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8-K - 8-K - BANC OF CALIFORNIA, INC.d673872d8k.htm
EX-23.2 - EX-23.2 - BANC OF CALIFORNIA, INC.d673872dex232.htm
EX-23.1 - EX-23.1 - BANC OF CALIFORNIA, INC.d673872dex231.htm
EX-99.3 - EX-99.3 - BANC OF CALIFORNIA, INC.d673872dex993.htm

Exhibit 99.4

UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The following unaudited pro forma combined condensed consolidated financial information has been prepared using the acquisition method of accounting, giving effect to our acquisition of The Private Bank of California, which we refer to as PBOC. The unaudited pro forma combined condensed consolidated statements of financial condition combines as of September 30, 2013 the historical financial information of Banc of California and the historical financial information of PBOC. The unaudited pro forma combined condensed consolidated statements of operations for the nine-month period ended September 30, 2013 and for the twelve-month period ended December 31, 2012 gives effect to our completed acquisitions of PBOC, which closed on July 1, 2013, as if the transaction had been completed on January 1, 2012.

The unaudited pro forma combined condensed consolidated financial information is presented for illustrative purposes only and does not indicate the financial results of the combined company had the companies actually been combined on the dates described above, nor is it necessarily indicative of the results of operations in future periods or the future financial position of the combined entities. The unaudited pro forma combined condensed consolidated financial information also does not consider any potential impacts of current market conditions on revenues, expense efficiencies, asset dispositions and share repurchases, among other factors.

The value of our shares of common stock issued in connection with the PBOC acquisition was based on the closing price of our common stock on the date the merger was completed. For purposes of the unaudited pro forma combined condensed consolidated financial information, the fair value of our common stock was assumed to be $12.00 per share.

The unaudited pro forma combined condensed consolidated financial information includes estimated pro forma adjustments to record assets and liabilities of PBOC at their respective fair values and represents our pro forma estimates based on available information. The pro forma adjustments included herein are subject to change depending on changes in interest rates and the fair value of the components of assets and liabilities and as additional information becomes available and additional analyses are performed. The final allocation of the purchase price will be determined after completion of thorough analyses to determine the fair value of PBOC’s tangible and identifiable intangible assets and liabilities as of the date the PBOC acquisition was completed. Increases or decreases in the estimated fair values of the net assets as compared with the information shown in the unaudited pro forma combined condensed consolidated financial information may change the amount of the purchase price allocated to goodwill and other assets and liabilities and may impact our consolidated statement of operations due to adjustments in yields and interest rates and/or amortization or accretion of the adjusted assets or liabilities. Any changes to PBOC’s shareholders’ equity will also change the purchase price allocation, which may include the recording of a lower or higher amount of goodwill. The final adjustments may be materially different from the unaudited pro forma adjustments presented herein.

The unaudited pro forma combined condensed consolidated financial information, although helpful in illustrating the financial characteristics of the combined company under one set of assumptions, does not necessarily reflect the exact benefits of expected cost savings or opportunities to earn additional revenue and, accordingly, does not attempt to predict or suggest future results. It also does not necessarily reflect what the historical results of the combined company would have been had the companies been combined during these periods.

The unaudited pro forma combined condensed consolidated financial information has been derived from and should be read in conjunction with the applicable historical consolidated financial statements and the related notes of Banc of California and PBOC. Historical consolidated financial statements of Banc of California and PBOC have been filed with the SEC.

The unaudited pro forma combined shareholders’ equity and net income are qualified by the statements set forth under this caption and should not be considered indicative of the market value of our common stock or the actual or future results of operations of Banc of California for any period. Actual results may be materially different than the pro forma information presented.


Banc of California, Inc.

Proforma Condensed Statements of Financial Condition

As of September 30, 2013 and December 31, 2012

(Dollars in thousands)

(Unaudited)

 

                                                                                                                            
     As of
September 30,
2013
     As of December 31, 2012  
                   PBOC Merger     Proforma  
                          Proforma     Combined  
    

BANC

     BANC      PBOC      Merger     BANC &  
     Historical*      Historical      Historical      Adjustments     PBOC  

Assets:

             

Cash and due from banks

     $ 7,951           $ 8,254           $ 33,708           $ (27,915)  (1)      $ 14,047     

Interest-bearing deposits

     408,059           100,389           3,238           -              103,627     
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total cash and cash equivalents

     416,010           108,643           36,946           (27,915)  (1)      117,674     

Time deposits in financial institutions

     2,938           5,027           -               -              5,027     

Securities available for sale, at fair value

     167,998           121,419           299,041           (2,495)  (2)      417,965     

Loans held for sale

     367,111           113,158           -               -              113,158     

Loans and leases receivable, net of allowance

     2,577,058           1,234,023           367,403           (3,475)  (3)      1,597,951     

Federal Home Loan Bank and other bank stock, at cost

     14,789           8,842           3,544           -              12,386     

Servicing rights, net

     7,603           2,278           -               -              2,278     

Accrued interest receivable

     10,425           5,002           2,035           -              7,037     

Other real estate owned, net

     1,383           4,527           -               -              4,527     

Premises, equipment, and capital leases, net

     64,523           16,147           1,321           5   (4)      17,473     

Bank-owned life insurance

     18,834           18,704           -               -              18,704     

Deferred income tax, net

     5,515           7,572           150           (4,207)  (5)      3,515     

Goodwill

     22,086           7,048           -               13,868   (6)      20,916     

Affordable housing fund investment

     5,787           6,197           -               -              6,197     

Income tax receivable

     4,077           5,545           -               -              5,545     

Other intangible assets, net

     13,191           5,474           -               10,400   (7)      15,874     

Other assets

     19,045           13,096           1,970           (64)  (8)      15,002     
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total assets

     $ 3,718,373           $ 1,682,702           $ 712,410           $ (13,883)         $ 2,381,229     
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Liabilities and Stockholders’ Equity:

             

Deposits:

             

Noninterest-bearing deposits

     $ 441,081           $ 194,662           $ 260,309         $ -              $ 454,971     

Interest-bearing deposits

     2,818,293           1,111,680           321,793           196   (9)      1,433,669     
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total deposits

     3,259,374           1,306,342           582,102           196   (9)      1,888,640     

Advances from Federal Home Loan Bank

     25,000           75,000           75,409           -              150,409     

Notes payable, net

     82,224           81,935           -               -              81,935     

Reserve for loss on repurchased loans

     4,282           3,485           -               -              3,485     

Accrued expenses and other liabilities

     44,913           27,183           2,451           56   (10)      29,690     
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total liabilities

     3,415,793           1,493,945           659,962           252          2,154,159     

Total shareholders’ equity

     302,580           188,757           52,448           (14,135)  (11)      227,070     
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total liabilities and shareholders’ equity

     $ 3,718,373           $ 1,682,702           $ 712,410           $ (13,883)         $ 2,381,229     
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

*  Includes the impact of the PBOC acquisition that was consummated on July 1, 2013.


Banc of California, Inc.

Proforma Condensed Statements of Operations

For the nine months ended September 30, 2013

(Dollars in thousands, except per share data)

(Unaudited)

 

                                                                                                   
            PBOC Merger     Proforma  
                   Proforma     Combined  
     BANC      PBOC      Merger     BANC &  
     Historical      (1/1 to 6/30)      Adjustments     PBOC  

Interest and dividend income

          

Loans, including fees

     $ 76,751           $ 7,456           $ 1,127   (12)      $ 85,334     

Securities and other earning assets

     3,004           2,183           399   (12)      5,586     
  

 

 

    

 

 

    

 

 

   

 

 

 

Total interest and dividend income

     79,755           9,639           1,526          90,920     

Interest expense

          

Deposits

     10,386           708           (49)  (12)      11,045     

Borrowings

     5,442           48           -              5,490     
  

 

 

    

 

 

    

 

 

   

 

 

 

Total interest expense

     15,828           756           (49)         16,535     
  

 

 

    

 

 

    

 

 

   

 

 

 

Net interest income

     63,927           8,883           1,575          74,385     

Provision for loan and lease losses

     6,195           792           -              6,987     
  

 

 

    

 

 

    

 

 

   

 

 

 

Net interest income after provision for loan and lease losses

     57,732           8,091           1,575          67,398     

Noninterest income

          

Customer service fees

     1,676           148           -              1,824     

Loan servicing income

     939           -               -              939     

Net gain on mortgage banking activities

     52,862           -               -              52,862     

Net gain on sale of loans

     4,520           2,484           -              7,004     

Net gain (loss) on sales of securities available for sale

     319           -               -              319     

Other income

     1,910           169           -              2,079     
  

 

 

    

 

 

    

 

 

   

 

 

 

Total noninterest income

     62,226           2,801           -              65,027     

Noninterest expense

          

Salaries and employee benefits

     74,570           5,544           -              80,114     

Occupancy and equipment

     12,070           927           3   (13)      13,000     

OREO expense

     (127)          -               -              (127)    

Amortization of intangible assets

     1,707           -               808   (13)      2,515     

All other expense

     33,236           2,879           -              36,115     
  

 

 

    

 

 

    

 

 

   

 

 

 

Total noninterest expense

     121,456           9,350           811          131,617     
  

 

 

    

 

 

    

 

 

   

 

 

 

Income (loss) before income taxes

     (1,498)          1,542           764          808     

Income tax expense

     1,744           373           596   (14)      2,713     
  

 

 

    

 

 

    

 

 

   

 

 

 

Net income (loss)

     $ (3,242)          $ 1,169           $ 168          $ (1,905)    
  

 

 

    

 

 

    

 

 

   

 

 

 

Preferred stock dividends

     1,234           50           -              1,284     
  

 

 

    

 

 

    

 

 

   

 

 

 

Net income (loss) available to common shareholders

     $ (4,476)          $ 1,119           $ 168          $ (3,189)    
  

 

 

    

 

 

    

 

 

   

 

 

 

Basic earnings (loss) per common share

     $ (0.32)               $ (0.21)    
  

 

 

         

 

 

 

Diluted earnings (loss) per common share

     $ (0.32)               $ (0.21)    
  

 

 

         

 

 

 

Weighted average common shares outstanding - basic

     14,078,048           3,872,051           (2,483,162)  (15)      15,466,937     

Weighted average common shares outstanding - diluted

     14,078,048           3,969,760           (2,580,871)  (15)      15,466,937     


Banc of California, Inc.

Proforma Condensed Statements of Operations

For the twelve months ended December 31, 2012

(Dollars in thousands, except per share data)

(Unaudited)

 

                                                                                                   
            PBOC Merger     Proforma  
                   Proforma     BANC, Beach,  
     BANC      PBOC      Merger     Gateway &  
     Historical      Historical      Adjustments     PBOC  

Interest and dividend income

          

Loans, including fees

     $ 51,942           $ 13,616           $ 1,887   (12)      $ 67,445     

Securities

     3,089           5,885           1,129   (12)      10,103     
  

 

 

    

 

 

    

 

 

   

 

 

 

Total interest and dividend income

     55,031           19,501           3,016          77,548     

Interest expense

          

Deposits

     5,960           1,617           (83)   (12)        7,494     

Borrowings

     2,519           112           -              2,631     
  

 

 

    

 

 

    

 

 

   

 

 

 

Total interest expense

     8,479           1,729           (83)          10,125     
  

 

 

    

 

 

    

 

 

   

 

 

 

Net interest income

     46,552           17,772           3,099          67,423     

Provision for loan and lease losses

     5,500           1,367           -              6,867     
  

 

 

    

 

 

    

 

 

   

 

 

 

Net interest income after provision for loan and lease losses

     41,052           16,405           3,099          60,556     

Noninterest income

          

Customer service fees

     1,883           219           -              2,102     

Loan servicing income

     92           -               -              92     

Net gain on mortgage banking activities

     21,310           -               -              21,310     

Net gain on sale of loans

     1,106           -               -              1,106     

Net gain (loss) on sales of securities available for sale

     (83)         1,886           -              1,803     

Other income

     12,311           181           -              12,492     
  

 

 

    

 

 

    

 

 

   

 

 

 

Total noninterest income

     36,619           2,286           -              38,905     

Noninterest expense

          

Salaries and employee benefits

     41,891           10,632           -              52,523     

Occupancy and equipment

     7,902           1,766           6   (13)      9,674     

OREO expense

     239           -               -              239     

Amortization of intangible assets

     696           -               1,857   (13)      2,553     

All other expense

     20,832           3,879           -              24,711     
  

 

 

    

 

 

    

 

 

   

 

 

 

Total noninterest expense

     71,560           16,277           1,863          89,700     
  

 

 

    

 

 

    

 

 

   

 

 

 

Income (loss) before income taxes

     6,111           2,414           1,236          9,761     

Income tax expense

     115           175           519   (14)      809     
  

 

 

    

 

 

    

 

 

   

 

 

 

Net income (loss)

     $ 5,996           $ 2,239           $ 717          $ 8,952     
  

 

 

    

 

 

    

 

 

   

 

 

 

Preferred stock dividends

     1,359           100           -              1,459     
  

 

 

    

 

 

    

 

 

   

 

 

 

Net income (loss) available to common shareholders

     $ 4,637           $ 2,139           $ 717          $ 7,493     
  

 

 

    

 

 

    

 

 

   

 

 

 

Basic earnings (loss) per common share

     $ 0.40                $ 0.54     
  

 

 

         

 

 

 

Diluted earnings (loss) per common share

     $ 0.40                $ 0.54     
  

 

 

         

 

 

 

Weighted average common shares outstanding - basic

     11,703,331           3,843,057           (1,759,724)   (15)      13,786,664     

Weighted average common shares outstanding - diluted

     11,712,507           3,940,766           (1,857,433)   (15)      13,795,840     


Note A—Basis of Presentation

The unaudited pro forma combined condensed consolidated financial information and explanatory notes show the impact on the historical financial condition and results of operations of Banc of California, Inc. (the Company) resulting from the completed PBOC acquisition, which closed July 1, 2013, under the acquisition method of accounting. Under the acquisition method of accounting, the assets and liabilities of PBOC were recorded by the Company at their respective fair values as of the date transaction was completed. The unaudited pro forma combined condensed consolidated statement of financial condition includes the historical financial information of the Company, and the impact of the historical financial information of PBOC as of September 30, 2013. The unaudited pro forma combined condensed consolidated statements of operations for the nine months ended September 30, 2013 and for the twelve months ended December 31, 2012 give effect to the completed PBOC acquisition as if the transaction had been completed on January 1, 2012.

Since the PBOC acquisition is recorded using the acquisition method of accounting, all loans are recorded at fair value, including adjustments for credit quality, and no allowance for credit losses is carried over to the Company’s balance sheet. In addition, certain nonrecurring costs associated with the completed PBOC acquisition, such as potential severance, professional fees, legal fees and conversion-related expenditures, are expensed as incurred and not reflected in the unaudited pro forma combined condensed consolidated statements of operations.

While the recording of the acquired loans at their fair value will impact the prospective determination of the provision for loan and lease losses and the allowance for loan and lease losses, for purposes of the unaudited pro forma combined condensed consolidated statement of operations for the nine months ended September 30, 2013 and for the twelve months ended December 31, 2012, the Company assumed no adjustments to the historical amount of PBOC’s provision for loan losses.

Note B—Accounting Policies and Financial Statement Classifications

The Company reviewed the historical accounting policies of PBOC and made conforming adjustments or financial statement reclassifications as necessary.

Note C—Merger and Acquisition Integration Costs

In connection with the PBOC acquisition, operations of PBOC have been integrated into Bank of California, N.A. (the Bank). Certain decisions arose from the integration assessments involved in involuntary termination of employees, vacating leased premises, changing information systems, canceling contracts with certain service providers, selling or otherwise disposing of certain premises, furniture and equipment and reassessing a possible deferred tax asset valuation allowance from a potential change in control for tax purposes. The Company also incurred merger-related costs including professional fees, legal fees, system conversion costs and costs related to communications with customers and others. No such costs were considered in the accompanying unaudited pro forma combined condensed consolidated statements of operations.

Note D—Estimated Annual Cost Savings

The Company expects to realize cost savings from the completed the completion of the PBOC acquisition. These cost savings are not reflected in the unaudited pro forma combined condensed consolidated financial information and there can be no assurance they will be achieved in the amount, manner or timing currently contemplated.

Note E—Pro Forma Adjustments

The following pro forma adjustments have been reflected in the unaudited pro forma combined condensed consolidated financial information. All adjustments are based on current assumptions and valuations, which are subject to change.

 

  1. Adjustment reflects the payment for cash consideration to PBOC shareholders

 

  2. Adjustment reflects the fair market value adjustment PBOC’s securities

 

  3. Adjustment reflects the fair market value adjustment of PBOC’s loans, net of elimination of PBOC’s allowance for loan and lease losses

 

  4. Adjustment reflects the fair market value adjustment for PBOC’s fixed assets

 

  5. Adjustment reflects the tax adjustments of 42 percent of the fair value adjustments related to the acquired assets and assumed liabilities. Adjustment is shown as a reduction of the consolidated net deferred tax assets


  6. The amount represents the recognition of goodwill resulting from the difference between the net fair value of the acquired assets and assumed liabilities and the consideration paid to PBOC shareholders. The excess of the value of the consideration paid over the fair value of net assets acquired was recorded as goodwill and can be summarized as follows.

 

                                         
     July 1, 2013  
     ($ in thousands)  

Consideration paid

     

Cash

      $ 25,252     

Options payout

        2,663     

Pre-merger options fair market value

        30     

Shares issued (1)

        28,282     
     

 

 

 

Total consideration

        56,227     

SBLF preferred stock assumed

        10,000     

Net assets pre-acquisition

        51,278     

Fair value marks

     

Loans receivable

   $ (10,856)      

Allowance for loan losses

     7,380       

Investment securities

     (2,495)      

Fixed assets

          

Trade name

     70       

Core deposit intangible

     10,330       

Deferred taxes assets, net

     (4,207)      

Prepaid rent

     (64)      

Lease liability

     (56)      

Certificate of deposits purchase premium

     (196)      
  

 

 

 

Total fair value marks

        (89)    

Fair value of net assets acquired

        51,189     
     

 

 

 

Excess of consideration paid over fair value of net assets acquired (goodwill)

        $ 15,038     
     

 

 

 

(1) @$13.58/share

 

  7. Adjustment reflects the purchase accounting adjustment in recognition of the fair value of core deposit intangible and trade name intangible

 

  8. Adjustment reflects a write-off of a portion of prepaid assets acquired

 

  9. Adjustment reflects the fair market value, or premium, of PBOC’s time deposits

 

  10. Adjustment reflects the fair market value of leases

 

  11. The amount represents a purchase accounting reversal of PBOC’s shareholders’ equity, net of additional $10.0 million preferred stock. Adjustment includes the value of the shares

 

  12. Adjustment reflects the amortization/accretion of fair value adjustments related to loans, investment securities, and deposits

 

  13. Adjustment reflects the amortization of core deposit intangibles, trade names intangibles, and fixed assets fair market value adjustments

 

  14. The amount represents the tax impact of 42 percent

 

  15. Adjustment reflects elimination of weighted average shares outstanding of acquired entities and the issuance of 2,083,333 shares in the acquisition of PBOC