SANTA ANA, Calif.–(BUSINESS WIRE)–Banc of California, Inc. (NYSE: BANC) today reported net income of $20.3 million, or $0.34 per diluted common share, for the first quarter of 2023. This compares to net income of $21.5 million, or $0.36 per diluted common share, for the fourth quarter of 2022. On an adjusted basis, net income was $21.7 million for the quarter, or $0.37 per diluted common share.(1) This compares to adjusted net income of $26.8 million, or $0.45 per diluted common share, for the fourth quarter of 2022, which excluded a pre-tax loss on sale of securities of $7.7 million.(1)
First quarter highlights:
- Diversified core deposit base with noninterest-bearing deposits representing 38% of average deposits and 36% at quarter end. Uninsured and uncollateralized deposits comprised 27% of total deposits.
- Significant available excess liquidity with immediately available on-balance sheet liquidity and unused borrowing capacity of $4.0 billion, including $1.0 billion in cash. Available liquidity was 2.2 times the level of uninsured and uncollateralized deposits.
- Low unrealized losses in the securities portfolio, with unrealized losses of $46.8 million on AFS securities of $958.4 million, representing 3.8% of CET1 capital(1).
- High capital ratios(2) projected to remain well above the regulatory thresholds for “well capitalized” banks, including an estimated 14.06% total risk-based capital ratio, 11.66% Tier 1 capital ratio, 11.66% CET1 capital ratio and 9.71% Tier 1 leverage ratio.
- Stable asset quality as total delinquent loans decreased 20%, or 25 bps, to 1.03% and classified assets also decreased 20%, or 33 bps, to 1.34% from the prior quarter. Total net charge-offs for the quarter were 0.22% of average loans. The ACL ratio remained relatively flat at 1.27% of total loans and 158% of nonperforming assets.
-
Other performance highlights as follows:
- Return on average assets of 0.88% and adjusted return on average assets of 0.94%(1)
- Book value per share of $16.33, up from $16.26
- Tangible common equity per share of $14.26, up from $14.19(1)
- Repurchased $5.2 million of common stock through March 31 and $10.0 million total as of April 12
- Increased the quarterly dividend 67% to $0.10 per share
- Net deposit outflow in the first quarter of only 2%
Jared Wolff, President & CEO of Banc of California, commented, “The strength of the franchise and balance sheet we have built over the past four years has enabled us to effectively manage through the recent turmoil in the banking industry. As a true relationship-focused commercial bank, we are deeply connected to our clients through the expertise and services that we provide. As a result, our deposit base remained stable and resilient over the past several weeks with noninterest-bearing deposits averaging 38% for the quarter, and we experienced only a two-percent decline in the quarter in total deposits with seasonal outflows we typically see in the first quarter. We also had a net increase in commercial deposit accounts and our deposit pipeline of business accounts remains strong.”
Mr. Wolff continued, “Additionally, the proactive steps we took over the past several quarters to manage and reposition our securities portfolio has resulted in low levels of unrealized losses despite the rapidly rising rate environment. With our high levels of capital and liquidity, alongside stable deposits, we opportunistically repurchased 1% of our shares through mid-April under our recently announced buy-back authorization. We remain focused on building shareholder value in the current environment by continuing to bring in new client relationships, optimizing liquidity sources, managing expenses, preserving credit quality, and effectively using our significant excess capital.”
Raymond Rindone, Interim Chief Financial Officer of Banc of California, said, “Our total available primary and secondary liquidity was just over $4.0 billion or 2.2 times our uninsured and uncollateralized deposits, with $1.0 billion of cash at quarter end. While the deposit base has been largely stable since the recent banking industry disruption, we increased our level of overnight borrowings and added some short-term brokered deposits to increase our liquidity. While these actions had an impact on our level of profitability and net interest margin in the first quarter, we believe it was prudent from a risk management perspective. The short-term nature of this additional liquidity gives us flexibility to quickly make adjustments in our liability mix as market conditions evolve. In addition, we saw positive credit quality trends in the loan portfolio as noted by the decline in delinquencies and classified assets during the first quarter.”
|
(1) |
|
Non-GAAP measures; refer to section ‘Non-GAAP Measures’ |
|
(2) |
|
Capital ratios are preliminary. |
Income Statement Highlights
|
|
Three Months Ended |
||||||||||||||||||
|
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
||||||||||
|
|
($ in thousands) |
||||||||||||||||||
|
Total interest and dividend income |
$ |
106,919 |
|
$ |
104,112 |
|
$ |
95,973 |
|
$ |
88,418 |
|
$ |
84,269 |
|||||
|
Total interest expense |
|
33,866 |
|
|
|
23,895 |
|
|
|
16,565 |
|
|
|
10,119 |
|
|
|
7,828 |
|
|
Net interest income |
|
73,053 |
|
|
|
80,217 |
|
|
|
79,408 |
|
|
|
78,299 |
|
|
|
76,441 |
|
|
Net (loss) gain on sale of securities available for sale |
|
— |
|
|
|
(7,708 |
) |
|
|
— |
|
|
|
— |
|
|
|
16 |
|
|
Other noninterest income |
|
7,859 |
|
|
|
6,281 |
|
|
|
5,681 |
|
|
|
7,186 |
|
|
|
5,894 |
|
|
Total noninterest income |
|
7,859 |
|
|
|
(1,427 |
) |
|
|
5,681 |
|
|
|
7,186 |
|
|
|
5,910 |
|
|
Total revenue |
|
80,912 |
|
|
|
78,790 |
|
|
|
85,089 |
|
|
|
85,485 |
|
|
|
82,351 |
|
|
Total noninterest expense |
|
51,239 |
|
|
|
48,203 |
|
|
|
50,962 |
|
|
|
48,612 |
|
|
|
46,596 |
|
|
Pre-tax / pre-provision income(1) |
|
29,673 |
|
|
|
30,587 |
|
|
|
34,127 |
|
|
|
36,873 |
|
|
|
35,755 |
|
|
Provision for (reversal of) credit losses |
|
2,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(31,542 |
) |
|
Income tax expense |
|
7,395 |
|
|
|
9,068 |
|
|
|
9,931 |
|
|
|
10,161 |
|
|
|
18,785 |
|
|
Net income |
$ |
20,278 |
|
|
$ |
21,519 |
|
|
$ |
24,196 |
|
|
$ |
26,712 |
|
|
$ |
48,512 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Net income available to common stockholders(2) |
$ |
20,278 |
|
|
$ |
21,519 |
|
|
$ |
24,196 |
|
|
$ |
26,712 |
|
|
$ |
43,345 |
|
|
(1) |
|
Non-GAAP Measure; refer to section ‘Non-GAAP Measures’ |
|
(2) |
|
Balance represents the net income available to common stockholders after subtracting preferred stock dividends and the impact of preferred stock redemption from net income. Refer to the Statements of Operations for additional detail on these amounts. |
Net interest income
Q1-2023 vs Q4–2022
Net interest income decreased $7.2 million to $73.1 million for the first quarter due to a higher average balance and cost of interest-bearing liabilities, partially offset by a higher average balance and yield on interest-earning assets. The net interest margin decreased 28 basis points to 3.41% for the first quarter as the average interest-earning assets yield increased 20 basis points and the cost of average total funding increased 51 basis points.
The yield on average interest-earning assets increased to 4.99% for the first quarter from 4.79% for the fourth quarter mainly due to higher yields on loans, securities and other interest-earning assets. The overall loan yield increased 15 basis points to 5.07% during the first quarter as a result of the impact of higher market interest rates and changes in portfolio mix. The loan yields include the impact of prepayment penalty fees, the net reversal or recapture of nonaccrual loan interest and accelerated discount accretion on the early payoff of purchased loans; these items increased the overall loan yield by 8 basis points in the first quarter and 6 basis points in the fourth quarter. The yield on securities increased 47 basis points to 4.66% due mostly to rate resets in the CLO portfolio and the positive impact of the investment portfolio repositioning during the fourth quarter to sell lower-yielding securities and reinvest the proceeds in higher-yielding securities.
The average cost of funds increased 51 basis points to 1.68% for the first quarter from 1.17% for the fourth quarter. This increase was due partially to the conservative strategy to hold extra liquidity toward the end of the quarter due to the operating environment. The increase in the average cost of funds was driven by the higher cost of average interest-bearing liabilities, which increased 66 basis points to 2.47% for the first quarter from 1.81% for the fourth quarter. The cost of average interest-bearing deposits increased 64 basis points to 1.98% for the first quarter from 1.34% for the fourth quarter while the cost of average FHLB advances and FRB borrowings increased 46 basis points to 3.67% for the first quarter from 3.21% for the fourth quarter. The increase in the cost of these funding sources was due to the increase in higher cost borrowed funds and the impact of higher market interest rates as the average effective Federal Funds rate increased 86 basis points from 3.65% in the fourth quarter to 4.51% in the first quarter.
Average noninterest-bearing deposits were $279.8 million lower in the first quarter compared to the fourth quarter, and average total deposits were $303.3 million lower for the linked quarter. Average noninterest-bearing deposits represented 38% of average total deposits for the first quarter, compared to 41% for the fourth quarter. The cost of average total deposits increased 43 basis points to 1.22% for the first quarter.
Average FHLB advances, FRB borrowings and other borrowings were $346.6 million higher in the first quarter compared to the fourth quarter as wholesale funding sources were strategically utilized to further improve liquidity and manage funding costs.
Provision for credit losses
Q1-2023 vs Q4–2022
The provision for credit losses was $2.0 million for the first quarter and included a $2.5 million provision for credit losses related to loans, partially offset by a $500 thousand reversal of credit losses related to lower unfunded commitments. There was no provision for credit losses for the fourth quarter. The increase in provision for credit losses was due to an increase in specific reserves and deterioration in the macroeconomic outlook, partially offset by net charge-off activity, changes in the portfolio mix and a decrease in total loan balances.
Noninterest income
Q1-2023 vs Q4–2022
Noninterest income increased $9.3 million to $7.9 million for the first quarter due mainly to the previous quarter including a $7.7 million loss on the sale of investment securities, coupled with higher other income of $1.7 million. Other income included $1.1 million in recoveries of certain charged-off loans acquired in a previous business combination and higher income from equity investments of $750 thousand.
Noninterest expense
Q1-2023 vs Q4–2022
Noninterest expense increased $3.0 million to $51.2 million for the first quarter compared to the fourth quarter. The increase was due to (i) higher salaries and employee benefits of $1.8 million including $1.0 million of severance costs related to expense management and higher payroll taxes normally incurred during the first quarter, (ii) higher net loss in alternative energy partnership investments of $1.0 million, (iii) higher professional fees of $879 thousand, due to a $1.2 million increase in indemnified legal fees (net of recoveries) offset by a $370 thousand decrease in other professional fees, and (iv) higher regulatory assessments of $297 thousand as the FDIC increased assessment rates in the first quarter. These increases were partially offset by lower other expenses of $994 thousand due to ongoing expense management. Professional fees included net indemnified legal expenses of $380 thousand in the first quarter compared to net indemnified legal recoveries of $869 thousand in the fourth quarter.
Adjusted noninterest expense, which represents total operating costs(1), increased $777 thousand to $49.2 million for the first quarter compared to $48.5 million for the prior quarter. This increase was due to higher salaries and benefits of $1.8 million and regulatory assessments of $297 thousand, partially offset by lower professional fees of $370 thousand, and other expenses of $994 thousand.
|
(1) |
|
Non-GAAP measures; refer to section ‘Non-GAAP Measures’ |
Income taxes
Q1-2023 vs Q4–2022
Income tax expense totaled $7.4 million for the first quarter resulting in an effective tax rate of 26.7% compared to $9.1 million for the fourth quarter and an effective tax rate of 29.6%. The effective tax rate for the full year 2023 is estimated to be 27% to 28%.
Balance Sheet
At March 31, 2023, total assets were $10.04 billion, which represented a linked-quarter increase of $841.9 million. The following table shows selected balance sheet line items as of the dates indicated:
|
|
|
|
Amount Change |
||||||||||||||||||||||||
|
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
Q1-23 vs. Q4-22 |
|
Q1-23 vs. Q1-22 |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
($ in thousands) |
||||||||||||||||||||||||||
|
Securities held-to-maturity |
$ |
328,520 |
|
$ |
328,641 |
|
$ |
328,757 |
|
$ |
329,272 |
|
$ |
329,381 |
|
$ |
(121 |
) |
|
$ |
(861 |
) |
|||||
|
Securities available-for-sale |
$ |
958,427 |
|
|
$ |
868,297 |
|
|
$ |
847,565 |
|
|
$ |
865,435 |
|
|
$ |
898,775 |
|
|
$ |
90,130 |
|
|
$ |
59,652 |
|
|
Loans held-for-investment |
$ |
7,054,380 |
|
|
$ |
7,115,038 |
|
|
$ |
7,289,320 |
|
|
$ |
7,451,264 |
|
|
$ |
7,451,573 |
|
|
$ |
(60,658 |
) |
|
$ |
(397,193 |
) |
|
Total assets |
$ |
10,038,901 |
|
|
$ |
9,197,016 |
|
|
$ |
9,368,578 |
|
|
$ |
9,502,113 |
|
|
$ |
9,583,540 |
|
|
$ |
841,885 |
|
|
$ |
455,361 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Noninterest-bearing deposits |
$ |
2,506,616 |
|
|
$ |
2,809,328 |
|
|
$ |
2,943,585 |
|
|
$ |
2,826,599 |
|
|
$ |
2,958,632 |
|
|
$ |
(302,712 |
) |
|
$ |
(452,016 |
) |
|
Total deposits |
$ |
6,951,974 |
|
|
$ |
7,120,921 |
|
|
$ |
7,280,385 |
|
|
$ |
7,558,683 |
|
|
$ |
7,479,701 |
|
|
$ |
(168,947 |
) |
|
$ |
(527,727 |
) |
|
Borrowings (1) |
$ |
2,007,665 |
|
|
$ |
1,002,254 |
|
|
$ |
1,011,767 |
|
|
$ |
884,282 |
|
|
$ |
1,020,842 |
|
|
$ |
1,005,411 |
|
|
$ |
986,823 |
|
|
Total liabilities |
$ |
9,079,994 |
|
|
$ |
8,237,398 |
|
|
$ |
8,416,588 |
|
|
$ |
8,552,983 |
|
|
$ |
8,604,531 |
|
|
$ |
842,596 |
|
|
$ |
475,463 |
|
|
Total equity |
$ |
958,907 |
|
|
$ |
959,618 |
|
|
$ |
951,990 |
|
|
$ |
949,130 |
|
|
$ |
979,009 |
|
|
$ |
(711 |
) |
|
$ |
(20,102 |
) |
|
(1) |
|
Represents FHLB advances and FRB borrowings, Other borrowings, and Long-term debt, net. |
Investments
Securities held-to-maturity totaled $328.5 million at March 31, 2023 and included $214.3 million in agency securities and $114.2 million in municipal securities.
Securities available-for-sale increased $90.1 million during the first quarter to $958.4 million at March 31, 2023, due to purchases of $101.7 million, offset by principal payments of $6.2 million and an increase in unrealized net losses of $5.5 million. The unrealized net losses of $5.5 million were due to wider credit spreads within corporate debt securities, offset by improvement in the valuation of CLOs, agency CMOs, and non-agency residential MBS securities.
As of March 31, 2023, the securities available-for-sale portfolio included $479.6 million of CLOs, $177.1 million of agency securities, $176.0 million of corporate debt securities, $115.4 million of residential collateralized mortgage obligations, and $10.3 million of SBA securities. The CLO portfolio, which is comprised of AAA and AA-rated securities, represented 37% of the total securities portfolio and the carrying value included an unrealized net loss of $11.2 million at March 31, 2023, compared to 40% of the total securities portfolio and an unrealized net loss of $15.6 million at December 31, 2022.
As of March 31, 2023, securities held-to-maturity had aggregate unrealized net losses of $55.6 million, of which $15.5 million related to unrealized losses from the transfer of certain fixed-rate mortgage-backed securities and municipal securities from the available-for-sale portfolio to the held-to-maturity portfolio in the prior year. Securities available-for-sale had aggregate unrealized net losses of $46.8 million. These unrealized net losses related primarily to changes in overall interest rates and the resulting impact on valuations of mortgage-backed securities, collateralized mortgage obligations, municipal securities and collateralized loan obligations and credit spreads within corporate debt securities.
Loans
The following table sets forth the composition, by loan category, of our loan portfolio as of the dates indicated:
|
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
||||||||||
|
|
($ in thousands) |
||||||||||||||||||
|
Composition of loans |
|
|
|
|
|
|
|
|
|
||||||||||
|
Commercial real estate |
$ |
1,302,277 |
|
|
$ |
1,259,651 |
|
|
$ |
1,240,927 |
|
|
$ |
1,204,414 |
|
|
$ |
1,163,381 |
|
|
Multifamily |
|
1,678,300 |
|
|
|
1,689,943 |
|
|
|
1,698,455 |
|
|
|
1,572,308 |
|
|
|
1,397,761 |
|
|
Construction |
|
260,167 |
|
|
|
243,553 |
|
|
|
236,495 |
|
|
|
228,341 |
|
|
|
225,153 |
|
|
Commercial and industrial |
|
1,150,416 |
|
|
|
1,243,452 |
|
|
|
1,227,054 |
|
|
|
1,273,307 |
|
|
|
1,224,908 |
|
|
Commercial and industrial – warehouse lending |
|
636,731 |
|
|
|
602,508 |
|
|
|
766,362 |
|
|
|
1,160,157 |
|
|
|
1,574,549 |
|
|
SBA |
|
65,040 |
|
|
|
68,137 |
|
|
|
85,674 |
|
|
|
92,235 |
|
|
|
133,116 |
|
|
Total commercial loans |
|
5,092,931 |
|
|
|
5,107,244 |
|
|
|
5,254,967 |
|
|
|
5,530,762 |
|
|
|
5,718,868 |
|
|
Single-family residential mortgage |
|
1,877,114 |
|
|
|
1,920,806 |
|
|
|
1,947,652 |
|
|
|
1,832,279 |
|
|
|
1,637,307 |
|
|
Other consumer |
|
84,335 |
|
|
|
86,988 |
|
|
|
86,701 |
|
|
|
88,223 |
|
|
|
95,398 |
|
|
Total consumer loans |
|
1,961,449 |
|
|
|
2,007,794 |
|
|
|
2,034,353 |
|
|
|
1,920,502 |
|
|
|
1,732,705 |
|
|
Total gross loans |
$ |
7,054,380 |
|
|
$ |
7,115,038 |
|
|
$ |
7,289,320 |
|
|
$ |
7,451,264 |
|
|
$ |
7,451,573 |
|
|
Composition percentage of loans |
|
|
|
|
|
|
|
|
|
||||||||||
|
Commercial real estate |
|
18.5 |
% |
|
|
17.7 |
% |
|
|
17.0 |
% |
|
|
16.2 |
% |
|
|
15.6 |
% |
|
Multifamily |
|
23.8 |
% |
|
|
23.8 |
% |
|
|
23.3 |
% |
|
|
21.1 |
% |
|
|
18.8 |
% |
|
Construction |
|
3.7 |
% |
|
|
3.4 |
% |
|
|
3.2 |
% |
|
|
3.1 |
% |
|
|
3.0 |
% |
|
Commercial and industrial |
|
16.3 |
% |
|
|
17.5 |
% |
|
|
16.8 |
% |
|
|
17.1 |
% |
|
|
16.4 |
% |
|
Commercial and industrial – warehouse lending |
|
9.0 |
% |
|
|
8.4 |
% |
|
|
10.6 |
% |
|
|
15.5 |
% |
|
|
21.1 |
% |
|
SBA |
|
0.9 |
% |
|
|
1.0 |
% |
|
|
1.2 |
% |
|
|
1.2 |
% |
|
|
1.8 |
% |
|
Total commercial loans |
|
72.2 |
% |
|
|
71.8 |
% |
|
|
72.1 |
% |
|
|
74.2 |
% |
|
|
76.7 |
% |
|
Single-family residential mortgage |
|
26.6 |
% |
|
|
27.0 |
% |
|
|
26.7 |
% |
|
|
24.6 |
% |
|
|
22.0 |
% |
|
Other consumer |
|
1.2 |
% |
|
|
1.2 |
% |
|
|
1.2 |
% |
|
|
1.2 |
% |
|
|
1.3 |
% |
|
Total consumer loans |
|
27.8 |
% |
|
|
28.2 |
% |
|
|
27.9 |
% |
|
|
25.8 |
% |
|
|
23.3 |
% |
|
Total gross loans |
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
Total loans ended the first quarter of 2023 at $7.05 billion, down $60.7 million from $7.12 billion at December 31, 2022, due mostly to a $88.1 million decrease in commercial loans, a $43.7 million decrease in single-family residential (SFR) loans, and a $3.1 million decrease in SBA loans, partially offset by a $42.6 million increase in commercial real estate loans and a $34.2 million increase in warehouse lending balances. Loan fundings of $398.9 million in the first quarter included net warehouse advances of $34.2 million, offset by other loan paydowns and payoffs of $453.9 million.
Loan concentrations were well-diversified between products and industries. In particular, at March 31, 2023, the CRE portfolio of $1.30 billion had balances related to office loans of $359.8 million. This was comprised of general office of $273.7 million with a weighted average LTV of 54% and debt service coverage ratio of 1.6x and medical office of $86.1 million with a weighted average LTV of 58% and debt service coverage ratio of 1.7x.
Deposits
The following table sets forth the composition of our deposits at the dates indicated:
|
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
||||||||||
|
|
($ in thousands) |
||||||||||||||||||
|
Composition of deposits |
|
|
|
|
|
|
|
|
|
||||||||||
|
Noninterest-bearing checking |
$ |
2,506,616 |
|
|
$ |
2,809,328 |
|
|
$ |
2,943,585 |
|
|
$ |
2,826,599 |
|
|
$ |
2,958,632 |
|
|
Interest-bearing checking |
|
1,862,003 |
|
|
|
1,947,247 |
|
|
|
1,921,816 |
|
|
|
2,359,857 |
|
|
|
2,395,329 |
|
|
Savings and money market |
|
998,365 |
|
|
|
1,174,925 |
|
|
|
1,478,045 |
|
|
|
1,622,922 |
|
|
|
1,605,088 |
|
|
Non-brokered certificates of deposit |
|
585,272 |
|
|
|
584,476 |
|
|
|
614,569 |
|
|
|
615,719 |
|
|
|
520,652 |
|
|
Brokered certificates of deposit |
|
999,718 |
|
|
|
604,945 |
|
|
|
322,370 |
|
|
|
133,586 |
|
|
|
— |
|
|
Total deposits |
$ |
6,951,974 |
|
|
$ |
7,120,921 |
|
|
$ |
7,280,385 |
|
|
$ |
7,558,683 |
|
|
$ |
7,479,701 |
|
|
Composition percentage of deposits |
|
|
|
|
|
|
|
|
|
||||||||||
|
Noninterest-bearing checking |
|
36.1 |
% |
|
|
39.5 |
% |
|
|
40.4 |
% |
|
|
37.4 |
% |
|
|
39.6 |
% |
|
Interest-bearing checking |
|
26.8 |
% |
|
|
27.3 |
% |
|
|
26.4 |
% |
|
|
31.2 |
% |
|
|
32.0 |
% |
|
Savings and money market |
|
14.3 |
% |
|
|
16.5 |
% |
|
|
20.4 |
% |
|
|
21.5 |
% |
|
|
21.4 |
% |
|
Non-brokered certificates of deposit |
|
8.4 |
% |
|
|
8.2 |
% |
|
|
8.4 |
% |
|
|
8.1 |
% |
|
|
7.0 |
% |
|
Brokered certificates of deposit |
|
14.4 |
% |
|
|
8.5 |
% |
|
|
4.4 |
% |
|
|
1.8 |
% |
|
|
— |
% |
|
Total deposits |
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
Total deposits decreased $168.9 million during the first quarter of 2023 to $6.95 billion at March 31, 2023, due mostly to lower noninterest-bearing checking balances of $302.7 million, savings and money market balances of $176.6 million and interest-bearing checking balances of $85.2 million, partially offset by higher certificate of deposit balances of $395.6 million. We continue to focus on growing granular relationship-based deposits and strategically replacing short-term wholesale funding as we actively manage our funding costs. We also executed a $300 million cash flow hedge during the quarter to further manage our interest rate risk and reduce our exposure to higher funding costs resulting from higher interest rates. Noninterest-bearing checking totaled $2.51 billion and represented 36% of total deposits at March 31, 2023, compared to $2.81 billion, or 40% of total deposits, at December 31, 2022.
Insured deposits of $4.77 billion and collateralized deposits of $314.6 million represented 73% of total deposits at March 31, 2023, compared to insured deposits of $3.93 billion and collateralized deposits of $343.9 million which represented 60% of total deposits at December 31, 2022.
Debt
In light of current volatility in the market, we have proactively taken a number of liquidity-enhancing measures, including additional advances from FHLB and draws on available FRB facilities. Advances from the FHLB and FRB borrowings increased $1.01 billion during the first quarter to $1.73 billion at March 31, 2023. FHLB advances included (i) $325.0 million of overnight borrowings and (ii) $811.0 million in term advances with a weighted average life of 3.6 years and weighted average interest rate of 3.04%. We also utilized available capacity from the FRB through $600.0 million in overnight borrowings.
Equity
During the first quarter, total stockholders’ equity decreased by $711 thousand to $958.9 million and tangible common equity(1) decreased by $250 thousand to $837.5 million at March 31, 2023. The decrease in total stockholders’ equity for the first quarter resulted from net income of $20.3 million, partially offset by accumulated other comprehensive net loss (net of tax) from unrealized losses of $6.1 million from the cash flow hedge and $3.7 million from investment securities available-for-sale, dividends to common stockholders of $5.7 million and repurchases of common stock of $5.2 million. Book value per common share increased $0.07 during the first quarter to $16.33 as of March 31, 2023. Tangible common equity per share(1) also increased $0.07 during the first quarter to $14.26 as of March 31, 2023 due mostly to net income, offset by accumulated other comprehensive losses and dividends.
|
(1) |
|
Non-GAAP measures; refer to section ‘Non-GAAP Measures’ |
Capital and Liquidity
Capital ratios remain strong with total risk-based capital at 14.06% and a tier 1 leverage ratio of 9.71% at March 31, 2023. The following table sets forth our regulatory capital ratios as of the dates indicated:
|
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|||||
|
Capital Ratios(1) |
|
|
|
|
|
|
|
|
|
|||||
|
Banc of California, Inc. |
|
|
|
|
|
|
|
|
|
|||||
|
Total risk-based capital ratio |
14.06 |
% |
|
14.21 |
% |
|
13.86 |
% |
|
13.69 |
% |
|
13.79 |
% |
|
Tier 1 risk-based capital ratio |
11.66 |
% |
|
11.80 |
% |
|
11.43 |
% |
|
11.29 |
% |
|
11.40 |
% |
|
Common equity tier 1 capital ratio |
11.66 |
% |
|
11.80 |
% |
|
11.43 |
% |
|
11.29 |
% |
|
11.40 |
% |
|
Tier 1 leverage ratio |
9.71 |
% |
|
9.70 |
% |
|
9.52 |
% |
|
9.58 |
% |
|
9.72 |
% |
|
Banc of California, NA |
|
|
|
|
|
|
|
|
|
|||||
|
Total risk-based capital ratio |
15.76 |
% |
|
16.02 |
% |
|
15.70 |
% |
|
15.54 |
% |
|
15.66 |
% |
|
Tier 1 risk-based capital ratio |
14.67 |
% |
|
14.94 |
% |
|
14.56 |
% |
|
14.41 |
% |
|
14.54 |
% |
|
Common equity tier 1 capital ratio |
14.67 |
% |
|
14.94 |
% |
|
14.56 |
% |
|
14.41 |
% |
|
14.54 |
% |
|
Tier 1 leverage ratio(2) |
12.22 |
% |
|
12.25 |
% |
|
12.12 |
% |
|
12.27 |
% |
|
12.38 |
% |
Contacts
Investor Relations Inquiries:
Banc of California, Inc.
(855) 361-2262
Jared Wolff, (949) 385-8700
