Investor Presentation

First Quarter 2024 Results

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. Words or phrases such as "believe," "will," "should," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," "plans," "strategy," or similar expressions are intended to identify these forward-looking statements. You are cautioned not to place undue reliance on any forward-looking statements. 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. (the "Company") with the Securities and Exchange Commission ("SEC"). The Company undertakes no obligation to revise or publicly release any revision or update to these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made, except as required by law.

Factors that could cause actual results to differ materially from the results anticipated or projected include, but are not limited to: (i) changes in general economic conditions, either nationally or in our market areas, including the impact of supply chain disruptions, and the risk of recession or an economic downturn; (ii) changes in the interest rate environment, including the recent and potential future changes in the FRB benchmark rate, which could adversely affect our revenue and expenses, the value of assets and obligations, the realization of deferred tax assets, the availability and cost of capital and liquidity, and the impacts of continuing inflation; (iii) 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 the effectiveness of our underwriting practices and the risk of fraud, any of which may lead to increased loan delinquencies, losses, and non-performing assets, and may result in our allowance for credit losses not being adequate; (iv) fluctuations in the demand for loans, and fluctuations in commercial and residential real estate values in our market area;

  1. the quality and composition of our securities portfolio; (vi) our ability to develop and maintain a strong core deposit base, including among our venture banking clients, or other low cost funding sources necessary to fund our activities particularly in a rising or high interest rate environment; (vii) the rapid withdrawal of a significant amount of demand deposits over a short period of time; (viii) the costs and effects of litigation; (ix) risks related to the Company's acquisitions, including disruption to current plans and operations; difficulties in customer and employee retention; fees, expenses and charges related to these transactions being significantly higher than anticipated; and our inability to achieve expected revenues, cost savings, synergies, and other benefits; and in the case of our recent acquisition of PacWest Bancorp ("PacWest"), reputational risk, regulatory risk and potential adverse reactions of the Company's or PacWest's customers, suppliers, vendors, employees or other business partners; (x) results of examinations by regulatory authorities of the Company and the possibility that any such regulatory authority may, among other things, limit our business activities, restrict our ability to invest in certain assets, refrain from issuing an approval or non-objection to certain capital or other actions, increase our allowance for credit losses, result in write-downs of asset values, restrict our ability or that of our bank subsidiary to pay dividends, or impose fines, penalties or sanctions; (xi) legislative or regulatory changes that adversely affect our business, including changes in tax laws and policies, accounting policies and practices, privacy laws, and regulatory capital or other rules; (xii) the risk that our enterprise risk management framework may not be effective in mitigating risk and reducing the potential for losses; (xiii) errors in estimates of the fair values of certain of our assets and liabilities, which may result in significant changes in valuation; (xiv) failures or security breaches with respect to the network, applications, vendors and computer systems on which we depend, including due to cybersecurity threats; (xv) our ability to attract and retain key members of our senior management team; (xvi) 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; (xvii) the impact of bank failures or other adverse developments at other banks on general depositor and investor sentiment regarding the stability and liquidity of banks; (xviii) the possibility that our recorded goodwill could become impaired, which may have an adverse impact on our earnings and capital; (xix) our existing indebtedness, together with any future incurrence of additional indebtedness, could adversely affect our ability to raise additional capital and to meet our debt obligations; (xx) the risk that we may incur significant losses on future asset sales; and (xxi) other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services and the other risks described in this press release and from time to time in other documents that we file with or furnish to the SEC.

First Quarter 2024 Earnings | 2

1Q24 Highlights

First full quarter results post merger reflect benefits of balance sheet restructuring and initial progress

  • Increased profitability largely driven by expanding NIM and lower operating expenses
  • NIM improvement reflects ongoing actions to lower total cost of funds
    • Right-sizedcash levels
    • Growing NIB and core deposit ratios
    • Lower reliance on wholesale funding
  • Growing capital and tangible book levels
  • Continued to strengthen reserve levels and experienced lower charge-offs
  • On track to achieve 4Q24 profitability targets of ~1.1% ROAA and ~13%
    ROTCE

Operating

Results

Balance

Sheet Results

Robust

Capital

Strong Credit

Reserves

1Q24

4Q23

PTPP / Adjusted PTPP(1,2)

$62.4 / $67.3mm

($613.0) / ($26.0)mm

EPS / Adjusted EPS(1)

$0.17 / $0.19

($4.55) / ($0.59)

ROAA / Adjusted ROAA(1)

0.41% / 0.45%

(5.09%) / (0.56%)

ROATCE / Adjusted ROATCE(1)

5.5% / 6.0%

(88.0%) / (10.8%)

NIE Ratio / Adjusted NIE Ratio(1)

2.26% / 2.20%

3.83% / 2.31%

NIM

2.78%

2.15%(3)

Cash / assets

8.6%

14.0%

Wholesale funding / assets(4)

15.4%

16.6%

Deposits / total funding

93.1%

91.3%

NIB ratio

27.1%

25.6%

CET 1

10.1%

10.1%

Total Capital

16.4%

16.4%

BVPS

$17.18

$17.12

TBVPS(1)

$15.07

$14.96

ACL ratio

1.26%

1.22%

NCOs

0.02%

0.22%

  1. Denotes a non-GAAP financial measure; see "Non-GAAP Reconciliation" slides at end of presentation.
  2. Pre-taxPre-provision income. Please see reconciliation tables in appendix for additionall detail.

3.

Average NIM for the month of December 2023.

First Quarter 2024 Earnings | 3

4.

Wholesale funding defined as borrowings plus brokered time deposits.

First Quarter 2024 Earnings Results

❖Net interest income increased $88

million, or 58%:

▪ Interest income increase due to the

full-quarter impact of the combined

loan portfolio

▪ Interest expense reduction driven by

4Q23 and 1Q24 balance sheet

restructuring activities and lower

deposit costs

❖Noninterest income stable when

Increased earnings driven by NIM expansion and lower operating expenses

($ in millions)

1Q24

4Q23

3Q23

Total interest income

$

489

$

467

$

446

Total interest expense

250

316

315

Net interest income

239

151

131

Noninterest income

34

46

46

Loss on sale of securitiies and loans

0

(446)

(2)

Total noninterest (loss) income

34

(400)

44

Total revenue

273

(249)

175

Noninterest expense

211

252

191

Acquisition, integration and reorganization costs

0

112

10

Total noninterest expense

211

364

201

Pre-taxpre-provision income

62

(613)

(27)

Provision for credit losses

10

47

0

(Loss) earnings before income taxes

52

(660)

(27)

Income tax (benefit) expense

14

(177)

(3)

Net (loss) earnings

$

38

$

(483)

$

(23)

Preferred stock dividends

10

10

10

Net (loss) earnings available to common stockholders

$

28

$

(493)

$

(33)

Cost of funds

-0.66%

3.68%

3.02%

4Q23 1Q24

Cost of deposits

-0.28%

2.94% 2.66%

adjusted for 4Q23 nonrecurring items,

including impact of legal recoveries

❖Operating expense reduction reflects

the early impact of the company's

integration and cost reduction

initiatives

Key Income Statement Metrics EPS Adjusted EPS Return on average assets (ROAA) Adjusted ROAA Net interest margin NIE / Average assets Adjusted NIE / Average assets

$

0.17

$

(4.55)

$

(0.42)

0.19

(0.59)

(0.32)

0.41%

-5.09%

-0.24%

0.45%

-0.56%

-0.15%

2.78%

1.69%

1.45%

2.26%

3.83%

2.11%

2.20%

2.31%

2.01%

4Q23 1Q24

Cost of interest-bearing deposits

-0.20%

3.80% 3.60%

4Q23 1Q24

Note: Periods prior to 4Q23 represent PACW standalone.

First Quarter 2024 Earnings | 4

Management

Outlook Q424

Assumptions

  • Profitability expectations currently assume two 25 bps Fed funds rate reductions in 2024 (one in 3Q24 and one in 4Q24), subject to market volatility
  • Execution of management strategy to reduce both interest expense and operating expense
  • Assumes generally flat loan levels at growing average yield
  • Does not assume a significant recession or credit event

4Q24 run-rate target guidance remains unchanged from 2023 year end

ROAA: ~1.1%

• Continue to improve overall profitability through execution of

strategy and further optimization of the balance sheet.

ROTCE: ~13%

• Grow NIM through lowering the avg cost of funds, increasing yields

on avg earning assets, and lowering operating expenses.

NIE / Assets: 2.0%-2.1%

• Execute on savings initiatives including systems conversions,

facility exits, process improvements, contract renegotiations and

cost eliminations.

Total Assets: $34B-$36B

• Balance sheet size expected to remain stable; however, will

opportunistically look to strengthen our balance sheet and

maximize profitability depending on economic developments.

First Quarter 2024 Earnings | 5

Integration roadmap update

Strong execution and achievement of deal closing timeline creates opportunity to complete integration and realize full cost savings in 2024

Accomplished since announcement of deal

  • Closed merger with PacWest
  • Closed on $400mm common equity with merger
  • Retained key employees and clients
  • Sold $6 billion assets (3.6% yield)
  • Paid down $10 billion wholesale funding (~5% cost)
  • Completed announced balance sheet restructuring and finalized plan for integration
  • Partial cost savings realized

Items to be completed in 2Q24 - 4Q24

Target

Core systems conversions

3Q

Execution on consolidation of facilities

4Q

Realize full operational expense savings

4Q+

Continued reduction of interest expense

4Q+

and improvement of deposit mix

First Quarter 2024 Earnings | 6

Balance Sheet

Repositioning

Continues

  • Excess 4Q23 liquidity used to pay down high cost wholesale funding sources, including brokered deposits and a portion of BTFP borrowings
  • Right-sizedcash levels continue to provide sufficient liquidity
  • Deposit mix shift as company focuses on growing noninterest-bearing deposit
  • Core loan portfolio growth offset by run-off of discontinued portfolios resulting in stable total loans

Increased balance sheet efficiency with improved deposit mix and lower wholesale funding

($ in millions)

1Q24

4Q23

3Q23

Cash and cash equivalents

$

3,085

$

5,378

$

6,070

Investment securities

4,708

4,761

6,787

Loans held for sale

81

123

189

Loans and leases HFI, net of deferred fees

25,483

25,490

21,921

Allowance for loan and lease losses

(292)

(282)

(222)

Goodwill and intangibles

356

364

24

Deferred tax asset, net

738

739

506

Other assets

1,921

1,962

1,603

Total assets

$

36,081

$

38,534

$

36,878

Noninterest-bearing deposits

$

7,834

$

7,774

$

5,579

Interest-bearing deposits

21,059

22,628

21,020

Total deposits

28,892

30,402

26,599

Borrowings

2,139

2,911

6,295

Subordinated debt

938

937

871

Accrued interest payable and other liabilities

710

894

714

Total liabilities

32,679

35,143

34,479

Total stockholders' equity

3,401

3,391

2,399

Total liabilities and stockholders' equity

$

36,081

$

38,534

$

36,878

Key Balance Sheet Metrics

TCE ratio(1)

7.1%

6.6%

5.1%

CET 1 ratio

10.1%

10.1%

11.2%

Cash / assets

8.6%

14.0%

16.5%

Securities / assets

13.0%

12.4%

18.4%

Cash + securities / assets

21.6%

26.3%

34.9%

Loans / deposits

88.2%

83.8%

82.4%

Noninterest-bearing deposits / deposits

27.1%

25.6%

21.0%

Deposits / total funding

93.1%

91.3%

80.9%

Wholesale funding / assets(2)

15.4%

16.6%

28.1%

ACL ratio

1.26%

1.22%

1.15%

1. Denotes a non-GAAP financial measure; see "Non-GAAP Reconciliation" slides at end of presentation.

Note: Periods prior to 4Q23 represent PACW standalone.

2. Wholesale funding defined as borrowings plus brokered time deposits.

First Quarter 2024 Earnings | 7

Net Interest Income

and Net Interest

Margin Expansion

1Q 2024 Highlights

  • NIM expanded 109 bps to 2.78%
  • NII increased $88 million driven by:
    • Borrowings costs decreased 126 bps: +$54mm
    • Loan yields increased 41 bps: +$49mm
    • Interest bearing deposits costs decreased 20 bps: +$13mm
    • Securities balances decreased, partly offset by a 20 bps increase in yields: ($7mm)
    • Lower cash balances: ($21mm)

Lower funding costs and improved asset yields and mix drive NII and NIM expansion

Net Interest Income (NII) ($M) and Net Interest Margin (NIM)

Quarter

Month

NIM

NII

2.78%

2.82%

2.15%

1.69%

1.45%

1.43%

$239.1

$69.4

$80.9

$130.7

$151.0

$41.5

3Q23

4Q23

1Q24

Sep '23

Dec '23

Mar '24

Impact to NII ($M) from cumulative change in yields, rates and mix

+$49.2

+$13.0

-$7.0

-$21.4

$239.1

$151.0

+$54.4

4Q23 NII

Borrowings

Loans

Deposits

Securities

Cash / Other EA

1Q24 NII

Note: Periods prior to 4Q23 represent PACW standalone.

First Quarter 2024 Earnings | 8

Funding Cost Reduction Actions

1Q24 Highlights

  • NIB and IB deposit composition trends reflects results of balance sheet restructuring and post-merger community bank-focused strategy
    • Lower deposit costs reflects the paydowns of higher cost brokered deposits, increased NIB % and actions taken to reduce IB deposit costs
  • Strategy to pay down higher cost wholesale funding as it matures and replace it with lower-cost funding sources beginning to gain momentum

Ongoing interest expense reduction results from focused strategy to improve deposit mix and reprice CDs lower

Improving Funding Mix(1)

% of Total Funding(1)

3Q23

4Q23

1Q24

17.0%

23.3%

25.2%

51.5%

57.4%

56.8%

12.4%

19.1%

10.5%

11.0%

8.7%

6.9%

NIB Deposits

Interest-bearing deposits

Brokered CDs

Borrowings

Reduced Cost of Liabilities

Total interest-bearing liabilities Total borrowings Total deposits

7.02%

5.91%

5.30%

4.51%

4.34%

3.92%

2.98%

2.94%

2.66%

3Q23

4Q23

1Q24

1. Excludes subordinated debt and accrued interest payable and other liabilities.

Note: Periods prior to 4Q23 represent PACW standalone.

First Quarter 2024 Earnings | 9

Noninterest Income Composition

1Q 2024 Highlights

  • Consistent noninterest income, adjusted for nonrecurring items including legal recoveries
  • Lower lease equipment income reflects lower early lease buyouts and is offset by across the board growth in most other categories
  • Other income growth in 1Q24 was driven mainly by the net impact of fair value marks relative to 4Q23
  • Other includes revenue from BOLI, warrants, fair value mark adjustments and other miscellaneous gains or losses

Noninterest income(1) (excl. nonrecurring items in 4Q23) remains consistent and reflects diversified fee sources

($ in millions)

$45.7

$45.5

$14.5

$11.5

$34.0mm(3)

$34.3

(2)

$4.6

$4.7

$31.2mm

$4.0

$7.6

$8.9

$8.1

$12.4

$11.7

$14.6

$3.1

$4.2

$3.8

$4.0

$6.6

$1.2

3Q23

4Q23

1Q24

Other Income

Loan and Card Fees

Dividends and Gains on Equity Investments

Deposit Fees

Leased Equipment Income

Nonrecurring Legal Recoveries and Gains

1. Excludes gain (loss) on sale of securities and loans.

Note: Periods prior to 4Q23 represent PACW standalone.

2. Excludes nonrecurring legal recovery of $14.5mm.

First Quarter 2024 Earnings | 10

3. Excludes nonrecurring legal recovery of $7.6mm and elevated CRA-related fair value gain of $3.9mm.

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Banc of California Inc. published this content on 23 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 April 2024 10:17:32 UTC.