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

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8-K - 8-K - BANC OF CALIFORNIA, INC.	d387296d8k.htm
EX-99.2 - EX-99.2 - BANC OF CALIFORNIA, INC.	d387296dex992.htm

Exhibit 99.1

LOGO

Banc of California Reports First Quarter 2017 Earnings

SANTA ANA, Calif., (May 3, 2017) – Banc of California, Inc. (NYSE: BANC) today reported net income of $17.2 million, and net income available to common stockholders of $12.1 million, for the first quarter of 2017, resulting in diluted earnings per common share of $0.23 for the quarter.

Highlights for the first quarter included:

•

Completed the sale of our Banc Home Loans mortgage banking division and sold $38 million of mortgage servicing rights on $3.9 billion in unpaid balances to Caliber Home Loans, thereby lowering volatile gain on sale revenues and furthering our transition to a commercial bank.

•

Increased commercial loan balances by $187 million, or 5%, from the prior quarter, and by $933 million, or 30%, from a year ago. Commercial loans now represent 66% of total loans held for investment, up from 56% a year ago.

•

Held for investment loan balances increased by $71 million, or 1%, during the quarter to $6.1 billion. The Company transferred $242 million of residential mortgage and multi-family loans to held-for-sale, which were subsequently sold during the quarter. Excluding these transfers, held for investment loan balances increased by $313 million, or 5%, from the prior quarter.

•

Net interest margin expanded to 3.19% for the first quarter, an increase of 6 bps compared to the prior quarter.

•

Asset quality remained strong as nonperforming assets to total assets totaled just 0.18%.

•

Common equity tier 1 capital ratio was flat from the prior quarter at 9.4%.

•

On April 27, the Board announced the hiring of Doug Bowers as President and Chief Executive Officer, effective on May 8

The Company’s consolidated assets totaled $11.1 billion at March 31, 2017, an increase of $22.2 million compared to the prior quarter and an increase of $1.4 billion, or 15%, compared to the prior year.

“Our core commercial banking business continued to expand during the first quarter as we saw strong loan originations and net commercial loan growth of 5% for the quarter,” said Hugh Boyle, Interim Chief Executive Officer and Chief Risk Officer of Banc of California. “We delivered on many of the items we outlined earlier this year, including responsible and disciplined growth, strong and stable asset quality, focus and optimization of our business, and strong corporate governance. During the first quarter, we accelerated and completed a number of strategic actions designed to better position the Company to deliver core, sustainable earnings. As a result of these actions, our first quarter financial results included various non-recurring items, both related to the sale of the Banc Home Loans Division, as well as related to corporate restructuring efforts tied to our efficiency improvement initiatives. The Company has materially improved our corporate governance during the quarter by separating the CEO and Chairman of the Board roles, adopting a more rigorous related party transaction policy, issuing pay-for-performance measures for executive management and announcing new board members who deepen our risk management, governance and shareholder representation at the board level.”

On April 27, the Board announced the hiring of Doug Bowers, effective May 8th, as President and Chief Executive Officer. Mr. Bowers is a veteran banking executive with over 35 years of banking experience, including his most recent role as President and Chief Executive Officer of Square 1 Bank from 2011 until its sale to PacWest Bancorp in 2015. He previously held roles at Lone Star/Hudson Advisors, a leading private equity firm, and at Bank of America, where he spent nearly 30 years managing various divisions including commercial banking, corporate banking, leasing and specialized products.

“Our first quarter results marked the successful execution of a series of strategic actions for the Company to ensure we continue to drive long-term shareholder value,” said J. Francisco A. Turner, Interim President, Chief Financial Officer and Chief Strategy Officer of Banc of California. “We have charted a path toward a strategic transformation of our business into a commercial banking franchise, and this quarter demonstrated our continued commitment to the execution of the

3 MacArthur Place ● Santa Ana, CA 92707 ● (949) 236-5250 ● www.bancofcal.com

previously communicated commercial banking focused model. This transformation is expected to drive core, recurring spread-based revenues, optimize and improve the overall efficiency of the business, and to improve our expense run-rate. We see a continued market opportunity to serve California’s diverse entrepreneurs, business owners and communities.”

The Company will host a conference call to discuss its first quarter financial results at 7:00 a.m. Pacific Time (PT) on Wednesday, May 3, 2017. Interested parties are welcome to attend the conference call by dialing 888-317-6003, and referencing event code 3117731. 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 37 offices in California. 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

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Banc of California, Inc.

Consolidated Statements of Financial Condition

(Dollars in thousands)

(Unaudited)


	March 31,			December 31,			September 30,			June 30,			March 31,
	2017			2016			2016			2016			2016
ASSETS
Cash and cash equivalents	$	409,281		$	439,510		$	372,603		$	271,732		$	215,012
Time deposits in financial institutions		1,000			1,000			1,500			1,500			1,500
Securities available-for-sale		2,434,541			2,381,488			1,941,588			1,302,785			1,663,711
Securities held-to-maturity		863,269			884,234			962,315			962,282			962,262
Loans held-for-sale		228,196			298,018			358,892			476,928			433,538
Loans and leases receivable		6,105,321			6,034,752			6,568,791			6,236,115			5,463,068
Allowance for loan and lease losses		(42,736	)		(40,444	)		(40,233	)		(37,483	)		(35,845	)
Federal Home Loan Bank and other bank stock		63,238			67,842			69,190			81,115			61,146
Servicing rights, net		44,451			39,936			33,064			29,291			27,141
Other real estate owned, net		3,345			2,502			275			429			325
Premises and equipment, net		146,631			140,917			131,481			117,017			110,395
Investments in alternative energy partnerships, net		47,633			25,639			23,912			—			—
Goodwill		37,144			37,144			37,144			37,144			37,144
Other intangible assets, net		12,191			13,617			15,335			16,514			17,836
Deferred income tax		18,673			9,989			408			7,270			7,441
Income tax receivable		15,973			16,009			12,487			5,904			—
Bank owned life insurance investment		103,093			102,512			101,909			101,314			100,734
Other assets		128,036			92,694			79,386			75,115			69,324
Assets of discontinued operations		432,805			482,494			546,357			472,690			482,240

Total assets	$	11,052,085		$	11,029,853		$	11,216,404		$	10,157,662		$	9,616,972


LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Noninterest-bearing deposits	$	1,273,649		$	1,282,629		$	1,267,363		$	1,093,686		$	1,398,728
Interest-bearing deposits		7,324,044			7,859,521			7,810,956			6,835,270			5,438,873

Total deposits		8,597,693			9,142,150			9,078,319			7,928,956			6,837,601
Advances from Federal Home Loan Bank		1,080,000			490,000			770,000			930,000			1,195,000
Securities sold under repurchase agreements		26,320			—			—			—			257,100
Other borrowings		67,981			67,922			49,903			—			—
Notes payable, net		174,090			175,378			176,579			177,743			260,896
Reserve for loss on repurchased loans		8,118			7,974			11,369			10,438			9,781
Income taxes payable		618			92			908			—			12,303
Accrued expenses and other liabilities		81,208			131,618			132,089			146,537			152,291
Liabilities of discontinued operations		30,309			34,480			25,813			24,104			24,470

Total liabilities		10,066,337			10,049,614			10,244,980			9,217,778			8,749,442
Commitments and contingent liabilities
Preferred stock		269,071			269,071			269,071			269,071			311,008
Common stock		537			537			536			510			454
Common stock, class B non-voting non-convertible		3			2			2			2			1
Additional paid-in capital		614,983			614,226			611,069			608,303			509,123
Retained earnings		139,926			134,515			112,751			88,385			73,179
Treasury stock		(29,070	)		(29,070	)		(29,070	)		(29,070	)		(29,070	)
Accumulated other comprehensive income/(loss), net		(9,702	)		(9,042	)		7,065			2,683			2,835

Total stockholders’ equity		985,748			980,239			971,424			939,884			867,530

Total liabilities and stockholders’ equity	$	11,052,085		$	11,029,853		$	11,216,404		$	10,157,662		$	9,616,972

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Banc of California, Inc.

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

(Unaudited)


	Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2017			2016			2016			2016			2016
Interest and dividend income
Loans, including fees	$	69,507		$	71,613		$	76,257		$	70,032		$	63,966
Securities		27,239			24,153			19,934			19,393			16,047
Other interest-earning assets		2,096			3,965			1,931			1,504			1,049

Total interest and dividend income		98,842			99,731			98,122			90,929			81,062
Interest expense
Deposits		13,960			12,504			11,224			8,385			8,107
Federal Home Loan Bank advances		1,423			1,076			1,413			1,966			1,262
Securities sold under repurchase agreements		6			221			48			389			160
Notes payable and other interest-bearing liabilities		2,972			2,998			2,589			2,863			4,294

Total interest expense		18,361			16,799			15,274			13,603			13,823

Net interest income		80,481			82,932			82,848			77,326			67,239
Provision for loan and lease losses		2,583			589			2,592			1,769			321

Net interest income after provision for loan and lease losses		77,898			82,343			80,256			75,557			66,918
Noninterest income
Customer service fees		1,623			1,560			1,566			1,173			848
Loan servicing (loss) income		2,756			4,699			74			(1,935	)		(2,205	)
Net gain (loss) on sale of securities available for sale		3,356			(695	)		487			12,824			16,789
Net gain on sale of loans		4,019			20,490			11,063			2,147			2,195
Loan brokerage income		1,027			1,331			1,298			721			901
Gain on sale of subsidiary and business unit		—			2,629			—			3,694			—
All other income		2,122			2,490			7,542			4,279			2,665

Total noninterest income		14,903			32,504			22,030			22,903			21,193
Noninterest expense
Salaries and employee benefits		32,443			42,800			37,133			32,745			33,469
Occupancy and equipment		10,668			10,012			10,036			9,057			8,941
Professional fees		15,073			11,562			6,482			6,426			5,903
Data processing		2,179			2,357			2,112			2,156			1,686
Loss on investments in alternative energy partnerships		8,682			13,850			17,660			—			—
Amortization of intangible assets		1,090			1,028			1,179			1,322			1,322
Restructuring expense		5,287			—			—			—			—
All other expenses		14,474			11,286			11,521			13,347			7,823

Total noninterest expense		89,896			92,895			86,123			65,053			59,144

Income from continuing operations before income taxes		2,905			21,952			16,163			33,407			28,967
Income tax (benefit) expense		(6,471	)		(2,543	)		(9,016	)		13,647			11,661

Income from continuing operations		9,376			24,495			25,179			19,760			17,306

Net gain on disposal		13,302			—			—			—			—
Income from discontinued operations before income taxes, excluding gain on disposal		46			14,965			18,574			11,390			3,988
Income tax expense		5,523			6,196			7,816			4,622			1,607

Income from discontinued operations		7,825			8,769			10,758			6,768			2,381

Net income		17,201			33,264			35,937			26,528			19,687

Preferred stock dividends		5,113			5,113			5,112			5,114			4,575

Net income available to common stockholders	$	12,088		$	28,151		$	30,825		$	21,414		$	15,112

Basic earnings per total common share
Income from continuing operations	$	0.08		$	0.37		$	0.38		$	0.30		$	0.30
Income from discontinued operations		0.15			0.18			0.22			0.14			0.06

Net income	$	0.23		$	0.55		$	0.60		$	0.44		$	0.36

Diluted earnings per total common share
Income from continuing operations	$	0.08		$	0.36		$	0.38		$	0.29		$	0.30
Income from discontinued operations		0.15			0.18			0.21			0.14			0.06

Net income	$	0.23		$	0.54		$	0.59		$	0.43		$	0.36

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Banc of California, Inc.

Reconciliation of Consolidated Statements of Operations between Continuing and Discontinued Operations

(Dollars in thousands, except per share data)

(Unaudited)


	Three Months Ended March 31, 2017
	Continuing			Discontinued		Consolidated
	Operations			Operations		Operations
Interest and dividend income	$	98,842		$	3,266	$	102,108
Interest expense		18,361			—		18,361

Net interest income		80,481			3,266		83,747
Provision for loan and lease losses		2,583			—		2,583

Net interest income after provision for loan and lease losses		77,898			3,266		81,164
Noninterest income
Customer service fees		1,623			—		1,623
Loan servicing (loss) income		2,756			1,551		4,307
Net gain (loss) on sale of securities available for sale		3,356			—		3,356
Net gain on sale of loans		4,019			—		4,019
Mortgage banking income		—			29,434		29,434
Loan brokerage income		1,027			90		1,117
Net gain on disposal of discontinued operations		—			13,302		13,302
All other income		2,122			424		2,546

Total noninterest income		14,903			44,801		59,704
Noninterest expense
Salaries and employee benefits		32,443			24,375		56,818
Occupancy and equipment		10,668			2,357		13,025
Professional fees		15,073			102		15,175
Data processing		2,179			464		2,643
Loss on investments in alternative energy partnerships		8,682			—		8,682
Amortization of intangible assets		1,090			—		1,090
Restructuring expense		5,287			3,218		8,505
All other expenses		14,474			4,203		18,677

Total noninterest expense		89,896			34,719		124,615

Income before income taxes		2,905			13,348		16,253
Income tax (benefit) expense		(6,471	)		5,523		(948	)

Net income	$	9,376		$	7,825	$	17,201


Basic earnings per total common share	$	0.08		$	0.15	$	0.23
Diluted earnings per total common share	$	0.08		$	0.15	$	0.23

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Banc of California, Inc.

Selected Financial Data

(Dollars in thousands)

(Unaudited)


	Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2017			2016			2016			2016			2016
Average balances of consolidated operations
Total assets	$	11,188,806		$	11,568,849		$	10,860,257		$	10,061,237		$	8,833,176
Total gross loans and leases		6,785,013			7,209,241			7,245,472			6,663,340			5,995,436
Investment Securities		3,376,698			3,236,253			2,776,304			2,696,524			2,128,882
Total interest earning assets		10,661,834			11,075,367			10,432,247			9,619,937			8,344,167
Total interest-bearing deposits		7,724,061			7,825,036			7,164,061			5,696,893			5,332,032
Total borrowings		1,058,607			1,190,060			1,297,382			2,067,234			1,309,710
Total interest bearing liabilities		8,782,668			9,015,096			8,461,443			7,764,127			6,641,742
Total stockholders’ equity		1,001,784			995,908			968,684			898,164			762,923
Profitability and other ratios of consolidated operations
Return on average assets⁽¹⁾		0.62	%		1.14	%		1.32	%		1.06	%		0.90	%
Return on average equity ⁽¹⁾		6.96	%		13.29	%		14.76	%		11.88	%		10.38	%
Return on average tangible common equity ⁽²⁾		7.76	%		17.30	%		19.51	%		15.65	%		14.46	%
Dividend payout ratio ⁽³⁾		56.52	%		23.64	%		20.00	%		27.27	%		33.33	%
Net interest spread		3.03	%		2.99	%		3.18	%		3.26	%		3.22	%
Net interest margin⁽¹⁾		3.19	%		3.13	%		3.32	%		3.39	%		3.39	%
Noninterest income to total revenue ⁽⁴⁾		41.62	%		47.79	%		46.18	%		44.74	%		42.46	%
Noninterest income to average total assets⁽¹⁾		2.16	%		2.74	%		2.73	%		2.62	%		2.37	%
Noninterest expense to average total assets⁽¹⁾		4.52	%		4.44	%		4.55	%		4.00	%		4.06	%
Efficiency ratio⁽⁵⁾		86.87	%		77.51	%		76.90	%		68.24	%		72.81	%
Adjusted efficiency ratio including the pre-tax effect of investments in alternative energy partnerships ^(2) , (5)		78.76	%		66.87	%		62.38	%		68.24	%		72.81	%
Average held for investment loans and leases to average deposits		68.33	%		69.11	%		75.92	%		82.88	%		79.76	%
Average investment securities to average total assets		30.18	%		27.97	%		25.56	%		26.80	%		24.10	%
Average stockholders’ equity to average total assets		8.95	%		8.61	%		8.92	%		8.93	%		8.64	%

(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 common 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.

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Banc of California, Inc.

Selected Financial Data, Continued

(Dollars in thousands)

(Unaudited)


	March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016			March 31, 2016
Allowance for loan and lease losses (ALLL)
Balance at beginning of period	$	40,444		$	40,233		$	37,483		$	35,845		$	35,533
Loans and leases charged off		(357	)		(1,351	)		(393	)		(772	)		(102	)
Recoveries		66			973			551			641			93
Provision for loan and lease losses		2,583			589			2,592			1,769			321

Balance at end of period	$	42,736		$	40,444		$	40,233		$	37,483		$	35,845

Annualized net loan charge-offs to average total gross loans held for investment		0.02	%		0.02	%		-0.01	%		0.01	%		0.00	%
Reserve for loss on repurchased loans
Balance at beginning of period	$	7,974		$	11,369		$	10,438		$	9,781		$	9,700
Provision for loan repurchases		517			(1,881	)		1,241			851			379
Utilization of reserve for loan repurchases		(373	)		(1,514	)		(310	)		(194	)		(298	)

Balance at end of period	$	8,118		$	7,974		$	11,369		$	10,438		$	9,781

Asset quality information and ratios
30 to 89 days delinquent, excluding PCI loans	$	22,596		$	30,140		$	39,054		$	50,494		$	36,022
90+ days delinquent, excluding PCI loans		9,802			14,218			22,827			28,675			27,469

Total delinquent loans, excluding PCI loans		32,398			44,358			61,881			79,169			63,491

PCI loans, 30 to 89 days delinquent		16,410			15,078			39,113			48,255			44,191
PCI loans, 90+ days delinquent		4,943			2,577			6,145			8,952			9,806

Total delinquent PCI loans		21,353			17,655			45,258			57,207			53,997

Total delinquent loans	$	53,751		$	62,013		$	107,139		$	136,376		$	117,488

Total delinquent non-PCI loans to total non-PCI loans		0.54	%		0.75	%		1.04	%		1.44	%		1.33	%
Total delinquent loans to gross loans		0.88	%		1.03	%		1.63	%		2.19	%		2.15	%

Non-performing loans, excluding PCI loans	$	16,222		$	14,942		$	35,223		$	45,012		$	44,216
90+ days delinquent and still accruing loans, excluding PCI loans		—			—			—			—			—
Other real estate owned		3,345			2,502			275			429			325

Non-performing assets	$	19,567		$	17,444		$	35,498		$	45,441		$	44,541

ALLL to non-performing loans		263.44	%		270.67	%		114.22	%		83.27	%		81.07	%
Non-performing loans to gross loans		0.27	%		0.25	%		0.54	%		0.72	%		0.81	%
Non-performing assets to total assets		0.18	%		0.16	%		0.32	%		0.45	%		0.46	%

Troubled debt restructurings (TDRs)
Performing TDRs	$	4,309		$	4,827		$	11,160		$	14,450		$	15,128
Non-performing TDRs		1,144			—			520			2,864			2,545

Total TDRs	$	5,453		$	4,827		$	11,680		$	17,314		$	17,673

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Banc of California, Inc.

Selected Financial Data, Continued

(Dollars in thousands)

(Unaudited)


	March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016			March 31, 2016
Loan and lease breakdown by ALLL evaluation type
Originated loans and leases
Individually evaluated for impairment	$	12,518		$	10,168		$	22,306		$	25,661		$	26,565
Collectively evaluated for impairment		5,096,657			4,933,381			4,789,155			4,254,975			3,484,995
Acquired loans not impaired at acquisition
Individually evaluated for impairment		—			2,429			3,397			3,470			3,530
Collectively evaluated for impairment		834,983			924,993			958,135			1,022,696			1,079,711
Seasoned SFR mortgage loan pools - non-impaired
Individually evaluated for impairment		877			755			6,581			9,717			9,287
Collectively evaluated for impairment		20,587			21,200			146,850			168,352			175,004
Acquired with deteriorated credit quality		139,699			141,826			642,367			751,244			683,976

Total loans	$	6,105,321		$	6,034,752		$	6,568,791		$	6,236,115		$	5,463,068

ALLL breakdown
Originated loans and leases
Individually evaluated for impairment	$	130		$	137		$	137		$	215		$	365
Collectively evaluated for impairment		41,091			38,394			37,858			34,575			32,202
Acquired loans not impaired at acquisition
Individually evaluated for impairment		—			—			—			—			—
Collectively evaluated for impairment		1,234			1,703			1,606			1,458			2,061
Seasoned SFR mortgage loan pools - non-impaired
Individually evaluated for impairment		120			106			528			1,131			1,011
Collectively evaluated for impairment		—			—			—			—			—
Acquired with deteriorated credit quality		161			104			104			104			206

Total ALLL	$	42,736		$	40,444		$	40,233		$	37,483		$	35,845

Discount on Purchased/Acquired Loans
Acquired loans not impaired at acquisition	$	16,275		$	17,820		$	18,400		$	20,136		$	20,781
Seasoned SFR mortgage loan pools - non-impaired		1,219			1,280			9,789			11,304			11,862
Acquired with deteriorated credit quality		21,538			22,454			57,780			76,505			66,573

Total Discount	$	39,032		$	41,554		$	85,969		$	107,945		$	99,216

Ratios
To originated loans and leases:
Individually evaluated for impairment		1.04	%		1.35	%		0.61	%		0.84	%		1.37	%
Collectively evaluated for impairment		0.81	%		0.78	%		0.79	%		0.81	%		0.92	%
Total ALLL		0.81	%		0.78	%		0.79	%		0.81	%		0.93	%
To originated loans and leases and acquired loans not impaired at acquisition:
Individually evaluated for impairment		1.04	%		1.09	%		0.53	%		0.74	%		1.21	%
Collectively evaluated for impairment		0.71	%		0.68	%		0.69	%		0.68	%		0.75	%
Total ALLL		0.71	%		0.69	%		0.69	%		0.68	%		0.75	%
To total loans and leases:
Individually evaluated for impairment		1.87	%		1.82	%		2.06	%		3.46	%		3.49	%
Collectively evaluated for impairment		0.71	%		0.68	%		0.67	%		0.66	%		0.72	%
Total ALLL		0.70	%		0.67	%		0.61	%		0.60	%		0.66	%

- 8 -

Banc of California, Inc.

Selected Financial Data, Continued

(Dollars in thousands)

(Unaudited)


	March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016			March 31, 2016
Composition of held for investment loans and leases
Commercial real estate	$	750,592		$	729,959		$	721,838		$	725,107		$	713,693
Multi-family		1,449,715			1,365,262			1,199,207			1,147,597			1,021,097
Construction		142,164			125,100			99,086			86,852			68,241
Commercial and industrial		1,585,656			1,522,960			1,531,041			1,306,866			983,961
SBA		76,040			73,840			67,737			65,477			71,640
Lease financing		285			379			234,540			228,663			212,836

Total commercial loans		4,004,452			3,817,500			3,853,449			3,560,562			3,071,468

Single family residential mortgage		1,975,055			2,106,630			2,601,375			2,555,344			2,282,445
Other consumer		125,814			110,622			113,967			120,209			109,155

Total consumer loans		2,100,869			2,217,252			2,715,342			2,675,553			2,391,600

Total gross loans and leases	$	6,105,321		$	6,034,752		$	6,568,791		$	6,236,115		$	5,463,068

Composition percentage of held for investment loans and leases
Commercial real estate		12.3	%		12.1	%		11.0	%		11.6	%		13.1	%
Multi-family		23.7	%		22.6	%		18.3	%		18.4	%		18.7	%
Construction		2.3	%		2.1	%		1.5	%		1.4	%		1.2	%
Commercial and industrial		26.1	%		25.2	%		23.3	%		21.0	%		18.0	%
SBA		1.2	%		1.2	%		1.0	%		1.0	%		1.3	%
Lease financing		0.0	%		0.1	%		3.6	%		3.7	%		3.9	%

Total commercial loans		65.6	%		63.3	%		58.7	%		57.1	%		56.2	%

Single family residential mortgage		32.3	%		34.9	%		39.6	%		41.0	%		41.8	%
Other consumer		2.1	%		1.8	%		1.7	%		1.9	%		2.0	%

Total consumer loans		34.4	%		36.7	%		41.3	%		42.9	%		43.8	%

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

Composition of deposits
Noninterest-bearing checking	$	1,273,649		$	1,282,629		$	1,267,363		$	1,093,686		$	1,398,728
Interest-bearing checking		1,998,778			2,048,839			2,369,332			2,053,656			2,052,507
Money market		2,610,376			2,731,314			2,900,248			2,343,561			1,534,492
Savings		1,008,218			1,118,175			880,712			909,242			844,177
Certificates of deposit		1,706,672			1,961,193			1,660,664			1,528,811			1,007,697

Total deposits	$	8,597,693		$	9,142,150		$	9,078,319		$	7,928,956		$	6,837,601

Composition percentage of deposits
Noninterest-bearing checking		14.8	%		14.0	%		14.0	%		13.8	%		20.5	%
Interest-bearing checking		23.2	%		22.4	%		26.1	%		25.9	%		30.0	%
Money market		30.4	%		29.9	%		31.9	%		29.5	%		22.4	%
Savings		11.7	%		12.2	%		9.7	%		11.5	%		12.3	%
Certificates of deposit		19.9	%		21.5	%		18.3	%		19.3	%		14.8	%

Total deposits		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

- 9 -

Banc of California, Inc.

Average Balance, Average Yield Earned, and Average Cost Paid

(Dollars in thousands)

(Unaudited)


	Three Months Ended
	March 31, 2017								December 31, 2016								September 30, 2016
	Average Balance			Interest		Yield / Cost			Average Balance			Interest		Yield / Cost			Average Balance			Interest		Yield / Cost
Interest earning assets
Loans held-for-sale of discontinued operations	$	388,194		$	3,266		3.41	%	$	519,495		$	4,126		3.16	%	$	479,133		$	4,113		3.42	%
Other loans held-for-sale and SFR mortgage		2,275,338			21,950		3.91	%		2,236,354			21,451		3.82	%		2,139,746			20,252		3.77	%
Seasoned SFR mortgage loan pools		154,736			2,145		5.62	%		570,006			6,281		4.38	%		907,387			11,924		5.23	%
Commercial real estate, multi-family, and construction		2,336,323			25,851		4.49	%		2,146,067			23,405		4.34	%		2,033,718			23,097		4.52	%
Commercial and industrial, SBA, and lease financing		1,508,756			18,293		4.92	%		1,628,177			19,228		4.70	%		1,576,379			19,734		4.98	%
Other consumer		121,666			1,268		4.23	%		109,142			1,248		4.55	%		109,109			1,250		4.56	%

Gross loans and leases		6,785,013			72,773		4.35	%		7,209,241			75,739		4.18	%		7,245,472			80,370		4.41	%
Securities		3,376,698			27,239		3.27	%		3,236,253			24,153		2.97	%		2,776,304			19,934		2.86	%
Other interest-earning assets		500,123			2,096		1.70	%		629,873			3,965		2.50	%		410,471			1,931		1.87	%

Total interest-earning assets		10,661,834			102,108		3.88	%		11,075,367			103,857		3.73	%		10,432,247			102,235		3.90	%
Allowance for loan and lease losses		(41,285	)							(39,163	)							(38,258	)
BOLI and non-interest earning assets		568,257								532,645								466,268

Total assets	$	11,188,806							$	11,568,849							$	10,860,257


Interest-bearing liabilities
Savings	$	1,042,031		$	2,292		0.89	%	$	941,404		$	1,917		0.81	%	$	887,973		$	1,704		0.76	%
Interest-bearing checking		2,008,828			3,414		0.69	%		2,081,105			3,371		0.64	%		2,300,128			3,972		0.69	%
Money market		2,735,810			4,691		0.70	%		2,830,271			3,909		0.55	%		2,427,356			3,226		0.53	%
Certificates of deposit		1,937,392			3,563		0.75	%		1,972,256			3,307		0.67	%		1,548,604			2,322		0.60	%

Total interest-bearing deposits		7,724,061			13,960		0.73	%		7,825,036			12,504		0.64	%		7,164,061			11,224		0.62	%
FHLB advances		812,444			1,423		0.71	%		892,120			1,076		0.48	%		1,104,663			1,413		0.51	%
Securities sold under repurchase agreements		2,123			6		1.15	%		59,761			221		1.47	%		12,539			48		1.52	%
Long-term debt and other interest-bearing liabilities		244,040			2,972		4.94	%		238,179			2,998		5.01	%		180,180			2,589		5.72	%

Total interest-bearing liabilities		8,782,668			18,361		0.85	%		9,015,096			16,799		0.74	%		8,461,443			15,274		0.72	%
Noninterest-bearing deposits		1,181,279								1,286,642								1,178,849
Non-interest-bearing liabilities		223,075								271,203								251,281

Total liabilities		10,187,022								10,572,941								9,891,573
Total stockholders’ equity		1,001,784								995,908								968,684

Total liabilities and stockholders’ equity	$	11,188,806							$	11,568,849							$	10,860,257


Net interest income/spread				$	83,747		3.03	%				$	87,058		2.99	%				$	86,961		3.18	%


Net interest margin							3.19	%							3.13	%							3.32	%

Ratio of interest-earning assets to interest-bearing liabilities		121.40	%							122.85	%							123.29	%

Total deposits	$	8,905,340		$	13,960		0.64	%	$	9,111,678		$	12,504		0.55	%	$	8,342,910		$	11,224		0.54	%
Total funding ⁽¹⁾	$	9,963,947		$	18,361		0.75	%	$	10,301,738		$	16,799		0.65	%	$	9,640,292		$	15,274		0.63	%

(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.

- 10 -

Banc of California, Inc.

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

(Dollars in thousands)

(Unaudited)


	Three Months Ended
	June 30, 2016								March 31, 2016
	Average					Yield			Average					Yield
	Balance			Interest		/ Cost			Balance			Interest		/ Cost
Interest earning assets
Loans held-for-sale of discontinued operations	$	402,784		$	3,711		3.71	%	$	363,537		$	3,178		3.52	%
Other loans held-for-sale and SFR mortgage		2,025,384			18,777		3.73	%		1,781,297			16,630		3.75	%
Seasoned SFR mortgage loan pools		878,068			12,404		5.68	%		876,142			12,710		5.83	%
Commercial real estate, multi-family, and construction		1,907,649			21,049		4.44	%		1,760,646			19,816		4.53	%
Commercial and industrial, SBA, and lease financing		1,343,961			16,642		4.98	%		1,105,971			13,665		4.97	%
Other consumer		105,494			1,160		4.42	%		107,843			1,145		4.27	%

Gross loans and leases		6,663,340			73,743		4.45	%		5,995,436			67,144		4.50	%
Securities		2,696,524			19,393		2.89	%		2,128,882			16,047		3.03	%
Other interest-earning assets		260,073			1,504		2.33	%		219,849			1,049		1.92	%

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

Total assets	$	10,061,237							$	8,833,176


Interest-bearing liabilities
Savings	$	866,051		$	1,603		0.74	%	$	834,965		$	1,572		0.76	%
Interest-bearing checking		1,981,702			3,135		0.64	%		1,900,834			3,244		0.69	%
Money market		1,672,662			1,962		0.47	%		1,437,332			1,679		0.47	%
Certificates of deposit		1,176,478			1,685		0.58	%		1,158,901			1,612		0.56	%

Total interest-bearing deposits		5,696,893			8,385		0.59	%		5,332,032			8,107		0.61	%
FHLB advances		1,663,791			1,966		0.48	%		955,659			1,262		0.53	%
Securities sold under repurchase agreements		210,299			389		0.74	%		90,395			160		0.71	%
Long-term debt and other interest-bearing liabilities		193,144			2,863		5.96	%		263,656			4,294		6.55	%

Total interest-bearing liabilities		7,764,127			13,603		0.70	%		6,641,742			13,823		0.84	%
Noninterest-bearing deposits		1,205,987								1,230,991
Non-interest-bearing liabilities		192,959								197,520

Total liabilities		9,163,073								8,070,253
Total stockholders’ equity		898,164								762,923

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


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


Net interest margin							3.39	%							3.39	%

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

Total deposits	$	6,902,880		$	8,385		0.49	%	$	6,563,023		$	8,107		0.50	%
Total funding ⁽¹⁾	$	8,970,114		$	13,603		0.61	%	$	7,872,733		$	13,823		0.71	%

(1)

- 11 -

Banc of California, Inc.

Capital Ratios

(Unaudited)


	March 31,			December 31,			September 30,			June 30,			March 31,
	2017			2016			2016			2016			2016
Capital Ratios
Banc of California, Inc.
Total risk-based capital ratio		13.72	%		13.70	%		12.79	%		13.45	%		13.59	%
Tier 1 risk-based capital ratio		13.08	%		13.22	%		12.54	%		13.14	%		13.17	%
Common equity tier 1 capital ratio		9.37	%		9.44	%		8.85	%		9.16	%		8.14	%
Tier 1 leverage ratio		8.51	%		8.17	%		8.47	%		8.87	%		9.27	%
Banc of California, NA
Total risk-based capital ratio		15.11	%		14.73	%		14.38	%		14.96	%		14.03	%
Tier 1 risk-based capital ratio		14.48	%		14.12	%		13.83	%		14.38	%		13.42	%
Common equity tier 1 capital ratio		14.48	%		14.12	%		13.83	%		14.38	%		13.42	%
Tier 1 leverage ratio		9.43	%		8.71	%		9.31	%		9.70	%		9.44	%

- 12 -

Banc of California, Inc.

Consolidated Operations

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 the Company’s capital strength and performance of businesses. 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 and financial strength of the Company. 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 these non-GAAP performance measures to the GAAP performance measures for the periods indicated:


	March 31,			December 31,			September 30,			June 30,			March 31,
	2017			2016			2016			2016			2016
Tangible common equity to tangible assets ratio
Total assets	$	11,052,085		$	11,029,853		$	11,216,404		$	10,157,662		$	9,616,972
Less goodwill		(37,144	)		(39,244	)		(39,244	)		(39,244	)		(39,244	)
Less other intangible assets		(12,191	)		(13,617	)		(15,335	)		(16,514	)		(17,836	)

Tangible assets	$	11,002,750		$	10,976,992		$	11,161,825		$	10,101,904		$	9,559,892


Total stockholders’ equity	$	985,748		$	980,239		$	971,424		$	939,884		$	867,530
Less goodwill		(37,144	)		(39,244	)		(39,244	)		(39,244	)		(39,244	)
Less other intangible assets		(12,191	)		(13,617	)		(15,335	)		(16,514	)		(17,836	)

Tangible equity		936,413			927,378			916,845			884,126			810,450
Less preferred stock		(269,071	)		(269,071	)		(269,071	)		(269,071	)		(311,008	)

Tangible common equity	$	667,342		$	658,307		$	647,774		$	615,055		$	499,442


Total stockholders’ equity to total assets		8.92	%		8.89	%		8.66	%		9.25	%		9.02	%
Tangible equity to tangible assets		8.51	%		8.45	%		8.21	%		8.75	%		8.48	%
Tangible common equity to tangible assets		6.07	%		6.00	%		5.80	%		6.09	%		5.22	%

Common shares outstanding		49,601,363			49,695,299			49,531,321			49,478,348			43,907,587
Class B non-voting non-convertible common shares outstanding		277,797			201,922			201,922			161,841			91,066

Total common shares outstanding		49,879,160			49,897,221			49,733,243			49,640,189			43,998,653

Minimum number of shares issuable under purchase contracts ⁽¹⁾		166,265			188,742			188,742			218,928			253,155

Total common shares outstanding and shares issuable under purchase contracts		50,045,425			50,085,963			49,921,985			49,859,117			44,251,808


(1) Purchase contracts relating to the tangible equity units

Tangible common equity per common share	$	13.38		$	13.19		$	13.02		$	12.39		$	11.35
Book value per common share	$	14.37		$	14.25		$	14.12		$	13.51		$	12.65
Tangible common equity per common share and shares issuable under purchase contracts	$	13.33		$	13.14		$	12.98		$	12.34		$	11.29
Book value per common share and shares issuable under purchase contracts	$	14.32		$	14.20		$	14.07		$	13.45		$	12.58

- 13 -

Banc of California, Inc.

Consolidated Operations

Non-GAAP Measures, Continued

(Dollars in thousands, except per share data)

(Unaudited)


	Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2017			2016			2016			2016			2016
Return on tangible common equity
Average total stockholders’ equity	$	1,001,784		$	995,908		$	968,684		$	898,164		$	762,923
Less average preferred stock		(269,071	)		(269,071	)		(269,071	)		(269,073	)		(260,959	)
Less average goodwill		(39,221	)		(39,244	)		(39,244	)		(39,244	)		(39,244	)
Less average other intangible assets		(13,190	)		(14,704	)		(16,039	)		(17,299	)		(18,601	)

Average tangible common equity	$	680,302		$	672,889		$	644,330		$	572,548		$	444,119


Net income	$	17,201		$	33,264		$	35,937		$	26,528		$	19,687
Less preferred stock dividends		(5,113	)		(5,113	)		(5,112	)		(5,114	)		(4,575	)
Add amortization of intangible assets		1,090			1,028			1,179			1,322			1,322
Add impairment on intangible assets		336			690			—			—			—
Less tax effect on amortization and impairment of intangible assets ⁽¹⁾		(499	)		(601	)		(413	)		(463	)		(463	)

Net income available to common stockholders	$	13,015		$	29,268		$	31,591		$	22,273		$	15,971


Return on average equity		6.96	%		13.29	%		14.76	%		11.88	%		10.38	%
Return on average tangible common equity		7.76	%		17.30	%		19.51	%		15.65	%		14.46	%

(1) Utilized a 35% effective tax rate

	Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2017			2016			2016			2016			2016
Adjusted efficiency ratio including the pre-tax effect of investments in alternative energy partnerships
Noninterest expense	$	124,615		$	129,239		$	124,262		$	100,075		$	89,100
Loss on investments in alternative energy partnerships		(8,682	)		(13,850	)		(17,660	)		—			—

Adjusted noninterest expense	$	115,933		$	115,389		$	106,602		$	100,075		$	89,100


Net interest income	$	83,747		$	87,058		$	86,961		$	81,037		$	70,417
Noninterest income		59,704			79,687			74,630			65,604			51,959

Total revenue		143,451			166,745			161,591			146,641			122,376
Tax credit from investments in alternative energy partnerships		8,829			14,048			19,357			—			—
Deferred tax expense on investments in alternative energy partnerships		(1,545	)		(2,459	)		(3,387	)		—			—
Tax effect on tax credit and deferred tax expense		5,140			8,078			11,002			—			—
Loss on investments in alternative energy partnerships		(8,682	)		(13,850	)		(17,660	)		—			—

Total pre-tax adjustments for investments in alternative energy partnerships		3,742			5,817			9,312			—			—

Adjusted total revenue	$	147,193		$	172,562		$	170,903		$	146,641		$	122,376


Efficiency ratio		86.87	%		77.51	%		76.90	%		68.24	%		72.81	%
Adjusted efficiency ratio including the pre-tax effect of investments in alternative energy partnerships		78.76	%		66.87	%		62.38	%		68.24	%		72.81	%

Effective tax rate utilized for calculating tax effect on tax credit and deferred tax expense		41.37	%		41.10	%		40.79	%		—			—

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