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Banc of California Reports Fourth Quarter and Full Year 2014 Financial Results

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Banc of California, Inc. (NYSE:BANC) today reported net income of $30.3 million and net income available to common shareholders of $26.7 million, or $0.91 per diluted common share for the year ended December 31, 2014. This compares to net income of $0.1 million and a net loss attributable to common shareholders of $2.1 million, or $(0.14) per diluted common share, for the year ended December 31, 2013.

For the quarter ended December 31, 2014, the Company reported net income available to common shareholders of $9.3 million, or $0.25 per diluted common share. This compares to net income available to common shareholders of $2.4 million, or $0.12 per diluted common share, for the quarter ended December 31, 2013.

“Over the past three years, Banc of California has emerged as California’s Bank,” said Steven Sugarman, President and Chief Executive Officer. “We are now a $6 billion financial institution with the scale to serve California’s diverse private businesses, entrepreneurs and homeowners. As we look to 2015, we believe there are compelling economics for continued growth and we are well situated to deliver on our stated financial targets.”

The Company’s consolidated assets totaled $6.0 billion at December 31, 2014, an increase of $1.4 billion compared to the prior quarter, and an increase of $2.3 billion compared to a year ago.

Return on average assets for the fourth quarter was 0.8%, and 0.7% for the full year ended December 31, 2014. Return on average tangible common equity was 11.2% for the fourth quarter, and 10.1% for the full year ended December 31, 2014. Both the full year and fourth quarter results included the release of the remaining $8.3 million deferred tax asset valuation allowance which resulted in a net tax benefit of $4.5 million and $5.5 million, for the full year and fourth quarter, respectively.

Total loans and leases, representing both loans held for investment and held for sale, of $5.1 billion at December 31, 2014 increased by $1.3 billion, compared to $3.8 billion at September 30, 2014, and have increased by $2.0 billion compared to the year ended December 31, 2013.

Total deposits of $4.7 billion at December 31, 2014 represented an increase of $1.0 billion compared to $3.6 billion at September 30, 2014, and an increase of $1.8 billion compared to $2.9 billion at December 31, 2013.

Growth in both total loans and deposits during the fourth quarter was primarily driven by the branch transaction with Popular Community Bank in November which resulted in the acquisition of $1.1 billion of loan balances and $1.1 billion of deposit balances.

Total revenue for the year ended December 31, 2014 of $300.9 million increased by $106.9 million, or 55%, compared to the full year ended December 31, 2013. Revenue of $87.2 million for the fourth quarter increased by $4.9 million compared with the prior quarter, and was $19.4 million higher compared to the fourth quarter 2013.

Net interest income of $155.3 million for 2014 increased by $58.0 million, or 60%, from 2013. Fourth quarter net interest income of $46.3 million increased 21% from the prior quarter, and increased by $13.0 million, or 39% compared to the year ago quarter.

Net interest margin of 3.72% for 2014 increased by 5 basis points compared to 3.67% for 2013. Fourth quarter net interest margin was 3.65%, an increase of 7 basis points from 3.58% reported in the third quarter. Lower deposit costs contributed to the margin expansion during the quarter.

Noninterest income for 2014 totaled $145.6 million, an increase of $48.9 million, compared to $96.7 million for 2013. Noninterest income for the fourth quarter totaled $40.9 million, compared to $44.1 million for the prior quarter and $34.5 million for the year ago quarter.

Total noninterest expense for the fourth quarter totaled $78.4 million, an increase of $10.8 million compared to the prior quarter. Fourth quarter noninterest expense included approximately $5.9 million of non-recurring costs including from the acquisition of branches from Popular Community Bank as well as an increase of $2.1 million of ongoing operating expense from the acquired branch locations.

The Company’s allowance for loan and lease losses (ALLL) increased to $29.5 million for the fourth quarter, and equaled 1.38% of originated loans, and represented a coverage ratio of 77% of nonperforming loans at December 31, 2014. The provision for loan losses for the fourth quarter was $4.2 million, compared to $2.8 million in the prior quarter, driven primarily by loan growth during the fourth quarter. The ratio of delinquent non-PCI loans to total non-PCI loans equaled 1.55% for the fourth quarter, and declined compared to 2.08% from the prior quarter, and was down from 2.43% a year ago. The ratio of nonperforming assets to total assets declined from 0.86% at the third quarter and stands at 0.65% as of December 31, 2014. Net charge offs for the fourth quarter were in a net recovery position of less than $0.1 million.

The Company remains well-capitalized with a Tier 1 Risk-Based Capital Ratio of 10.5%, a Tier 1 Leverage Ratio of 8.6%, and a Tangible Common Equity to Tangible Assets Ratio (TCE/TA) of 6.2% as of December 31, 2014.

The Company will host a conference call to discuss its fourth quarter and full year financial results at 8:00 a.m. Pacific Time (PT) tomorrow, March 6, 2015. Interested parties are welcome to attend the conference call by dialing 888-317-6003, and referencing event code 9966897. A live audio webcast will also be available and the webcast link will be posted on the Company’s website under the Investors section. The slide presentation for the call will also be available on the Company’s website prior to the call.

About Banc of California, Inc.

Banc of California, Inc. (NYSE:BANC) has total assets of $6.0 billion and is the largest bank holding company headquartered in Orange County, CA. The Company’s principal subsidiary, Banc of California, N.A., provides banking services and loans serving the diverse needs of California’s private businesses, entrepreneurs and homeowners. Banc of California operates over 100 offices, including 40 full-service branch locations, in California and the West.

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 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. with the Securities and Exchange Commission. You should not place undue reliance on forward-looking statements and Banc of California, Inc. undertakes no obligation to update any such statements to reflect circumstances or events that occur after the date on which the forward-looking statement is made.

Banc of California, Inc
Consolidated Statements of Financial Condition
(Dollars in thousands)
(Unaudited)
December 31, September 30, December 31,
2014 2014 2013
ASSETS
Cash and due from banks $ 14,364 $ 5,646 $ 4,937
Interest-bearing deposits 216,835 179,339 105,181
Total cash and cash equivalents 231,199 184,985 110,118
Time deposits in financial institutions 1,900 1,900 1,846
Securities available for sale 345,695 310,385 170,022
Loans held for sale 1,187,090 1,127,339 716,733
Loans and leases receivable 3,949,122 2,712,068 2,446,111
Allowance for loan and lease losses (29,480 ) (25,283 ) (18,805 )
Federal Home Loan Bank and other bank stock 42,241 35,432 22,600
Servicing rights, net 19,566 11,745 13,883
Other real estate owned, net 423 605
Premises and equipment, net 78,685 67,323 66,260
Goodwill 31,591 31,591 30,143
Other intangible assets, net 25,252 10,829 12,152
Deferred income tax 16,445 8,663
Income tax receivable 2,995
Bank-owned life insurance investment 19,095 19,038 18,881
Other assets 52,747 41,376 35,084
Total assets $ 5,971,571 $ 4,537,996 $ 3,628,023
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Noninterest-bearing deposits $ 662,295 $ 457,743 $ 429,158
Interest-bearing deposits 4,009,536 3,173,967 2,489,486
Total deposits 4,671,831 3,631,710 2,918,644
Advances from Federal Home Loan Bank 633,000 305,000 250,000
Notes payable, net 93,569 95,549 82,320
Reserve for loss reimbursements on sold loans 8,303 7,045 5,427
Income taxes payable 56 2,158
Accrued expenses and other liabilities 61,223 49,653 46,763
Total liabilities 5,467,982 4,091,115 3,303,154
Commitments and contingent liabilities
Preferred stock, Series A, non-cumulative perpetual preferred stock 31,934 31,934 31,934
Preferred stock, Series B, non-cumulative perpetual preferred stock 10,000 10,000 10,000
Preferred stock, Series C, 8.00% non-cumulative perpetual preferred stock 37,943 37,943 37,943
Common stock 358 297 210
Common stock, class B non-voting non-convertible 6 6 6
Additional paid-in capital 422,910 371,738 256,306
Retained earnings 29,863 24,862 16,981
Treasury stock (29,798 ) (29,798 ) (27,911 )
Accumulated other comprehensive (loss)/income, net 373 (101 ) (600 )
Total shareholders’ equity 503,589 446,881 324,869
Total liabilities and shareholders’ equity $ 5,971,571 $ 4,537,996 $ 3,628,023
Banc of California, Inc
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended Year Ended
December 31, September 30, December 31, December 31, December 31,
2014 2014 2013 2014 2013
Interest and dividend income
Loans, including fees $ 52,599 $ 44,555 $ 39,922 $ 180,761 $ 116,673
Securities 1,781 1,460 473 5,158 2,632
Dividends and other interest-earning assets 700 634 361 2,220 1,206
Total interest and dividend income 55,080 46,649 40,756 188,139 120,511
Interest expense
Deposits 6,440 6,165 5,665 24,411 16,051
Federal Home Loan Bank advances 210 118 92 527 269
Notes payable and other interest-bearing liabilities 2,099 2,180 1,697 7,924 6,962
Total interest expense 8,749 8,463 7,454 32,862 23,282
Net interest income 46,331 38,186 33,302 155,277 97,229
Provision for loan and lease losses 4,159 2,780 1,768 10,976 7,963
Net interest income after provision for loan and lease losses 42,172 35,406 31,534 144,301 89,266
Noninterest income
Customer service fees 651 230 266 1,490 1,942
Net gain on sale of loans 3,927 10,260 4,180 19,828 8,700
Mortgage banking income 25,030 26,943 15,028 95,430 67,890
Advisory service fees 6,722 3,264 354 12,904 377
Loan brokerage income 2,314 2,033 1,343 8,674 1,356
All other income 2,245 1,368 13,346 7,311 16,478
Total noninterest income 40,889 44,098 34,517 145,637 96,743
Noninterest expense
Salaries and employee benefits 47,974 41,094 36,117 162,879 110,687
Occupancy and equipment 9,512 7,969 7,592 33,443 19,662
All other expenses 20,885 18,494 13,505 67,839 48,321
Total noninterest expense 78,371 67,557 57,214 264,161 178,670
Income before income taxes 4,690 11,947 8,837 25,777 7,339
Income tax (benefit) expense (5,524 ) 721 5,516 (4,541 ) 7,260
Net income 10,214 11,226 3,321 30,318 79
Preferred stock dividends 910 910 951 3,640 2,185
Net income (loss) available to common shareholders $ 9,304 $ 10,316 $ 2,370 $ 26,678 $ (2,106 )
Basic earnings (loss) per total common share $ 0.25 $ 0.31 $ 0.13 $ 0.91 $ (0.14 )
Diluted earnings (loss) per total common share $ 0.25 $ 0.30 $ 0.12 $ 0.91 $ (0.14 )
Banc of California, Inc
Selected Financial Data
(Dollars in thousands)
(Unaudited)
Three Months Ended Year Ended
December 31, September 30, December 31, December 31, December 31,
2014 2014 2013 2014 2013
Average balances:
Total assets $ 5,223,463 $ 4,391,523 $ 3,555,265 $ 4,348,626 $ 2,773,276
Total gross loans and leases 4,534,428 3,829,204 3,056,232 3,805,239 2,217,421
Securities available for sale 310,454 257,067 170,350 225,182 153,229
Total interest earning assets 5,033,973 4,228,555 3,387,120 4,176,518 2,647,070
Total interest-bearing deposits 3,699,464 3,070,130 2,507,302 3,057,606 2,026,408
Total borrowings 406,531 378,671 244,708 364,095 160,045
Interest bearing liabilities 4,105,995 3,448,801 2,752,010 3,421,701 2,186,453
Total shareholders’ equity 487,578 449,392 324,290 413,454 264,818
Profitability and other ratios:
Return on average assets (1) 0.78 % 1.01 % 0.37 % 0.70 % 0.00 %
Return on average equity (1) 8.31 % 9.91 % 4.06 % 7.33 % 0.03 %
Dividend payout ratio (2) 48.00 % 38.71 % 92.31 % 52.75 % 0.00 %
Net interest spread 3.49 % 3.41 % 3.70 % 3.54 % 3.49 %
Net interest margin (1) 3.65 % 3.58 % 3.90 % 3.72 % 3.67 %
Noninterest income to total revenue (3) 46.88 % 53.59 % 50.90 % 48.40 % 49.87 %
Noninterest income to average total assets (1) 3.11 % 3.98 % 3.85 % 3.35 % 3.49 %
Noninterest expense to average total assets (1) 5.95 % 6.10 % 6.38 % 6.07 % 6.44 %
Efficiency ratio (4) 89.85 % 82.10 % 84.36 % 87.79 % 92.11 %
Average held for investment loans and leases to average deposits 79.08 % 75.39 % 93.19 % 77.36 % 86.34 %
Average securities available for sale to average total assets 5.94 % 5.85 % 4.79 % 5.18 % 5.53 %
Average shareholders’ equity to average total assets 9.33 % 10.23 % 9.12 % 9.51 % 9.55 %
Allowance for loan and lease losses (ALLL):
Balance at beginning of period $ 25,283 $ 22,627 $ 19,130 $ 18,805 $ 14,448
Loans and leases charged off (25 ) (312 ) (868 ) (923 ) (3,013 )
Recoveries of loans and leases previously charged off 63 96 218 1,235 850
Transfer of loans from (to) held-for-sale 92 (1,443 ) (613 ) (1,443 )
Provision for loan and lease losses 4,159 2,780 1,768 10,976 7,963
Balance at end of period $ 29,480 $ 25,283 $ 18,805 $ 29,480 $ 18,805
Reserve for loss on repurchased loans
Balance at beginning of period $ 7,045 $ 6,174 $ 4,282 $ 5,427 $ 3,485
Acquired in business combinations 314 314
Provision for loan repurchases 1,149 1,556 1,020 4,243 2,383
Payment made for loss reimbursement on sold loans 109 (685 ) (189 ) (1,367 ) (755 )
Balance at end of period $ 8,303 $ 7,045 $ 5,427 $ 8,303 $ 5,427
(1) Ratios are presented on an annualized basis
(2) Dividends declared per common share divided by basic earnings per share. Not applicable for the year ended December 31, 2013, due to the net loss attributable to shareholders.
(3) Total revenue is equal to the sum of net interest income before provision and noninterest income.
(4) The ratios were calculated by dividing noninterest expense by the sum of net interest income before provision for loan and lease losses and noninterest income.
Banc of California, Inc
Selected Financial Data, Continued
(Dollars in thousands)
(Unaudited)
December 31, September 30, December 31,
2014 2014 2013
Asset quality information and ratios:
30 to 89 days delinquent, excluding PCI loans $ 40,694 $ 35,531 $ 37,699
90+ days delinquent, excluding PCI loans 16,835 15,672 13,441
Total delinquent loans, excluding PCI loans 57,529 51,203 51,140
PCI loans, 30 to 89 days delinquent 17,641 18,743 30,514
PCI loans, 90+ days delinquent 5,761 4,017 12,205
Total delinquent PCI loans 23,402 22,760 42,719
Total delinquent loans $ 80,931 $ 73,963 $ 93,859
Total delinquent non-PCI loans to total non-PCI loans 1.55 % 2.08 % 2.43 %
Total delinquent loans to gross loans 2.05 % 2.73 % 3.84 %
Non-performing loans, excluding PCI loans $ 38,381 $ 38,333 $ 31,648
90+ days delinquent and still accruing loans, excluding PCI loans
Other real estate owned 423 605 -
Non-performing assets 38,804 38,938 31,648
ALLL to non-performing loans 76.81 % 65.96 % 59.42 %
Non-performing loans to gross loans 0.97 % 1.41 % 1.29 %
Non-performing assets to total assets 0.65 % 0.86 % 0.87 %
Loan breakdown by ALLL evaluation type:
Originated loans
Individually evaluated for impairment $ 29,287 $ 29,030 $ 16,704
Collectively evaluated for impairment 1,892,240 1,668,004 1,168,195
Acquired loans through business acquisitions – non-impaired
Individually evaluated for impairment 4,191 8,004 2,243
Collectively evaluated for impairment 1,411,927 377,554 469,916
Seasoned SFR mortgage loan pools – non-impaired 364,580 376,575 449,767
Acquired with deteriorated credit quality 246,897 252,901 339,286
Total loans $ 3,949,122 $ 2,712,068 $ 2,446,111
ALLL breakdown:
Originated loans
Individually evaluated for impairment $ 1,288 $ 517 $ 96
Collectively evaluated for impairment 25,263 22,011 17,103
Acquired loans through business acquisitions – non-impaired
Individually evaluated for impairment 7
Collectively evaluated for impairment 2,906 2,748 1,410
Seasoned SFR mortgage loan pools – non-impaired
Acquired with deteriorated credit quality 23 - 196
Total ALLL $ 29,480 $ 25,283 $ 18,805
Discount on Purchased/Acquired Loans:
Acquired loans through business acquisitions – non-impaired $ 16,441 $ 6,512 $ 8,354
Seasoned SFR mortgage loan pools – non-impaired 29,955 30,811 38,240
Acquired with deteriorated credit quality 55,865 57,961 105,650
Total Discount $ 102,261 $ 95,284 $ 152,244
Ratios:
To originated loans:
Individually evaluated for impairment 4.40 % 1.78 % 0.57 %
Collectively evaluated for impairment 1.34 % 1.32 % 1.46 %
Total ALLL 1.38 % 1.33 % 1.45 %
To originated and acquired non-impaired loans:
Individually evaluated for impairment 3.85 % 1.41 % 0.51 %
Collectively evaluated for impairment 0.85 % 1.21 % 1.13 %
Total ALLL 0.88 % 1.21 % 1.12 %
Total ALLL and discount (1) 1.38 % 1.53 % 1.63 %
To total loans:
Individually evaluated for impairment 3.85 % 1.41 % 0.51 %
Collectively evaluated for impairment 0.77 % 1.02 % 0.89 %
Total ALLL 0.75 % 0.93 % 0.77 %
Total ALLL and discount (1) 3.34 % 4.45 % 6.99 %
(1) The ratios were calculated by dividing a sum of ALLL and discounts by carrying value of loans.
Banc of California, Inc
Selected Financial Data, Continued
(Dollars in thousands)
(Unaudited)
December 31, September 30, December 31,
2014 2014 2013
Composition of held for investment loans and leases
Commercial real estate $ 999,857 $ 521,867 $ 529,883
Multi-family 955,683 367,364 141,580
Construction 42,198 25,997 24,933
Commercial and industrial 490,900 366,416 287,771
SBA 36,155 25,729 27,428
Lease financing 85,749 72,027 31,949
Total commercial loans 2,610,542 1,379,400 1,043,544
Single family residential mortgage 1,171,662 1,191,021 1,286,541
Other consumer 166,918 141,647 116,026
Total consumer loans 1,338,580 1,332,668 1,402,567
Total gross loans and leases $ 3,949,122 $ 2,712,068 $ 2,446,111
Composition percentage of held for investment loans and leases
Commercial real estate 25.3 % 19.2 % 21.7 %
Multi-family 24.2 % 13.5 % 5.8 %
Construction 1.1 % 1.0 % 1.0 %
Commercial and industrial 12.4 % 13.5 % 11.8 %
SBA 0.9 % 0.9 % 1.1 %
Lease financing 2.2 % 2.7 % 1.3 %
Total commercial loans 66.1 % 50.8 % 42.7 %
Single family residential mortgage 29.7 % 44.0 % 52.6 %
Other consumer 4.2 % 5.2 % 4.7 %
Total consumer loans 33.9 % 49.2 % 57.3 %
Total gross loans and leases 100.0 % 100.0 % 100.0 %
Composition of deposits
Noninterest-bearing checking $ 662,295 $ 457,743 $ 429,158
Interest-bearing checking 1,054,828 779,704 539,098
Money market 1,074,432 769,291 518,696
Savings 985,646 932,133 963,536
Certificates of deposit 894,630 692,839 468,156
Total deposits $ 4,671,831 $ 3,631,710 $ 2,918,644
Composition percentage of deposits
Noninterest-bearing checking 14.2 % 12.6 % 14.7 %
Interest-bearing checking 22.6 % 21.5 % 18.5 %
Money market 23.0 % 21.2 % 17.8 %
Savings 21.1 % 25.6 % 33.0 %
Certificates of deposit 19.1 % 19.1 % 16.0 %

Total deposits

100.0 % 100.0 % 100.0 %
Banc of California, Inc
Average Balance, Average Yield Earned, and Average Cost Paid
(Dollars in thousands)
(Unaudited)
Three Months Ended
December 31, 2014 September 30, 2014 December 31, 2013
Average Yield Average Yield Average Yield
Balance Interest / Cost Balance Interest / Cost Balance Interest / Cost
Interest earning assets:
Loans held for sale and SFR mortgage $ 1,778,112 $ 16,741 3.74 % $ 1,757,890 $ 16,979 3.83 % $ 1,204,739 $ 13,230 4.36 %
Seasoned SFR mortgage loan pools 606,879 9,605 6.28 % 675,083 11,753 6.91 % 776,359 12,776 6.53 %
Commercial real estate, multi-family, and construction 1,486,406 17,993 4.80 % 827,934 9,592 4.60 % 670,057 8,765 5.19 %
Commercial and industrial, SBA, and lease financing 523,194 6,192 4.70 % 451,992 5,060 4.44 % 326,160 4,255 5.18 %
Other consumer 139,837 2,068 5.87 % 116,305 1,171 3.99 % 78,917 896 4.50 %
Gross loans and leases 4,534,428 52,599 4.60 % 3,829,204 44,555 4.62 % 3,056,232 39,922 5.18 %
Securities 310,454 1,781 2.28 % 257,067 1,460 2.25 % 170,350 473 1.10 %
Other interest-earning assets 189,091 700 1.47 % 142,284 634 1.77 % 160,538 361 0.89 %
Total interest-earning assets 5,033,973 55,080 4.34 % 4,228,555 46,649 4.38 % 3,387,120 40,756 4.77 %
Allowance for loan and lease losses (26,105 ) (23,266 ) (19,960 )
BOLI and non-interest earning assets 215,595 186,234 188,105
Total assets $ 5,223,463 $ 4,391,523 $ 3,555,265
Interest-bearing liabilities:
Savings 960,253 1,963 0.81 % 953,925 2,215 0.92 % 969,266 2,751 1.13 %
Interest-bearing checking 937,623 2,078 0.88 % 745,635 2,037 1.08 % 515,911 1,450 1.12 %
Money market 964,414 841 0.35 % 681,576 673 0.39 % 550,652 639 0.46 %
Certificates of deposit 837,174 1,558 0.74 % 688,994 1,240 0.71 % 471,473 825 0.69 %
FHLB advances 307,859 210 0.27 % 276,739 118 0.17 % 157,772 92 0.23 %
Long-term debt and other interest-bearing liabilities 98,672 2,099 8.44 % 101,932 2,180 8.48 % 86,936 1,697 7.74 %

Total interest-bearing liabilities

4,105,995 8,749 0.85 % 3,448,801 8,463 0.97 % 2,752,010 7,454 1.07 %
Noninterest-bearing deposits 577,623 448,825 429,620
Non-interest-bearing liabilities 52,267 44,505 49,345
Total liabilities 4,735,885 3,942,131 3,230,975
Total shareholders’ equity 487,578 449,392 324,290
Total liabilities and shareholders’ equity $ 5,223,463 $ 4,391,523 $ 3,555,265
Net interest income/spread $ 46,331 3.49 % $ 38,186 3.41 % $ 33,302 3.70 %
Net interest margin 3.65 % 3.58 % 3.90 %
Banc of California, Inc
Average Balance, Average Yield Earned, and Average Cost Paid, Continued
(Dollars in thousands)
(Unaudited)
Year Ended
December 31, 2014 December 31, 2013
Average Yield Average Yield
Balance Interest / Cost Balance Interest / Cost
Interest earning assets:
Loans held for sale and SFR mortgage $ 1,632,547 $ 62,269 3.81 % $ 935,284 $ 39,216 4.19 %
Seasoned SFR mortgage loan pools 683,121 $ 46,153 6.76 % 439,445 32,878 7.48 %
Commercial real estate, multi-family, and construction 935,129 $ 44,494 4.76 % 560,661 28,241 5.04 %
Commercial and industrial, SBA, and lease financing 438,250 $ 22,558 5.15 % 234,426 14,376 6.13 %
Other consumer 116,192 $ 5,287 4.55 % 47,605 1,962 4.12 %
Gross loans and leases 3,805,239 180,761 4.75 % 2,217,421 116,673 5.26 %
Securities 225,182 5,158 2.29 % 153,229 2,632 1.72 %
Other interest-earning assets 146,097 2,220 1.52 % 276,420 1,206 0.44 %

Total interest-earning assets

4,176,518 188,139 4.50 % 2,647,070 120,511 4.55 %
Allowance for loan and lease losses (22,354 ) (17,332 )
BOLI and non-interest earning assets 194,462 143,538
Total assets $ 4,348,626 $ 2,773,276
Interest-bearing liabilities:
Savings 967,803 9,121 0.94 % 756,625 7,994 1.06 %
Interest-bearing checking 735,156 7,629 1.04 % 339,731 2,041 0.60 %
Money market 692,464 2,788 0.40 % 371,058 1,901 0.51 %
Certificates of deposit 662,183 4,873 0.74 % 558,994 4,115 0.74 %
FHLB advances 267,816 527 0.20 % 74,712 269 0.36 %
Notes payable and other interest-bearing liabilities 96,279 7,924 8.23 % 85,333 6,962 8.16 %
Total interest-bearing liabilities 3,421,701 32,862 0.96 % 2,186,453 23,282 1.06 %
Noninterest-bearing deposits 468,077 287,325
Non-interest-bearing liabilities 45,394 34,680
Total liabilities 3,935,172 2,508,458
Total shareholders’ equity 413,454 264,818
Total liabilities and shareholders’ equity $ 4,348,626 $ 2,773,276
Net interest income/spread $ 155,277 3.54 % $ 97,229 3.49 %
Net interest margin 3.72 % 3.67 %
Banc of California, Inc
Capital Ratios
(Unaudited)
December 31, September 30, December 31,
2014 2014 2013
Capital Ratios:
Banc of California, Inc.
Total risk-based capital ratio: 11.28 % 14.97 % 12.45 %
Tier 1 risk-based capital ratio: 10.54 % 14.03 % 11.41 %
Tier 1 leverage ratio: 8.57 % 9.28 % 8.02 %
Banc of California, NA
Total risk-based capital ratio: 12.04 % 15.75 % 14.65 %
Tier 1 risk-based capital ratio: 11.29 % 14.80 % 13.60 %
Tier 1 leverage ratio: 9.17 % 9.80 % 9.58 %
Banc of California, Inc
Non-GAAP Measures
(Dollars in thousands, except per share data)
(Unaudited)
Non-GAAP performance measure:
Tangible common equity to tangible assets ratio and return on average tangible common equity are supplemental financial information determined by a method other than in accordance with U.S. generally accepted accounting principles (“GAAP”). These non-GAAP measures are used by management in the analysis of Banc of California, Inc.’s capital strength and performance of businesses. Tangible equity is calculated by subtracting goodwill and other intangible assets from total stockholders’ equity. Banking and financial institution regulators also exclude goodwill and other intangible assets from total stockholders’ equity when assessing the capital adequacy of a financial institution. Management believes the presentation of this financial measure excluding the impact of these items provides useful supplemental information that is essential to a proper understanding of the capital strength of Banc of California, Inc. This disclosure should not be viewed as a substitution 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 reconcile this non-GAAP performance measures to the GAAP performance measures for the periods indicated:
December 31, September 30, December 31,
2014 2014 2013
Tangible common equity to tangible assets ratio
Total assets $ 5,971,571 $ 4,537,996 $ 3,628,023
Less goodwill (31,591 ) (31,591 ) (30,143 )
Less other intangible assets (25,252 ) (10,829 ) (12,152 )
Tangible assets $ 5,914,728 $ 4,495,576 $ 3,585,728
Total shareholders’ equity $ 503,589 $ 446,881 $ 324,869
Less preferred stock (79,877 ) (79,877 ) (79,877 )
Less goodwill (31,591 ) (31,591 ) (30,143 )
Less other intangible assets (25,252 ) (10,829 ) (12,152 )
Tangible common equity $ 366,869 $ 324,584 $ 202,697
Total shareholders’ equity to total assets 8.43 % 9.85 % 8.95 %
Tangible common equity to tangible assets 6.20 % 7.22 % 5.65 %
Common stock outstanding 34,190,740 28,023,701 19,561,469
Class B non-voting non-convertible common stock outstanding 609,195 602,783 584,674
Total common stock outstanding 34,799,935 28,626,484 20,146,143
Minimum number of shares issuable under purchase contracts (1) 3,215,538 4,198,425 -

Total common stock outstanding and shares issuable under purchase contracts

38,015,473 32,824,909 20,146,143
(1) Purchase contracts relating to the tangible equity units
Tangible common equity per common stock $ 10.54 $ 11.34 $ 10.06
Book value per common stock $ 12.18 $ 12.82 $ 12.16

Tangible equity per common stock and shares issuable under purchase contracts

$ 9.65 $ 9.89 $ 10.06

Book value per common stock and shares issuable under purchase contracts

$ 11.15 $ 11.18 $ 12.16
Three Months Ended Year Ended
December 31, September 30, December 31, December 31, December 31,
2014 2014 2013 2014 2013
Return on tangible common equity
Average total shareholders’ equity $ 487,578 $ 449,392 $ 324,290 $ 413,454 $ 264,818
Less average preferred stock (79,877 ) (79,877 ) (79,882 ) (79,877 ) (56,284 )
Less average goodwill (33,129 ) (32,209 ) (27,384 ) (32,326 ) (15,872 )
Less average other intangible assets (13,611 ) (10,634 ) (12,861 ) (11,739 ) (9,580 )
Average tangible common equity 360,961 326,672 204,163 289,512 183,082
Net income $ 10,214 $ 11,226 $ 3,321 $ 30,318 $ 79
Less preferred stock dividends (910 ) (910 ) (951 ) (3,640 ) (2,185 )
Add tax-effected amortization of intangible assets (1) 849 579 614 2,651 1,723
Add tax-effected impairment on intangible assets (1) 31 - 55 31 690
Net income (loss) available to common shareholders $ 10,184 $ 10,895 $ 3,039 $ 29,361 $ 307
(1) Utilized a 35% effective tax rate
Return on average equity 8.31 % 9.91 % 4.06 % 7.33 % 0.03 %
Return on average tangible common equity 11.19 % 13.23 % 5.91 % 10.14 % 0.17 %

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