LOS ANGELES--(BUSINESS WIRE)--Banc of California, Inc. (NYSE: BANC): $38.5B Total Assets $17.12 Book Value Per Share $14.96 Tangible Book Value Per Share(1) 10.12% CET1 Ratio 26% Noninterest-Bearing Deposits Banc of California, Inc. (NYSE: BANC) (“Banc of California”), parent of wholly-owned subsidiary Banc of California (the “Bank”), today reported financial results for the fourth quarter and year ended December 31, 2023. On November 30, 2023, Banc of California and PacWest Bancorp clo ...

Wall Street analysts expect Banc of California (BANC) to post quarterly loss of $0.32 per share in its upcoming report, which indicates a year-over-year decline of 171.1%. Revenues are expected to be $156.8 million, up 99% from the year-ago quarter.Over the last 30 days, there has been an upward revision of 3.6% in the consensus EPS estimate for the quarter, leading to its current level. This signifies the covering analysts' collective reconsideration of their initial forecasts over the course of this timef ...

Financial Position - Total assets increased to $9,247,072 thousand as of September 30, 2023, compared to $9,197,016 thousand at December 31, 2022, reflecting a growth of approximately 0.54%[17] - The company reported a total stockholders' equity of $1,001,720 thousand, up from $959,618 thousand, reflecting an increase of about 4.38%[17] - Cash and cash equivalents at the end of the period increased to $310.985 million from $256.058 million, reflecting a positive liquidity position[31] - As of September 30, 2023, cash and cash equivalents totaled $310,985 thousand, an increase from $228,896 thousand as of December 31, 2022, representing a growth of 36%[56] - The company pledged investment securities with carrying values of $525,700 thousand as of September 30, 2023, up from $356,500 thousand at the end of 2022, indicating a significant increase of 47%[62] Loan Portfolio - Loans receivable decreased to $6,961,032 thousand from $7,115,038 thousand, representing a decline of about 2.17%[17] - The total loan portfolio as of September 30, 2023, was $6,961,032,000, a decrease from $7,115,038,000 as of December 31, 2022[76] - The allowance for loan losses improved to $74,390,000 from $85,960,000, indicating improved credit quality[76] - The company recognized a provision for credit losses of $1,000,000 on three corporate debt securities that were downgraded to below investment grade during the nine months ended September 30, 2023[67] - The total balance of loans was $74,390,000, a decrease from $80,883,000 as of June 30, 2023, representing a reduction of approximately 8.5%[106] Income and Expenses - Total interest and dividend income for Q3 2023 was $116,222 thousand, a slight increase from $116,151 thousand in Q2 2023 and a significant increase from $95,973 thousand in Q3 2022[20] - Net interest income after provision for credit losses was $64,218 thousand for Q3 2023, down from $67,732 thousand in Q2 2023 and down from $79,408 thousand in Q3 2022[20] - Noninterest income for Q3 2023 was $50,778 thousand, a substantial increase from $6,024 thousand in Q2 2023 and an increase from $5,681 thousand in Q3 2022[20] - Total noninterest expense increased to $56,164 thousand in Q3 2023 from $49,132 thousand in Q2 2023 and from $50,962 thousand in Q3 2022[20] - Net income for Q3 2023 was $42,574 thousand, compared to $17,879 thousand in Q2 2023 and $24,196 thousand in Q3 2022, reflecting a strong year-over-year growth[20] Credit Quality - The provision for credit losses was $5,000 thousand in Q3 2023, a notable increase from $1,900 thousand in Q2 2023, indicating a more cautious outlook on credit quality[20] - Total past due loans as of September 30, 2023, were $90,250 thousand, reflecting a slight decrease from $91,220 thousand on December 31, 2022[94] - The company had 8 single-family residential mortgage loans totaling $7.7 million in process of foreclosure as of September 30, 2023, down from 9 loans totaling $11.7 million at the end of 2022[98] - The total allowance for credit losses for loans was $78,395 thousand for the nine months ended September 30, 2023, compared to $98,849 thousand for the same period in 2022[101] - The overall credit quality indicators suggest a focus on managing potential weaknesses, with a notable increase in "Substandard" loans that may require management's attention[81] Strategic Initiatives - The company completed the acquisition of Deepstack Technologies, LLC, aiming to enhance its technological capabilities and market position[16] - The company is focused on expanding its market presence and enhancing its product offerings through strategic initiatives and technology investments[16] - The proposed merger with PacWest includes a stock exchange ratio of 0.6569 shares of Banc of California for each share of PacWest common stock[34] - The merger is expected to be accompanied by a $400 million investment from Warburg Pincus LLC and Centerbridge Partners, with shares priced at $12.30 each[34] - The proposed merger between Banc of California and PacWest is expected to close on or about November 30, 2023, pending stockholder approval and a concurrent $400 million equity capital raise[36] Market Conditions - The company anticipates continued challenges from rising interest rates and economic conditions impacting revenue and expenses[16] - The Federal Reserve has increased the federal funds target rate by 525 basis points from the beginning of 2022 to September 2023, impacting the company's performance due to its monetary asset and liability structure[205] - Economic uncertainty and recent bank failures have created a challenging operating environment, leading to proactive liquidity-enhancing measures by the company[205] Stockholder Information - The company declared dividends of $0.10 per common share, totaling $5,692 for the quarter ended September 30, 2023[26] - The company has a total of 446,863,844 shares authorized, with 65,342,478 shares issued and 56,959,141 shares outstanding as of September 30, 2023[17] - The shares issued to PacWest stockholders are expected to represent approximately 47% of the outstanding shares of the combined company[206] - The shares issued to investors in the equity capital raise are expected to represent approximately 19% of the outstanding shares of the combined company[206] - The outstanding shares of Banc of California prior to the merger are expected to represent approximately 34% of the combined company's shares[206]

Financial Data and Key Metrics Changes - The company reported a net income of $42.6 million for Q3 2023, with an adjusted net income of $17.1 million, compared to $18.4 million in the previous quarter [11][12] - The net interest margin expanded to 3.19%, driven by a 16 basis point increase in overall earning asset yield to 5.36% [12] - Total assets decreased by approximately 1% to $9.2 billion, while total equity increased by $44.7 million during the quarter [15] Business Line Data and Key Metrics Changes - The average loan yield increased by 10 basis points to 5.38%, attributed to variable rate loans and higher rates on new loan production [12] - Noninterest income rose by $44.8 million, primarily due to a $46.2 million mark-to-market gain on derivative instruments related to the merger [14] - Total loans decreased by approximately $195 million, reflecting a cautious outlook for loan originations [15] Market Data and Key Metrics Changes - The company generated over $200 million in new non-interest bearing deposits from new commercial relationships in the first nine months of the year [7] - The loan-to-deposit ratio is expected to be in the low 80s at the time of the merger closing [7] - The average cost of deposits increased to 1.86%, up 19 basis points compared to the previous quarter [13] Company Strategy and Development Direction - The company is focused on integrating with PacWest and has made significant progress in merger planning, aiming to close the merger around November 30 [5][20] - A new payments processing business was launched in Q3 2023, expected to contribute meaningfully to revenue in 2024 [9] - The company aims to limit higher-cost deposits and focus on building core deposit relationships [7][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the earnings range for 2024, reaffirming a target of $1.65 to $1.80 per share [19] - The management noted that the economic environment is challenging, but there is optimism for a return to economic activity as interest rates stabilize [78] - The company is committed to closing the merger and believes it will unlock significant value for stakeholders [20][50] Other Important Information - The company recorded a provision for credit losses of $5 million, primarily related to loans from the PNB acquisition [8][16] - The allowance for credit losses at the end of Q3 totaled $78.4 million, with a coverage ratio of 1.13% [17] - The integration process is planned for May 2024, allowing for a thorough and careful transition [72][74] Q&A Session Summary Question: Update on PacWest NII and restructuring benefits - Management reaffirmed confidence in the earnings range and noted ongoing updates to pro forma numbers as they approach the merger [23][24] Question: FDIC surcharge and expenses - The expected annual FDIC surcharge is projected to be around $36 million [27] Question: AOCI effect on tangible book value - AOCI is expected to move tangible book value from around 15% to 14%, with potential for improvement as rates stabilize [29] Question: Integration challenges and processes - The integration team is well-prepared, with a senior management committee in place to oversee the process [73] Question: Opportunities for growth post-merger - Management sees potential for increased lending activity as economic conditions stabilize and rates become more predictable [78]

Financial Performance - The company reported a net income of $XX thousand for the quarter ended June 30, 2023, compared to $XX thousand for the same period last year, reflecting a year-over-year change of XX%[20] - Net income for Q2 2023 was $17,879,000, down from $20,278,000 in Q1 2023 and $26,712,000 in Q2 2022, representing a year-over-year decline of 33.0%[21] - Basic earnings per common share for the three months ended June 30, 2023, was $0.31, consistent with the same period in 2022[170] - Adjusted net income for Q2 2023 was $18.4 million, or $0.32 per diluted share, compared to $21.7 million, or $0.37 per diluted share in Q1 2023, and $27.8 million, or $0.45 per diluted share in Q2 2022[195] - The total risk-based capital ratio was 14.26%, well above regulatory thresholds for "well capitalized" banks[195] Asset and Liability Management - Total assets increased to $9,370,265 thousand as of June 30, 2023, up from $9,197,016 thousand at December 31, 2022, representing a growth of 1.88%[18] - The company’s total liabilities increased to $8,413,211 thousand from $8,237,398 thousand, marking a rise of 2.14%[18] - Total deposits decreased to $6,871,076 thousand from $7,120,921 thousand, reflecting a decline of 3.50%[18] - The company’s retained earnings increased to $275,430 thousand as of June 30, 2023, up from $248,988 thousand at the end of 2022, a growth of 10.65%[18] - The total carrying value of collateralized loan obligations is $482,831,000, with non-agency residential mortgage-backed securities valued at $111,508,000 as of June 30, 2023[45] Loan Portfolio - Loans receivable rose to $7,156,206 thousand, compared to $7,115,038 thousand at the end of 2022, indicating an increase of 0.58%[18] - The allowance for loan losses decreased to $80,883 thousand from $85,960 thousand, indicating improved credit quality[75] - The commercial and industrial loan portfolio grew to $2,000,408 thousand, up from $1,845,960 thousand, representing an increase of about 8.4%[75] - The total loans reported were $7,156,206, with a pass category of $121,607, indicating a significant portion of loans are performing well[83] - The total amount of substandard loans across all categories was $100,035, indicating potential risk in the loan portfolio[83] Income and Expenses - Total interest and dividend income for Q2 2023 was $116,151,000, an increase of 9.5% from $106,919,000 in Q1 2023 and up 31.4% from $88,418,000 in Q2 2022[21] - Net interest income after provision for credit losses was $67,732,000 for Q2 2023, down from $71,053,000 in Q1 2023 and $78,299,000 in Q2 2022[21] - Noninterest income decreased to $6,024,000 in Q2 2023 from $7,859,000 in Q1 2023 and $7,186,000 in Q2 2022[21] - Total noninterest expense for Q2 2023 was $49,132,000, a decrease from $51,239,000 in Q1 2023 and an increase from $48,612,000 in Q2 2022[21] - The company reported a provision for credit losses of $1.7 million for the three months ended June 30, 2023[97] Mergers and Acquisitions - The proposed merger with PacWest Bancorp is subject to various risks, including the potential for delays or failure to complete the transaction[16] - The company announced a merger with PacWest, where PacWest stockholders will receive 0.6569 shares of the company's common stock for each share held[186] - The shares issued to PacWest stockholders in the merger are expected to represent approximately 47% of the outstanding shares of the combined company[192] - The merger is expected to result in the combined company repaying approximately $13 billion in wholesale borrowings and high-cost deposits using proceeds from asset sales[192] Market and Economic Conditions - The Federal Reserve raised the federal funds target rate by 525 basis points from the beginning of 2022 through July 2023, impacting the company's performance[191] - The company believes that the decline in fair value of securities is primarily due to changes in interest rates and market volatility, with no credit impairment expected for the majority of the portfolio[65] Stockholder Information - The company repurchased 1,348,545 shares of treasury stock during the quarter, resulting in a reduction of $16,178 thousand in equity[27] - Dividends declared for the quarter were $0.10 per common share, totaling $5,880 thousand[27] - The company has authorized a common stock repurchase program of up to $35 million, with 1,348,545 shares repurchased at a weighted average price of $11.85 during the three months ended June 30, 2023[152] Risk Management - The allowance for credit losses was $1,036 thousand as of June 30, 2023, compared to $0 at December 31, 2022, indicating a proactive approach to risk management[18] - The company has entered into $3.5 billion in interest rate swap options to hedge interest rate risk, costing $15.7 million[186] - The company recognized a loss of $165 on single family residential real estate owned in the three months ended June 30, 2023[51] Taxation - For the three months ended June 30, 2023, the income tax expense was $6.7 million, resulting in an effective tax rate of 27.4%[135] - The total unrecognized tax benefit that could impact the effective tax rate was $0.6 million as of June 30, 2023[137]

Financial Data and Key Metrics Changes - The net income for Q2 2023 was $17.9 million or $0.31 per diluted share, with adjusted net income totaling $18.4 million or $0.32 per diluted common share, compared to adjusted net income of $21.7 million or $0.37 per diluted common share in the prior quarter [11][12] - The net interest margin decreased by 30 basis points from the prior quarter to 3.11%, largely due to higher levels of cash carried during the first two months of the quarter [12] - Total assets decreased by approximately 7% to $9.4 billion, primarily due to a reduction in excess liquidity held in cash [15] Business Line Data and Key Metrics Changes - Total loans increased by approximately $102 million, primarily due to increases in core C&I and warehouse portfolios [16] - Noninterest income decreased by $1.8 million from prior quarters, mainly due to nonrecurring items in the first quarter [14] - Adjusted noninterest expense decreased by $825,000 from the prior quarter, reflecting cost savings from headcount reductions [14] Market Data and Key Metrics Changes - The average loan yield increased by 21 basis points to 5.28%, attributed to variable rate loans repricing higher [13] - The total cost of funds increased by 52 basis points to 2.20%, with the average cost of deposits rising by 45 basis points [13] Company Strategy and Development Direction - The merger with PacWest is expected to create the third largest bank headquartered in California, enhancing capital and liquidity while being accretive to EPS and tangible book value [5][24] - The combined strategy will focus on in-market relationship banking, providing superior customer service and robust treasury management solutions [24][25] - The company aims to reduce reliance on wholesale funding and improve profitability through strategic asset sales and operational efficiencies [18][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the merger's potential to create significant value for stakeholders, citing a favorable competitive environment in California due to other banks exiting the market [25][26] - The company anticipates a slow economic growth environment, with projections for loan growth being conservative until 2025 [75] Other Important Information - The merger is accompanied by a $400 million capital raise from sophisticated bank investors, which will support the transformation of the combined company [5][26] - The company plans to sell liquid assets and utilize excess cash to pay down $13 billion of wholesale funding, aiming for a loan-to-deposit ratio of approximately 85% [27][28] Q&A Session Summary Question: Cost savings from the merger - The $130 million in cost savings is derived from temporary elevated expenses at PacWest and identified overlaps in expenses for the combined company [36][37] Question: Deposit assumptions and growth - The plan is to achieve approximately 30% noninterest-bearing deposits at close, with expectations for growth [49][50] Question: Credit quality and portfolio management - The credit quality remains solid, with a focus on de-risking the balance sheet and improving the credit profile through asset sales [51][54] Question: Timing of merger approval - The company expects to close the transaction by the end of Q4 or early Q1, having previewed the transaction with regulators [84]

www.bancofcal.com Investor Presentation 2023 Second Quarter Earnings 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 anticipat ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | --- | |--------------------------------------------------------------------------------------------------------------------------------------------------------| | | | Fo ...

Financial Data and Key Metrics Changes - Net income for Q1 2023 was $20.3 million or $0.34 per diluted share, with adjusted net income at $21.7 million or $0.37 per diluted share, down from $26.8 million or $0.45 per diluted share in the previous quarter [18] - Net interest margin decreased by 28 basis points to 3.41%, while overall earning asset yield increased by 20 basis points to 4.99% [18] - Average loan yield increased by 15 basis points to 5.07%, and average cost of deposits rose by 43 basis points to 122 basis points [19] Business Line Data and Key Metrics Changes - Total loans decreased by approximately $61 million, primarily due to three loan payoffs in the C&I portfolio [22] - Non-interest income increased by $9.3 million from the prior quarter, driven by a recovery on a loan acquired and higher income from equity investments [20] - Non-interest expense increased by approximately $800,000, mainly due to higher salaries and benefits [21] Market Data and Key Metrics Changes - Total assets increased by approximately 9% to $10 billion, reflecting an increase in liquidity [22] - Total deposits decreased by $169 million, primarily due to outflows in January and February, but increased since mid-March [23] - Delinquent loans declined by $19 million or 20%, indicating stable credit quality [23] Company Strategy and Development Direction - The company aims to maintain strong capital levels while focusing on prudent risk management amid challenging economic conditions [25] - Plans to enhance the value proposition through a new payments processing business expected to onboard clients in the second half of the year [26] - The company is positioned to capitalize on market disruptions, focusing on relationship-oriented business clients and attractive lending opportunities [25][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the franchise and the ability to attract new clients amid recent banking turmoil [6][25] - The outlook remains cautious, with expectations of low single-digit loan growth and a focus on optimizing earnings and shareholder value [44] - Management noted that the current environment is temporary, and they expect to emerge stronger by building on fundamental strengths [26] Other Important Information - The company repurchased approximately 1% of its common shares and increased its quarterly cash dividend by 67% [14] - The allowance for credit losses at the end of Q1 totaled $89.4 million, with a coverage ratio of 1.27% [24] - The company has significant excess liquidity, with cash balances reaching approximately $1 billion at quarter end [20] Q&A Session Summary Question: Competitive landscape in California post-bank failures - Management noted a strong inflow of core deposits and a solid pipeline, emphasizing the importance of safety and depositor confidence in the current environment [30][31] Question: Loan and deposit ratio dynamics - Management indicated comfort with the current loan-to-deposit ratio around 100%, with new lending opportunities being funded primarily through core deposits [34][36] Question: Consolidation activity in California - Management believes it is early to predict consolidation trends but sees potential benefits from smaller banks seeking scale [39][40] Question: Lending appetite and risk-adjusted returns - Management stated that they could shrink the loan portfolio if attractive risk-adjusted returns are not available, focusing on optimizing earnings [42][44] Question: New commercial accounts and non-interest bearing balances - Management highlighted the importance of sophisticated treasury management solutions in attracting new clients and maintaining non-interest bearing balances [46][50] Question: Interest rate risk management - Management discussed a recent $300 million hedge to manage rate sensitivity, indicating a rate-neutral position currently [51][54]

www.bancofcal.com Investor Presentation 2023 First Quarter Earnings 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," "pla ...