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Banc of California, Inc. Reports First Quarter 2024 Financial Results with Improved Profitability and Strengthened Balance Sheet
$0.17 $17.18 $17.18 10.12% 10.12% 27% 27%
Earnings Per Share Book Value Per Share Book Value Per Share CET1 Ratio CET1 Ratio Noninterest-Bearing Deposits Noninterest-Bearing Deposits
$0.19 $15.07 $15.07
Adjusted Earnings Per Share(1) Tangible Book Value Per Share(1) Tangible Book Value Per Share(1)
------------------------------ -------------------------------- -------------------------------- ---------- ---------- ---------------------------- ----------------------------
Banc of California, Inc. (NYSE: BANC) ("Banc of California"), the parent company of wholly-owned subsidiary Banc of California (the "Bank"), today reported financial results for the first quarter ended March 31, 2024. The Company recorded net earnings available to common and equivalent stockholders of $28.2 million, or $0.17 per diluted common share, for the first quarter of 2024. On an adjusted basis, excluding the FDIC special assessment accrued for the first quarter, net earnings available to common and equivalent stockholders was $31.7 million, or $0.19 per diluted common share(1). This compares to a net loss of $492.9 million, or a loss of $4.55 per diluted common share, for the fourth quarter of 2023. The fourth quarter of 2023 included pre-tax amounts of $442.4 million of losses on security sales relating to our balance sheet repositioning strategy, merger costs of $111.8 million, and an FDIC special assessment of $32.7 million.
First quarter highlights include:
Net interest income increased by $88.1 million, or 58%, in the first quarter to $239.1 million, reflecting the benefits of our balance sheet repositioning which continued into the first quarter. Net interest margin of 2.78%, an increase of 109 basis points from 1.69% in the fourth quarter. The average total cost of deposits decreased by 28 basis points to 2.66% for the first quarter compared to 2.94% in the fourth quarter. Improved overall deposit mix, with noninterest-bearing deposits increasing over $59 million in the first quarter and the noninterest-bearing percentage of total deposits increasing from 26% at December 31, 2023 to 27% at March 31, 2024. Noninterest expenses declined by over $41 million to $210.5 million (excluding merger costs). High liquidity levels, with available on-balance sheet liquidity and unused borrowing capacity of $16.8 billion at March 31, 2024, which was 2.4 times greater than uninsured and uncollateralized deposits. Allowance for credit losses of 1.26% at March 31, 2024, up from 1.22% at December 31, 2023, after a first quarter provision for credit losses of $10.0 million. Net charge-offs of $1.2 million, or 2 basis points of average loans and leases. Strong capital ratios well above the regulatory thresholds for "well capitalized" banks at March 31, 2024, including an estimated 16.43% Total risk-based capital ratio, 12.41% Tier 1 capital ratio, 10.12% CET1 capital ratio, and 9.14% Tier 1 leverage ratio. Book value per share increased to $17.18 and tangible book value per share(1) increased to $15.07.
(1) Non-GAAP measure; refer to section 'Non-GAAP Measures' Non-GAAP measure; refer to section 'Non-GAAP Measures'
Jared Wolff, President & CEO of Banc of California, commented, "Our first full quarter results as a combined company reflect strong execution on the key initiatives that will lead to achieving the profitability targets we set for the fourth quarter of 2024. We began to realize the benefits of the balance sheet repositioning following the closing of the merger and generated a significantly higher level of net interest income and significantly lower operating expenses. Our deposit gathering engine generated an increase in noninterest-bearing deposits during the first quarter, which contributed to a lower average cost of deposits and the expansion in our net interest margin."
Mr. Wolff continued, "We are positioned with a strong balance sheet that has good levels of capital, liquidity, and loan loss reserves, and a stable loan portfolio. While remaining disciplined and conservative in new loan originations, core loans grew 4% annualized in the quarter, offset by runoff in our discontinued portfolio. We are benefitting from our market position, seeing good opportunities to bring over new banking relationships that provide both operating deposit accounts and high-quality loans. We remain on track with our initiatives to reduce both interest expense and operating expenses and expect to make steady progress as we move through the year toward our stated profitability targets."
INCOME STATEMENT HIGHLIGHTS
Three Months Ended Three Months Ended
---------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
March 31, March 31, December 31, March 31,
Summary Income Statement 2024 2023 2023
---------------------------------------------------- -------------------- ------- -------------------- -------------------- -------- -------------------- -------------------- ---------- --------------------
(In thousands) (In thousands)
Total interest income $ 488,750 $ $ 467,240 $ $ 517,788
Total interest expense 249,602 316,189 238,516
-------------------- ------- -------------------- -------------------- -------------------- -------- -------------------- -------------------- -------------------- ---------- --------------------
Net interest income 239,148 151,051 279,272
-------------------- ------- -------------------- -------------------- -------------------- -------- -------------------- -------------------- -------------------- ---------- --------------------
Provision for credit losses 10,000 47,000 3,000
-------------------- ------- -------------------- -------------------- -------------------- -------- -------------------- -------------------- -------------------- ---------- --------------------
(Loss) gain on sale of loans (448 ) (3,526 ) 2,962
Loss on sale of securities - (442,413 ) -
Other noninterest income 34,264 45,537 33,429
-------------------- ------- -------------------- -------------------- -------------------- -------- -------------------- -------------------- -------------------- ---------- --------------------
Total noninterest income (loss) 33,816 (400,402 ) 36,391
-------------------- ------- -------------------- -------------------- -------------------- -------- -------------------- -------------------- -------------------- ---------- --------------------
Total revenue 272,964 (249,351 ) 315,663
-------------------- ------- -------------------- -------------------- -------------------- -------- -------------------- -------------------- -------------------- ---------- --------------------
Goodwill impairment - - 1,376,736
Acquisition, integration and reorganization costs - 111,800 8,514
Other noninterest expense 210,518 251,838 187,753
-------------------- ------- -------------------- -------------------- -------------------- -------- -------------------- -------------------- -------------------- ---------- --------------------
Total noninterest expense 210,518 363,638 1,573,003
-------------------- ------- -------------------- -------------------- -------------------- -------- -------------------- -------------------- -------------------- ---------- --------------------
Earnings (loss) before income taxes 52,446 (659,989 ) (1,260,340 )
Income tax expense (benefit) 14,310 (177,034 ) (64,916 )
-------------------- ------- -------------------- -------------------- -------------------- -------- -------------------- -------------------- -------------------- ---------- --------------------
Net earnings (loss) 38,136 (482,955 ) (1,195,424 )
Preferred stock dividends 9,947 9,947 9,947
-------------------- ------- -------------------- -------------------- -------------------- -------- -------------------- -------------------- -------------------- ---------- --------------------
Net Interest Income
Q1-2024 vs Q4-2023
Net interest income increased by $88.1 million, or 58.3%, to $239.1 million for the first quarter from $151.1 million for the fourth quarter due to lower borrowing balances and costs, higher asset yields that were driven by changes in the interest-earning asset mix, and lower deposit costs.
Average interest-earning assets decreased by $809.5 million to $34.6 billion for the first quarter due to the full quarter impact of our fourth quarter securities sales and lower cash balances, which were used to pay down higher-cost funding sources. The overall decline in average interest-earning assets was offset partially by the increase in average loans and leases during the first quarter due mostly to the full quarter impact of legacy Banc of California loans acquired in the fourth quarter. The net interest margin increased by 109 basis points to 2.78% for the first quarter compared to 1.69% for the fourth quarter due to the average yield on interest-earning assets increasing by 45 basis points, while the average total cost of funds decreased by 66 basis points, which was positively impacted by an increase in average noninterest-bearing deposits.
The average yield on interest-earning assets increased by 45 basis points to 5.68% for the first quarter from 5.23% in the fourth quarter due mainly to the change in the interest-earning asset mix. This was driven by the increase in the balance of average loans and leases as a percentage of average interest-earning assets to 74% for the first quarter from 67% for the fourth quarter, the decrease in the balance of average investment securities as a percentage of average interest-earning assets to 14% for the first quarter from 17% for the fourth quarter, and the decrease in the balance of average deposits in financial institutions as a percentage of average interest-earning assets to 13% for the first quarter from 16% for the fourth quarter.
The average yield on loans and leases increased by 41 basis points to 6.23% for the first quarter from 5.82% for the fourth quarter as a result of higher discount accretion income and changes in portfolio mix and a full quarter benefit from the acquired loans and leases.
The average total cost of funds decreased by 66 basis points to 3.02% for the first quarter from 3.68% in the fourth quarter due mainly to decreases in higher-cost borrowings and interest-bearing deposits combined with an increase in average noninterest-bearing deposits. The average cost of interest-bearing liabilities decreased by 59 basis points to 3.92% for the first quarter from 4.51% in the fourth quarter. The average total cost of deposits decreased by 28 basis points to 2.66% for the first quarter compared to 2.94% in the fourth quarter. Average noninterest-bearing deposits increased by $1.4 billion for the first quarter compared to the fourth quarter and average total deposits increased by $1.5 billion.
Provision For Credit Losses
Q1-2024 vs Q4-2023
The provision for credit losses was $10.0 million for the first quarter. The first quarter provision was driven by an increase in qualitative reserves related to loans secured by office properties and an increase in quantitative reserves due to an increase in nonaccrual and classified loans and leases. The provision for credit losses was $47.0 million for the fourth quarter and included an initial provision of $22.2 million for acquired legacy Banc of California non-PCD loans. Outside this initial provision, the fourth quarter's expense was driven by $13.2 million of net charge-offs and a need for increased quantitative reserves resulting from revising the economic forecast to reflect a 60% probability weighting on recessionary scenarios and updating expected prepayment speeds based on a high interest rate environment.
Noninterest Income
Q1-2024 vs Q4-2023
Noninterest income increased by $434.2 million to $33.8 million for the first quarter due almost entirely to a decrease in the loss on sale of securities of $442.4 million. As part of our balance sheet repositioning strategy, we sold $2.7 billion of legacy PacWest available-for-sale securities in the fourth quarter resulting in losses of $442.4 million. There were no securities sales in the first quarter of 2024.
Noninterest Expense
Q1-2024 vs Q4-2023
Noninterest expense decreased by $153.1 million to $210.5 million for the first quarter due mainly to fourth quarter acquisition, integration and reorganization costs of $111.8 million related to our merger with PacWest and a decrease in insurance and assessments expense of $39.6 million, which includes $32.7 million for the FDIC special assessment for the fourth quarter.
Income Taxes
Q1-2024 vs Q4-2023
Income tax expense of $14.3 million was recorded for the first quarter resulting in an effective tax rate of 27.3% compared to a benefit of $177.0 million for the fourth quarter and an effective tax rate of 26.8%.
BALANCE SHEET HIGHLIGHTS
March 31, March 31, December 31, December 31, March 31, March 31, Increase (Decrease) Increase (Decrease)
-------------------- -------------------------------------------------------------------------------------------------------------------------------
Selected Balance Sheet Items 2024 2023 2023 2023 2023 CQ vs PQ CQ vs PQ CQ vs PYQ CQ vs PYQ
--------------------------------------------------------- ------------------------------ -------------------- ------------------------------ -------------------- ------------------------------ -------------------- -------------------------------------------------- -------------------- --------------------------------------------------
(In thousands) (In thousands)
Cash and cash equivalents $ 3,085,228 $ $ 5,377,576 $ $ 6,680,136 $ $ (2,292,348 ) $ $ (3,594,908 )
Securities available-for-sale 2,286,682 2,346,864 4,848,607 (60,182 ) (2,561,925 )
Securities held-to-maturity 2,291,984 2,287,291 2,273,650 4,693 18,334
Loan and leases held for investment, net of deferred fees 25,483,069 25,489,687 25,672,381 (6,618 ) (189,312 )
Total assets 36,080,778 38,534,064 44,302,981 (2,453,286 ) (8,222,203 )
Noninterest-bearing deposits $ 7,833,608 $ $ 7,774,254 $ $ 7,030,759 $ $ 59,354 $ $ 802,849
Total deposits 28,892,407 30,401,769 28,187,561 (1,509,362 ) 704,846
Borrowings 2,139,498 2,911,322 11,881,712 (771,824 ) (9,742,214 )
Total liabilities 32,679,344 35,143,299 41,531,504 (2,463,955 ) (8,852,160 )
Securities
The balance of securities held-to-maturity ("HTM") remained consistent through the first quarter and totaled $2.3 billion at March 31, 2024. As of March 31, 2024, HTM securities had aggregate unrealized net after-tax losses in AOCI of $175.6 million remaining from the balance established at the time of transfer on June 1, 2022.
Securities available-for-sale ("AFS") decreased by $60.2 million during the first quarter to $2.3 billion at March 31, 2024. AFS securities had aggregate unrealized net after-tax losses in AOCI of $265.3 million. These AFS unrealized net losses related primarily to changes in overall interest rates and spreads and the resulting impact on valuations.
Loans and Leases
The following table sets forth the composition, by loan category, of our loan and lease portfolio held for investment, net of deferred fees, as of the dates indicated:
March 31, March 31, December 31, December 31, September 30, September 30, June 30, June 30, March 31, March 31,
Composition of Loans and Leases 2024 2023 2023 2023 2023
------------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
(Dollars in thousands) (Dollars in thousands)
Real estate mortgage:
Commercial $ 4,902,987 $ $ 5,026,497 $ $ 3,526,308 $ $ 3,610,320 $ $ 3,808,751
Multi-family 6,124,404 6,025,179 5,279,659 5,304,544 5,523,320
Other residential 4,949,371 5,060,309 5,228,524 5,373,178 6,075,540
-------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Total real estate mortgage 15,976,762 16,111,985 14,034,491 14,288,042 15,407,611
-------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Real estate construction and land:
Commercial 775,364 759,585 465,266 415,997 910,327
Residential 2,470,340 2,399,684 2,272,271 2,049,526 3,698,113
-------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Total real estate construction and land 3,245,704 3,159,269 2,737,537 2,465,523 4,608,440
-------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Total real estate 19,222,466 19,271,254 16,772,028 16,753,565 20,016,051
-------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Commercial:
Asset-based 2,061,093 2,189,085 2,287,893 2,357,098 2,068,327
Venture capital 1,513,641 1,446,362 1,464,160 1,723,476 2,058,237
Other commercial 2,246,157 2,129,860 1,002,377 1,014,212 1,102,543
-------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Total commercial 5,820,891 5,765,307 4,754,430 5,094,786 5,229,107
-------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Consumer 439,712 453,126 394,488 409,859 427,223
-------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Total loans and leases held for investment, net of deferred fees $ 25,483,069 $ $ 25,489,687 $ $ 21,920,946 $ $ 22,258,210 $ $ 25,672,381
==================== ========== ==================== ==================== ==================== ========== ==================== ==================== ==================== ========== ==================== ==================== ==================== ========== ==================== ==================== ==================== ========== ====================
Total unfunded loan commitments $ 5,482,672 $ $ 5,578,907 $ $ 5,289,221 $ $ 5,845,375 $ $ 9,776,789
Composition as % of Total March 31, December 31, December 31, September 30, September 30, June 30, June 30, March 31, March 31,
Loans and Leases 2024 2023 2023 2023 2023
------------------------------------------------------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Real estate mortgage:
Commercial 19 % 20 % 16 % 16 % 15 %
Multi-family 24 % 23 % 24 % 24 % 21 %
Other residential 19 % 20 % 24 % 24 % 24 %
-------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Total real estate mortgage 62 % 63 % 64 % 64 % 60 %
-------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Real estate construction and land:
Commercial 3 % 3 % 2 % 2 % 4 %
Residential 10 % 9 % 10 % 9 % 14 %
-------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Total real estate construction and land 13 % 12 % 12 % 11 % 18 %
-------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Total real estate 75 % 75 % 76 % 75 % 78 %
-------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Commercial:
Asset-based 8 % 9 % 10 % 11 % 8 %
Venture capital 6 % 6 % 7 % 8 % 8 %
Other commercial 9 % 8 % 5 % 4 % 4 %
-------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Total commercial 23 % 23 % 22 % 23 % 20 %
-------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Consumer 2 % 2 % 2 % 2 % 2 %
-------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Total loans and leases held for investment, net of deferred fees, remained consistent through the first quarter and totaled $25.5 billion at March 31, 2024. Loan fundings were $141.7 million in the first quarter at a weighted-average interest rate of 8.31%.
Deposits and Client Investment Funds
The following table sets forth the composition of our deposits at the dates indicated:
March 31, March 31, December 31, December 31, September 30, September 30, June 30, June 30, March 31, March 31,
Composition of Deposits 2024 2023 2023 2023 2023
---------------------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
(Dollars in thousands) (Dollars in thousands)
Noninterest-bearing checking $ 7,833,608 $ $ 7,774,254 $ $ 5,579,033 $ $ 6,055,358 $ $ 7,030,759
-------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Interest-bearing:
Checking 7,836,097 7,808,764 7,038,808 7,112,807 5,360,622
Money market 5,020,110 6,187,889 5,424,347 5,678,323 8,195,670
Savings 2,016,398 1,997,989 1,441,700 897,277 671,918
Time deposits:
Non-brokered 2,761,836 3,139,270 3,038,005 2,725,265 2,502,914
Brokered 3,424,358 3,493,603 4,076,788 5,428,053 4,425,678
-------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Total time deposits 6,186,194 6,632,873 7,114,793 8,153,318 6,928,592
-------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Total interest-bearing 21,058,799 22,627,515 21,019,648 21,841,725 21,156,802
-------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Total deposits $ 28,892,407 $ $ 30,401,769 $ $ 26,598,681 $ $ 27,897,083 $ $ 28,187,561
==================== ========== ==================== ==================== ==================== ========== ==================== ==================== ==================== ========== ==================== ==================== ==================== ========== ==================== ==================== ==================== ========== ====================
March 31, March 31, December 31, December 31, September 30, September 30, June 30, June 30, March 31, March 31,
Composition as % of Total Deposits 2024 2023 2023 2023 2023
---------------------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Noninterest-bearing checking 27 % 26 % 21 % 22 % 25 %
-------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Interest-bearing:
Checking 27 % 26 % 27 % 26 % 19 %
Money market 17 % 20 % 20 % 20 % 29 %
Savings 7 % 6 % 5 % 3 % 2 %
Time deposits:
Non-brokered 10 % 10 % 12 % 10 % 9 %
Brokered 12 % 12 % 15 % 19 % 16 %
-------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Total time deposits 22 % 22 % 27 % 29 % 25 %
-------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Total interest-bearing 73 % 74 % 79 % 78 % 75 %
-------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
Total deposits decreased by $1.5 billion during the first quarter to $28.9 billion at March 31, 2024, due primarily to decreases of $1.2 billion in money market accounts and $377.4 million in non-brokered time deposits.
Noninterest-bearing checking totaled $7.83 billion and represented 27% of total deposits at March 31, 2024, compared to $7.77 billion, or 26% of total deposits, at December 31, 2023.
Uninsured and uncollateralized deposits of $7.1 billion represented 24% of total deposits at March 31, 2024, compared to uninsured and uncollateralized deposits of $7.0 billion or 23% of total deposits at December 31, 2023.
In addition to deposit products, we also offer alternative, non-depository corporate treasury solutions for select clients to invest excess liquidity. These alternative options include investments managed by BofCal Asset Management Inc. ("BAM"), our registered investment advisor subsidiary, and third-party sweep products. Total off-balance sheet client investment funds were $0.6 billion as of December 31, 2023 and increased to $1.2 billion at March 31, 2024, of which $0.6 billion was managed by BAM.
Borrowings
Borrowings decreased by $771.8 million from $2.9 billion at December 31, 2023, to $2.1 billion at March 31, 2024 due primarily to the paydown of $1.1 billion of the Bank Term Funding Program balance, offset partially by $300 million in FHLB borrowings. We chose to extend the $1.5 billion remaining Bank Term Funding Program balance to March 2025 in order to have the flexibility to pay down or pay off the balance at our discretion as business needs dictate.
Equity
During the first quarter, total stockholders' equity increased by $10.7 million to $3.4 billion and tangible common equity(1) increased by $18.9 million to $2.5 billion at March 31, 2024. The increase in total stockholders' equity for the first quarter resulted primarily from net earnings in the first quarter, offset partially by dividends declared and paid.
At March 31, 2024, book value per common share increased to $17.18, compared to $17.12 at December 31, 2023, and tangible book value per common share(1) increased to $15.07, compared to $14.96 at December 31, 2023.
(1) Non-GAAP measures; refer to section 'Non-GAAP Measures' Non-GAAP measures; refer to section 'Non-GAAP Measures'
CAPITAL AND LIQUIDITY
Capital ratios remain strong with total risk-based capital at 16.43% and a tier 1 leverage ratio of 9.14% at March 31, 2024.
The following table sets forth our regulatory capital ratios as of the dates indicated:
March 31, March 31, December 31, December 31, September 30, September 30, June 30, June 30, March 31, March 31,
Capital Ratios 2024 (1) 2023 2023 2023 2023 2023 2023 2023 2023
------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Banc of California, Inc.
Total risk-based capital ratio 16.43% 16.43% 16.43% 17.83% 17.83% 17.61% 17.61% 14.21% 14.21%
Tier 1 risk-based capital ratio 12.41% 12.44% 12.44% 13.84% 13.84% 13.70% 13.70% 11.15% 11.15%
Common equity tier 1 capital ratio 10.12% 10.14% 10.14% 11.23% 11.23% 11.16% 11.16% 9.21% 9.21%
Tier 1 leverage capital ratio 9.14% 9.00% 9.00% 8.65% 8.65% 7.76% 7.76% 8.33% 8.33%
Banc of California
Total risk-based capital ratio 15.90% 15.75% 15.75% 16.37% 16.37% 16.07% 16.07% 12.94% 12.94%
Tier 1 risk-based capital ratio 13.37% 13.27% 13.27% 13.72% 13.72% 13.48% 13.48% 10.89% 10.89%
Common equity tier 1 capital ratio 13.37% 13.27% 13.27% 13.72% 13.72% 13.48% 13.48% 10.89% 10.89%
Tier 1 leverage capital ratio 9.86% 9.62% 9.62% 8.57% 8.57% 7.62% 7.62% 8.14% 8.14%
-------------------------------------
At March 31, 2024, immediately available cash and cash equivalents were $2.9 billion, a decrease of $2.3 billion from December 31, 2023. Combined with total available borrowing capacity of $12.6 billion and unpledged AFS securities of $1.4 billion, total available liquidity was $16.8 billion at the end of the first quarter.
CREDIT QUALITY
March 31, March 31, December 31, December 31, September 30, September 30, June 30, June 30, March 31, March 31,
Asset Quality Information and Ratios 2024 2023 2023 2023 2023
---------------------------------------------------------------------------- -------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- ------- --------------------
(Dollars in thousands) (Dollars in thousands)
Delinquent loans and leases held for investment:
30 to 89 days delinquent $ 178,594 $ $ 113,307 $ $ 49,970 $ $ 57,428 $ $ 144,431
90+ days delinquent 57,595 30,881 77,327 62,322 49,936
-------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- ------- --------------------
Total delinquent loans and leases $ 236,189 $ $ 144,188 $ $ 127,297 $ $ 119,750 $ $ 194,367
==================== ======= ==================== ==================== ==================== ======= ==================== ==================== ==================== ======= ==================== ==================== ==================== ======= ==================== ==================== ==================== ======= ====================
Total delinquent loans and leases to loans and leases held for investment 0.93 % 0.57 % 0.58 % 0.54 % 0.76 %
Nonperforming assets, excluding loans held for sale:
Nonaccrual loans and leases $ 145,981 $ $ 62,527 $ $ 125,396 $ $ 104,886 $ $ 87,124
90+ days delinquent loans and still accruing - 11,750 - - -
-------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- ------- --------------------
Total nonperforming loans and leases ("NPLs") 145,981 74,277 125,396 104,886 87,124
Foreclosed assets, net 12,488 7,394 6,829 8,426 2,135
-------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- ------- --------------------
Total nonperforming assets ("NPAs") $ 158,469 $ $ 81,671 $ $ 132,225 $ $ 113,312 $ $ 89,259
==================== ======= ==================== ==================== ==================== ======= ==================== ==================== ==================== ======= ==================== ==================== ==================== ======= ==================== ==================== ==================== ======= ====================
Allowance for loan and lease losses $ 291,503 $ $ 281,687 $ $ 222,297 $ $ 219,234 $ $ 210,055
Allowance for loan and lease losses to NPLs 199.69 % 379.24 % 177.28 % 209.02 % 241.10 %
NPLs to loans and leases held for investment 0.57 % 0.29 % 0.57 % 0.47 % 0.34 %
At March 31, 2024, total delinquent loans and leases were $236.2 million, compared to $144.2 million at December 31, 2023. The $92.0 million increase in total delinquent loans was due mostly to a $56.8 million increase in commercial real estate mortgage loans that were 30 to 89 days delinquent and a $35.1 million increase in other residential real estate mortgage loans that were 90 or more days delinquent. Total delinquent loans and leases as a percentage of total loans and leases increased to 0.93% at March 31, 2024, as compared to 0.57% at December 31, 2023.
At March 31, 2024, nonperforming assets were $158.5 million, or 0.44% of total assets, compared to $81.7 million, or 0.21% of total assets, as of December 31, 2023.
At March 31, 2024, nonperforming loans were $146.0 million, and included $66.7 million of CRE loans, $61.8 million of other residential loans (mostly Civic), $15.7 million of commercial and industrial loans, $1.0 million of multi-family loans, and $0.8 million of consumer loans. During the first quarter, nonperforming loans increased by $71.7 million due to additions of $90.9 million, offset partially by borrowers that became current of $12.8 million, payoffs and paydowns of $5.0 million, and net charge-offs of $1.4 million.
Nonperforming loans and leases as a percentage of total loans and leases increased to 0.57% at March 31, 2024 compared to 0.29% at December 31, 2023. Four CRE credits drove the majority of the increase to nonperforming loans during the period, which included 3 office properties and 1 retail property. Specific reserves were established for two office properties which contributed to the increase in the provision. The legacy Civic portfolio also contributed to the increase in both delinquencies and nonperforming loans. The nonperforming loan increase was driven mainly by the four CRE properties which represented 60% of the increase, Civic represented 29% of the increase, and SFR/consumer loans represented 7% of the increase.
At March 31, 2024, nonperforming assets included $12.5 million of other real estate owned, consisting entirely of single-family residences.
ALLOWANCE FOR CREDIT LOSSES - LOANS
Three Months Ended Three Months Ended
------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
March 31, March 31, December 31, December 31, March 31, March 31,
Allowance for Credit Losses - Loans 2024 2023 2023
------------------------------------------------------ -------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- ------- --------------------
(Dollars in thousands) (Dollars in thousands)
Allowance for loan and lease losses ("ALLL"):
Balance at beginning of period $ 281,687 $ $ 222,297 $ $ 200,732
Initial ALLL on acquired PCD loans - 25,623 -
Charge-offs (5,014 ) (14,628 ) (10,397 )
Recoveries 3,830 1,395 1,220
-------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- ------- --------------------
Net charge-offs (1,184 ) (13,233 ) (9,177 )
Provision for loan losses 11,000 47,000 (1) 18,500
-------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- ------- --------------------
Balance at end of period $ 291,503 $ $ 281,687 $ $ 210,055
==================== ======= ==================== ==================== ==================== ======= ==================== ==================== ==================== ======= ====================
Reserve for unfunded loan commitments ("RUC"):
Balance at beginning of period $ 29,571 $ $ 29,571 $ $ 91,071
(Negative provision) provision for credit losses (1,000 ) - (15,500 )
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Balance at end of period $ 28,571 $ $ 29,571 $ $ 75,571
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Allowance for credit losses ("ACL") - Loans:
Balance at beginning of period $ 311,258 $ $ 251,868 $ $ 291,803
Initial ALLL on acquired PCD loans - 25,623 -
Charge-offs (5,014 ) (14,628 ) (10,397 )
Recoveries 3,830 1,395 1,220
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