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

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EX-99.2 - EXHIBIT 99.2 - BANC OF CALIFORNIA, INC.	d339400dex992.htm
8-K - FORM 8-K - BANC OF CALIFORNIA, INC.	d339400d8k.htm

Exhibit 99.1

LOGO

Banc of California Reports Record 2016 Earnings

• Full Year Net Income of $115.4 million

• Full Year Diluted EPS of $1.94

• Fourth Quarter Diluted EPS of $0.54

• Fourth Quarter and Full Year Results Exceed Guidance

IRVINE, Calif., (January 30, 2017) – Banc of California, Inc. (NYSE: BANC) today reported net income of $33.3 million, and net income available to common stockholders of $28.2 million, for the fourth quarter of 2016, resulting in diluted earnings per share of $0.54 for the quarter and $1.94 for the full year. Net income for the full year was $115.4 million, an increase of 86% compared to 2015. Net income available to common stockholders for 2016 grew to $95.5 million, an increase of 83% compared to FY 2015.

Highlights for the fourth quarter included:

•

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 17.3%.

•

Total loan originations for the fourth quarter were $2.3 billion, including $1.0 billion from the commercial banking segment. The Company sold $865 million of leases, seasoned single family residential pools and nonperforming loans during the quarter. As a result, net held for investment loan balances declined by $534 million for the quarter.

•

Full year 2016 total loan originations were $9.5 billion, an increase of 34% from the prior year, and of which $4.3 billion were from the commercial banking segment.

•

Nonperforming assets to total assets declined to just 0.16%, the lowest level in over six years.

The Company’s consolidated assets totaled $11.0 billion at December 31, 2016, a decrease of $186.6 million compared to prior quarter and an increase of $2.8 billion, or 34%, compared to the prior year.

“Our fourth quarter results capped off a strong finish to a successful 2016,” said Hugh Boyle, Interim Chief Executive Officer of Banc of California. “We have invested a great deal of resources into attracting and developing talented, entrepreneurial employees. I would like to thank all of my colleagues for our record 2016 results which are a strong reflection of their hard work and dedication. As we look to 2017 with a fresh perspective, our foundation continues to be our mission and vision as California’s Bank. Our objectives for 2017 are focused on four key pillars: responsible and disciplined growth, strong and stable asset quality, focus and optimization of our business, and strong corporate governance. We are confident that we can continue to execute and deliver strong financial returns for shareholders.”

“For both the quarter and the full year, we exceeded each of our stated financial targets, producing full-year return on assets of 1.1% and full-year return on tangible common equity of 17.0%,” said J. Francisco A. Turner, Interim President and Chief Financial Officer of Banc of California. “During the fourth quarter, we continued to optimize our balance sheet, reduce risk in our portfolio and efficiently redeploy capital to support the business. Looking forward, we see opportunities to continue to grow recurring, spread-based revenue and drive efficiencies and expense management, and demonstrate scalable products and businesses.”

The Company will host a conference call to discuss its fourth quarter financial results at 7:00 a.m. Pacific Time (PT) on Monday, January 30, 2017. Interested parties are welcome to attend the conference call by dialing 888-317-6003, and

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

referencing event code 0379665. 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. The Company was recently recognized by Forbes for the second straight year as one of the 100 Best Banks in America for 2017.

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.		Abernathy MacGregor
Timothy Sedabres, (855) 361-2262		Ian Campbell / Joe Hixson / Kristin Cole, (213) 630-6550
		idc@abmac.com / jrh@abmac.com / kec@abmac.com

Banc of California, Inc.

Consolidated Statements of Financial Condition

(Dollars in thousands)

(Unaudited)


	December 31,			September 30,			June 30,			March 31,			December 31,
	2016			2016			2016			2016			2015
ASSETS
Cash and cash equivalents	$	439,510		$	372,603		$	271,732		$	215,012		$	156,124
Time deposits in financial institutions		1,000			1,500			1,500			1,500			1,500
Securities available for sale		2,381,488			1,941,588			1,302,785			1,663,711			833,596
Securities held to maturity		884,234			962,315			962,282			962,262			962,203
Loans held for sale		704,651			846,844			893,782			863,944			668,841
Loans and leases receivable		6,034,752			6,568,791			6,236,115			5,463,068			5,184,394
Allowance for loan and lease losses		(40,444	)		(40,233	)		(37,483	)		(35,845	)		(35,533	)
Federal Home Loan Bank and other bank stock		67,842			69,190			81,115			61,146			59,069
Servicing rights, net		77,617			63,843			53,650			49,406			50,727
Other real estate owned, net		2,502			275			429			325			1,097
Premises and equipment, net		143,617			133,228			120,755			114,668			111,539
Goodwill		39,244			39,244			39,244			39,244			39,244
Other intangible assets, net		13,617			15,335			16,514			17,836			19,158
Deferred income tax		9,989			408			7,270			7,441			11,341
Income tax receivable		16,009			12,487			5,904			—			604
Bank-owned life insurance investment		102,512			101,909			101,314			100,734			100,171
Other assets		151,713			127,077			100,754			92,520			71,480

Total assets	$	11,029,853		$	11,216,404		$	10,157,662		$	9,616,972		$	8,235,555

LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Noninterest-bearing deposits	$	1,282,629		$	1,267,363		$	1,093,686		$	1,398,728		$	1,121,124
Interest-bearing deposits		7,859,521			7,810,956			6,835,270			5,438,873			5,181,961

Total deposits		9,142,150			9,078,319			7,928,956			6,837,601			6,303,085
Advances from Federal Home Loan Bank		490,000			770,000			930,000			1,195,000			930,000
Securities sold under repurchase agreements		—			—			—			257,100			—
Other borrowings		67,922			49,903			—			—			—
Notes payable, net		175,378			176,579			177,743			260,896			261,876
Reserve for loss on repurchased loans		7,974			11,369			10,438			9,781			9,700
Income taxes payable		92			908			—			12,303			1,241
Accrued expenses and other liabilities		166,098			157,902			170,641			176,761			77,248

Total liabilities		10,049,614			10,244,980			9,217,778			8,749,442			7,583,150
Commitments and contingent liabilities
Preferred stock, Series A, non-cumulative perpetual		—			—			—			31,934			31,934
Preferred stock, Series B, non-cumulative perpetual		—			—			—			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			120,255			120,255			120,258			—
Common stock		537			536			510			454			395
Common stock, class B non-voting non-convertible		2			2			2			1			1
Additional paid-in capital		614,226			611,069			608,303			509,123			429,790
Retained earnings		134,515			112,751			88,385			73,179			63,534
Treasury stock		(29,070	)		(29,070	)		(29,070	)		(29,070	)		(29,070	)
Accumulated other comprehensive income/(loss), net		(9,042	)		7,065			2,683			2,835			(2,995	)

Total stockholders’ equity		980,239			971,424			939,884			867,530			652,405

Total liabilities and stockholders’ equity	$	11,029,853		$	11,216,404		$	10,157,662		$	9,616,972		$	8,235,555

Banc of California, Inc.

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

(Unaudited)


	Three Months Ended														Year Ended
	December 31,			September 30,			June 30,			March 31,			December 31,		December 31,		December 31,
	2016			2016			2016			2016			2015		2016		2015
Interest and dividend income
Loans, including fees	$	75,739		$	80,370		$	73,743		$	67,144		$	62,248	$	296,996	$	241,556
Securities		24,153			19,934			19,393			16,047			11,163		79,527		20,263
Dividends and other interest-earning assets		3,965			1,931			1,504			1,049			788		8,449		4,519

Total interest and dividend income		103,857			102,235			94,640			84,240			74,199		384,972		266,338
Interest expense
Deposits		12,504			11,224			8,385			8,107			6,862		40,220		25,783
Federal Home Loan Bank advances		1,076			1,413			1,966			1,262			890		5,717		2,120
Securities sold under repurchase agreements		221			48			389			160			15		818		18
Notes payable and other interest-bearing liabilities		2,998			2,589			2,863			4,294			4,366		12,744		14,700

Total interest expense		16,799			15,274			13,603			13,823			12,133		59,499		42,621

Net interest income		87,058			86,961			81,037			70,417			62,066		325,473		223,717
Provision for loan and lease losses		589			2,592			1,769			321			1,260		5,271		7,469

Net interest income after provision for loan and lease losses		86,469			84,369			79,268			70,096			60,806		320,202		216,248
Noninterest income
Customer service fees		1,560			1,566			1,173			848			957		5,147		4,057
Loan servicing (loss) income		11,924			2,096			(3,347	)		(5,288	)		3,663		5,385		2,974
Net gain on sale of securities available for sale		(695	)		487			12,824			16,789			1,510		29,405		3,258
Net gain on sale of loans		20,490			11,063			2,147			2,195			15,164		35,895		37,211
Mortgage banking income		39,386			50,159			43,795			33,684			30,334		167,024		144,685
Advisory service fees		—			—			510			997			1,942		1,507		9,868
Loan brokerage income		1,502			1,384			759			874			678		4,519		3,140
Gain on sale of building		—			—			—			—			—		—		9,919
All other income		5,520			7,875			7,743			1,860			2,571		22,998		5,107

Total noninterest income		79,687			74,630			65,604			51,959			56,819		271,880		220,219
Noninterest expense
Salaries and employee benefits		71,680			68,033			61,022			57,183			54,008		257,918		213,114
Occupancy and equipment		12,607			12,728			11,943			11,740			11,200		49,018		41,405
Professional fees		11,586			6,732			6,763			6,212			4,808		31,293		20,193
Data processing		2,964			2,837			2,838			2,194			2,104		10,833		8,184
Loss on investments in alternative energy partnerships, net		13,850			17,660			—			—			—		31,510		—
Amortization of intangible assets		1,028			1,179			1,322			1,322			1,346		4,851		5,836
All other expenses		15,524			15,093			16,187			10,449			13,193		57,253		43,469

Total noninterest expense		129,239			124,262			100,075			89,100			86,659		442,676		332,201

Income before income taxes		36,917			34,737			44,797			32,955			30,966		149,406		104,266
Income tax (benefit) expense		3,653			(1,200	)		18,269			13,268			11,928		33,990		42,194

Net income		33,264			35,937			26,528			19,687			19,038		115,416		62,072
Preferred stock dividends		5,113			5,112			5,114			4,575			3,030		19,914		9,823

Net income available to common stockholders	$	28,151		$	30,825		$	21,414		$	15,112		$	16,008	$	95,502	$	52,249

Basic earnings per total common share	$	0.55		$	0.60		$	0.44		$	0.36		$	0.40	$	1.97	$	1.36
Diluted earnings per total common share	$	0.54		$	0.59		$	0.43		$	0.36		$	0.39	$	1.94	$	1.34

Banc of California, Inc.

Selected Financial Data

(Dollars in thousands)

(Unaudited)


	Three Months Ended															Year Ended
	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,
	2016			2016			2016			2016			2015			2016			2015
Average balances
Total assets	$	11,568,849		$	10,860,257		$	10,061,237		$	8,833,176		$	7,590,781		$	10,335,705		$	6,619,017
Total gross loans and leases		7,209,241			7,245,472			6,663,340			5,995,436			5,531,539			6,780,826			5,300,237
Investment Securities		3,236,253			2,776,304			2,696,524			2,128,882			1,506,626			2,711,112			776,256
Total interest earning assets		11,075,367			10,432,247			9,619,937			8,344,167			7,264,341			9,872,770			6,353,316
Total interest-bearing deposits		7,825,036			7,164,061			5,696,893			5,332,032			4,685,145			6,509,915			4,292,629
Total borrowings		1,190,060			1,297,382			2,067,234			1,309,710			1,141,554			1,464,882			778,182
Total interest bearing liabilities		9,015,096			8,461,443			7,764,127			6,641,742			5,826,699			7,974,797			5,070,811
Total stockholders’ equity		995,908			968,684			898,164			762,923			654,106			906,831			612,393
Profitability and other ratios
Return on average assets⁽¹⁾		1.14	%		1.32	%		1.06	%		0.90	%		1.00	%		1.12	%		0.94	%
Return on average equity ⁽¹⁾		13.29	%		14.76	%		11.88	%		10.38	%		11.55	%		12.73	%		10.14	%
Return on average tangible common equity ⁽²⁾		17.30	%		19.51	%		15.65	%		14.46	%		16.57	%		16.97	%		14.22	%
Dividend payout ratio ⁽³⁾		23.64	%		20.00	%		27.27	%		33.33	%		30.00	%		24.87	%		35.29	%
Net interest spread		2.99	%		3.18	%		3.26	%		3.22	%		3.22	%		3.15	%		3.35	%
Net interest margin⁽¹⁾		3.13	%		3.32	%		3.39	%		3.39	%		3.39	%		3.30	%		3.52	%
Noninterest income to total revenue ⁽⁴⁾		47.79	%		46.18	%		44.74	%		42.46	%		47.79	%		45.51	%		49.61	%
Noninterest income to average total assets⁽¹⁾		2.74	%		2.73	%		2.62	%		2.37	%		2.97	%		2.63	%		3.33	%
Noninterest expense to average total assets⁽¹⁾		4.44	%		4.55	%		4.00	%		4.06	%		4.53	%		4.28	%		5.02	%
Efficiency ratio⁽⁵⁾		77.51	%		76.90	%		68.24	%		72.81	%		72.89	%		74.11	%		74.83	%
Adjusted efficiency ratio for including the pre-tax effect of investments in alternative energy partnerships ^{(2) , (5)}		66.87	%		62.38	%		68.24	%		72.81	%		72.89	%		67.13	%		74.83	%
Average held for investment loans and leases to average deposits		69.11	%		75.92	%		82.88	%		79.76	%		86.88	%		76.26	%		83.82	%
Average investment securities to average total assets		27.97	%		25.56	%		26.80	%		24.10	%		19.85	%		26.23	%		11.73	%
Average stockholders’ equity to average total assets		8.61	%		8.92	%		8.93	%		8.64	%		8.62	%		8.77	%		9.25	%
Allowance for loan and lease losses (ALLL)
Balance at beginning of period	$	40,233		$	37,483		$	35,845		$	35,533		$	34,774		$	35,533		$	29,480
Loans and leases charged off		(1,351	)		(393	)		(772	)		(102	)		(718	)		(2,618	)		(1,942	)
Recoveries		973			551			641			93			217			2,258			526
Provision for loan and lease losses		589			2,592			1,769			321			1,260			5,271			7,469

Balance at end of period	$	40,444		$	40,233		$	37,483		$	35,845		$	35,533		$	40,444		$	35,533

Annualized net loan charge-offs to average total gross loans held for investment		0.02	%		-0.01	%		0.01	%		0.00	%		0.04	%		0.01	%		0.03	%
Reserve for loss on repurchased loans
Balance at beginning of period	$	11,369		$	10,438		$	9,781		$	9,700		$	9,098		$	9,700		$	8,303
Provision for loan repurchases		(1,881	)		1,241			851			379			735			590			4,352
Change in estimates		—			—			—			—			846			—			846
Utilization of reserve for loan repurchases		(1,514	)		(310	)		(194	)		(298	)		(979	)		(2,316	)		(3,801	)

Balance at end of period	$	7,974		$	11,369		$	10,438		$	9,781		$	9,700		$	7,974		$	9,700

(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,			September 30,			June 30,			March 31,			December 31,
	2016			2016			2016			2016			2015
Asset quality information and ratios
30 to 89 days delinquent, excluding PCI loans	$	30,140		$	39,054		$	50,494		$	36,022		$	39,946
90+ days delinquent, excluding PCI loans		14,218			22,827			28,675			27,469			23,338

Total delinquent loans, excluding PCI loans		44,358			61,881			79,169			63,491			63,284

PCI loans, 30 to 89 days delinquent		15,078			39,113			48,255			44,191			40,291
PCI loans, 90+ days delinquent		2,577			6,145			8,952			9,806			6,894

Total delinquent PCI loans		17,655			45,258			57,207			53,997			47,185

Total delinquent loans	$	62,013		$	107,139		$	136,376		$	117,488		$	110,469

Total delinquent non-PCI loans to total non-PCI loans		0.75	%		1.04	%		1.44	%		1.33	%		1.42	%
Total delinquent loans to gross loans		1.03	%		1.63	%		2.19	%		2.15	%		2.13	%
Non-performing loans, excluding PCI loans	$	14,942		$	35,223		$	45,012		$	44,216		$	45,129
90+ days delinquent and still accruing loans, excluding PCI loans		—			—			—			—			—
Other real estate owned		2,502			275			429			325			1,097

Non-performing assets	$	17,444		$	35,498		$	45,441		$	44,541		$	46,226

ALLL to non-performing loans		270.67	%		114.22	%		83.27	%		81.07	%		78.74	%
Non-performing loans to gross loans		0.25	%		0.54	%		0.72	%		0.81	%		0.87	%
Non-performing assets to total assets		0.16	%		0.32	%		0.45	%		0.46	%		0.56	%
Troubled Debt Restructurings (TDRs)
Performing TDRs	$	4,827		$	11,160		$	14,450		$	15,128		$	7,842
Non-performing TDRs		—			520			2,864			2,545			1,970

Total TDRs	$	4,827		$	11,680		$	17,314		$	17,673		$	9,812

Banc of California, Inc.

Selected Financial Data, Continued

(Dollars in thousands)

(Unaudited)


	December 31,			September 30,			June 30,			March 31,			December 31,
	2016			2016			2016			2016			2015
Loan and lease breakdown by ALLL evaluation type
Originated loans and leases
Individually evaluated for impairment	$	10,168		$	22,306		$	25,661		$	26,565		$	30,654
Collectively evaluated for impairment		4,933,381			4,789,155			4,254,975			3,484,995			3,117,528
Acquired loans not impaired at acquisition
Individually evaluated for impairment		2,429			3,397			3,470			3,530			3,629
Collectively evaluated for impairment		924,993			958,135			1,022,696			1,079,711			1,124,874
Seasoned SFR mortgage loan pools - non-impaired
Individually evaluated for impairment		755			6,581			9,717			9,287			—
Collectively evaluated for impairment		21,200			146,850			168,352			175,004			194,978
Acquired with deteriorated credit quality		141,826			642,367			751,244			683,976			712,731

Total loans	$	6,034,752		$	6,568,791		$	6,236,115		$	5,463,068		$	5,184,394

ALLL breakdown
Originated loans and leases
Individually evaluated for impairment	$	137		$	137		$	215		$	365		$	369
Collectively evaluated for impairment		38,394			37,858			34,575			32,202			32,713
Acquired loans not impaired at acquisition
Individually evaluated for impairment		—			—			—			—			—
Collectively evaluated for impairment		1,703			1,606			1,458			2,061			2,245
Seasoned SFR mortgage loan pools - non-impaired
Individually evaluated for impairment		106			528			1,131			1,011			—
Collectively evaluated for impairment		—			—			—			—			—
Acquired with deteriorated credit quality		104			104			104			206			206

Total ALLL	$	40,444		$	40,233		$	37,483		$	35,845		$	35,533

Discount on Purchased/Acquired Loans
Acquired loans not impaired at acquisition	$	17,820		$	18,400		$	20,136		$	20,781		$	21,366
Seasoned SFR mortgage loan pools - non-impaired		1,280			9,789			11,304			11,862			12,545
Acquired with deteriorated credit quality		22,454			57,780			76,505			66,573			68,372

Total Discount	$	41,554		$	85,969		$	107,945		$	99,216		$	102,283

Ratios
To originated loans and leases:
Individually evaluated for impairment		1.35	%		0.61	%		0.84	%		1.37	%		1.20	%
Collectively evaluated for impairment		0.78	%		0.79	%		0.81	%		0.92	%		1.05	%
Total ALLL		0.78	%		0.79	%		0.81	%		0.93	%		1.05	%
To originated loans and leases and acquired loans not impaired at acquisition:
Individually evaluated for impairment		1.09	%		0.53	%		0.74	%		1.21	%		1.08	%
Collectively evaluated for impairment		0.68	%		0.69	%		0.68	%		0.75	%		0.82	%
Total ALLL		0.69	%		0.69	%		0.68	%		0.75	%		0.83	%
Total ALLL and discount ⁽¹⁾		0.99	%		1.00	%		1.06	%		1.21	%		1.33	%
To total loans and leases:
Individually evaluated for impairment		1.82	%		2.06	%		3.46	%		3.49	%		1.08	%
Collectively evaluated for impairment		0.68	%		0.67	%		0.66	%		0.72	%		0.79	%
Total ALLL		0.67	%		0.61	%		0.60	%		0.66	%		0.69	%
Total ALLL and discount ⁽¹⁾		1.36	%		1.92	%		2.33	%		2.47	%		2.66	%

(1)

The ratios were calculated by dividing a sum of ALLL and discounts by carrying value of loans.

Banc of California, Inc.

Selected Financial Data, Continued

(Dollars in thousands)

(Unaudited)


	December 31,			September 30,			June 30,			March 31,			December 31,
	2016			2016			2016			2016			2015
Composition of held for investment loans and leases
Commercial real estate	$	729,959		$	721,838		$	725,107		$	713,693		$	727,707
Multi-family		1,365,262			1,199,207			1,147,597			1,021,097			904,300
Construction		125,100			99,086			86,852			68,241			55,289
Commercial and industrial		1,522,960			1,531,041			1,306,866			983,961			876,999
SBA		73,840			67,737			65,477			71,640			57,706
Lease financing		379			234,540			228,663			212,836			192,424

Total commercial loans		3,817,500			3,853,449			3,560,562			3,071,468			2,814,425

Single family residential mortgage		2,106,630			2,601,375			2,555,344			2,282,445			2,255,584
Other consumer		110,622			113,967			120,209			109,155			114,385

Total consumer loans		2,217,252			2,715,342			2,675,553			2,391,600			2,369,969

Total gross loans and leases	$	6,034,752		$	6,568,791		$	6,236,115		$	5,463,068		$	5,184,394

Composition percentage of held for investment loans and leases
Commercial real estate		12.1	%		11.0	%		11.6	%		13.1	%		14.0	%
Multi-family		22.6	%		18.3	%		18.4	%		18.7	%		17.4	%
Construction		2.1	%		1.5	%		1.4	%		1.2	%		1.1	%
Commercial and industrial		25.2	%		23.3	%		21.0	%		18.0	%		16.9	%
SBA		1.2	%		1.0	%		1.0	%		1.3	%		1.1	%
Lease financing		0.1	%		3.6	%		3.7	%		3.9	%		3.7	%

Total commercial loans		63.3	%		58.7	%		57.1	%		56.2	%		54.2	%

Single family residential mortgage		34.9	%		39.6	%		41.0	%		41.8	%		43.6	%
Other consumer		1.8	%		1.7	%		1.9	%		2.0	%		2.2	%

Total consumer loans		36.7	%		41.3	%		42.9	%		43.8	%		45.8	%

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

Composition of deposits
Noninterest-bearing checking	$	1,282,629		$	1,267,363		$	1,093,686		$	1,398,728		$	1,121,124
Interest-bearing checking		2,048,839			2,369,332			2,053,656			2,052,507			1,697,055
Money market		2,731,314			2,900,248			2,343,561			1,534,492			1,479,931
Savings		1,118,175			880,712			909,242			844,177			823,618
Certificates of deposit		1,961,193			1,660,664			1,528,811			1,007,697			1,181,357

Total deposits	$	9,142,150		$	9,078,319		$	7,928,956		$	6,837,601		$	6,303,085

Composition percentage of deposits
Noninterest-bearing checking		14.0	%		14.0	%		13.8	%		20.5	%		17.8	%
Interest-bearing checking		22.4	%		26.1	%		25.9	%		30.0	%		26.8	%
Money market		29.9	%		31.9	%		29.5	%		22.4	%		23.5	%
Savings		12.2	%		9.7	%		11.5	%		12.3	%		13.1	%
Certificates of deposit		21.5	%		18.3	%		19.3	%		14.8	%		18.8	%

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, 2016								September 30, 2016								June 30, 2016
	Average					Yield			Average					Yield			Average					Yield
	Balance			Interest		/ Cost			Balance			Interest		/ Cost			Balance			Interest		/ Cost
Interest earning assets
Loans held for sale and SFR mortgage	$	2,755,849		$	25,577		3.69	%	$	2,618,879		$	24,365		3.70	%	$	2,428,168		$	22,488		3.72	%
Seasoned SFR mortgage loan pools		570,006			6,281		4.38	%		907,387			11,924		5.23	%		878,068			12,404		5.68	%
Commercial real estate, multi-family, and construction		2,146,067			23,405		4.34	%		2,033,718			23,097		4.52	%		1,907,649			21,049		4.44	%
Commercial and industrial, SBA, and lease financing		1,628,177			19,228		4.70	%		1,576,379			19,734		4.98	%		1,343,961			16,642		4.98	%
Other consumer		109,142			1,248		4.55	%		109,109			1,250		4.56	%		105,494			1,160		4.42	%

Gross loans and leases		7,209,241			75,739		4.18	%		7,245,472			80,370		4.41	%		6,663,340			73,743		4.45	%
Securities		3,236,253			24,153		2.97	%		2,776,304			19,934		2.86	%		2,696,524			19,393		2.89	%
Other interest-earning assets		629,873			3,965		2.50	%		410,471			1,931		1.87	%		260,073			1,504		2.33	%

Total interest-earning assets		11,075,367			103,857		3.73	%		10,432,247			102,235		3.90	%		9,619,937			94,640		3.96	%
Allowance for loan and lease losses		(39,163	)							(38,258	)							(37,637	)
BOLI and non-interest earning assets		532,645								466,268								478,937

Total assets	$	11,568,849							$	10,860,257							$	10,061,237

Interest-bearing liabilities
Savings	$	941,404		$	1,917		0.81	%	$	887,973		$	1,704		0.76	%	$	866,051		$	1,603		0.74	%
Interest-bearing checking		2,081,105			3,371		0.64	%		2,300,128			3,972		0.69	%		1,981,702			3,135		0.64	%
Money market		2,830,271			3,909		0.55	%		2,427,356			3,226		0.53	%		1,672,662			1,962		0.47	%
Certificates of deposit		1,972,256			3,307		0.67	%		1,548,604			2,322		0.60	%		1,176,478			1,685		0.58	%

Total interest-bearing deposits		7,825,036			12,504		0.64	%		7,164,061			11,224		0.62	%		5,696,893			8,385		0.59	%
FHLB advances		892,120			1,076		0.48	%		1,104,663			1,413		0.51	%		1,663,791			1,966		0.48	%
Securities sold under repurchase agreements		59,761			221		1.47	%		12,539			48		1.52	%		210,299			389		0.74	%
Long-term debt and other interest-bearing liabilities		238,179			2,998		5.01	%		180,180			2,589		5.72	%		193,144			2,863		5.96	%

Total interest-bearing liabilities		9,015,096			16,799		0.74	%		8,461,443			15,274		0.72	%		7,764,127			13,603		0.70	%
Noninterest-bearing deposits		1,286,642								1,178,849								1,205,987
Non-interest-bearing liabilities		271,203								251,281								192,959

Total liabilities		10,572,941								9,891,573								9,163,073
Total stockholders’ equity		995,908								968,684								898,164

Total liabilities and stockholders’ equity	$	11,568,849							$	10,860,257							$	10,061,237

Net interest income/spread				$	87,058		2.99	%				$	86,961		3.18	%				$	81,037		3.26	%

Net interest margin							3.13	%							3.32	%							3.39	%
Ratio of interest-earning assets to interest-bearing liabilities		122.85	%							123.29	%							123.90	%
Total deposits	$	9,111,678		$	12,504		0.55	%	$	8,342,910		$	11,224		0.54	%	$	6,902,880		$	8,385		0.49	%
Total funding ⁽¹⁾	$	10,301,738		$	16,799		0.65	%	$	9,640,292		$	15,274		0.63	%	$	8,970,114		$	13,603		0.61	%

(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, 2016								December 31, 2015
	Average					Yield			Average					Yield
	Balance			Interest		/ Cost			Balance			Interest		/ Cost
Interest earning assets
Loans held for sale and SFR mortgage	$	2,144,834		$	19,808		3.71	%	$	1,903,331		$	17,584		3.67	%
Seasoned SFR mortgage loan pools		876,142			12,710		5.83	%		858,601			12,098		5.59	%
Commercial real estate, multi-family, and construction		1,760,646			19,816		4.53	%		1,638,329			19,006		4.60	%
Commercial and industrial, SBA, and lease financing		1,105,971			13,665		4.97	%		1,020,306			12,754		4.96	%
Other consumer		107,843			1,145		4.27	%		110,972			806		2.88	%

Gross loans and leases		5,995,436			67,144		4.50	%		5,531,539			62,248		4.46	%
Securities		2,128,882			16,047		3.03	%		1,506,626			11,163		2.94	%
Other interest-earning assets		219,849			1,049		1.92	%		226,176			788		1.38	%

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

Total assets	$	8,833,176							$	7,590,781

Interest-bearing liabilities
Savings	$	834,965		$	1,572		0.76	%	$	805,445		$	1,538		0.76	%
Interest-bearing checking		1,900,834			3,244		0.69	%		1,475,461			2,663		0.72	%
Money market		1,437,332			1,679		0.47	%		1,343,683			1,267		0.37	%
Certificates of deposit		1,158,901			1,612		0.56	%		1,060,556			1,394		0.52	%

Total interest-bearing deposits		5,332,032			8,107		0.61	%		4,685,145			6,862		0.58	%
FHLB advances		955,659			1,262		0.53	%		869,457			890		0.41	%
Securities sold under repurchase agreements		90,395			160		0.71	%		7,010			15		0.85	%
Long-term debt and other interest-bearing liabilities		263,656			4,294		6.55	%		265,087			4,366		6.53	%

Total interest-bearing liabilities		6,641,742			13,823		0.84	%		5,826,699			12,133		0.83	%
Noninterest-bearing deposits		1,230,991								1,037,966
Non-interest-bearing liabilities		197,520								72,010

Total liabilities		8,070,253								6,936,675
Total stockholders’ equity		762,923								654,106

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

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

Net interest margin							3.39	%							3.39	%
Ratio of interest-earning assets to interest-bearing liabilities		125.63	%							124.67	%
Total deposits	$	6,563,023		$	8,107		0.50	%	$	5,723,111		$	6,862		0.48	%
Total funding ⁽¹⁾	$	7,872,733		$	13,823		0.71	%	$	6,864,665		$	12,133		0.70	%

(1)

Banc of California, Inc.

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

(Dollars in thousands)

(Unaudited)


	Year Ended
	December 31, 2016								December 31, 2015
	Average					Yield			Average					Yield
	Balance			Interest		/ Cost			Balance			Interest		/ Cost
Interest earning assets
Loans held for sale and SFR mortgage	$	2,488,028		$	92,239		3.71	%	$	1,924,593		$	72,167		3.75	%
Seasoned SFR mortgage loan pools		807,522			43,318		5.36	%		683,612			42,102		6.16	%
Commercial real estate, multi-family, and construction		1,962,719			87,367		4.45	%		1,751,851			80,708		4.61	%
Commercial and industrial, SBA, and lease financing		1,414,653			69,268		4.90	%		802,821			40,989		5.11	%
Other consumer		107,904			4,804		4.45	%		137,360			5,590		4.07	%

Gross loans and leases		6,780,826			296,996		4.38	%		5,300,237			241,556		4.56	%
Securities		2,711,112			79,527		2.93	%		776,256			20,263		2.61	%
Other interest-earning assets		380,832			8,449		2.22	%		276,823			4,519		1.63	%

Total interest-earning assets		9,872,770			384,972		3.90	%		6,353,316			266,338		4.19	%
Allowance for loan and lease losses		(37,664	)							(32,467	)
BOLI and non-interest earning assets		500,599								298,168

Total assets	$	10,335,705							$	6,619,017

Interest-bearing liabilities
Savings	$	882,774		$	6,795		0.77	%	$	862,160		$	6,467		0.75	%
Interest-bearing checking		2,066,623			13,723		0.66	%		1,204,560			8,973		0.74	%
Money market		2,094,839			10,776		0.51	%		1,219,416			4,590		0.38	%
Certificates of deposit		1,465,679			8,926		0.61	%		1,006,493			5,753		0.57	%

Total interest-bearing deposits		6,509,915			40,220		0.62	%		4,292,629			25,783		0.60	%
FHLB advances		1,153,208			5,717		0.50	%		553,162			2,120		0.38	%
Securities sold under repurchase agreements		92,937			818		0.88	%		2,443			18		0.74	%
Long-term debt and other interest-bearing liabilities		218,737			12,744		5.83	%		222,577			14,700		6.60	%

Total interest-bearing liabilities		7,974,797			59,499		0.75	%		5,070,811			42,621		0.84	%
Noninterest-bearing deposits		1,225,656								875,227
Non-interest-bearing liabilities		228,421								60,586

Total liabilities		9,428,874								6,006,624
Total stockholders’ equity		906,831								612,393

Total liabilities and stockholders’ equity	$	10,335,705							$	6,619,017

Net interest income/spread				$	325,473		3.15	%				$	223,717		3.35	%

Net interest margin							3.30	%							3.52	%
Ratio of interest-earning assets to interest-bearing liabilities		123.80	%							125.29	%
Total deposits	$	7,735,571		$	40,220		0.52	%	$	5,167,856		$	25,783		0.50	%
Total funding ⁽¹⁾	$	9,200,453		$	59,499		0.65	%	$	5,946,038		$	42,621		0.72	%

(1)

Banc of California, Inc.

Capital Ratios

(Unaudited)


	December 31,			September 30,			June 30,			March 31,			December 31,
	2016			2016			2016			2016			2015
Capital Ratios
Banc of California, Inc.
Total risk-based capital ratio		13.70	%		12.79	%		13.45	%		13.59	%		11.18	%
Tier 1 risk-based capital ratio		13.22	%		12.54	%		13.14	%		13.17	%		10.71	%
Common equity tier 1 capital ratio		9.44	%		8.85	%		9.16	%		8.14	%		7.36	%
Tier 1 leverage ratio		8.17	%		8.47	%		8.87	%		9.27	%		8.07	%
Banc of California, NA
Total risk-based capital ratio		14.73	%		14.38	%		14.96	%		14.03	%		13.45	%
Tier 1 risk-based capital ratio		14.12	%		13.83	%		14.38	%		13.42	%		12.79	%
Common equity tier 1 capital ratio		14.12	%		13.83	%		14.38	%		13.42	%		12.79	%
Tier 1 leverage ratio		8.71	%		9.31	%		9.70	%		9.44	%		9.64	%

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, return on average tangible common equity, and adjusted efficiency ratio are supplemental financial information determined by methods 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. Adjusted efficiency ratio is calculated by subtracting loss on investments in alternative energy partnerships from noninterest expense and adding total pretax return, which includes the loss on investments in alternative energy partnerships, from investments in alternative energy partnerships to noninterest income. 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 and financial 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,
	2016			2016			2016			2016			2015
Tangible common equity to tangible assets ratio
Total assets	$	11,029,853		$	11,216,404		$	10,157,662		$	9,616,972		$	8,235,555
Less goodwill		(39,244	)		(39,244	)		(39,244	)		(39,244	)		(39,244	)
Less other intangible assets		(13,617	)		(15,335	)		(16,514	)		(17,836	)		(19,158	)

Tangible assets	$	10,976,992		$	11,161,825		$	10,101,904		$	9,559,892		$	8,177,153

Total stockholders’ equity	$	980,239		$	971,424		$	939,884		$	867,530		$	652,405
Less goodwill		(39,244	)		(39,244	)		(39,244	)		(39,244	)		(39,244	)
Less other intangible assets		(13,617	)		(15,335	)		(16,514	)		(17,836	)		(19,158	)

Tangible equity		927,378			916,845			884,126			810,450			594,003
Less preferred stock		(269,071	)		(269,071	)		(269,071	)		(311,008	)		(190,750	)

Tangible common equity	$	658,307		$	647,774		$	615,055		$	499,442		$	403,253

Total stockholders’ equity to total assets		8.89	%		8.66	%		9.25	%		9.02	%		7.92	%
Tangible equity to tangible assets		8.45	%		8.21	%		8.75	%		8.48	%		7.26	%
Tangible common equity to tangible assets		6.00	%		5.80	%		6.09	%		5.22	%		4.93	%
Common stock outstanding		49,695,299			49,531,321			49,478,348			43,907,587			38,002,267
Class B non-voting non-convertible common stock outstanding		201,922			201,922			161,841			91,066			37,355

Total common stock outstanding		49,897,221			49,733,243			49,640,189			43,998,653			38,039,622

Minimum number of shares issuable under purchase contracts ⁽¹⁾		188,742			188,742			218,928			253,155			601,299

Total common stock outstanding and shares issuable under purchase contracts		50,085,963			49,921,985			49,859,117			44,251,808			38,640,921

(1) Purchase contracts relating to the tangible equity units
Tangible common equity per common stock	$	13.19		$	13.02		$	12.39		$	11.35		$	10.60
Book value per common stock	$	14.25		$	14.12		$	13.51		$	12.65		$	12.14
Tangible common equity per common stock and shares issuable under purchase contracts	$	13.14		$	12.98		$	12.34		$	11.29		$	10.44
Book value per common stock and shares issuable under purchase contracts	$	14.20		$	14.07		$	13.45		$	12.58		$	11.95

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,
	2016			2016			2016			2016			2015			2016			2015
Return on tangible common equity
Average total stockholders’ equity	$	995,908		$	968,684		$	898,164		$	762,923		$	654,106		$	906,831		$	612,393
Less average preferred stock		(269,071	)		(269,071	)		(269,073	)		(260,959	)		(190,750	)		(267,054	)		(161,288	)
Less average goodwill		(39,244	)		(39,244	)		(39,244	)		(39,244	)		(39,244	)		(39,244	)		(33,541	)
Less average other intangible assets		(14,704	)		(16,039	)		(17,299	)		(18,601	)		(19,877	)		(16,654	)		(22,222	)

Average tangible common equity	$	672,889		$	644,330		$	572,548		$	444,119		$	404,235		$	583,879		$	395,342

Net income	$	33,264		$	35,937		$	26,528		$	19,687		$	19,038		$	115,416		$	62,072
Less preferred stock dividends		(5,113	)		(5,112	)		(5,114	)		(4,575	)		(3,030	)		(19,914	)		(9,823	)
Add amortization of intangible assets		1,028			1,179			1,322			1,322			1,346			4,851			5,836
Add impairment on intangible assets		690			—			—			—			—			690			258
Less tax effect on amortization and impairment of intangible assets ⁽¹⁾		(601	)		(413	)		(463	)		(463	)		(471	)		(1,939	)		(2,133	)

Net income available to common stockholders	$	29,268		$	31,591		$	22,273		$	15,971		$	16,883		$	99,104		$	56,210

Return on average equity		13.29	%		14.76	%		11.88	%		10.38	%		11.55	%		12.73	%		10.14	%
Return on average tangible common equity		17.30	%		19.51	%		15.65	%		14.46	%		16.57	%		16.97	%		14.22	%

(1) Utilized a 35% effective tax rate
	Three Months Ended															Year Ended
	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,
	2016			2016			2016			2016			2015			2016			2015
Adjusted efficiency ratio for including the pre-tax effect of investments in alternative energy partnerships
Noninterest expense	$	129,239		$	124,262		$	100,075		$	89,100		$	86,659		$	442,676		$	332,201
Loss on investments in alternative energy partnerships, net		(13,850	)		(17,660	)		—			—			—			(31,510	)		—

Adjusted noninterest expense	$	115,389		$	106,602		$	100,075		$	89,100		$	86,659		$	411,166		$	332,201

Net interest income	$	87,058		$	86,961		$	81,037		$	70,417		$	62,066		$	325,473		$	223,717
Noninterest income		79,687			74,630			65,604			51,959			56,819			271,880			220,219

Total revenue		166,745			161,591			146,641			122,376			118,885			597,353			443,936
Tax credit from investments in alternative energy partnerships		14,048			19,357			—			—			—			33,405			—
Deferred tax expense on investments in alternative energy partnerships		(2,459	)		(3,387	)		—			—			—			(5,846	)		—
Tax effect on tax credit and deferred tax expense		8,078			11,002			—			—			—			19,080			—
Loss on investments in alternative energy partnerships, net		(13,850	)		(17,660	)		—			—			—			(31,510	)		—

Total pre-tax adjustments for investments in alternative energy partnerships		5,817			9,312			—			—			—			15,129			—

Total adjusted revenue	$	172,562		$	170,903		$	146,641		$	122,376		$	118,885		$	612,482		$	443,936

Efficiency ratio		77.51	%		76.90	%		68.24	%		72.81	%		72.89	%		74.11	%		74.83	%
Adjusted efficiency ratio for excluding the effect of investments in alternative energy partnerships		66.87	%		62.38	%		68.24	%		72.81	%		72.89	%		67.13	%		74.83	%
Effective tax rate utilized for calculating tax effect on tax credit and deferred tax expense		41.10	%		40.79	%		—			—			—			40.91	%		—

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BANC OF CALIFORNIA, INC. Reports