BANC OF CALIFORNIA, INC. INVESTOR PRESENTATION
2022 Fourth Quarter Earnings | bancofcal.com |
FORWARD LOOKING STATEMENTS
When used in this report and in documents filed with or furnished to the Securities and Exchange Commission (the "SEC"), in press releases or other public stockholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases "believe," "will," "should," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," "plans," or similar expressions are intended to identify "forward-looking statements" within the meaning of the "Safe-Harbor" provisions of the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on any forward-looking statements. These statements may relate to future financial performance, strategic plans or objectives, revenue, expense or earnings projections, or other financial items of Banc of California, Inc. and its affiliates ("BANC," the "Company", "we", "us" or "our"). By their nature, these statements are subject to numerous uncertainties that could cause actual results to differ materially from those anticipated in the statements.
Factors that could cause actual results to differ materially from the results anticipated or projected include, but are not limited to, the following: (i) the continuing effects of the COVID-19 pandemic and steps taken by governmental and other authorities to contain, mitigate, and combat the pandemic on our business, operations, financial performance and prospects; (ii) the costs and effects of litigation, including legal fees and other expenses, settlements and judgments; (iii) the risk that we will not be successful in the implementation of our capital utilization strategy, new lines of business, new products and services, or other strategic project initiatives; (iv) risks that the Company's merger and acquisition transactions may disrupt current plans and operations and lead to difficulties in customer and employee retention, risks that the costs, fees, expenses and charges related to these transactions could be significantly higher than anticipated and risks that the expected revenues, cost savings, synergies, and other benefits of these transactions might not be realized to the extent anticipated, within the anticipated timetables, or at all and, in the case of our recent acquisition of Deepstack Technologies, reputational risk, regulatory risk and potential adverse reactions of the Company's or Deepstack's customers, suppliers, vendors, employees or other business partners; (v) the credit risks of lending activities, which may be affected by deterioration in real estate markets and the financial condition of borrowers, and the operational risk of lending activities, including but not limited to, the effectiveness of our underwriting practices and the risk of fraud, any of which may lead to increased loan delinquencies, losses, and nonperforming assets in our loan portfolio, and may result in our allowance for credit losses not being adequate and require us to materially increase our credit loss reserves; (vi) the quality and composition of our securities portfolio; (vii) changes in general economic conditions, either nationally or in our market areas, including the impact of supply chain disruptions, or changes in financial markets, and the risk of recession or an economic downtrun;
- changes in the interest rate environment and levels of general interest rates, including the recent and anticipated increases by the FRB in its benchmark rate, the impacts of inflation, the relative differences between short- and long-term interest rates, deposit interest rates, our net interest margin, and funding sources; (ix) fluctuations in the demand for loans, and fluctuations in commercial and residential real estate values in our market area; (x) our ability to develop and maintain a strong core deposit base or other low cost funding sources necessary to fund our activities; (xi) results of examinations of us by regulatory authorities and the possibility that any such regulatory authority may, among other things, limit our business activities, require us to change our business mix, restrict our ability to invest in certain assets, increase our allowance for credit losses, result in write-downs of asset values, increase our capital levels, affect our ability to borrow funds or maintain or increase deposits, or impose fines, penalties or sanctions, any of which could adversely affect our liquidity and earnings; (xii) legislative or regulatory changes that adversely affect our business, including, without limitation, changes in tax laws and policies, changes in privacy laws, and changes in regulatory capital or other rules, and the availability of resources to address or respond to such changes; (xiii) our ability to control operating costs and expenses; (xiv) staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our work force and potential associated charges; (xv) the risk that our enterprise risk management framework may not be effective in mitigating risk and reducing the potential for losses; (xvi) errors in estimates of the fair values of certain of our assets and liabilities, which may result in significant changes in valuation; (xvii) uncertainty regarding the expected discontinuation of the London Interbank Offered Rate ("LIBOR") and the use of alternative reference rates; (xviii) failures or security breaches with respect to the network, applications, vendors and computer systems on which we depend, including but not limited to, due to cybersecurity threats; (xix) our ability to attract and retain key members of our senior management team; (xx) increased competitive pressures among financial services companies; (xxi) changes in consumer spending, borrowing and saving habits; (xxii) the effects of climate change, severe weather events, natural disasters, pandemics, epidemics and other public health crises, acts of war or terrorism, and other external events on our business; (xxiii) the ability of key third-party providers to perform their obligations to us; (xxiv) changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies or the Financial Accounting Standards Board or their application to our business, including additional guidance and interpretation on accounting issues and details of the implementation of new accounting standards; (xxv) continuing impact of the Financial Accounting Standards Board's credit loss accounting standard, referred to as Current Expected Credit Loss, which requires financial institutions to determine periodic estimates of lifetime expected credit losses on loans, and provide for the expected credit losses as allowances for loan losses; (xxvi) share price volatility and reputational risks, related to, among other things, speculative trading and certain traders shorting our common shares and attempting to generate negative publicity about us; (xxvii) our ability to obtain regulatory approvals or non-objection to take various capital actions, including the payment of dividends by us or our bank subsidiary, or repurchases of our common stock; and (xxviii) other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services and the other risks described in this report and from time to time in other documents that we file with or furnish to the SEC.
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FOURTH QUARTER 2022 RESULTS
($ in Thousands Except Per Share Data) | 4Q22 | 3Q22 | 4Q21 | |||
Net interest income | $ | 80,217 | $ | 79,408 | $ | 73,039 |
Provision for credit losses | - | - | $ | 11,262 | ||
Net income | $ | 21,519 | $ | 24,196 | $ | 5,751 |
Net income available to common stockholders | $ | 21,519 | $ | 24,196 | $ | 4,024 |
Earnings per diluted common share | $ | 0.36 | $ | 0.40 | $ | 0.07 |
Adjusted net income(1) | $ | 26,764 | $ | 26,732 | $ | 14,831 |
Adjusted net income available to common stockholders(1) | $ | 26,764 | $ | 26,732 | $ | 13,104 |
Adjusted earnings per diluted common share(1) | $ | 0.45 | $ | 0.44 | $ | 0.22 |
Pre-taxpre-provision (PTPP) income(1) | $ | 30,587 | $ | 34,127 | $ | 19,772 |
Adjusted PTPP income(1) | $ | 38,034 | $ | 37,728 | $ | 32,663 |
Return on average assets (ROAA) | 0.92% | 1.02% | 0.24% | |||
Adjusted ROAA(1) | 1.15% | 1.13% | 0.63% | |||
PTPP ROAA(1) | 1.31% | 1.44% | 0.84% | |||
Adjusted PTPP ROAA(1) | 1.63% | 1.59% | 1.39% | |||
Average assets | $ | 9,257,311 | $ | 9,408,740 | $ | 9,331,955 |
Net interest margin | 3.69% | 3.58% | 3.28% | |||
Allowance for credit losses coverage ratio | 1.28% | 1.36% | 1.35% | |||
NIE / Average Assets(1) | 2.07% | 2.15% | 2.50% | |||
Adjusted NIE / Average Assets(1) | 2.08% | 2.00% | 1.95% | |||
Common equity tier 1(2) | 11.88% | 11.43% | 11.31% | |||
Tangible common equity per share(1) | $ | 14.19 | $ | 13.79 | $ | 13.88 |
Noninterest-bearing deposits as % of total ending deposits | 39.5% | 40.4% | 37.5% |
(1) | Denotes a non-GAAP financial measure; see "Non-GAAP Reconciliation" slides at end of presentation | 3 |
(2) | 4Q22 capital ratios are preliminary | |
ENHANCING FRANCHISE VALUE
4th Quarter 2022 Summary | |||||
• Adjusted ROAA(1) increased to 115 bps for 4Q22 compared to 113 bps for the prior quarter and | |||||
63 bps same quarter a year ago | |||||
Consistent Earnings Power | • Increase in adjusted net income on a slightly smaller balance sheet | ||||
• Proactive balance sheet management to reposition securities portfolio, resulting in higher future | |||||
yields | |||||
Continued Growth in | • Average noninterest-bearing deposits increased from 38% to 41% of total average deposits | ||||
• The number of commercial noninterest-bearing deposit accounts increased year-to-date | |||||
Targeted Areas | |||||
• Total commercial loans, excluding warehouse lending and SBA, increased 3% annualized | |||||
Asset Sensitivity Expanded | • 11 basis points of NIM expansion aided by stable base of noninterest-bearing deposits | ||||
Net Interest Margin | • Remain slightly asset sensitive as we near expected peak rate increases | ||||
• Lower NPLs excluding SFR loans (which are well-secured with low LTVs) | |||||
Stable Asset Quality | • Extensive stress testing on portfolio indicates asset quality should remain strong if economic | ||||
conditions deteriorate in near future | |||||
• Tangible common equity per share(1) grew 2.9%, or 11.6% annualized, in the quarter to $14.19 | |||||
• TCE ratio(1) grew 26 bps to 9.23% | |||||
Continued Growth in Capital | • CET 1 ratio grew 45 bps to 11.88% | ||||
• $18.9 million of common shares repurchased in Q4 completing $75 million buyback program | |||||
announced in Q1 | |||||
(1) Denotes a non-GAAP financial measure; see "Non-GAAP Reconciliation" slides at end of presentation | 4 | ||||
CONSISTENT CORE EARNINGS POWER
Adjusted Pre-taxPre-provision (PTPP) Income (1)
($ in millions)
+212% | 1.65% | ||||||||||
1.55% | 1.59% | 1.63% | |||||||||
1.35% | 1.39% | +16% | |||||||||
1.25% | |||||||||||
1.06% | 1.13% | ||||||||||
0.98% | |||||||||||
$18.9 | |||||||||||
0.83% | |||||||||||
0.65% | $32.7 | $35.8 | $38.4 | $37.7 | $38.0 | ||||||
$27.7 | |||||||||||
$24.5 | |||||||||||
$20.6 | $22.0 | ||||||||||
$18.9 | |||||||||||
$16.0 | |||||||||||
$12.2 | |||||||||||
1Q20 | 2Q20 | 3Q20 | 4Q20 | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 |
Adjusted PTPP Income Adjusted PTPP Income / Avg. Assets
(1) Denotes a non-GAAP financial measure; see "Non-GAAP Reconciliation" slides at end of presentation | 5 |
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Banc of California Inc. published this content on 19 January 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 January 2023 12:30:01 UTC.
