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

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EX-99.2 - EX-99.2 - BANC OF CALIFORNIA, INC.	d207283dex992.htm
8-K - FORM 8-K - BANC OF CALIFORNIA, INC.	d207283d8k.htm

Exhibit 99.1

LOGO

Banc of California Reports Record

Second Quarter Earnings

IRVINE, Calif., (July 21, 2016) – Banc of California, Inc. (NYSE: BANC) today reported record quarterly net income of $26.5 million for the second quarter of 2016, resulting in earnings per share of $0.43 for the quarter, fully diluted. Excluding $2.7 million of debt extinguishment costs related to the redemption of senior notes during the quarter, earnings per share for the second quarter was $0.46.

Pre-tax income for the second quarter of 2016 was $44.8 million, an increase of 63% compared to second quarter of 2015. Net income available to common shareholders for the second quarter was $21.4 million, an increase of 64% compared to the second quarter of 2015.

Highlights for the quarter included:

•

Record quarterly deposit growth of $1.1 billion, or 16%, resulting in a reduction in quarter over quarter total interest expense.

•

Record quarterly loan production of $2.6 billion, driven by record quarterly commercial banking segment loan and lease originations of $1.3 billion, an increase of 109% from a year ago.

•

The Company’s return on average assets for the quarter was 1.1% and its return on average tangible common equity for the quarter was 15.7%.

The Company finished the quarter with consolidated assets totaling $10.2 billion, an increase of $0.5 billion, or 6%, compared to the prior quarter, and an increase of $3.7 billion, or 58%, compared to a year ago. The Company’s growth over this period has been organic as Banc of California’s last acquisition occurred in 2014. Banc of California joins Pacific Western Bank, East West Bank, Cathay Bank and Silicon Valley Bank as the only mid-sized banks headquartered in California.

“Our strong second quarter performance is the direct result of our differentiated value proposition as California’s Bank. Based on total shareholder return since the beginning of 2015, Banc of California is the #1 performing bank stock amongst Forbes’ Magazine’s list of America’s Top 100 Banks,” said Steven Sugarman, Chairman and Chief Executive Officer of Banc of California. “Banc of California’s scale as a $10 billion bank is enabling the achievement of our long-term financial targets. This includes a return on tangible common equity over 15% and a return on assets over 1%. We are proud of these accomplishments. The consistent and strong financial performance showcases our strategy, focus and execution quarter-over-quarter. We are winning market share and we are winning top talent. Banc of California is a business built for the long-term.”

During the second quarter, the Company raised $100 million in common stock, completed its redemption of $85 million of 7.50% Senior Notes and increased its line of credit to $75 million. The redemption of the senior notes directly resulted in non-core expenses related to capital transactions of $2.7 million during the quarter.

“Banc of California meaningfully deleveraged its balance sheet, increased its liquidity and strengthened its capital structure during the second quarter,” said James McKinney, Chief Financial Officer of Banc of California. “We expect these actions will not only make us a safer and stronger financial institution, but they will be accretive to the holders of our debt, preferred stock and common stock. These actions are part of our on-going strategy to strengthen, and increase the durability of, our balance-sheet and liquidity as we grow beyond $10 billion in assets. We continue to seek opportunities to strengthen our franchise for the benefit of all our clients and other stakeholders.”

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

During the quarter, Banc of California grew its recurring net interest income by $10.6 million, or 15% from the prior quarter, increased its total assets by $0.5 billion, reduced its total borrowings by over $0.6 billion, and maintained its net interest margin. These results occurred while the yield on the 10-year Treasury fell from 1.78% to 1.49%.

“We are proud that our interest rate risk controls and balance sheet management strategy enabled our bank to successfully navigate a volatile rate environment for the second quarter in a row without impacting the consistency and predictability of our earnings,” Sugarman said. “The losses from negative valuation marks in our mortgage servicing rights and SWAPs were offset by concurrent fair market value gains realized in our securities portfolio. We believe this further validates the investments we have made and continue to make in our enterprise risk analytics and controls. Our analytical approach to building our balance sheet and our business continues to support our track record of consistent, growing earnings.”

The Company will host a conference call to discuss its second quarter financial results at 7:00 a.m. Pacific Time (PT) on Thursday, July 21, 2016. Interested parties are welcome to attend the conference call by dialing 888-317-6003, and referencing event code 6455872. 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 businesses, entrepreneurs and communities. 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

Banc of California, Inc.

Consolidated Statements of Financial Condition

(Dollars in thousands)

(Unaudited)


	June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015
ASSETS
Cash and cash equivalents	$	271,732		$	215,012		$	156,124		$	378,963		$	458,990
Time deposits in financial institutions		1,500			1,500			1,500			1,900			1,900
Securities available for sale		1,302,785			1,663,711			833,596			693,219			487,293
Securities held to maturity		962,282			962,262			962,203			529,532			53,414
Loans held for sale		893,782			863,944			668,841			596,565			746,651
Loans and leases receivable		6,236,115			5,463,068			5,184,394			4,730,077			4,473,095
Allowance for loan and lease losses		(37,483	)		(35,845	)		(35,533	)		(34,774	)		(34,787	)
Federal Home Loan Bank and other bank stock		81,115			61,146			59,069			40,643			34,187
Servicing rights, net		53,650			49,406			50,727			41,646			34,942
Other real estate owned, net		429			325			1,097			34			50
Premises and equipment, net		120,755			114,668			111,539			34,689			35,229
Goodwill		39,244			39,244			39,244			39,244			31,591
Other intangible assets, net		16,514			17,836			19,158			20,504			21,905
Deferred income tax		7,270			7,441			11,341			13,388			12,081
Income tax receivable		5,904			—			604			2,649			3,091
Bank-owned life insurance investment		101,314			100,734			100,171			99,570			19,201
Other assets		100,754			92,520			71,480			68,961			59,049

Total assets	$	10,157,662		$	9,616,972		$	8,235,555		$	7,256,810		$	6,437,882


LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Noninterest-bearing deposits	$	1,093,686		$	1,398,728		$	1,121,124		$	1,011,169		$	867,930
Interest-bearing deposits		6,835,270			5,438,873			5,181,961			4,410,821			4,184,260
Deposits held for sale		—			—			—			—			52,820

Total deposits		7,928,956			6,837,601			6,303,085			5,421,990			5,105,010
Advances from Federal Home Loan Bank		930,000			1,195,000			930,000			830,000			350,000
Securities sold under repurchase agreements		—			257,100			—			—			—
Notes payable, net		177,743			260,896			261,876			262,779			264,077
Reserve for loss on repurchased loans		10,438			9,781			9,700			9,098			9,411
Income taxes payable		—			12,303			1,241			5,939			—
Accrued expenses and other liabilities		170,641			176,761			77,248			83,470			75,502

Total liabilities		9,217,778			8,749,442			7,583,150			6,613,276			5,804,000
Commitments and contingent liabilities

Preferred stock, Series A, non-cumulative perpetual		—			31,934			31,934			31,934			31,934
Preferred stock, Series B, non-cumulative perpetual		—			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			110,873			110,873
Preferred stock, Series E, 7.00% non-cumulative perpetual		120,255			120,258			—			—			—
Common stock		510			454			395			393			372
Common stock, class B non-voting non-convertible		2			1			1			—			—
Additional paid-in capital		608,303			509,123			429,790			427,599			425,784
Retained earnings		88,385			73,179			63,534			52,277			45,494
Treasury stock		(29,070	)		(29,070	)		(29,070	)		(29,070	)		(29,070	)
Accumulated other comprehensive income/(loss), net		2,683			2,835			(2,995	)		1,585			552

Total stockholders’ equity		939,884			867,530			652,405			643,534			633,882

Total liabilities and stockholders’ equity	$	10,157,662		$	9,616,972		$	8,235,555		$	7,256,810		$	6,437,882

Banc of California, Inc.

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

(Unaudited)


	Three Months Ended													Six Months Ended
	June 30, 2016			March 31, 2016			December 31, 2015		September 30, 2015			June 30, 2015		June 30, 2016			June 30, 2015
Interest and dividend income
Loans, including fees	$	73,743		$	67,144		$	62,248	$	60,454		$	60,699	$	140,887		$	118,854
Securities		19,393			16,047			11,163		5,054			2,119		35,440			4,046
Dividends and other interest-earning assets		1,504			1,049			788		1,007			2,026		2,553			2,724

Total interest and dividend income		94,640			84,240			74,199		66,515			64,844		178,880			125,624
Interest expense
Deposits		8,385			8,107			6,862		6,395			6,165		16,492			12,526
Federal Home Loan Bank advances		1,966			1,262			890		587			290		3,228			643
Securities sold under repurchase agreements		389			160			15		3			—		549			—
Notes payable and other interest-bearing liabilities		2,863			4,294			4,366		3,980			4,285		7,157			6,354

Total interest expense		13,603			13,823			12,133		10,965			10,740		27,426			19,523

Net interest income		81,037			70,417			62,066		55,550			54,104		151,454			106,101
Provision for loan and lease losses		1,769			321			1,260		735			5,474		2,090			5,474

Net interest income after provision for loan and lease losses		79,268			70,096			60,806		54,815			48,630		149,364			100,627
Noninterest income
Customer service fees		1,173			848			957		1,118			1,072		2,021			1,982
Loan servicing (loss) income		(3,347	)		(5,288	)		3,663		(2,254	)		2,007		(8,635	)		1,565
Net gain on sale of securities available for sale		12,824			16,789			1,510		1,750			—		29,613			(2	)
Net gain on sale of loans		2,147			2,195			15,164		9,737			7,838		4,342			12,310
Mortgage banking income		43,795			33,684			30,334		37,015			39,403		77,479			77,336
Advisory service fees		510			997			1,942		2,294			4,435		1,507			5,632
Loan brokerage income		759			874			678		660			661		1,633			1,802
Gain on sale of building		—			—			—		—			9,919		—			9,919
All other income		7,743			1,860			2,571		407			1,358		9,603			2,129

Total noninterest income		65,604			51,959			56,819		50,727			66,693		117,563			112,673
Noninterest expense
Salaries and employee benefits		61,022			57,183			54,008		53,215			56,120		118,205			105,891
Occupancy and equipment		11,943			11,740			11,200		10,109			10,325		23,683			20,096
Professional fees		6,763			6,212			4,808		5,261			6,689		12,975			10,124
Data processing		2,838			2,194			2,104		2,170			2,075		5,032			3,910
Amortization of intangible assets		1,322			1,322			1,346		1,401			1,545		2,644			3,089
All other expenses		16,187			10,449			13,193		9,587			11,166		26,636			20,689

Total noninterest expense		100,075			89,100			86,659		81,743			87,920		189,175			163,799

Income before income taxes		44,797			32,955			30,966		23,799			27,403		77,752			49,501
Income tax (benefit) expense		18,269			13,268			11,928		9,263			11,479		31,537			21,003

Net income		26,528			19,687			19,038		14,536			15,924		46,215			28,498
Preferred stock dividends		5,114			4,575			3,030		3,040			2,843		9,689			3,753

Net income available to common stockholders	$	21,414		$	15,112		$	16,008	$	11,496		$	13,081	$	36,526		$	24,745


Basic earnings per total common share	$	0.44		$	0.36		$	0.40	$	0.29		$	0.33	$	0.81		$	0.62
Diluted earnings per total common share	$	0.43		$	0.36		$	0.39	$	0.29		$	0.32	$	0.79		$	0.62

Banc of California, Inc.

Selected Financial Data

(Dollars in thousands)

(Unaudited)


	Three Months Ended															Six Months Ended
	June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015			June 30, 2016			June 30, 2015
Average balances
Total assets	$	10,061,237		$	8,833,176		$	7,590,781		$	6,681,590		$	6,253,350		$	9,447,206		$	6,093,277
Total gross loans and leases		6,663,340			5,995,436			5,531,539			5,271,293			5,254,729			6,329,388			5,197,382
Investment Securities		2,696,524			2,128,882			1,506,626			828,326			402,366			2,412,703			378,553
Total interest earning assets		9,619,937			8,344,167			7,264,341			6,449,862			5,967,200			8,982,052			5,841,183
Total interest-bearing deposits		5,696,893			5,332,032			4,685,145			4,314,330			4,078,540			5,514,463			4,082,087
Total borrowings		2,067,234			1,309,710			1,141,554			745,959			635,460			1,688,472			609,862
Total interest bearing liabilities		7,764,127			6,641,742			5,826,699			5,060,289			4,714,000			7,202,935			4,691,949
Total stockholders’ equity		898,164			762,923			654,106			645,713			630,547			830,544			574,254
Profitability and other ratios
Return on average assets⁽¹⁾		1.06	%		0.90	%		1.00	%		0.86	%		1.02	%		0.98	%		0.94	%
Return on average equity ⁽¹⁾		11.88	%		10.38	%		11.55	%		8.93	%		10.13	%		11.19	%		10.01	%
Return on average tangible common equity ⁽²⁾		15.65	%		14.46	%		16.57	%		12.25	%		14.52	%		15.13	%		14.01	%
Dividend payout ratio ⁽³⁾		27.27	%		33.33	%		30.00	%		41.38	%		36.36	%		29.63	%		38.71	%
Net interest spread		3.26	%		3.22	%		3.22	%		3.23	%		3.45	%		3.23	%		3.50	%
Net interest margin⁽¹⁾		3.39	%		3.39	%		3.39	%		3.42	%		3.64	%		3.39	%		3.66	%
Noninterest income to total revenue ⁽⁴⁾		44.74	%		42.46	%		47.79	%		47.73	%		55.21	%		43.70	%		51.50	%
Noninterest income to average total assets⁽¹⁾		2.62	%		2.37	%		2.97	%		3.01	%		4.28	%		2.50	%		3.73	%
Noninterest expense to average total assets⁽¹⁾		4.00	%		4.06	%		4.53	%		4.85	%		5.64	%		4.03	%		5.42	%
Efficiency ratio⁽⁵⁾		68.24	%		72.81	%		72.89	%		76.92	%		72.78	%		70.32	%		74.87	%
Average held for investment loans and leases to average deposits		82.88	%		79.76	%		86.88	%		86.03	%		79.87	%		81.36	%		80.78	%
Average investment securities to average total assets		26.80	%		24.10	%		19.85	%		12.40	%		6.43	%		25.54	%		6.21	%
Average stockholders’ equity to average total assets		8.93	%		8.64	%		8.62	%		9.66	%		10.08	%		8.79	%		9.42	%
Allowance for loan and lease losses (ALLL)
Balance at beginning of period	$	35,845		$	35,533		$	34,774		$	34,787		$	29,345		$	35,533		$	29,480
Loans and leases charged off		(772	)		(102	)		(718	)		(788	)		(79	)		(874	)		(436	)
Recoveries		641			93			217			40			47			734			269
Provision for loan and lease losses		1,769			321			1,260			735			5,474			2,090			5,474

Balance at end of period	$	37,483		$	35,845		$	35,533		$	34,774		$	34,787		$	37,483		$	34,787

Annualized net loan charge-offs to average total gross loans held for investment		0.01	%		0.00	%		0.04	%		0.07	%		0.00	%		0.01	%		0.01	%
Reserve for loss on repurchased loans
Balance at beginning of period	$	9,781		$	9,700		$	9,098		$	9,411		$	8,432		$	9,700		$	8,303
Provision for loan repurchases		851			379			735			716			1,573			1,230			2,901
Change in estimates		—			—			846			—			—			—			—
Utilization of reserve for loan repurchases		(194	)		(298	)		(979	)		(1,029	)		(594	)		(492	)		(1,793	)

Balance at end of period	$	10,438		$	9,781		$	9,700		$	9,098		$	9,411		$	10,438		$	9,411

(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)


	June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015
Asset quality information and ratios
30 to 89 days delinquent, excluding PCI loans	$	50,494		$	36,022		$	39,946		$	48,550		$	46,820
90+ days delinquent, excluding PCI loans		28,675			27,469			23,338			23,725			22,855

Total delinquent loans, excluding PCI loans		79,169			63,491			63,284			72,275			69,675

PCI loans, 30 to 89 days delinquent		48,255			44,191			40,291			17,593			17,351
PCI loans, 90+ days delinquent		8,952			9,806			6,894			6,223			8,648

Total delinquent PCI loans		57,207			53,997			47,185			23,816			25,999

Total delinquent loans	$	136,376		$	117,488		$	110,469		$	96,091		$	95,674

Total delinquent non-PCI loans to total non-PCI loans		1.44	%		1.33	%		1.42	%		1.66	%		1.66	%
Total delinquent loans to gross loans		2.19	%		2.15	%		2.13	%		2.03	%		2.14	%

Non-performing loans, excluding PCI loans	$	45,012		$	44,216		$	45,129		$	45,188		$	42,708
90+ days delinquent and still accruing loans, excluding PCI loans		—			—			—			—			—
Other real estate owned		429			325			1,097			34			50

Non-performing assets	$	45,441		$	44,541		$	46,226		$	45,222		$	42,758

ALLL to non-performing loans		83.27	%		81.07	%		78.74	%		76.95	%		81.45	%
Non-performing loans to gross loans		0.72	%		0.81	%		0.87	%		0.96	%		0.95	%
Non-performing assets to total assets		0.45	%		0.46	%		0.56	%		0.62	%		0.66	%

Troubled Debt Restructings (TDRs)
Performing TDRs	$	14,450		$	15,128		$	7,842		$	9,378		$	7,402
Non-performing TDRs		2,864			2,545			1,970			2,017			1,937

Total TDRs	$	17,314		$	17,673		$	9,812		$	11,395		$	9,339

Banc of California, Inc.

Selected Financial Data, Continued

(Dollars in thousands)

(Unaudited)


	June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015
Loan and lease breakdown by ALLL evaluation type
Originated loans and leases
Individually evaluated for impairment	$	25,661		$	26,565		$	30,654		$	31,008		$	31,791
Collectively evaluated for impairment		4,254,975			3,484,995			3,117,528			2,776,601			2,489,347
Acquired loans not impaired at acquisition
Individually evaluated for impairment		3,470			3,530			3,629			1,704			8
Collectively evaluated for impairment		1,022,696			1,079,711			1,124,874			1,174,573			1,294,384
Seasoned SFR mortgage loan pools - non-impaired
Individually evaluated for impairment		9,717			9,287			—			—			—
Collectively evaluated for impairment		168,352			175,004			194,978			373,634			391,193
Acquired with deteriorated credit quality		751,244			683,976			712,731			372,557			266,372

Total loans	$	6,236,115		$	5,463,068		$	5,184,394		$	4,730,077		$	4,473,095

ALLL breakdown
Originated loans and leases
Individually evaluated for impairment	$	215		$	365		$	369		$	512		$	686
Collectively evaluated for impairment		34,575			32,202			32,713			31,419			31,440
Acquired loans not impaired at acquisition
Individually evaluated for impairment		—			—			—			—			—
Collectively evaluated for impairment		1,458			2,061			2,245			2,637			2,455
Seasoned SFR mortgage loan pools - non-impaired
Individually evaluated for impairment		1,131			1,011			—			—			—
Collectively evaluated for impairment		—			—			—			—			—
Acquired with deteriorated credit quality		104			206			206			206			206

Total ALLL	$	37,483		$	35,845		$	35,533		$	34,774		$	34,787

Discount on Purchased/Acquired Loans
Acquired loans not impaired at acquisition	$	20,136		$	20,781		$	21,366		$	21,759		$	15,245
Seasoned SFR mortgage loan pools - non-impaired		11,304			11,862			12,545			27,699			29,201
Acquired with deteriorated credit quality		76,505			66,573			68,372			41,280			52,394

Total Discount	$	107,945		$	99,216		$	102,283		$	90,738		$	96,840

Ratios
To originated loans and leases:
Individually evaluated for impairment		0.84	%		1.37	%		1.20	%		1.65	%		2.16	%
Collectively evaluated for impairment ⁽¹⁾		0.81	%		0.92	%		1.05	%		1.13	%		1.26	%
Total ALLL		0.81	%		0.93	%		1.05	%		1.14	%		1.27	%
To originated loans and leases and acquired loans not impaired at acquisition:
Individually evaluated for impairment		0.74	%		1.21	%		1.08	%		1.57	%		2.16	%
Collectively evaluated for impairment		0.68	%		0.75	%		0.82	%		0.86	%		0.90	%
Total ALLL		0.68	%		0.75	%		0.83	%		0.87	%		0.91	%
Total ALLL and discount ⁽²⁾		1.06	%		1.21	%		1.33	%		1.41	%		1.31	%
To total loans and leases:
Individually evaluated for impairment		3.46	%		3.49	%		1.08	%		1.57	%		2.16	%
Collectively evaluated for impairment		0.66	%		0.72	%		0.79	%		0.79	%		0.81	%
Total ALLL		0.60	%		0.66	%		0.69	%		0.74	%		0.78	%
Total ALLL and discount ⁽²⁾		2.33	%		2.47	%		2.66	%		2.65	%		2.94	%

(1)

At June 30, 2015, the ratio included an unallocated ALLL of $2.2 million. Without the unallocated, the ratio was 1.17% at June 30, 2015.

(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)


	June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015
Composition of held for investment loans and leases
Commercial real estate	$	725,107		$	713,693		$	727,707		$	690,862		$	807,146
Multi-family		1,147,597			1,021,097			904,300			823,415			696,768
Construction		86,852			68,241			55,289			39,475			32,022
Commercial and industrial		1,306,866			983,961			876,999			822,690			771,477
SBA		65,477			71,640			57,706			52,985			56,887
Lease financing		228,663			212,836			192,424			162,504			131,189

Total commercial loans		3,560,562			3,071,468			2,814,425			2,591,931			2,495,489

Single family residential mortgage		2,555,344			2,282,445			2,255,584			2,013,450			1,840,924
Other consumer		120,209			109,155			114,385			124,696			136,682

Total consumer loans		2,675,553			2,391,600			2,369,969			2,138,146			1,977,606

Total gross loans and leases	$	6,236,115		$	5,463,068		$	5,184,394		$	4,730,077		$	4,473,095

Composition percentage of held for investment loans and leases
Commercial real estate		11.6	%		13.1	%		14.0	%		14.6	%		18.0	%
Multi-family		18.4	%		18.7	%		17.4	%		17.4	%		15.6	%
Construction		1.4	%		1.2	%		1.1	%		0.8	%		0.7	%
Commercial and industrial		21.0	%		18.0	%		16.9	%		17.4	%		17.2	%
SBA		1.0	%		1.3	%		1.1	%		1.1	%		1.3	%
Lease financing		3.7	%		3.9	%		3.7	%		3.4	%		2.9	%

Total commercial loans		57.1	%		56.2	%		54.2	%		54.7	%		55.7	%

Single family residential mortgage		41.0	%		41.8	%		43.6	%		42.7	%		41.2	%
Other consumer		1.9	%		2.0	%		2.2	%		2.6	%		3.1	%

Total consumer loans		42.9	%		43.8	%		45.8	%		45.3	%		44.3	%

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

Composition of deposits
Noninterest-bearing checking	$	1,093,686		$	1,398,728		$	1,121,124		$	1,011,169		$	880,766
Interest-bearing checking		2,053,656			2,052,507			1,697,055			1,458,208			1,002,443
Money market		2,343,561			1,534,492			1,479,931			1,238,180			1,393,751
Savings		909,242			844,177			823,618			814,230			843,274
Certificates of deposit		1,528,811			1,007,697			1,181,357			900,203			984,776

Total deposits	$	7,928,956		$	6,837,601		$	6,303,085		$	5,421,990		$	5,105,010

Composition percentage of deposits
Noninterest-bearing checking		13.8	%		20.5	%		17.8	%		18.6	%		17.3	%
Interest-bearing checking		25.9	%		30.0	%		26.8	%		26.9	%		19.6	%
Money market		29.5	%		22.4	%		23.5	%		22.8	%		27.3	%
Savings		11.5	%		12.3	%		13.1	%		15.0	%		16.5	%
Certificates of deposit		19.3	%		14.8	%		18.8	%		16.7	%		19.3	%

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
	June 30, 2016								March 31, 2016								December 31, 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	$	2,428,168		$	22,488		3.72	%	$	2,144,834		$	19,808		3.71	%	$	1,903,331		$	17,584		3.67	%
Seasoned SFR mortgage loan pools		878,068			12,404		5.68	%		876,142			12,710		5.83	%		858,601			12,098		5.59	%
Commercial real estate, multi-family, and construction		1,907,649			21,049		4.44	%		1,760,646			19,816		4.53	%		1,638,329			19,006		4.60	%
Commercial and industrial, SBA, and lease financing		1,343,961			16,642		4.98	%		1,105,971			13,665		4.97	%		1,020,306			12,754		4.96	%
Other consumer		105,494			1,160		4.42	%		107,843			1,145		4.27	%		110,972			806		2.88	%

Gross loans and leases		6,663,340			73,743		4.45	%		5,995,436			67,144		4.50	%		5,531,539			62,248		4.46	%
Securities		2,696,524			19,393		2.89	%		2,128,882			16,047		3.03	%		1,506,626			11,163		2.94	%
Other interest-earning assets		260,073			1,504		2.33	%		219,849			1,049		1.92	%		226,176			788		1.38	%

Total interest-earning assets		9,619,937			94,640		3.96	%		8,344,167			84,240		4.06	%		7,264,341			74,199		4.05	%
Allowance for loan and lease losses		(37,637	)							(35,575	)							(35,894	)
BOLI and non-interest earning assets		478,937								524,584								362,334

Total assets	$	10,061,237							$	8,833,176							$	7,590,781


Interest-bearing liabilities
Savings	$	866,051		$	1,603		0.74	%	$	834,965		$	1,572		0.76	%	$	805,445		$	1,538		0.76	%
Interest-bearing checking		1,981,702			3,135		0.64	%		1,900,834			3,244		0.69	%		1,475,461			2,663		0.72	%
Money market		1,672,662			1,962		0.47	%		1,437,332			1,679		0.47	%		1,343,683			1,267		0.37	%
Certificates of deposit		1,176,478			1,685		0.58	%		1,158,901			1,612		0.56	%		1,060,556			1,394		0.52	%

Total interest-bearing deposits		5,696,893			8,385		0.59	%		5,332,032			8,107		0.61	%		4,685,145			6,862		0.58	%
FHLB advances		1,663,791			1,966		0.48	%		955,659			1,262		0.53	%		869,457			890		0.41	%
Securities sold under repurchase agreements		210,299			389		0.74	%		90,395			160		0.71	%		7,010			15		0.85	%
Long-term debt and other interest-bearing liabilities		193,144			2,863		5.96	%		263,656			4,294		6.55	%		265,087			4,366		6.53	%

Total interest-bearing liabilities		7,764,127			13,603		0.70	%		6,641,742			13,823		0.84	%		5,826,699			12,133		0.83	%
Noninterest-bearing deposits		1,205,987								1,230,991								1,037,966
Non-interest-bearing liabilities		192,959								197,520								72,010

Total Liabilities		9,163,073								8,070,253								6,936,675
Total stockholders’ equity		898,164								762,923								654,106

Total liabilities and stockholders’ equity	$	10,061,237							$	8,833,176							$	7,590,781


Net interest income/spread				$	81,037		3.26	%				$	70,417		3.22	%				$	62,066		3.22	%


Net interest margin							3.39	%							3.39	%							3.39	%

Ratio of interest-earning assets to interest-bearing liabilities		123.90	%							125.63	%							124.67	%

Total deposits	$	6,902,880		$	8,385		0.49	%	$	6,563,023		$	8,107		0.50	%	$	5,723,111		$	6,862		0.48	%
Total funding ⁽¹⁾	$	8,970,114		$	13,603		0.61	%	$	7,872,733		$	13,823		0.71	%	$	6,864,665		$	12,133		0.70	%

(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
	September 30, 2015								June 30, 2015
	Average Balance			Interest		Yield / Cost			Average Balance			Interest		Yield / Cost
Interest earning assets
Loans held for sale and SFR mortgage	$	1,966,373		$	18,123		3.66	%	$	1,959,738		$	18,984		3.89	%
Seasoned SFR mortgage loan pools		689,666			10,901		6.27	%		591,460			9,690		6.57	%
Commercial real estate, multi-family, and construction		1,568,975			17,643		4.46	%		1,848,780			21,552		4.68	%
Commercial and industrial, SBA, and lease financing		914,811			12,125		5.26	%		697,291			8,871		5.10	%
Other consumer		131,468			1,662		5.02	%		157,460			1,602		4.08	%

Gross loans and leases		5,271,293			60,454		4.55	%		5,254,729			60,699		4.63	%
Securities		828,326			5,054		2.42	%		402,366			2,119		2.11	%
Other interest-earning assets		350,243			1,007		1.14	%		310,105			2,026		2.62	%

Total interest-earning assets		6,449,862			66,515		4.09	%		5,967,200			64,844		4.36	%
Allowance for loan and lease losses		(34,810	)							(29,445	)
BOLI and non-interest earning assets		266,538								315,595

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


Interest-bearing liabilities
Savings	$	832,006		$	1,575		0.75	%	$	867,532		$	1,606		0.74	%
Interest-bearing checking		1,282,066			2,273		0.70	%		1,012,211			1,996		0.79	%
Money market		1,294,554			1,337		0.41	%		1,142,858			1,028		0.36	%
Certificates of deposit		905,704			1,210		0.53	%		1,055,939			1,535		0.58	%

Total interest-bearing deposits		4,314,330			6,395		0.59	%		4,078,540			6,165		0.61	%
FHLB advances		476,848			587		0.49	%		375,385			290		0.31	%
Securities sold under repurchase agreements		2,681			3		0.44	%		—			—		—
Long-term debt and other interest-bearing liabilities		266,430			3,980		5.93	%		260,075			4,285		6.61	%

Total interest-bearing liabilities		5,060,289			10,965		0.86	%		4,714,000			10,740		0.91	%
Noninterest-bearing deposits		916,670								859,420
Non-interest-bearing liabilities		58,918								49,383

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

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


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


Net interest margin							3.42	%							3.64	%

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

Total deposits	$	5,231,000		$	6,395		0.49	%	$	4,937,960		$	6,165		0.50	%
Total funding ⁽¹⁾	$	5,976,959		$	10,965		0.73	%	$	5,573,420		$	10,740		0.77	%

(1)

Banc of California, Inc.

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

(Dollars in thousands)

(Unaudited)


	Six Months Ended
	June 30, 2016								June 30, 2015
	Average Balance			Interest		Yield / Cost			Average Balance			Interest		Yield / Cost
Interest earning assets
Loans held for sale and SFR mortgage	$	2,286,502		$	42,296		3.72	%	$	1,914,165		$	36,461		3.84	%
Seasoned SFR mortgage loan pools		877,105			25,114		5.76	%		591,591			19,103		6.51	%
Commercial real estate, multi-family, and construction		1,834,147			40,865		4.48	%		1,902,507			44,060		4.67	%
Commercial and industrial, SBA, and lease financing		1,224,966			30,307		4.98	%		635,353			16,110		5.11	%
Other consumer		106,668			2,305		4.35	%		153,766			3,120		4.09	%

Gross loans and leases		6,329,388			140,887		4.48	%		5,197,382			118,854		4.61	%
Securities		2,412,703			35,440		2.95	%		378,553			4,046		2.16	%
Other interest-earning assets		239,961			2,553		2.14	%		265,248			2,724		2.07	%

Total interest-earning assets		8,982,052			178,880		4.00	%		5,841,183			125,624		4.34	%
Allowance for loan and lease losses		(36,606	)							(29,533	)
BOLI and non-interest earning assets		501,760								281,627

Total assets	$	9,447,206							$	6,093,277


Interest-bearing liabilities
Savings	$	850,508		$	3,175		0.75	%	$	906,316		$	3,354		0.75	%
Interest-bearing checking		1,941,268			6,378		0.66	%		1,027,468			4,037		0.79	%
Money market		1,554,997			3,641		0.47	%		1,118,060			1,986		0.36	%
Certificates of deposit		1,167,690			3,298		0.57	%		1,030,243			3,149		0.62	%

Total interest-bearing deposits		5,514,463			16,492		0.60	%		4,082,087			12,526		0.62	%
FHLB advances		1,309,725			3,228		0.50	%		431,182			643		0.30	%
Securities sold under repurchase agreements		150,347			549		0.73	%		—			—		—
Long-term debt and other interest-bearing liabilities		228,400			7,157		6.30	%		178,680			6,354		7.17	%

Total interest-bearing liabilities		7,202,935			27,426		0.77	%		4,691,949			19,523		0.84	%
Noninterest-bearing deposits		1,218,489								771,445
Non-interest-bearing liabilities		195,238								55,629

Total liabilities		8,616,662								5,519,023
Total stockholders’ equity		830,544								574,254

Total liabilities and stockholders’ equity	$	9,447,206							$	6,093,277


Net interest income/spread				$	151,454		3.23	%				$	106,101		3.50	%

Net interest margin							3.39	%							3.66	%

Ratio of interest-earning assets to interest-bearing liabilities		124.70	%							124.49	%

Total deposits	$	6,732,952		$	16,492		0.49	%	$	4,853,532		$	12,526		0.52	%
Total funding ⁽¹⁾	$	8,421,424		$	27,426		0.65	%	$	5,463,394		$	19,523		0.72	%

(1)

Banc of California, Inc.

Capital Ratios

(Unaudited)


	June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015
Capital Ratios
Banc of California, Inc.
Total risk-based capital ratio		13.45	%		13.59	%		11.18	%		12.56	%		14.01	%
Tier 1 risk-based capital ratio		13.14	%		13.17	%		10.71	%		12.06	%		13.19	%
Common equity tier 1 capital ratio		9.16	%		8.14	%		7.36	%		8.19	%		8.96	%
Tier 1 leverage ratio		8.87	%		9.27	%		8.07	%		8.97	%		9.55	%
Banc of California, NA
Total risk-based capital ratio		14.96	%		14.03	%		13.45	%		14.93	%		14.86	%
Tier 1 risk-based capital ratio		14.38	%		13.42	%		12.79	%		14.19	%		14.04	%
Common equity tier 1 capital ratio		14.38	%		13.42	%		12.79	%		14.19	%		14.04	%
Tier 1 leverage ratio		9.70	%		9.44	%		9.64	%		10.53	%		10.26	%

Banc of California, Inc.

Non-GAAP Measures

(Dollars in thousands, except per share data)

(Unaudited)

Non-GAAP performance measure:

Tangible equity to tangible assets, tangible common equity to tangible assets ratios 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 and tangible common equity is calculated by subtracting preferred stock from tangible 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 these financial measures 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:


	June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015
Tangible common equity to tangible assets ratio
Total assets	$	10,157,662		$	9,616,972		$	8,235,555		$	7,256,810		$	6,437,882
Less goodwill		(39,244	)		(39,244	)		(39,244	)		(39,244	)		(31,591	)
Less other intangible assets		(16,514	)		(17,836	)		(19,158	)		(20,504	)		(21,905	)

Tangible assets	$	10,101,904		$	9,559,892		$	8,177,153		$	7,197,062		$	6,384,386


Total stockholders’ equity	$	939,884		$	867,530		$	652,405		$	643,534		$	633,882
Less goodwill		(39,244	)		(39,244	)		(39,244	)		(39,244	)		(31,591	)
Less other intangible assets		(16,514	)		(17,836	)		(19,158	)		(20,504	)		(21,905	)

Tangible equity		884,126			810,450			594,003			583,786			580,386
Less preferred stock		(269,071	)		(311,008	)		(190,750	)		(190,750	)		(190,750	)

Tangible common equity	$	615,055		$	499,442		$	403,253		$	393,036		$	389,636


Total stockholders’ equity to total assets		9.25	%		9.02	%		7.92	%		8.87	%		9.85	%
Tangible equity to tangible assets		8.75	%		8.48	%		7.26	%		8.11	%		9.09	%
Tangible common equity to tangible assets		6.09	%		5.22	%		4.93	%		5.46	%		6.10	%

Common stock outstanding		49,478,348			43,907,587			38,002,267			37,751,445			35,647,476
Class B non-voting non-convertible common stock outstanding		161,841			91,066			37,355			—			—

Total common stock outstanding		49,640,189			43,998,653			38,039,622			37,751,445			35,647,476

Minimum number of shares issuable under purchase contracts ⁽¹⁾		218,928			253,155			601,299			828,246			2,883,892

Total common stock outstanding and shares issuable under purchase contracts		49,859,117			44,251,808			38,640,921			38,579,691			38,531,368


(1) Purchase contracts relating to the tangible equity units

Tangible common equity per common stock	$	12.39		$	11.35		$	10.60		$	10.41		$	10.93
Book value per common stock	$	13.51		$	12.65		$	12.14		$	11.99		$	12.43

Tangible common equity per common stock and shares issuable under purchase contracts	$	12.34		$	11.29		$	10.44		$	10.19		$	10.11
Book value per common stock and shares issuable under purchase contracts	$	13.45		$	12.58		$	11.95		$	11.74		$	11.50

Banc of California, Inc.

Non-GAAP Measures, Continued

(Dollars in thousands, except per share data)

(Unaudited)


	Three Months Ended															Six Months Ended
	June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015			June 30, 2016			June 30, 2015
Return on tangible common equity
Average total stockholders’ equity	$	898,164		$	762,923		$	654,106		$	645,713		$	630,547		$	830,544		$	574,254
Less average preferred stock		(269,073	)		(260,959	)		(190,750	)		(190,750	)		(182,233	)		(265,016	)		(131,338	)
Less average goodwill		(39,244	)		(39,244	)		(39,244	)		(31,674	)		(31,591	)		(39,244	)		(31,591	)
Less average other intangible assets		(17,299	)		(18,601	)		(19,877	)		(21,320	)		(23,032	)		(17,950	)		(23,871	)

Average tangible common equity	$	572,548		$	444,119		$	404,235		$	401,969		$	393,691		$	508,334		$	387,454


Net income	$	26,528		$	19,687		$	19,038		$	14,536		$	15,924		$	46,215		$	28,498
Less preferred stock dividends		(5,114	)		(4,575	)		(3,030	)		(3,040	)		(2,843	)		(9,689	)		(3,753	)
Add tax-effected amortization of intangible assets⁽¹⁾		859			859			875			911			1,004			1,719			2,008
Add tax-effected impairment on intangible assets⁽¹⁾		—			—			—			—			168			—			168

Net income available to common stockholders	$	22,273		$	15,971		$	16,883		$	12,407		$	14,253		$	38,245		$	26,921


(1) Utilized a 35% effective tax rate

Return on average equity		11.88	%		10.38	%		11.55	%		8.93	%		10.13	%		11.19	%		10.01	%
Return on average tangible common equity		15.65	%		14.46	%		16.57	%		12.25	%		14.52	%		15.13	%		14.01	%

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BANC OF CALIFORNIA, INC. Reports