BANC OF CALIFORNIA, INC. - FORM 8-K - EX-99.1

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EX-99.2 - EX-99.2 - BANC OF CALIFORNIA, INC.	d117720dex992.htm
8-K - FORM 8-K - BANC OF CALIFORNIA, INC.	d117720d8k.htm

Exhibit 99.1

LOGO

Banc of California Reports Record 2015 Earnings

•

Full Year Pre-Tax Income over $100 Million

•

Full Year Diluted EPS of $1.34

•

Fourth Quarter Diluted EPS of $0.39

IRVINE, Calif., (January 28, 2016) – Banc of California, Inc. (NYSE: BANC) today reported net income of $19.0 million for the fourth quarter of 2015, resulting in diluted earnings per share of $0.39 for the quarter and $1.34 for the full year.

Pre-tax income for the full year 2015 was $104.3 million, an increase of 294% compared to full year 2014. Net income available to common shareholders for 2015 grew to $52.2 million, an increase of 97% compared to full year 2014.

Highlights for the fourth quarter included:

•

Record quarterly core deposit growth of $540 million; including $110 million from non-interest bearing deposits.

•

Record quarterly commercial banking segment loan and lease originations of $914 million; resulting in $2.8 billion for the full year.

•

Full year 2015 total loan originations of $7.1 billion.

•

Commercial Banking profits increased to 90% of total, fully allocated segment profitability with Financial Advisory finishing at 9% and Mortgage Banking falling to 1% for the quarter.

•

The Company’s return on average assets for the quarter was 1.0%, and its return on average tangible common equity (ROTCE) for the quarter was 16.6%.

The Company’s consolidated assets totaled $8.2 billion at December 31, 2015, an increase of $1.0 billion compared to the prior quarter, and an increase of $2.3 billion compared to a year ago.

“Banc of California finished 2015 with accelerating growth and profitability across our businesses,” said Steven Sugarman, Chairman and Chief Executive Officer. “Our return on tangible common equity over 15% and return on assets over 1% demonstrates the long-term earnings power of our franchise. Combining these returns with our industry leading growth continues to yield significant value creation for shareholders. Our strong results are a testament to the hard work and dedication of our talented employees, who as employee-shareholders take pride in the shared success in growing the long-term value of the franchise. I am also particularly proud that Banc of California ranked #1 for total shareholder return in 2015 of all west coast banks included on Forbes Magazine’s list of America’s Top 100 banks.”

The Company will host a conference call to discuss its fourth quarter financial results at 8:00 a.m. Pacific Time (PT) on Thursday, January 28, 2016. Interested parties are welcome to attend the conference call by dialing 888-317-6003, and referencing event code 4988712. 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.

About Banc of California, Inc.

Banc of California, Inc. (NYSE: BANC) provides comprehensive banking services to California’s diverse private businesses, entrepreneurs and homeowners. Banc of California operates over 100 offices 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.


Source: Banc of California, Inc.
INVESTOR RELATIONS INQUIRIES:		MEDIA INQUIRIES:
Banc of California, Inc.		Vectis Strategies
Timothy Sedabres, (855) 361-2262		David Herbst, (213) 973-4113 x101

18500 Von Karman Ave. ● Suite 1100 ● Irvine, CA 92612 ● (949) 236-5250 ● www.bancofcal.com

Banc of California, Inc.

Consolidated Statements of Financial Condition

(Dollars in thousands)

(Unaudited)


	December 31, 2015			September 30, 2015			June 30, 2015			March 31, 2015			December 31, 2014
ASSETS
Cash and cash equivalents	$	156,124		$	378,963		$	458,990		$	265,402		$	231,199
Time deposits in financial institutions		1,500			1,900			1,900			1,900			1,900
Securities available for sale		833,596			693,219			487,293			393,586			345,695
Securities held to maturity		962,203			529,532			53,414			—			—
Loans held for sale		668,841			596,565			746,651			1,240,942			1,187,090
Loans and leases receivable		5,184,394			4,730,077			4,473,095			3,933,715			3,949,122
Allowance for loan and lease losses		(35,533	)		(34,774	)		(34,787	)		(29,345	)		(29,480	)
Federal Home Loan Bank and other bank stock		59,069			40,643			34,187			39,844			42,241
Servicing rights, net		50,727			41,646			34,942			21,829			19,566
Other real estate owned, net		1,097			34			50			498			423
Premises and equipment, net		111,539			34,689			35,229			78,285			78,685
Goodwill		39,244			39,244			31,591			31,591			31,591
Other intangible assets, net		19,158			20,504			21,905			23,708			25,252
Deferred income tax ⁽¹⁾		11,341			13,388			12,081			14,157			16,373
Income tax receivable		604			2,649			3,091			—			—
Bank-owned life insurance investment		100,171			99,570			19,201			19,154			19,095
Other assets ⁽¹⁾		71,480			68,961			59,049			62,089			52,545

Total assets	$	8,235,555		$	7,256,810		$	6,437,882		$	6,097,355		$	5,971,297


LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Noninterest-bearing deposits	$	1,121,124		$	1,011,169		$	867,930		$	749,129		$	662,295
Interest-bearing deposits		5,181,961			4,410,821			4,184,260			4,112,863			4,009,536
Deposits held for sale		—			—			52,820			—			—

Total deposits		6,303,085			5,421,990			5,105,010			4,861,992			4,671,831
Advances from Federal Home Loan Bank		930,000			830,000			350,000			545,000			633,000
Other borrowings		—			—			—			15,000			—
Notes payable, net		261,876			262,779			264,077			92,668			93,569
Reserve for loss on repurchased loans		9,700			9,098			9,411			8,432			8,303
Income taxes payable		1,241			5,939			—			4,488			56
Accrued expenses and other liabilities		77,248			83,470			75,502			55,615			61,223

Total liabilities		7,583,150			6,613,276			5,804,000			5,583,195			5,467,982
Commitments and contingent liabilities

Preferred stock, Series A, non-cumulative perpetual		31,934			31,934			31,934			31,934			31,934
Preferred stock, Series B, non-cumulative perpetual		10,000			10,000			10,000			10,000			10,000
Preferred stock, Series C, 8.00% non-cumulative perpetual		37,943			37,943			37,943			37,943			37,943
Preferred stock, Series D, 7.375% non-cumulative perpetual		110,873			110,873			110,873			—			—
Common stock		395			393			372			367			358
Common stock, class B non-voting non-convertible		1			—			—			—			6
Additional paid-in capital		429,790			427,599			425,784			424,636			422,910
Retained earnings ⁽¹⁾		63,534			52,277			45,494			36,880			29,589
Treasury stock		(29,070	)		(29,070	)		(29,070	)		(29,798	)		(29,798	)
Accumulated other comprehensive income/(loss), net		(2,995	)		1,585			552			2,198			373

Total stockholders’ equity		652,405			643,534			633,882			514,160			503,315

Total liabilities and stockholders’ equity	$	8,235,555		$	7,256,810		$	6,437,882		$	6,097,355		$	5,971,297

(1)

Amounts for 2014 periods have been updated to reflect the first quarter 2015 adoption of ASU 2014-1 related to investment in low income housing tax credit.

Banc of California, Inc.

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

(Unaudited)


	Three Months Ended													Year Ended
	December 31, 2015		September 30, 2015			June 30, 2015		March 31, 2015			December 31, 2014			December 31, 2015		December 31, 2014
Interest and dividend income
Loans, including fees	$	62,248	$	60,454		$	60,699	$	58,155		$	52,599		$	241,556	$	180,761
Securities		11,163		5,054			2,119		1,927			1,781			20,263		5,158
Dividends and other interest-earning assets		788		1,007			2,026		698			700			4,519		2,220

Total interest and dividend income		74,199		66,515			64,844		60,780			55,080			266,338		188,139
Interest expense
Deposits		6,862		6,395			6,165		6,361			6,440			25,783		24,411
Federal Home Loan Bank advances		890		587			290		353			210			2,120		527
Notes payable and other interest-bearing liabilities		4,381		3,983			4,285		2,069			2,099			14,718		7,924

Total interest expense		12,133		10,965			10,740		8,783			8,749			42,621		32,862

Net interest income		62,066		55,550			54,104		51,997			46,331			223,717		155,277
Provision for loan and lease losses		1,260		735			5,474		—			4,159			7,469		10,976

Net interest income after provision for loan and lease losses		60,806		54,815			48,630		51,997			42,172			216,248		144,301
Noninterest income
Customer service fees		957		1,118			1,072		910			651			4,057		1,490
Loan servicing income		3,663		(2,254	)		2,007		(442	)		1,248			2,974		4,199
Net gain on sale of securities available for sale		1,510		1,750			—		(2	)		661			3,258		1,183
Net gain on sale of loans		15,164		9,737			7,838		4,472			3,927			37,211		19,828
Mortgage banking income		30,334		37,015			39,403		37,933			25,030			144,685		95,430
Advisory service fees		1,942		2,294			4,435		1,197			6,722			9,868		12,904
Loan brokerage income		678		660			661		1,141			2,314			3,140		8,674
Gain on sale of building		—		—			9,919		—			—			9,919		—
All other income		2,571		407			1,358		771			336			5,107		1,929

Total noninterest income		56,819		50,727			66,693		45,980			40,889			220,219		145,637
Noninterest expense
Salaries and employee benefits		54,008		53,215			56,120		49,771			47,974			213,114		162,879
Occupancy and equipment		11,200		10,109			10,325		9,771			9,512			41,405		33,443
Professional fees		4,808		5,261			6,689		3,435			7,096			20,193		19,247
Data processing		2,104		2,170			2,075		1,835			1,884			8,184		5,231
Amortization of intangible assets		1,346		1,401			1,545		1,544			1,306			5,836		4,079
All other expenses ⁽¹⁾		13,193		9,587			11,166		9,523			10,448			43,469		38,593

Total noninterest expense		86,659		81,743			87,920		75,879			78,220			332,201		263,472

Income before income taxes		30,966		23,799			27,403		22,098			4,841			104,266		26,466
Income tax (benefit) expense ⁽¹⁾		11,928		9,263			11,479		9,524			(5,269	)		42,194		(3,739	)

Net income		19,038		14,536			15,924		12,574			10,110			62,072		30,205
Preferred stock dividends		3,030		3,040			2,843		910			910			9,823		3,640

Net income available to common stockholders	$	16,008	$	11,496		$	13,081	$	11,664		$	9,200		$	52,249	$	26,565


Basic earnings per total common share	$	0.40	$	0.29		$	0.33	$	0.30		$	0.25		$	1.36	$	0.91
Diluted earnings per total common share	$	0.39	$	0.29		$	0.32	$	0.29		$	0.25		$	1.34	$	0.90

(1)

Amounts for 2014 periods have been updated to reflect the first quarter 2015 adoption of ASU 2014-1 related to investment in low income housing tax credit.

Banc of California, Inc.

Selected Financial Data

(Dollars in thousands)

(Unaudited)


	Three Months Ended															Year Ended
	December 31, 2015			September 30, 2015			June 30, 2015			March 31, 2015			December 31, 2014			December 31, 2015			December 31, 2014
Average balances
Total assets	$	7,590,781		$	6,681,590		$	6,253,350		$	5,931,426		$	5,223,463		$	6,619,017		$	4,348,626
Total gross loans and leases		5,531,539			5,271,293			5,254,729			5,139,399			4,534,428			5,300,237			3,805,239
Investment Securities		1,506,626			828,326			402,366			354,475			310,454			776,256			225,182
Total interest earning assets		7,264,341			6,449,862			5,967,200			5,713,766			5,033,973			6,353,316			4,176,518
Total interest-bearing deposits		4,685,145			4,314,330			4,078,540			4,085,673			3,699,464			4,292,629			3,057,606
Total borrowings		1,141,554			745,959			635,460			583,979			406,531			778,182			364,095
Total interest bearing liabilities		5,826,699			5,060,289			4,714,000			4,669,652			4,105,995			5,070,811			3,421,701
Total stockholders’ equity		654,106			645,713			630,547			517,335			487,578			612,393			413,454
Profitability and other ratios
Return on average assets⁽¹⁾		1.00	%		0.86	%		1.02	%		0.86	%		0.77	%		0.94	%		0.69	%
Return on average equity ⁽¹⁾		11.55	%		8.93	%		10.13	%		9.86	%		8.23	%		10.14	%		7.31	%
Return on average tangible common equity ⁽²⁾		16.57	%		12.25	%		14.52	%		13.48	%		11.08	%		14.22	%		10.10	%
Dividend payout ratio ⁽³⁾		30.00	%		41.38	%		36.36	%		40.00	%		48.00	%		35.29	%		52.75	%
Net interest spread		3.22	%		3.23	%		3.45	%		3.55	%		3.49	%		3.35	%		3.54	%
Net interest margin⁽¹⁾		3.39	%		3.42	%		3.64	%		3.69	%		3.65	%		3.52	%		3.72	%
Noninterest income to total revenue ⁽⁴⁾		47.79	%		47.73	%		55.21	%		46.93	%		46.88	%		49.61	%		48.40	%
Noninterest income to average total assets⁽¹⁾		2.97	%		3.01	%		4.28	%		3.14	%		3.11	%		3.33	%		3.35	%
Noninterest expense to average total assets⁽¹⁾		4.53	%		4.85	%		5.64	%		5.19	%		5.94	%		5.02	%		6.06	%
Efficiency ratio⁽⁵⁾		72.89	%		76.92	%		72.78	%		77.45	%		89.68	%		74.83	%		87.56	%
Average held for investment loans and leases to average deposits		86.88	%		86.03	%		79.87	%		81.72	%		79.08	%		83.82	%		77.36	%
Average investment securities to average total assets		19.85	%		12.40	%		6.43	%		5.98	%		5.94	%		11.73	%		5.18	%
Average stockholders’ equity to average total assets		8.62	%		9.66	%		10.08	%		8.72	%		9.33	%		9.25	%		9.51	%
Allowance for loan and lease losses (ALLL)
Balance at beginning of period	$	34,774		$	34,787		$	29,345		$	29,480		$	25,283		$	29,480		$	18,805
Loans and leases charged off		(718	)		(788	)		(79	)		(357	)		(25	)		(1,942	)		(923	)
Recoveries		217			40			47			222			63			526			1,235
Transfer of loans from (to) held-for-sale		—			—			—			—			—			—			(613	)
Provision for loan and lease losses		1,260			735			5,474			—			4,159			7,469			10,976

Balance at end of period	$	35,533		$	34,774		$	34,787		$	29,345		$	29,480		$	35,533		$	29,480

Annualized net loan charge-offs to average total gross loans held for investment		0.04	%		0.07	%		0.00	%		0.01	%		0.00	%		0.03	%		-0.01	%
Reserve for loss on repurchased loans
Balance at beginning of period	$	9,098		$	9,411		$	8,432		$	8,303		$	7,045		$	8,303		$	5,427
Provision for loan repurchases		735			716			1,573			1,328			1,149			4,352			4,243
Change in estimates		846			—			—			—			—			846			—
Utilization of reserve for loan repurchases		(979	)		(1,029	)		(594	)		(1,199	)		109			(3,801	)		(1,367	)

Balance at end of period	$	9,700		$	9,098		$	9,411		$	8,432		$	8,303		$	9,700		$	8,303

(1)

Ratios are presented on an annualized basis.

(2)

Non-GAAP measure. See Non-GAAP measures section for reconciliation of the calculation.

(3)

Dividends declared per common share divided by basic earnings per share.

(4)

Total revenue is equal to the sum of net interest income before provision and noninterest income.

(5)

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, 2015			September 30, 2015			June 30, 2015			March 31, 2015			December 31, 2014
Asset quality information and ratios
30 to 89 days delinquent, excluding PCI loans	$	39,946		$	48,550		$	46,820		$	40,641		$	40,694
90+ days delinquent, excluding PCI loans		23,338			23,725			22,855			20,538			16,835

Total delinquent loans, excluding PCI loans		63,284			72,275			69,675			61,179			57,529

PCI loans, 30 to 89 days delinquent		40,291			17,593			17,351			16,375			17,641
PCI loans, 90+ days delinquent		6,894			6,223			8,648			6,986			5,761

Total delinquent PCI loans		47,185			23,816			25,999			23,361			23,402

Total delinquent loans	$	110,469		$	96,091		$	95,674		$	84,540		$	80,931

Total delinquent non-PCI loans to total non-PCI loans		1.42	%		1.66	%		1.66	%		1.66	%		1.55	%
Total delinquent loans to gross loans		2.13	%		2.03	%		2.14	%		2.15	%		2.05	%

Non-performing loans, excluding PCI loans	$	45,129		$	45,188		$	42,708		$	42,754		$	38,381
90+ days delinquent and still accruing loans, excluding PCI loans		—			—			—			—			—
Other real estate owned		1,097			34			50			498			423

Non-performing assets	$	46,226		$	45,222		$	42,758		$	43,252		$	38,804

ALLL to non-performing loans		78.74	%		76.95	%		81.45	%		68.64	%		76.81	%
Non-performing loans to gross loans		0.87	%		0.96	%		0.95	%		1.09	%		0.97	%
Non-performing assets to total assets		0.56	%		0.62	%		0.66	%		0.71	%		0.65	%

Troubled Debt Restructings (TDRs)
Performing TDRs	$	7,842		$	9,378		$	7,402		$	7,431		$	6,346
Non-performing TDRs		1,970			2,017			1,937			1,964			1,665

Total TDRs	$	9,812		$	11,395		$	9,339		$	9,395		$	8,011

Banc of California, Inc.

Selected Financial Data, Continued

(Dollars in thousands)

(Unaudited)


	December 31, 2015			September 30, 2015			June 30, 2015			March 31, 2015			December 31, 2014
Loan and lease breakdown by ALLL evaluation type
Originated loans and leases
Individually evaluated for impairment	$	30,654		$	31,008		$	31,791		$	29,301		$	29,287
Collectively evaluated for impairment		3,117,528			2,776,601			2,489,347			1,947,212			1,892,240
Acquired loans through business acquisitions - non-impaired
Individually evaluated for impairment		3,629			1,704			8			2,818			4,191
Collectively evaluated for impairment		1,124,874			1,174,573			1,294,384			1,358,184			1,411,927
Seasoned SFR mortgage loan pools - non-impaired		194,978			373,634			391,193			354,402			364,580
Acquired with deteriorated credit quality		712,731			372,557			266,372			241,798			246,897

Total loans	$	5,184,394		$	4,730,077		$	4,473,095		$	3,933,715		$	3,949,122

ALLL breakdown
Originated loans and leases
Individually evaluated for impairment	$	369		$	512		$	686		$	1,199		$	1,288
Collectively evaluated for impairment		32,713			31,419			31,440			25,474			25,263
Acquired loans through business acquisitions - non-impaired
Individually evaluated for impairment		—			—			—			—			—
Collectively evaluated for impairment		2,245			2,637			2,455			2,466			2,906
Seasoned SFR mortgage loan pools - non-impaired		—			—			—			—			—
Acquired with deteriorated credit quality		206			206			206			206			23

Total ALLL	$	35,533		$	34,774		$	34,787		$	29,345		$	29,480

Discount on Purchased/Acquired Loans
Acquired loans through business acquisitions - non-impaired	$	21,366		$	21,759		$	15,245		$	16,877		$	17,866
Seasoned SFR mortgage loan pools - non-impaired		12,545			27,699			29,201			28,967			29,955
Acquired with deteriorated credit quality		68,372			41,280			52,394			53,381			55,865

Total Discount	$	102,283		$	90,738		$	96,840		$	99,225		$	103,686

Ratios
To originated loans and leases:
Individually evaluated for impairment		1.20	%		1.65	%		2.16	%		4.09	%		4.40	%
Collectively evaluated for impairment ⁽¹⁾		1.05	%		1.13	%		1.26	%		1.31	%		1.34	%
Total ALLL		1.05	%		1.14	%		1.27	%		1.35	%		1.38	%
To originated loans and leases and acquired loans not impaired at acquisition:
Individually evaluated for impairment		1.08	%		1.57	%		2.16	%		3.73	%		3.85	%
Collectively evaluated for impairment		0.82	%		0.86	%		0.90	%		0.85	%		0.85	%
Total ALLL		0.83	%		0.87	%		0.91	%		0.87	%		0.88	%
Total ALLL and discount ⁽²⁾		1.33	%		1.41	%		1.31	%		1.38	%		1.42	%
To total loans and leases:
Individually evaluated for impairment		1.08	%		1.57	%		2.16	%		3.73	%		3.85	%
Collectively evaluated for impairment		0.79	%		0.79	%		0.81	%		0.76	%		0.77	%
Total ALLL		0.69	%		0.74	%		0.78	%		0.75	%		0.75	%
Total ALLL and discount ⁽²⁾		2.66	%		2.65	%		2.94	%		3.27	%		3.37	%

(1)

For the three months ended June 30, 2015 and March 31, 2015, the ratios included an unallocated allowance for loan and lease losses of $2.2 million and $364 thousand. Without the unallocated, the ratios are 1.17% and 1.29% for the three months ended June 30, 2015 and March 31, 2015, respectively.

(2)

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, 2015			September 30, 2015			June 30, 2015			March 31, 2015			December 31, 2014
Composition of held for investment loans and leases
Commercial real estate	$	727,707		$	690,862		$	807,146		$	975,734		$	999,857
Multi-family		904,300			823,415			696,768			940,053			955,683
Construction		55,289			39,475			32,022			38,081			42,198
Commercial and industrial		876,999			822,690			771,477			489,229			490,900
SBA		57,706			52,985			56,887			48,254			36,155
Lease financing		192,424			162,504			131,189			102,012			85,749

Total commercial loans		2,814,425			2,591,931			2,495,489			2,593,363			2,610,542

Single family residential mortgage		2,255,584			2,013,450			1,840,924			1,169,134			1,171,662
Other consumer		114,385			124,696			136,682			171,218			166,918

Total consumer loans		2,369,969			2,138,146			1,977,606			1,340,352			1,338,580

Total gross loans and leases	$	5,184,394		$	4,730,077		$	4,473,095		$	3,933,715		$	3,949,122

Composition percentage of held for investment loans and leases
Commercial real estate		14.0	%		14.6	%		18.0	%		24.8	%		25.3	%
Multi-family		17.4	%		17.4	%		15.6	%		23.9	%		24.2	%
Construction		1.1	%		0.8	%		0.7	%		1.0	%		1.1	%
Commercial and industrial		16.9	%		17.4	%		17.2	%		12.4	%		12.4	%
SBA		1.1	%		1.1	%		1.3	%		1.2	%		0.9	%
Lease financing		3.7	%		3.4	%		2.9	%		2.6	%		2.2	%

Total commercial loans		54.2	%		54.7	%		55.7	%		65.9	%		66.1	%

Single family residential mortgage		43.6	%		42.7	%		41.2	%		29.7	%		29.7	%
Other consumer		2.2	%		2.6	%		3.1	%		4.4	%		4.2	%

Total consumer loans		45.8	%		45.3	%		44.3	%		34.1	%		33.9	%

Total gross loans and leases		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

Composition of deposits
Noninterest-bearing checking	$	1,121,124		$	1,011,169		$	880,766		$	749,129		$	662,295
Interest-bearing checking		1,697,055			1,458,208			1,002,443			1,032,482			1,054,828
Money market		1,479,931			1,238,180			1,393,751			1,136,562			1,074,432
Savings		823,618			814,230			843,274			898,483			985,646
Certificates of deposit		1,181,357			900,203			984,776			1,045,336			894,630

Total deposits	$	6,303,085		$	5,421,990		$	5,105,010		$	4,861,992		$	4,671,831

Composition percentage of deposits
Noninterest-bearing checking		17.8	%		18.6	%		17.3	%		15.4	%		14.2	%
Interest-bearing checking		26.8	%		26.9	%		19.6	%		21.2	%		22.6	%
Money market		23.5	%		22.8	%		27.3	%		23.4	%		23.0	%
Savings		13.1	%		15.0	%		16.5	%		18.5	%		21.1	%
Certificates of deposit		18.8	%		16.7	%		19.3	%		21.5	%		19.1	%

Total deposits		100.0	%		100.0	%		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, 2015								September 30, 2015								June 30, 2015
	Average Balance			Interest		Yield / Cost			Average Balance			Interest		Yield / Cost			Average Balance			Interest		Yield / Cost
Interest earning assets
Loans held for sale and SFR mortgage	$	1,903,331		$	17,584		3.67	%	$	1,966,373		$	18,123		3.66	%	$	1,959,738		$	18,984		3.89	%
Seasoned SFR mortgage loan pools		858,601			12,098		5.59	%		689,666			10,901		6.27	%		591,460			9,690		6.57	%
Commercial real estate, multi-family, and construction		1,638,329			19,006		4.60	%		1,568,975			17,643		4.46	%		1,848,780			21,552		4.68	%
Commercial and industrial, SBA, and lease financing		1,020,306			12,754		4.96	%		914,811			12,125		5.26	%		697,291			8,871		5.10	%
Other consumer		110,972			806		2.88	%		131,468			1,662		5.02	%		157,460			1,602		4.08	%

Gross loans and leases		5,531,539			62,248		4.46	%		5,271,293			60,454		4.55	%		5,254,729			60,699		4.63	%
Securities		1,506,626			11,163		2.94	%		828,326			5,054		2.42	%		402,366			2,119		2.11	%
Other interest-earning assets		226,176			788		1.38	%		350,243			1,007		1.14	%		310,105			2,026		2.62	%

Total interest-earning assets		7,264,341			74,199		4.05	%		6,449,862			66,515		4.09	%		5,967,200			64,844		4.36	%
Allowance for loan and lease losses		(35,894	)							(34,810	)							(29,445	)
BOLI and non-interest earning assets		362,334								266,538								315,595

Total assets	$	7,590,781							$	6,681,590							$	6,253,350


Interest-bearing liabilities
Savings	$	805,445		$	1,538		0.76	%	$	832,006		$	1,575		0.75	%	$	867,532		$	1,606		0.74	%
Interest-bearing checking		1,475,461			2,663		0.72	%		1,282,066			2,273		0.70	%		1,012,211			1,996		0.79	%
Money market		1,343,683			1,267		0.37	%		1,294,554			1,337		0.41	%		1,142,858			1,028		0.36	%
Certificates of deposit		1,060,556			1,394		0.52	%		905,704			1,210		0.53	%		1,055,939			1,535		0.58	%

Total interest-bearing deposits		4,685,145			6,862		0.58	%		4,314,330			6,395		0.59	%		4,078,540			6,165		0.61	%
FHLB advances		869,457			890		0.41	%		476,848			587		0.49	%		375,385			290		0.31	%
Long-term debt and other interest-bearing liabilities		272,097			4,381		6.39	%		269,111			3,983		5.87	%		260,075			4,285		6.61	%

Total interest-bearing liabilities		5,826,699			12,133		0.83	%		5,060,289			10,965		0.86	%		4,714,000			10,740		0.91	%
Noninterest-bearing deposits		1,037,966								916,670								859,420
Non-interest-bearing liabilities		72,010								58,918								49,383

Total liabilities		6,936,675								6,035,877								5,622,803
Total stockholders’ equity		654,106								645,713								630,547

Total liabilities and stockholders’ equity	$	7,590,781							$	6,681,590							$	6,253,350


Net interest income/spread				$	62,066		3.22	%				$	55,550		3.23	%				$	54,104		3.45	%


Net interest margin							3.39	%							3.42	%							3.64	%

Ratio of interest-earning assets to interest-bearing liabilities		124.67	%							127.46	%							126.58	%

Total deposits	$	5,723,111		$	6,862		0.48	%	$	5,231,000		$	6,395		0.49	%	$	4,937,960		$	6,165		0.50	%
Total funding ⁽¹⁾	$	6,864,665		$	12,133		0.70	%	$	5,976,959		$	10,965		0.73	%	$	5,573,420		$	10,740		0.77	%

(1)

Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.

Banc of California, Inc.

Average Balance, Average Yield Earned, and Average Cost Paid, Continued

(Dollars in thousands)

(Unaudited)


	Three Months Ended
	March 31, 2015								December 31, 2014
	Average Balance			Interest		Yield / Cost			Average Balance			Interest		Yield / Cost
Interest earning assets
Loans held for sale and SFR mortgage	$	1,868,085		$	17,477		3.79	%	$	1,778,112		$	16,741		3.74	%
Seasoned SFR mortgage loan pools		591,724			9,413		6.45	%		606,879			9,605		6.28	%
Commercial real estate, multi-family, and construction		1,956,830			22,508		4.66	%		1,486,406			17,993		4.80	%
Commercial and industrial, SBA, and lease financing		572,726			7,239		5.13	%		523,194			6,192		4.70	%
Other consumer		150,034			1,518		4.10	%		139,837			2,068		5.87	%

Gross loans and leases		5,139,399			58,155		4.59	%		4,534,428			52,599		4.60	%
Securities		354,475			1,927		2.20	%		310,454			1,781		2.28	%
Other interest-earning assets		219,892			698		1.29	%		189,091			700		1.47	%

Total interest-earning assets		5,713,766			60,780		4.31	%		5,033,973			55,080		4.34	%
Allowance for loan and lease losses		(29,623	)							(26,105	)
BOLI and non-interest earning assets		247,283								215,595

Total assets	$	5,931,426							$	5,223,463


Interest-bearing liabilities
Savings	$	945,530		$	1,748		0.75	%	$	960,253		$	1,963		0.81	%
Interest-bearing checking		1,042,895			2,041		0.79	%		937,623			2,078		0.88	%
Money market		1,092,987			958		0.36	%		964,414			841		0.35	%
Certificates of deposit		1,004,261			1,614		0.65	%		837,174			1,558		0.74	%

Total interest-bearing deposits		4,085,673			6,361		0.63	%		3,699,464			6,440		0.69	%
FHLB advances		487,600			353		0.29	%		307,859			210		0.27	%
Long-term debt and other interest-bearing liabilities		96,379			2,069		8.71	%		98,672			2,099		8.44	%

Total interest-bearing liabilities		4,669,652			8,783		0.76	%		4,105,995			8,749		0.85	%
Noninterest-bearing deposits		682,492								577,623
Non-interest-bearing liabilities		61,947								52,267

Total liabilities		5,414,091								4,735,885
Total stockholders’ equity		517,335								487,578

Total liabilities and stockholders’ equity	$	5,931,426							$	5,223,463


Net interest income/spread				$	51,997		3.55	%				$	46,331		3.49	%


Net interest margin							3.69	%							3.65	%

Ratio of interest-earning assets to interest-bearing liabilities		122.36	%							122.60	%

Total deposits	$	4,768,165		$	6,361		0.54	%	$	4,277,087		$	6,440		0.60	%
Total funding ⁽¹⁾	$	5,352,144		$	8,783		0.67	%	$	4,683,618		$	8,749		0.74	%

(1)

Banc of California, Inc.

Average Balance, Average Yield Earned, and Average Cost Paid, Continued

(Dollars in thousands)

(Unaudited)


	Year Ended
	December 31, 2015								December 31, 2014
	Average Balance			Interest		Yield / Cost			Average Balance			Interest		Yield / Cost
Interest earning assets
Loans held for sale and SFR mortgage	$	1,924,593		$	72,167		3.75	%	$	1,632,547		$	62,269		3.81	%
Seasoned SFR mortgage loan pools		683,612			42,102		6.16	%		683,121			46,153		6.76	%
Commercial real estate, multi-family, and construction		1,751,851			80,708		4.61	%		935,129			44,494		4.76	%
Commercial and industrial, SBA, and lease financing		802,821			40,989		5.11	%		438,250			22,558		5.15	%
Other consumer		137,360			5,590		4.07	%		116,192			5,287		4.55	%

Gross loans and leases		5,300,237			241,556		4.56	%		3,805,239			180,761		4.75	%
Securities		776,256			20,263		2.61	%		225,182			5,158		2.29	%
Other interest-earning assets		276,823			4,519		1.63	%		146,097			2,220		1.52	%

Total interest-earning assets		6,353,316			266,338		4.19	%		4,176,518			188,139		4.50	%
Allowance for loan and lease losses		(32,467	)							(22,354	)
BOLI and non-interest earning assets		298,168								194,462

Total assets	$	6,619,017							$	4,348,626


Interest-bearing liabilities
Savings	$	862,160		$	6,467		0.75	%	$	967,803		$	9,121		0.94	%
Interest-bearing checking		1,204,560			8,973		0.74	%		735,156			7,629		1.04	%
Money market		1,219,416			4,590		0.38	%		692,464			2,788		0.40	%
Certificates of deposit		1,006,493			5,753		0.57	%		662,183			4,873		0.74	%

Total interest-bearing deposits		4,292,629			25,783		0.60	%		3,057,606			24,411		0.80	%
FHLB advances		553,162			2,120		0.38	%		267,816			527		0.20	%
Long-term debt and other interest-bearing liabilities		225,020			14,718		6.54	%		96,279			7,924		8.23	%

Total interest-bearing liabilities		5,070,811			42,621		0.84	%		3,421,701			32,862		0.96	%
Noninterest-bearing deposits		875,227								468,077
Non-interest-bearing liabilities		60,586								45,394

Total liabilities		6,006,624								3,935,172
Total stockholders’ equity		612,393								413,454

Total liabilities and stockholders’ equity	$	6,619,017							$	4,348,626


Net interest income/spread				$	223,717		3.35	%				$	155,277		3.54	%


Net interest margin							3.52	%							3.72	%

Ratio of interest-earning assets to interest-bearing liabilities		125.29	%							122.06	%

Total deposits	$	5,167,856		$	25,783		0.50	%	$	3,525,683		$	24,411		0.69	%
Total funding ⁽¹⁾	$	5,946,038		$	42,621		0.72	%	$	3,889,778		$	32,862		0.84	%

(1)

Banc of California, Inc.

Capital Ratios

(Unaudited)


	December 31,			September 30,			June 30,			March 31,			December 31,
	2015			2015			2015			2015 ⁽¹⁾			2014
Capital Ratios
Banc of California, Inc.
Total risk-based capital ratio:		11.18	%		12.56	%		14.01	%		11.55	%		11.28	%
Tier 1 risk-based capital ratio:		10.71	%		12.06	%		13.19	%		10.83	%		10.54	%
Common equity tier 1 capital ratio ⁽¹⁾		7.36	%		8.19	%		8.96	%		9.01	%		N/A
Tier 1 leverage ratio:		8.07	%		8.97	%		9.55	%		7.99	%		8.57	%
Banc of California, NA
Total risk-based capital ratio:		13.45	%		14.93	%		14.86	%		13.58	%		12.04	%
Tier 1 risk-based capital ratio:		12.79	%		14.19	%		14.04	%		12.86	%		11.29	%
Common equity tier 1 capital ratio ⁽¹⁾		12.79	%		14.19	%		14.04	%		12.86	%		N/A
Tier 1 leverage ratio:		9.64	%		10.53	%		10.26	%		9.49	%		9.17	%

(1)

From the first quarter of 2015, BASEL III common equity tier 1 capital ratio is required.

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,			June 30,			March 31,			December 31,
	2015			2015			2015			2015			2014
Tangible common equity to tangible assets ratio
Total assets	$	8,235,555		$	7,256,810		$	6,437,882		$	6,097,355		$	5,971,297
Less goodwill		(39,244	)		(39,244	)		(31,591	)		(31,591	)		(31,591	)
Less other intangible assets		(19,158	)		(20,504	)		(21,905	)		(23,708	)		(25,252	)

Tangible assets	$	8,177,153		$	7,197,062		$	6,384,386		$	6,042,056		$	5,914,454


Total stockholders’ equity	$	652,405		$	643,534		$	633,882		$	514,160		$	503,315
Less preferred stock		(190,750	)		(190,750	)		(190,750	)		(79,877	)		(79,877	)
Less goodwill		(39,244	)		(39,244	)		(31,591	)		(31,591	)		(31,591	)
Less other intangible assets		(19,158	)		(20,504	)		(21,905	)		(23,708	)		(25,252	)

Tangible common equity	$	403,253		$	393,036		$	389,636		$	378,984		$	366,595


Total stockholders’ equity to total assets		7.92	%		8.87	%		9.85	%		8.43	%		8.43	%
Tangible common equity to tangible assets		4.93	%		5.46	%		6.10	%		6.27	%		6.20	%

Common stock outstanding		38,002,267			37,751,445			35,647,476			35,063,199			34,190,740
Class B non-voting non-convertible common stock outstanding		37,355			—			—			11			609,195

Total common stock outstanding		38,039,622			37,751,445			35,647,476			35,063,210			34,799,935

Minimum number of shares issuable under purchase contracts ⁽¹⁾		601,299			828,246			2,883,892			2,984,367			3,215,538

Total common stock outstanding and shares issuable under purchase contracts		38,640,921			38,579,691			38,531,368			38,047,577			38,015,473


(1) Purchase contracts relating to the tangible equity units

Tangible common equity per common stock	$	10.60		$	10.41		$	10.93		$	10.81		$	10.53
Book value per common stock	$	12.14		$	11.99		$	12.43		$	12.39		$	12.17

Tangible equity per common stock and shares issuable under purchase contracts	$	10.44		$	10.19		$	10.11		$	9.96		$	9.64
Book value per common stock and shares issuable under purchase contracts	$	11.95		$	11.74		$	11.50		$	11.41		$	11.14

Banc of California, Inc.

Non-GAAP Measures, Continued

(Dollars in thousands, except per share data)

(Unaudited)


	Three Months Ended															Year Ended
	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,
	2015			2015			2015			2015			2014			2015			2014
Return on tangible common equity
Average total stockholders’ equity	$	654,106		$	645,713		$	630,547		$	517,335		$	487,578		$	612,393		$	413,454
Less average preferred stock		(190,750	)		(190,750	)		(182,233	)		(79,877	)		(79,877	)		(161,288	)		(79,877	)
Less average goodwill		(39,244	)		(31,674	)		(31,591	)		(31,591	)		(33,129	)		(33,541	)		(32,326	)
Less average other intangible assets		(19,877	)		(21,320	)		(23,032	)		(24,720	)		(13,611	)		(22,222	)		(11,739	)

Average tangible common equity	$	404,235		$	401,969		$	393,691		$	381,147		$	360,961		$	395,342		$	289,512


Net income	$	19,038		$	14,536		$	15,924		$	12,574		$	10,110		$	62,072		$	30,205
Less preferred stock dividends		(3,030	)		(3,040	)		(2,843	)		(910	)		(910	)		(9,823	)		(3,640	)
Add tax-effected amortization of intangible assets⁽¹⁾		875			911			1,004			1,004			849			3,793			2,651
Add tax-effected impairment on intangible assets⁽¹⁾		—			—			168			—			31			168			31

Net income available to common stockholders	$	16,883		$	12,407		$	14,253		$	12,668		$	10,080		$	56,210		$	29,247


(1) Utilized a 35% effective tax rate

Return on average equity		11.55	%		8.93	%		10.13	%		9.86	%		8.23	%		10.14	%		7.31	%
Return on average tangible common equity		16.57	%		12.25	%		14.52	%		13.48	%		11.08	%		14.22	%		10.10	%

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BANC OF CALIFORNIA, INC. Reports