			23,527,777				23,228,909				21,920,946				298,868				1,606,831
Total assets			33,432,613				35,243,839				36,877,833				(1,811,226	)			(3,445,220	)
Noninterest-bearing deposits		$	7,811,796			$	7,825,007			$	5,579,033			$	(13,211	)		$	2,232,763
Total deposits			26,828,269				28,804,450				26,598,681				(1,976,181	)			229,588
Borrowings			1,591,833				1,440,875				6,294,525				150,958				(4,702,692	)
Total liabilities			29,936,415				31,835,991				34,478,556				(1,899,576	)			(4,542,141	)
Total stockholders' equity			3,496,198				3,407,848				2,399,277				88,350				1,096,921

Securities

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

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

Loans and Leases

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

		September 30,				June 30,				March 31,				December 31,				September 30,
Composition of Loans and Leases		2024				2024				2024				2023				2023
		(Dollars in thousands)
Real estate mortgage:
Commercial		$	4,557,939			$	4,722,585			$	4,896,544			$	5,026,497			$	3,526,308
Multi-family			6,009,280				5,984,930				6,121,472				6,025,179				5,279,659
Other residential			2,767,187				2,866,085				4,949,383				5,060,309				5,228,524
Total real estate mortgage			13,334,406				13,573,600				15,967,399				16,111,985				14,034,491
Real estate construction and land:
Commercial			836,902				784,166				775,021				759,585				465,266
Residential			2,622,507				2,573,431				2,470,333				2,399,684				2,272,271
Total real estate construction and land			3,459,409				3,357,597				3,245,354				3,159,269				2,737,537
Total real estate			16,793,815				16,931,197				19,212,753				19,271,254				16,772,028
Commercial:
Asset-based			2,115,311				1,968,713				2,061,016				2,189,085				2,287,893
Venture capital			1,353,626				1,456,122				1,513,641				1,446,362				1,464,160
Other commercial			2,850,535				2,446,974				2,245,910				2,129,860				1,002,377
Total commercial			6,319,472				5,871,809				5,820,567				5,765,307				4,754,430
Consumer			414,490				425,903				439,702				453,126				394,488
Total loans and leases held for investment, net of deferred fees		$	23,527,777			$	23,228,909			$	25,473,022			$	25,489,687			$	21,920,946
Total unfunded loan commitments		$	5,008,449			$	5,256,473			$	5,482,672			$	5,578,907			$	5,289,221
Composition as % of Total		September 30,				June 30,				March 31,				December 31,				September 30,
Loans and Leases		2024				2024				2024				2023				2023
Real estate mortgage:
Commercial			19	%			20	%			19	%			20	%			16	%
Multi-family			25	%			26	%			24	%			23	%			24	%
Other residential			12	%			12	%			19	%			20	%			24	%
Total real estate mortgage			56	%			58	%			62	%			63	%			64	%
Real estate construction and land:
Commercial			4	%			4	%			3	%			3	%			2	%
Residential			11	%			11	%			10	%			9	%			10	%
Total real estate construction and land			15	%			15	%			13	%			12	%			12	%
Total real estate			71	%			73	%			75	%			75	%			76	%
Commercial:
Asset-based			9	%			8	%			8	%			9	%			10	%
Venture capital			6	%			6	%			6	%			6	%			7	%
Other commercial			12	%			11	%			9	%			8	%			5	%
Total commercial			27	%			25	%			23	%			23	%			22	%
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, increased by $298.9 million in the third quarter and totaled $23.5 billion at September 30, 2024. The increase in loans and leases held for investment was due primarily to increased balances in the lender finance, warehouse lending, and real estate construction portfolios. Loan fundings were $699.6 million in the third quarter at a weighted average interest rate of 8.29%.

Credit Quality

		September 30,				June 30,				March 31,				December 31,				September 30,
Asset Quality Information and Ratios		2024				2024				2024				2023				2023
		(Dollars in thousands)
Delinquent loans and leases held for investment:
30 to 89 days delinquent		$	52,927			$	27,962			$	178,421			$	113,307			$	49,970
90+ days delinquent			72,037				55,792				57,573				30,881				77,327
Total delinquent loans and leases		$	124,964			$	83,754			$	235,994			$	144,188			$	127,297
Total delinquent loans and leases to loans and leases held for investment			0.53	%			0.36	%			0.93	%			0.57	%			0.58	%
Nonperforming assets, excluding loans held for sale:
Nonaccrual loans and leases		$	168,341			$	117,070			$	145,785			$	62,527			$	125,396
90+ days delinquent loans and still accruing			-				-				-				11,750				-
Total nonperforming loans and leases ("NPLs")			168,341				117,070				145,785				74,277				125,396
Foreclosed assets, net			8,661				13,302				12,488				7,394				6,829
Total nonperforming assets ("NPAs")		$	177,002			$	130,372			$	158,273			$	81,671			$	132,225
Classified loans and leases held for investment		$	533,591			$	415,498			$	366,729			$	228,417			$	211,095
Allowance for loan and lease losses		$	254,345			$	247,762			$	291,503			$	281,687			$	222,297
Allowance for loan and lease losses to NPLs			151.09	%			211.64	%			199.95	%			379.24	%			177.28	%
NPLs to loans and leases held for investment			0.72	%			0.50	%			0.57	%			0.29	%			0.57	%
NPAs to total assets			0.53	%			0.37	%			0.44	%			0.21	%			0.36	%
Classified loans and leases to loans and leases held for investment			2.27	%			1.79	%			1.44	%			0.90	%			0.96	%

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

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

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

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

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

Allowance for Credit Losses – Loans

		Three Months Ended												Nine Months Ended
		September 30,				June 30,				September 30,				September 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		$	247,762			$	291,503			$	219,234			$	281,687			$	200,732
Charge-offs			(4,163	)			(58,070	)			(6,695	)			(67,247	)			(48,800	)
Recoveries			1,746				2,329				1,758				7,905				3,865
Net charge-offs			(2,417	)			(55,741	)			(4,937	)			(59,342	)			(44,935	)
Provision for loan losses			9,000				12,000				8,000				32,000				66,500
Balance at end of period		$	254,345			$	247,762			$	222,297			$	254,345			$	222,297
Reserve for unfunded loan commitments
("RUC"):
Balance at beginning of period		$	27,571			$	28,571			$	37,571			$	29,571			$	91,071
(Negative provision) provision for credit losses			-				(1,000	)			(8,000	)			(2,000	)			(61,500	)
Balance at end of period		$	27,571			$	27,571			$	29,571			$	27,571			$	29,571
Allowance for credit losses ("ACL") -
Loans:
Balance at beginning of period		$	275,333			$	320,074			$	256,805			$	311,258			$	291,803
Charge-offs			(4,163	)			(58,070	)			(6,695	)			(67,247	)			(48,800	)
Recoveries			1,746				2,329				1,758				7,905				3,865
Net charge-offs			(2,417	)			(55,741	)			(4,937	)			(59,342	)			(44,935	)
Provision for credit losses			9,000				11,000				-				30,000				5,000
Balance at end of period		$	281,916			$	275,333			$	251,868			$	281,916			$	251,868
ALLL to loans and leases held for investment			1.08	%			1.07	%			1.01	%			1.08	%			1.01	%
ACL to loans and leases held for investment			1.20	%			1.19	%			1.15	%			1.20	%			1.15	%
ACL to NPLs			167.47	%			235.19	%			200.86	%			167.47	%			200.86	%
ACL to NPAs			159.27	%			211.19	%			190.48	%			159.27	%			190.48	%
Annualized net charge-offs to average loans and leases			0.04	%			0.89	%			0.09	%			0.32	%			0.23	%

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

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

Deposits and Client Investment Funds

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

		September 30,				June 30,				March 31,				December 31,				September 30,
Composition of Deposits		2024				2024				2024				2023				2023
		(Dollars in thousands)
Noninterest-bearing checking		$	7,811,796			$	7,825,007			$	7,833,608			$	7,774,254			$	5,579,033
Interest-bearing:
Checking			7,539,899				7,309,833				7,836,097				7,808,764				7,038,808
Money market			5,039,607				4,837,025				5,020,110				6,187,889				5,424,347
Savings			1,992,364				2,040,461				2,016,398				1,997,989				1,441,700
Time deposits:
Non-brokered			2,451,340				2,758,067				2,761,836				3,139,270				3,038,005
Brokered			1,993,263				4,034,057				3,424,358				3,493,603				4,076,788
Total time deposits			4,444,603				6,792,124				6,186,194				6,632,873				7,114,793
Total interest-bearing			19,016,473				20,979,443				21,058,799				22,627,515				21,019,648
Total deposits		$	26,828,269			$	28,804,450			$	28,892,407			$	30,401,769			$	26,598,681
		September 30,				June 30,				March 31,				December 31,				September 30,
Composition as % of Total Deposits		2024				2024				2024				2023				2023
Noninterest-bearing checking			29	%			27	%			27	%			26	%			21	%
Interest-bearing:
Checking			28	%			25	%			27	%			26	%			27	%
Money market			19	%			17	%			17	%			20	%			20	%
Savings			7	%			7	%			7	%			6	%			5	%
Time deposits:
Non-brokered			9	%			10	%			10	%			10	%			12	%
Brokered			8	%			14	%			12	%			12	%			15	%
Total time deposits			17	%			24	%			22	%			22	%			27	%
Total interest-bearing			71	%			73	%			73	%			74	%			79	%
Total deposits			100	%			100	%			100	%			100	%			100	%

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

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

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

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

Borrowings

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

Equity

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

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

(1)

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

CAPITAL AND LIQUIDITY

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

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

		September 30,			June 30,			March 31,			December 31,			September 30,
Capital Ratios		2024 (1)			2024			2024			2023			2023
Banc of California, Inc.
Total risk-based capital ratio		16.98	%		16.57	%		16.40	%		16.43	%		17.83	%
Tier 1 risk-based capital ratio		12.87	%		12.62	%		12.38	%		12.44	%		13.84	%
Common equity tier 1 capital ratio		10.45	%		10.27	%		10.09	%		10.14	%		11.23	%
Tier 1 leverage capital ratio		9.83	%		9.51	%		9.12	%		9.00	%		8.65	%
Banc of California
Total risk-based capital ratio		16.59	%		16.19	%		15.88	%		15.75	%		16.37	%
Tier 1 risk-based capital ratio		14.07	%		13.77	%		13.34	%		13.27	%		13.72	%
Common equity tier 1 capital ratio		14.07	%		13.77	%		13.34	%		13.27	%		13.72	%
Tier 1 leverage capital ratio		10.74	%		10.38	%		9.84	%		9.62	%		8.57	%

____________________
(1)		Capital information for September 30, 2024 is preliminary.

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

Conference Call

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

About Banc of California, Inc.

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

Forward-Looking Statements and Other Matters

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

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

Non-GAAP Financial Measures

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

BANC OF CALIFORNIA, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
		September 30,				June 30,				March 31,				December 31,				September 30,
		2024				2024				2024				2023				2023
		(Dollars in thousands)
ASSETS:
Cash and due from banks		$	251,869			$	203,467			$	199,922			$	202,427			$	182,261
Interest-earning deposits in financial institutions			2,302,358				2,495,343				2,885,306				5,175,149				5,887,406
Total cash and cash equivalents			2,554,227				2,698,810				3,085,228				5,377,576				6,069,667
Securities available-for-sale			2,300,284				2,244,031				2,286,682				2,346,864				4,487,172
Securities held-to-maturity			2,301,263				2,296,708				2,291,984				2,287,291				2,282,586
FRB and FHLB stock			145,123				132,380				129,314				126,346				17,250
Total investment securities			4,746,670				4,673,119				4,707,980				4,760,501				6,787,008
Loans held for sale			28,639				1,935,455				80,752				122,757				188,866
Gross loans and leases held for investment			23,553,534				23,255,297				25,517,028				25,534,730				21,969,789
Deferred fees, net			(25,757	)			(26,388	)			(44,006	)			(45,043	)			(48,843	)
Total loans and leases held for investment, net of deferred fees			23,527,777				23,228,909				25,473,022				25,489,687				21,920,946
Allowance for loan and lease losses			(254,345	)			(247,762	)			(291,503	)			(281,687	)			(222,297	)
Total loans and leases held for investment, net			23,273,432				22,981,147				25,181,519				25,208,000				21,698,649
Equipment leased to others under operating leases			314,998				335,968				339,925				344,325				352,330
Premises and equipment, net			143,200				145,734				144,912				146,798				50,236
Bank owned life insurance			343,212				341,779				341,806				339,643				207,946
Goodwill			216,770				215,925				198,627				198,627				-
Intangible assets, net			140,562				148,894				157,226				165,477				24,192
Deferred tax asset, net			706,849				738,534				741,158				739,111				506,248
Other assets			964,054				1,028,474				1,094,383				1,131,249				992,691
Total assets		$	33,432,613			$	35,243,839			$	36,073,516			$	38,534,064			$	36,877,833
LIABILITIES:
Noninterest-bearing deposits		$	7,811,796			$	7,825,007			$	7,833,608			$	7,774,254			$	5,579,033
Interest-bearing deposits			19,016,473				20,979,443				21,058,799				22,627,515				21,019,648
Total deposits			26,828,269				28,804,450				28,892,407				30,401,769				26,598,681
Borrowings			1,591,833				1,440,875				2,139,498				2,911,322				6,294,525
Subordinated debt			942,151				939,287				937,717				936,599				870,896
Accrued interest payable and other liabilities			574,162				651,379				709,744				893,609				714,454
Total liabilities			29,936,415				31,835,991				32,679,366				35,143,299				34,478,556
STOCKHOLDERS' EQUITY:
Preferred stock			498,516				498,516				498,516				498,516				498,516
Common stock			1,586				1,583				1,583				1,577				1,231
Class B non-voting common stock			5				5				5				5				-
Non-voting common stock equivalents			98				101				101				108				-
Additional paid-in-capital			3,802,314				3,813,312				3,827,777				3,840,974				2,798,611
Retained deficit			(478,173	)			(477,010	)			(497,396	)			(518,301	)			(25,399	)
Accumulated other comprehensive loss, net			(328,148	)			(428,659	)			(436,436	)			(432,114	)			(873,682	)
Total stockholders’ equity			3,496,198				3,407,848				3,394,150				3,390,765				2,399,277
Total liabilities and stockholders’ equity		$	33,432,613			$	35,243,839			$	36,073,516			$	38,534,064			$	36,877,833
Common shares outstanding (1)			168,879,566				168,875,712				169,013,629				168,959,063				78,806,969

____________________
(1)		Common shares outstanding include non-voting common equivalents that are participating securities.

BANC OF CALIFORNIA, INC.
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) (UNAUDITED)
		Three Months Ended												Nine Months Ended
		September 30,				June 30,				September 30,				September 30,
		2024				2024				2023				2024				2023
		(In thousands, except per share amounts)
Interest income:
Loans and leases		$	369,913			$	388,853			$	310,392			$	1,144,231			$	1,150,049
Investment securities			34,912				33,836				45,326				103,051				133,716
Deposits in financial institutions			42,068				39,900				90,366				140,904				219,995
Total interest income			446,893				462,589				446,084				1,388,186				1,503,760
Interest expense:
Deposits			180,986				186,106				205,982				561,899				540,663
Borrowings			16,970				30,311				94,234				85,405				324,270
Subordinated debt			16,762				16,684				15,139				50,117				42,750
Total interest expense			214,718				233,101				315,355				697,421				907,683
Net interest income			232,175				229,488				130,729				690,765				596,077
Provision for credit losses			9,000				11,000				-				30,000				5,000
Net interest income after provision for credit losses			223,175				218,488				130,729				660,765				591,077
Noninterest income:
Service charges on deposit accounts			4,568				4,540				4,018				13,813				11,906
Other commissions and fees			8,256				8,629				7,641				25,027				29,226
Leased equipment income			17,176				11,487				14,554				40,379				50,798
(Loss) gain on sale of loans and leases			(62	)			1,135				(1,901	)			625				(157,820	)
Loss on sale of securities			(59,946	)			-				-				(59,946	)			-
Dividends and gains on equity investments			3,730				1,166				3,837				7,964				7,593
Warrant income (loss)			211				(324	)			(88	)			65				(545	)
LOCOM HFS adjustment			(74	)			(38	)			307				218				(11,636	)
Other income			10,689				3,197				15,440				20,011				22,595
Total noninterest (loss) income			(15,452	)			29,792				43,808				48,156				(47,883	)
Noninterest expense:
Compensation			85,585				85,914				71,642				263,735				242,999
Occupancy			16,892				17,455				15,293				52,315				45,743
Information technology and data processing			14,995				15,459				12,840				45,872				38,706
Other professional services			5,101				5,183				5,597				15,359				21,643
Insurance and assessments			12,708				26,431				38,298				59,600				75,650
Intangible asset amortization			8,485				8,484				2,389				25,373				7,189
Leased equipment depreciation			7,144				7,511				8,333				22,175				26,796
Acquisition, integration and reorganization costs			(510	)			(12,650	)			9,925				(13,160	)			30,833
Customer related expense			34,475				32,405				26,971				97,799				78,278
Loan expense			3,994				4,332				4,243				12,817				16,012
Goodwill impairment			-				-				-				-				1,376,736
Other expense			7,340				13,119				5,572				28,485				133,958
Total noninterest expense			196,209				203,643				201,103				610,370				2,094,543
Earnings (loss) before income taxes			11,514				44,637				(26,566	)			98,551				(1,551,349	)
Income tax expense (benefit)			2,730				14,304				(3,222	)			28,582				(135,167	)
Net earnings (loss)			8,784				30,333				(23,344	)			69,969				(1,416,182	)
Preferred stock dividends			9,947				9,947				9,947				29,841				29,841
Net (loss) earnings available to common and equivalent stockholders		$	(1,163	)		$	20,386			$	(33,291	)		$	40,128			$	(1,446,023	)
Basic and diluted (loss) earnings per common share (1)		$	(0.01	)		$	0.12			$	(0.42	)		$	0.24			$	(18.61	)
Basic and diluted weighted average number of common shares outstanding (1)			168,583				168,432				77,881				168,386				77,678

____________________
(1)		Common shares include non-voting common equivalents that are participating securities.

BANC OF CALIFORNIA, INC.
SELECTED FINANCIAL DATA
(UNAUDITED)
		Three Months Ended									Nine Months Ended
		September 30,			June 30,			September 30,			September 30,
Profitability and Other Ratios		2024			2024			2023			2024			2023
Return on average assets (1)		0.10	%		0.34	%		(0.24	)%		0.26	%		(4.60	)%
Adjusted ROAA (1)(2)		0.59	%		0.34	%		(0.16	)%		0.41	%		0.40	%
Return on average equity (1)		1.01	%		3.59	%		(3.73	)%		2.74	%		(61.86	)%
Return on average tangible common equity (1)(2)		0.70	%		4.42	%		(6.47	)%		3.13	%		(11.66	)%
Adjusted return on average tangible common equity (1)(2)		7.30	%		4.42	%		(4.64	)%		5.12	%		6.31	%
Dividend payout ratio (3)		(1000.00	)%		83.33	%		(2.38	)%		125.00	%		(1.45	)%
Average yield on loans and leases (1)		6.18	%		6.18	%		5.54	%		6.14	%		5.95	%
Average yield on interest-earning assets (1)		5.63	%		5.65	%		4.94	%		5.61	%		5.20	%
Average cost of interest-bearing deposits (1)		3.52	%		3.58	%		3.78	%		3.57	%		3.35	%
Average total cost of deposits (1)		2.54	%		2.60	%		2.98	%		2.60	%		2.50	%
Average cost of interest-bearing liabilities (1)		3.80	%		3.93	%		4.34	%		3.89	%		4.03	%
Average total cost of funds (1)		2.82	%		2.95	%		3.61	%		2.93	%		3.24	%
Net interest spread		1.83	%		1.72	%		0.60	%		1.72	%		1.17	%
Net interest margin (1)		2.93	%		2.80	%		1.45	%		2.79	%		2.07	%
Noninterest income to total revenue (4)		(7.13	)%		11.49	%		25.10	%		6.52	%		(8.73	)%
Noninterest expense to average total assets (1)		2.27	%		2.29	%		2.11	%		2.27	%		6.80	%
Loans to deposits ratio		87.80	%		87.36	%		83.12	%		87.80	%		83.12	%
Average loans and leases to average deposits		84.05	%		87.95	%		81.03	%		86.22	%		89.61	%
Average investment securities to average total assets		13.55	%		13.00	%		18.30	%		13.03	%		17.23	%
Average stockholders' equity to average total assets		10.03	%		9.48	%		6.56	%		9.50	%		7.43	%

____________________
(1)		Annualized.
(2)		Non-GAAP measure.
(3)		Ratio calculated by dividing dividends declared per common and equivalent share by basic earnings per common and equivalent share.
(4)		Total revenue equals the sum of net interest income and noninterest income.

BANC OF CALIFORNIA, INC.
AVERAGE BALANCE, AVERAGE YIELD EARNED, AND AVERAGE COST PAID
(UNAUDITED)
		Three Months Ended
		September 30, 2024									June 30, 2024									September 30, 2023
					Interest			Average						Interest			Average						Interest			Average
		Average			Income/			Yield/			Average			Income/			Yield/			Average			Income/			Yield/
		Balance			Expense			Cost			Balance			Expense			Cost			Balance			Expense			Cost
		(Dollars in thousands)
Assets:
Loans and leases (1)		$	23,803,691		$	369,913		6.18	%		$	25,325,578		$	388,853		6.18	%		$	22,226,390		$	310,392		5.54	%
Investment securities			4,665,549			34,912		2.98	%			4,658,690			33,836		2.92	%			6,919,948			45,326		2.60	%
Deposits in financial institutions			3,106,227			42,068		5.39	%			2,960,292			39,900		5.42	%			6,645,335			90,366		5.40	%
Total interest-earning assets			31,575,467			446,893		5.63	%			32,944,560			462,589		5.65	%			35,791,673			446,084		4.94	%
Other assets			2,850,718									2,889,907									2,016,085
Total assets		$	34,426,185								$	35,834,467								$	37,807,758
Liabilities and Stockholders' Equity:
Interest checking		$	7,644,515			61,880		3.22	%		$	7,673,902			61,076		3.20	%		$	6,983,013			57,237		3.25	%
Money market			4,958,777			32,361		2.60	%			4,962,567			32,776		2.66	%			5,662,980			42,516		2.98	%
Savings			2,028,931			17,140		3.36	%			2,002,670			16,996		3.41	%			1,163,827			10,255		3.50	%
Time			5,841,965			69,605		4.74	%			6,274,242			75,258		4.82	%			7,801,880			95,974		4.88	%
Total interest-bearing deposits			20,474,188			180,986		3.52	%			20,913,381			186,106		3.58	%			21,611,700			205,982		3.78	%
Borrowings			1,063,541			16,970		6.35	%			2,013,600			30,311		6.05	%			6,325,537			94,234		5.91	%
Subordinated debt			940,480			16,762		7.09	%			938,367			16,684		7.15	%			870,968			15,139		6.90	%
Total interest-bearing liabilities			22,478,209			214,718		3.80	%			23,865,348			233,101		3.93	%			28,808,205			315,355		4.34	%
Noninterest-bearing demand deposits			7,846,641									7,881,620									5,817,488
Other liabilities			648,760									692,149									701,355
Total liabilities			30,973,610									32,439,117									35,327,048
Stockholders' equity			3,452,575									3,395,350									2,480,710
Total liabilities and stockholders' equity		$	34,426,185								$	35,834,467								$	37,807,758
Net interest income (1)					$	232,175								$	229,488								$	130,729
Net interest spread								1.83	%								1.72	%								0.60	%
Net interest margin								2.93	%								2.80	%								1.45	%
Total deposits (2)		$	28,320,829		$	180,986		2.54	%		$	28,795,001		$	186,106		2.60	%		$	27,429,188		$	205,982		2.98	%
Total funds (3)		$	30,324,850		$	214,718		2.82	%		$	31,746,968		$	233,101		2.95	%		$	34,625,693		$	315,355		3.61	%

____________________
(1)		Includes net loan discount accretion of $23.0 million and $21.8 million for the three months ended September 30, 2024 and June 30, 2024 and net loan premium amortization of $1.7 million for the three months ended September 30, 2023.
(2)		Total deposits is the sum of total interest-bearing deposits and noninterest-bearing demand deposits. The cost of total deposits is calculated as annualized interest expense on total deposits divided by average total deposits.
(3)		Total funds is the sum of total interest-bearing liabilities and noninterest-bearing demand deposits. The cost of total funds is calculated as annualized total interest expense divided by average total funds.

BANC OF CALIFORNIA, INC.
AVERAGE BALANCE, AVERAGE YIELD EARNED, AND AVERAGE COST PAID
(UNAUDITED)
		Nine Months Ended
		September 30, 2024									September 30, 2023
					Interest			Average						Interest			Average
		Average			Income/			Yield/			Average			Income/			Yield/
		Balance			Expense			Cost			Balance			Expense			Cost
		(Dollars in thousands)
Assets:
Loans and leases (1)(2)(3)		$	24,878,682		$	1,144,231		6.14	%		$	25,910,694		$	1,152,393		5.95	%
Investment securities			4,681,872			103,051		2.94	%			7,097,438			133,716		2.52	%
Deposits in financial institutions			3,479,130			140,904		5.41	%			5,731,733			219,995		5.13	%
Total interest-earning assets (1)			33,039,684			1,388,186		5.61	%			38,739,865			1,506,104		5.20	%
Other assets			2,888,600									2,447,563
Total assets		$	35,928,284								$	41,187,428
Liabilities and Stockholders' Equity:
Interest checking		$	7,733,588			184,505		3.19	%		$	6,890,661			159,992		3.10	%
Money market			5,218,774			106,488		2.73	%			7,049,910			145,748		2.76	%
Savings			2,022,600			52,166		3.45	%			833,719			14,532		2.33	%
Time			6,073,993			218,740		4.81	%			6,815,786			220,391		4.32	%
Total interest-bearing deposits			21,048,955			561,899		3.57	%			21,590,076			540,663		3.35	%
Borrowings			1,986,468			85,405		5.74	%			7,688,698			324,270		5.64	%
Subordinated debt			938,624			50,117		7.13	%			869,353			42,750		6.57	%
Total interest-bearing liabilities			23,974,047			697,421		3.89	%			30,148,127			907,683		4.03	%
Noninterest-bearing demand deposits			7,804,534									7,323,673
Other liabilities			736,739									654,932
Total liabilities			32,515,320									38,126,732
Stockholders' equity			3,412,964									3,060,696
Total liabilities and stockholders' equity		$	35,928,284								$	41,187,428
Net interest income (1)(2)					$	690,765								$	598,421
Net interest spread (1)								1.72	%								1.17	%
Net interest margin (1)								2.79	%								2.07	%
Total deposits (4)		$	28,853,489		$	561,899		2.60	%		$	28,913,749		$	540,663		2.50	%
Total funds (5)		$	31,778,581		$	697,421		2.93	%		$	37,471,800		$	907,683		3.24	%

____________________
(1)		Tax equivalent.
(2)		Includes net loan discount accretion of $67.3 million for the nine months ended September 30, 2024 and net loan premium amortization of $6.0 million for the nine months ended September 30, 2023.
(3)		Includes tax-equivalent adjustments of $0.0 million and $2.3 million for the nine months ended September 30, 2024 and 2023 related to tax-exempt income on loans.
		The federal statutory tax rate utilized was 21%.
(4)		Total deposits is the sum of total interest-bearing deposits and noninterest-bearing demand deposits.
		The cost of total deposits is calculated as annualized interest expense on total deposits divided by average total deposits.
(5)		Total funds is the sum of total interest-bearing liabilities and noninterest-bearing demand deposits.
		The cost of total funds is calculated as annualized total interest expense divided by average total funds.

BANC OF CALIFORNIA, INC.

NON-GAAP MEASURES

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

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

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

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

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

BANC OF CALIFORNIA, INC.
NON-GAAP MEASURES
(UNAUDITED)
Tangible Common Equity to
Tangible Assets and Tangible		September 30,				June 30,				March 31,				December 31,				September 30,
Book Value Per Common Share		2024				2024				2024				2023				2023
		(Dollars in thousands, except per share amounts)
Stockholders' equity		$	3,496,198			$	3,407,848			$	3,394,150			$	3,390,765			$	2,399,277
Less: Preferred stock			498,516				498,516				498,516				498,516				498,516
Total common equity			2,997,682				2,909,332				2,895,634				2,892,249				1,900,761
Less: Goodwill and Intangible assets			357,332				364,819				355,853				364,104				24,192
Tangible common equity		$	2,640,350			$	2,544,513			$	2,539,781			$	2,528,145			$	1,876,569
Total assets		$	33,432,613			$	35,243,839			$	36,073,516			$	38,534,064			$	36,877,833
Less: Goodwill and Intangible assets			357,332				364,819				355,853				364,104				24,192
Tangible assets		$	33,075,281			$	34,879,020			$	35,717,663			$	38,169,960			$	36,853,641
Total stockholders' equity to total assets			10.46	%			9.67	%			9.41	%			8.80	%			6.51	%
Tangible common equity to tangible assets			7.98	%			7.30	%			7.11	%			6.62	%			5.09	%
Book value per common share (1)		$	17.75			$	17.23			$	17.13			$	17.12			$	24.12
Tangible book value per common share (2)		$	15.63			$	15.07			$	15.03			$	14.96			$	23.81
Common shares outstanding (3)			168,879,566				168,875,712				169,013,629				168,959,063				78,806,969

____________________
(1)		Total common equity divided by common shares outstanding.
(2)		Tangible common equity divided by common shares outstanding.
(3)		Common shares outstanding include non-voting common equivalents that are participating securities.

BANC OF CALIFORNIA, INC.
NON-GAAP MEASURES
(UNAUDITED)
		Three Months Ended												Nine Months Ended
Return on Average Tangible		September 30,				June 30,				September 30,				September 30,
Common Equity ("ROATCE")		2024				2024				2023				2024				2023
		(Dollars in thousands)
Net earnings (loss)		$	8,784			$	30,333			$	(23,344	)		$	69,969			$	(1,416,182	)
Earnings (loss) before income taxes		$	11,514			$	44,637			$	(26,566	)		$	98,551			$	(1,551,349	)
Add: Intangible asset amortization			8,485				8,484				2,389				25,373				7,189
Add: Goodwill impairment			-				-				-				-				1,376,736
Adjusted earnings (loss) before income taxes used for ROATCE			19,999				53,121				(24,177	)			123,924				(167,424	)
Adjusted income tax expense (benefit) (1)			5,522				15,203				(2,212	)			34,215				(15,319	)
Adjusted net earnings (loss) for ROATCE			14,477				37,918				(21,965	)			89,709				(152,105	)
Less: Preferred stock dividends			9,947				9,947				9,947				29,841				29,841
Adjusted net earnings (loss) available to common and equivalent stockholders for ROATCE		$	4,530			$	27,971			$	(31,912	)		$	59,868			$	(181,946	)
Average stockholders' equity		$	3,452,575			$	3,395,350			$	2,480,710			$	3,412,964			$	3,060,696
Less: Average goodwill and intangible assets			361,316				352,934				25,499				358,321				476,721
Less: Average preferred stock			498,516				498,516				498,516				498,516				498,516
Average tangible common equity		$	2,592,743			$	2,543,900			$	1,956,695			$	2,556,127			$	2,085,459
Return on average equity (2)			1.01	%			3.59	%			(3.73	)%			2.74	%			(61.86	)%
ROATCE (3)			0.70	%			4.42	%			(6.47	)%			3.13	%			(11.66	)%

____________________
(1)		Effective tax rates of 27.61%, 28.62%, and 9.15% used for the three months ended September 30, 2024, June 30, 2024, and September 30, 2023, respectively. Effective tax rates of 27.61% and 9.15% used for the nine months ended September 30, 2024 and 2023.
(2)		Annualized net earnings (loss) divided by average stockholders' equity.
(3)		Annualized adjusted net earnings (loss) available to common and equivalent stockholders for ROATCE divided by average tangible common equity.
(4)		Annualized adjusted net earnings available to common and equivalent stockholders for adjusted ROATCE divided by average tangible common equity.

BANC OF CALIFORNIA, INC.
NON-GAAP MEASURES
(UNAUDITED)
		Three Months Ended								Nine Months Ended
Adjusted Return on Average		September 30,				September 30,				September 30,
Tangible Common Equity ("ROATCE")		2024				2023				2024				2023
		(Dollars in thousands)
Net earnings (loss)		$	8,784			$	(23,344	)		$	69,969			$	(1,416,182	)
Earnings (loss) before income taxes		$	11,514			$	(26,566	)		$	98,551			$	(1,551,349	)
Add: Intangible asset amortization			8,485				2,389				25,373				7,189
Add: Goodwill impairment			-				-				-				1,376,736
Add: FDIC special assessment			-				-				5,816				-
Add: Loss on sale of securities			59,946				-				59,946				-
Less: Acquisition, integration, and reorganization costs			(510	)			9,925				(13,160	)			30,833
Add: Loan fair value loss adjustments			-				-				-				170,971
Add: Unfunded commitments fair value loss adjustments			-				-				-				106,767
Adjusted earnings before income taxes used for adjusted ROATCE			79,435				(14,252	)			176,526				141,147
Adjusted income tax expense (1)			21,932				(1,304	)			48,739				12,915
Adjusted net earnings for adjusted ROATCE			57,503				(12,948	)			127,787				128,232
Less: Preferred stock dividends			9,947				9,947				29,841				29,841
Adjusted net earnings available to common and equivalent stockholders for adjusted ROATCE		$	47,556			$	(22,895	)		$	97,946			$	98,391
Average stockholders' equity		$	3,452,575			$	2,480,710			$	3,412,964			$	3,060,696
Less: Average goodwill and intangible assets			361,316				25,499				358,321				476,721
Less: Average preferred stock			498,516				498,516				498,516				498,516
Average tangible common equity		$	2,592,743			$	1,956,695			$	2,556,127			$	2,085,459
Adjusted ROATCE (2)			7.30	%			(4.64	)%			5.12	%			6.31	%

____________________
(1)		Effective tax rates of 27.61% used for the 2024 periods and 9.15% for the 2023 periods.
(2)		Annualized adjusted net earnings available to common and equivalent stockholders for adjusted ROATCE divided by average tangible common equity.

BANC OF CALIFORNIA, INC.
NON-GAAP MEASURES
(UNAUDITED)
Adjusted Net Earnings, Net Earnings		Three Months Ended								Nine Months Ended
Available to Common and Equivalent		September 30,				September 30,				September 30,
Stockholders, Diluted EPS, and ROAA		2024				2023				2024				2023
		(In thousands, except per share amounts)
Net earnings (loss)		$	8,784			$	(23,344	)		$	69,969			$	(1,416,182	)
Earnings (loss) before income taxes		$	11,514			$	(26,566	)		$	98,551			$	(1,551,349	)
Add: FDIC special assessment			-				-				5,816				-
Add: Loss on sale of securities			59,946				-				59,946				-
Less: Acquisition, integration, and reorganization costs			(510	)			9,925				(13,160	)			30,833
Add: Loan fair value loss adjustments			-				-				-				170,971
Add: Unfunded commitments fair value loss adjustments			-				-				-				106,767
Add: Goodwill impairment			-				-				-				1,376,736
Adjusted earnings (loss) before income taxes			70,950				(16,641	)			151,153				133,958
Adjusted income tax expense (benefit) (1)			19,589				(1,523	)			41,733				12,257
Adjusted net earnings (loss)			51,361				(15,118	)			109,420				121,701
Less: Preferred stock dividends			(9,947	)			(9,947	)			(29,841	)			(29,841	)
Adjusted net earnings (loss) available to common and equivalent stockholders		$	41,414			$	(25,065	)		$	79,579			$	91,860
Weighted average common shares outstanding			168,583				77,881				168,386				77,678
Diluted (loss) earnings per common share		$	(0.01	)		$	(0.42	)		$	0.24			$	(18.61	)
Adjusted diluted earnings per common share (2)		$	0.25			$	(0.32	)		$	0.47			$	1.18
Average total assets		$	34,426,185			$	37,807,758			$	35,928,284			$	41,187,428
Return on average assets ("ROAA") (3)			0.10	%			(0.24	)%			0.26	%			(4.60	)%
Adjusted ROAA (4)			0.59	%			(0.16	)%			0.41	%			0.40	%

____________________
(1)		Effective tax rates of 27.61% used for the 2024 periods and 9.15% for the 2023 periods.
(2)		Adjusted net earnings (loss) available to common and equivalent stockholders divided by weighted average common shares outstanding.
(3)		Annualized net earnings (loss) divided by average assets.
(4)		Annualized adjusted net earnings (loss) divided by average assets.

 

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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 was Banc of California's (BANC) net loss for Q3 2024?

Banc of California reported a net loss of $1.2 million, or $0.01 per diluted share, for Q3 2024.

How much did Banc of California's (BANC) net interest margin increase in Q3 2024?

Banc of California's net interest margin increased by 13 basis points to 2.93% in Q3 2024 compared to Q2 2024.

What was the impact of the Civic loan sale for Banc of California (BANC) in Q3 2024?

Banc of California closed the sale of $1.95 billion of Civic loans in July 2024, generating net proceeds of $1.91 billion, which improved the company's capital ratios and liquidity.

How did Banc of California's (BANC) noninterest expenses change in Q3 2024?

Banc of California's noninterest expenses decreased by 4% to $196.2 million in Q3 2024, achieving Q4 2024 cost targets ahead of schedule.