Banc of California Reports Second Quarter 2019 Earnings

Banc of California, Inc. (NYSE: BANC) today reported net income available to common stockholders of $11.9 million, for the second quarter of 2019, resulting in diluted earnings per common share of $0.23.

Highlights for the second quarter included:

• Net interest margin increased by 5 basis points from the prior quarter to 2.86% for the second quarter, resulting from a 5 basis point decline in our cost of deposits
• Loan production was $599 million for the quarter, including $186 million of commercial and industrial loan commitments
• Loan delinquencies decreased by 12.2% from the prior quarter to $52.2 million
• Held-for-investment loan balances for the second quarter decreased to $6.7 billion as we sold lower coupon single family and multifamily loans and transferred $574 million of multifamily loans to held-for-sale, pending a planned Freddie Mac securitization
• Collateralized loan obligations declined to $737 million following $298 million of sales and calls
• Noninterest expense was $43.6 million for the quarter, including non-core expenses of $6.2 million of litigation, indemnification, investigation and other legal fees, $12.6 million of insurance recoveries, and net project charge-offs of $869 thousand
• Efficiency ratio for the second quarter decreased to 69.75%
• Return on average assets increased to 0.69%, while return on average tangible common equity was 7.43%

Jared Wolff, President and Chief Executive Officer of Banc of California, commented, “The second quarter results reflect our accelerated efforts to focus on our three initiatives designed to improve our franchise and profitability on an ongoing basis: reducing our cost of deposits, optimizing the balance sheet to focus on higher-margin products and appropriately managing down expenses to the size and complexity of the business. Through these efforts, we continue to transform our franchise into a relationship-focused community bank, maintaining our high credit quality and serving businesses, entrepreneurs and individuals within our footprint. Further, as part of our efforts to improve our balance sheet, we commenced today a tender offer for our preferred equity for up to $75 million aggregate purchase price.”

Speaking specifically about operational results for the quarter, John Bogler, Chief Financial Officer of Banc of California said “The sales of non-core and low-margin assets allowed us to reduce high costing deposits, resulting in a 5 basis point decline in the cost of total deposits. Efforts to simplify our operating model allowed noninterest expense and operating expenses each to come in below $50 million for the quarter, which is ahead of our schedule for reducing expenses.”

Business Results - Income Statement Highlights

		Three Months Ended
		June 30, 2019						March 31, 2019						December 31, 2018						September 30, 2018						June 30, 2018
Total interest and dividend income		$			104,040			$			110,712			$			111,130			$			107,774			$			105,185
Total interest expense					39,260						42,904						40,448						36,582						32,421
(Reversal of) provision for loan and lease losses					(1,987	)					2,512						6,653						1,410						2,653
Net interest income after provision for loan and lease losses					66,767						65,296						64,029						69,782						70,111
Total noninterest (loss) income					(2,290	)					6,295						2,448						4,824						8,061
Total noninterest expense					43,587						61,835						49,569						60,877						62,539
Income tax expense					4,308						2,719						6,117						3,301						1,779
Income from continuing operations					16,582						7,037						10,791						10,428						13,854
Income from discontinued operations		—						—									247						668						926
Net income		$			16,582			$			7,037			$			11,038			$			11,096			$			14,780

Net interest income

Net interest income for the second quarter decreased to $64.8 million as we sold non-core assets and repaid high cost funding during the quarter. For the second quarter, average interest-earning assets declined from the prior quarter by $695 million to $9.1 billion, while the net interest margin improved by 5 basis points versus the prior quarter.

Our average yield on interest-earning assets remained flat at 4.59% for the second quarter as compared to the first quarter of 2019, primarily attributable to an increase in our average yield on loans partially offset by a decrease in our average yield on securities. Our average yield on loans came in at 4.80% for the second quarter which increased by 4 basis points from the prior quarter, primarily attributable to a reduction in lower-yielding single family residential mortgage and multifamily loans. Our average yield on securities decreased primarily as a result of an interest rate reset on our collateralized loan obligations and a decrease in our average balance attributable to the sale and calls of $298 million of our higher yielding collateralized loan obligations during the second quarter. The decline in the average balance of collateralized loan obligations was also due to sales that occurred late in the first quarter of 2019. We sold a significant amount of these securities at the end of the first quarter, with the full impact of the first quarter sales reflected in the second quarter.

Our average cost of interest-bearing liabilities decreased to 2.09% for the second quarter from 2.12% for the first quarter, primarily resulting from a 5 basis point decrease in our average cost of total deposits from the prior quarter to 1.62% for the second quarter. The decrease in our cost of deposits from the prior quarter primarily resulted from the shift in our deposit strategy to focus on relationship-based customers and de-emphasize high-rate transactional customers.

Provision for loan losses

During the second quarter, we released $2.0 million of our allowance for loan losses primarily attributable to a decrease in the held-for-investment loan portfolio, partially offset by an increase in net charge-offs and other qualitative provisions during the quarter. The decrease in the loan portfolio primarily resulted from the sale of $178 million of multifamily loans and the transfer of $574 million of multifamily loans to held-for-sale. During the quarter, we had $2.4 million in net charge-off activity and a $900 thousand increase in our specific reserves. The net charge-offs were driven primarily by a charge-off of $2.0 million on one commercial and industrial loan relationship.

Noninterest (loss) income

Noninterest (loss) income for the second quarter was $(2.3) million, which represented a decrease of $8.6 million, or 136.38% from the prior quarter. The decrease is primarily attributable to a $9.6 million loss on our hedge of the pending Freddie Mac multifamily securitization in which we also plan to sell the associated mortgage servicing rights. The $9.6 million hedging loss is due to a decline in interest rates since the hedge was executed and is expected to be mostly offset by the gain in fair value of the loans sold into the securitization in the third quarter. This was partially offset by an increase of $1.3 million in our gain on sale of loans during the second quarter, resulting from the sale of $178 million and $344 million of multifamily and single family residential mortgage loans, respectively.

Noninterest expense

Noninterest expense for the second quarter was $43.6 million, which represented a decrease of $18.2 million, or 29.5%, from the prior quarter. The decrease primarily relates to: (1) a $13.9 million decline in our professional fees, primarily attributable to $6.2 million of insurance recoveries net of expenses related to securities litigation, indemnification, investigation and other legal expenses in the second quarter as compared to $3.0 million of net expense in the prior quarter, (2) $158 thousand reversal true-up related to restructuring expense in the second quarter as compared to $2.8 million of restructuring expense in the prior quarter, and (3) a 933 thousand decrease in our compensation expense resulting from lower headcount. The net recovery of $6.2 million in insurance proceeds from the securities litigation, indemnification, investigation and other legal expenses reduced our efficiency ratio by 10%.

Income taxes

Taxes totaled $4.3 million for the quarter, representing an increase of 58% from the prior quarter, and an effective tax rate of 20.62%. During the second quarter of 2019, we closed on a tax planning strategy investment that is expected to produce $3.4 million of investment tax credits in 2019, resulting in a 5% reduction in the projected annual effective tax rate. For the full year, we expect our tax rate to normalize closer to 20%.

Balance Sheet

The following table shows selected balance sheet line items as of June 30, 2019 and for the previous four quarters. As indicated in the table below, at June 30, 2019, total assets were approximately $9.4 billion, which represented a decrease of $527 million million consistent with our strategic shift towards reducing our balance sheet and focusing on relationship lending.

		As of and for the Three Months Ended																				Amount Change
		June 30, 2019				March 31, 2019				December 31, 2018				September 30, 2018				June 30, 2018				Q2-19 vs. Q1 19				Q2-19 vs. Q2 18
Total assets		$	9,359,931			$	9,886,525			$	10,630,067			$	10,260,822			$	10,319,280			$	(526,594	)		$	(959,349	)
Securities available-for-sale		$	1,167,687			$	1,471,303			$	1,992,500			$	2,059,832			$	2,297,124			$	(303,616	)		$	(1,129,437	)
Loans held-for-investment		$	6,719,570			$	7,557,200			$	7,700,873			$	7,253,293			$	7,036,004			$	(837,630	)		$	(316,434	)
Loans held-for-sale		$	597,720			$	25,191			$	8,116			$	9,382			$	13,753			$	572,529			$	583,967
Demand deposits		$	2,571,646			$	2,694,199			$	2,579,770			$	2,775,347			$	2,783,432			$	(122,553	)		$	(211,786	)
Other core deposits			3,239,667				3,735,667				3,793,605				3,638,624				3,666,159				(496,000	)			(426,492	)
Brokered deposits			480,977				1,295,066				1,543,269				987,771				686,203				(814,089	)			(205,226	)
Total Deposits		$	6,292,290			$	7,724,932			$	7,916,644			$	7,401,742			$	7,135,794			$	(1,432,642	)		$	(843,504	)
As percentage of total deposits
Demand deposits			40.87	%			34.88	%			32.59	%			37.50	%			39.01	%			5.99	%			1.86	%
Other core deposits			51.49	%			48.36	%			47.92	%			49.16	%			51.38	%			3.13	%			0.11	%
Brokered deposits			7.64	%			16.76	%			19.49	%			13.35	%			9.62	%			(9.12	)%			(1.98	)%
Average Loan Yield			4.80	%			4.76	%			4.74	%			4.70	%			4.63	%			0.04	%			0.17	%
Average Cost of Interest-Bearing Deposits			1.89	%			1.92	%			1.77	%			1.58	%			1.34	%			(0.03	)%			0.55	%

Investments

Securities available-for-sale declined to $1.2 billion, a decrease of 20.6% from the previous quarter, primarily due to the continued reduction in the size of the collateralized loan obligation portfolio. During the second quarter, $298 million of collateralized loan obligations were sold or called. As of June 30, 2019, our securities balance included $737 million of collateralized loan obligations, $852 thousand of small business administration loan pool securities, $429 million of agency residential mortgage-backed securities and $285 thousand of non-agency residential mortgage-backed securities.

Loans

The following table sets forth the composition, by loan category, of our loan portfolio at June 30, 2019 and the previous four quarters.

		June 30, 2019				March 31, 2019				December 31, 2018				September 30, 2018				June 30, 2018
Composition of held-for-investment loans
Commercial real estate		$	856,497			$	865,521			$	867,013			$	823,193			$	793,855
Multifamily			1,598,978				2,332,527				2,241,246				2,112,190				1,959,965
Construction			209,029				211,549				203,976				200,294				211,110
Commercial and industrial			1,951,707				1,907,102				1,944,142				1,673,055				1,742,559
SBA			80,929				74,998				68,741				71,494				78,092
Total commercial loans			4,697,140				5,391,697				5,325,118				4,880,226				4,785,581
Single family residential mortgage			1,961,065				2,102,694				2,305,490				2,300,069				2,174,183
Other consumer			61,365				62,809				70,265				72,998				76,240
Total consumer loans			2,022,430				2,165,503				2,375,755				2,373,067				2,250,423
Total gross loans		$	6,719,570			$	7,557,200			$	7,700,873			$	7,253,293			$	7,036,004
Composition percentage of held-for-investment loans
Commercial real estate			12.7	%			11.5	%			11.3	%			11.3	%			11.3	%
Multifamily			23.8	%			30.9	%			29.2	%			29.1	%			27.9	%
Construction			3.1	%			2.8	%			2.6	%			2.8	%			3.0	%
Commercial and industrial			29.1	%			25.2	%			25.2	%			23.1	%			24.8	%
SBA			1.2	%			1.0	%			0.9	%			1.0	%			1.1	%
Total commercial loans			69.9	%			71.4	%			69.2	%			67.3	%			68.1	%
Single family residential mortgage			29.2	%			27.8	%			29.9	%			31.7	%			30.9	%
Other consumer			0.9	%			0.8	%			0.9	%			1.0	%			1.0	%
Total consumer loans			30.1	%			28.6	%			30.8	%			32.7	%			31.9	%
Total gross loans			100.0	%			100.0	%			100.0	%			100.0	%			100.0	%

Held-for-investment loans decreased to $6.7 billion driven mostly by the transfer of $574 million of multifamily loans from held-for-investment to held-for-sale during the quarter and the sale of $178 million and $131 million of multifamily and single family residential mortgage loans, respectively, partially offset by quarterly net production of $45 million. The quarterly net production increased from the prior quarter primarily as a result of new loan growth of $63 million during the quarter, and $128 million of single family residential mortgage loan production in the second quarter as opposed to $183 million during the first quarter of 2019. The $128 million of single family residential mortgage loan production in the second quarter represented funding on commitments made prior to our decision to discontinue the single family residential mortgage loan business. Going forward, we would expect minimal production from this business in the third and fourth quarters of 2019 as we focus on relationship lending.

Commercial real estate loans comprised 12.7% of the loan portfolio and commercial and industrial loans constituted 29.1%, with yields of 4.67% and 5.77%, respectively. During the second quarter of 2019, our commercial and industrial loan production was $186 million, which represented an increase of 12.6% over the prior quarter.

Held-for-sale loans increased by $573 million primarily resulting from the transfer of certain multifamily loans from loans held-for-investment related to our pending Freddie Mac multifamily securitization which is expected to close during the third quarter of 2019. The loans included in the securitization have a weighted average coupon of 3.79% and a weighted average term to initial reset of 3.5 years. The related mortgage servicing rights will also be sold.

Excluding the aforementioned loan sales and loans transferred to held-for-sale, the loan portfolio had net growth of $45 million from the prior quarter.

Deposits

The following table sets forth the composition of our deposits at June 30, 2019 and the previous four quarters.

		June 30, 2019				March 31, 2019				December 31, 2018				September 30, 2018				June 30, 2018
Composition of deposits
Noninterest-bearing checking		$	993,745			$	1,120,700			$	1,023,360			$	1,061,557			$	1,005,032
Interest-bearing checking			1,577,901				1,573,499				1,556,410				1,713,790				1,778,400
Money market			800,898				899,330				873,153				856,886				1,136,335
Savings			1,061,115				1,151,442				1,265,847				1,269,489				1,175,275
Non-brokered certificates of deposit			1,479,137				1,684,895				1,654,605				1,512,249				1,354,549
Brokered certificates of deposit			379,494				1,295,066				1,543,269				987,771				686,203
Total deposits		$	6,292,290			$	7,724,932			$	7,916,644			$	7,401,742			$	7,135,794
Composition percentage of deposits
Noninterest-bearing checking			15.8	%			14.5	%			12.9	%			14.3	%			14.1	%
Interest-bearing checking			25.1	%			20.4	%			19.7	%			23.2	%			24.9	%
Money market			12.7	%			11.6	%			11.0	%			11.6	%			15.9	%
Savings			16.9	%			14.9	%			16.0	%			17.2	%			16.5	%
Non-brokered certificates of deposit			23.5	%			21.8	%			20.9	%			20.4	%			19.0	%
Brokered certificates of deposit			6.0	%			16.8	%			19.5	%			13.3	%			9.6	%
Total deposits			100.0	%			100.0	%			100.0	%			100.0	%			100.0	%

Deposits finished the second quarter at $6.3 billion, with noninterest-bearing deposits decreasing approximately $127 million. The decline in noninterest-bearing deposits for the quarter consisted primarily of transactional balances that fluctuate throughout the quarter but are expected to return. For the second quarter, the average balance of noninterest-bearing deposits was $1.034 billion up from the first quarter average balance of $1.022 billion. Total deposits decreased by $1.4 billion, of which $916 million was as a result of maturities on our brokered certificates of deposit and no new brokered certificates of deposit were acquired during the quarter.

Debt

Advances from the Federal Home Loan Bank (“FHLB”) increased $890 million, or 95%, to $1.8 billion as of June 30, 2019, as a result of overnight advances with the FHLB that we plan to pay down with the proceeds from the sale of loans sold into the Freddie Mac multifamily securitization which is expected to close in the third quarter. At the end of the quarter, the maturity dates of FHLB advances consisted of $645 million of overnight, $400 million maturing in 3 months or less, and $780 million maturing beyond 3 months. As of the end of the quarter, the overnight advance interest rate was 2.52%.

Equity

At June 30, 2019, stockholders’ equity increased by $15.2 million to $963.5 million, while tangible common equity was $690.2 million. The improvement in stockholders’ equity partially related to the improvement within our accumulated other comprehensive income as a result of other comprehensive income of $5.4 million. During the second quarter of 2019, we reduced the dividend per common share from 13 cents to 6 cents. Subsequent to June 30, 2019, we launched a tender offer for our preferred equity for up to $75 million aggregate purchase price with the tender offer expected to close by the end of August.

Capital remains strong with total risk based capital at 14.88% and a tier 1 leverage ratio of 9.62%. The following table sets forth our regulatory capital ratios at June 30, 2019 and the previous four quarters.

		June 30, 2019			March 31, 2019			December 31, 2018			September 30, 2018			June 30, 2018
Capital Ratios
Banc of California, Inc.
Total risk-based capital ratio		14.88	%		14.01	%		13.71	%		14.05	%		14.71	%
Tier 1 risk-based capital ratio		13.91	%		13.03	%		12.77	%		13.15	%		13.83	%
Common equity tier 1 capital ratio		10.41	%		9.72	%		9.53	%		9.80	%		9.90	%
Tier 1 leverage ratio		9.62	%		8.87	%		8.95	%		8.99	%		9.30	%
Banc of California, NA
Total risk-based capital ratio		16.56	%		15.79	%		15.71	%		15.94	%		16.63	%
Tier 1 risk-based capital ratio		15.60	%		14.81	%		14.77	%		15.04	%		15.74	%
Common equity tier 1 capital ratio		15.60	%		14.81	%		14.77	%		15.04	%		15.74	%
Tier 1 leverage ratio		10.80	%		10.07	%		10.36	%		10.29	%		10.58	%

Credit Quality

		June 30, 2019				March 31, 2019				December 31, 2018				September 30, 2018				June 30, 2018
Asset quality information and ratios		($ in thousands)
Delinquent loans held-for-investment
30 to 89 days delinquent		$	34,938			$	44,840			$	26,684			$	20,265			$	15,097
90+ days delinquent			17,272				14,623				13,846				15,269				11,453
Total delinquent loans		$	52,210			$	59,463			$	40,530			$	35,534			$	26,550
Total delinquent loans to total loans			0.78	%			0.79	%			0.53	%			0.49	%			0.38	%
Non-performing assets, excluding loans held-for-sale
Non-performing loans		$	28,499			$	27,739			$	21,585			$	25,523			$	22,290
90+ days delinquent and still accruing loans			275				731				470			—				—
Other real estate owned			276				316				672				434				710
Non-performing assets		$	29,050			$	28,786			$	22,727			$	25,957			$	23,000
ALLL to non-performing loans			206.86	%			224.40	%			281.99	%			226.39	%			254.28	%
Non-performing loans to total loans held-for-investment			0.43	%			0.38	%			0.29	%			0.35	%			0.32	%
Non-performing assets to total assets			0.31	%			0.29	%			0.21	%			0.25	%			0.22	%
Troubled debt restructurings (TDRs)
Performing TDRs		$	20,245			$	5,574			$	5,745			$	5,580			$	5,648
Non-performing TDRs			2,428				1,943				2,276				2,684				2,701
Total TDRs		$	22,673			$	7,517			$	8,021			$	8,264			$	8,349

Loan delinquencies decreased by 12.2% to $52.2 million at June 30, 2019, primarily related to the decrease in our 30 to 89 days delinquent loans. The decrease in our total delinquent loans resulted from $12.6 million returning to current status and $11.7 million of principal payments or payoffs, partially offset by $17.0 million of additions. Loans 90+ days delinquent includes single family mortgage residential loans, which account for 44% of the balance. Loan delinquencies as a percentage of total loans held-for-investment decreased to 78 basis points for the quarter, primarily resulting from the improvement in our delinquent loans, partially offset by the reduction in our balance sheet over the same period.

Non-performing loans increased slightly to $28.5 million as of June 30, 2019, while non-performing assets finished the second quarter at $29.1 million attributable to an increase in our nonperforming loans as of June 30, 2019, partially offset by a reduction in our other real estate owned and loans 90+ days delinquent and still accruing interest. The increase in performing TDRs during the second quarter was primarily due to one loan relationship.

Allowance for Loan Losses

		Three Months Ended
		June 30, 2019				March 31, 2019				December 31, 2018				September 30, 2018				June 30, 2018
		($ in thousands)
Allowance for loan losses (ALLL)
Balance at beginning of period		$	63,885			$	62,192			$	57,782			$	56,678			$	54,763
Loans and leases charged off		$	(2,451	)		$	(1,063	)		$	(2,522	)		$	(388	)		$	(950	)
Recoveries		$	76			$	244			$	279			$	82			$	212
Net charge-offs		$	(2,375	)		$	(819	)		$	(2,243	)		$	(306	)		$	(738	)
(Reversal of) provision for loan losses		$	(1,987	)		$	2,512			$	6,653			$	1,410			$	2,653
Balance at end of period		$	59,523			$	63,885			$	62,192			$	57,782			$	56,678
Annualized net loan charge-offs to average total loans held-for-investment			0.13	%			0.04	%			0.12	%			0.02	%			0.04	%
Reserve for loss on repurchased loans
Balance at beginning of period		$	2,486			$	2,506			$	2,575			$	3,149			$	3,426
Reversal of provision for loan repurchases			(8	)			(20	)			(69	)			(342	)			(165	)
Utilization of reserve for loan repurchases		—				—				—					(232	)			(112	)
Balance at end of period		$	2,478			$	2,486			$	2,506			$	2,575			$	3,149

Charge-offs for the second quarter totaled $2.5 million, which primarily consisted of a $2.0 million write-down related to one loan relationship and a write-down of $425 thousand related to the sale of single family residential mortgage loans during the quarter. The allowance for loan losses decreased to $59.5 million, or 0.89% of total loans held-for-investment, primarily attributable to the release of $5.0 million resulting from the upcoming securitization of our multifamily portfolio and other decreases in the loan portfolio, partially offset by net charge-offs of $2.4 million and increases in other qualitative provisions during the quarter.

The Company will host a conference call to discuss its second quarter 2019 financial results at 10:00 a.m. Pacific Time (PT) on Thursday, July 25, 2019. Interested parties are welcome to attend the conference call by dialing 888-317-6003, and referencing event code 4783507. A live audio webcast will also be available and the webcast link will be posted on the Company’s Investor Relations website at www.bancofcal.com/investor. The slide presentation for the call will also be available on the Company's Investor Relations website prior to the call.

About Banc of California, Inc.

Banc of California, Inc. (NYSE: BANC) is a bank holding company with approximately $9 billion in assets and one wholly-owned banking subsidiary, Banc of California, N.A. (the “Bank”). The Bank has 43 offices including 32 full-service branches located throughout Southern California. Through our 700+ dedicated professionals, we provide customized and innovative banking and lending solutions to businesses, entrepreneurs and individuals throughout California. We help to improve the communities where we live and work, by supporting organizations that provide financial literacy and job training, small business support and affordable housing. With a commitment to service and building enduring relationships, we provide a higher standard of banking. We look forward to helping you achieve your goals. For more information, please visit us at www.bancofcal.com.

Forward-Looking Statements

This press release includes 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. with the Securities and Exchange Commission. You should not place undue reliance on forward-looking statements and Banc of California, Inc. undertakes no obligation to update any such statements to reflect circumstances or events that occur after the date on which the forward-looking statement is made.

Additional Information

This press release is neither an offer to purchase nor a solicitation of an offer to sell securities. The tender offer for the outstanding depositary shares representing Banc of California, Inc.’s 7.00% Non-Cumulative Perpetual Preferred Stock, Series E and its 7.375% Non-Cumulative Perpetual Preferred Stock, Series D described in this press release is being made pursuant to an Offer to Purchase and related materials that Banc of California, Inc. has filed or will file with the Securities and Exchange Commission (the “SEC”) pursuant to a Schedule TO. The Schedule TO, Offer to Purchase, a related letter of transmittal and other tender offer documents contain important information that should be read carefully before any decision is made with respect to the tender offer. These materials (and all other documents Banc of California, Inc. has filed with the SEC) are available at no charge on the SEC's website at www.sec.gov.

Banc of California, Inc.
Consolidated Statements of Financial Condition
(Dollars in thousands)
(Unaudited)
		June 30, 2019				March 31, 2019				December 31, 2018				September 30, 2018				June 30, 2018
ASSETS
Cash and cash equivalents		$	313,850			$	304,705			$	391,592			$	372,221			$	385,691
Securities available-for-sale			1,167,687				1,471,303				1,992,500				2,059,832				2,297,124
Loans held-for-sale			597,720				25,191				8,116				9,382				13,753
Loans held-for-investment			6,719,570				7,557,200				7,700,873				7,253,293				7,036,004
Allowance for loan losses			(59,523	)			(63,885	)			(62,192	)			(57,782	)			(56,678	)
Federal Home Loan Bank and other bank stock			76,373				55,794				68,094				71,308				75,737
Servicing rights, net			2,715				3,053				3,428				3,770				3,869
Other real estate owned, net			276				316				672				434				710
Premises and equipment, net			129,227				130,417				129,394				133,129				135,478
Investments in alternative energy partnerships, net			26,633				26,578				28,988				41,781				44,806
Goodwill			37,144				37,144				37,144				37,144				37,144
Other intangible assets, net			5,105				5,726				6,346				6,990				7,683
Deferred income tax, net			42,798				45,111				49,404				47,865				42,334
Income tax receivable			2,547				4,787				2,695				1,764				7,995
Bank owned life insurance investment			108,132				107,552				107,027				106,468				105,917
Right of use assets			24,118				24,519			—				—				—
Other assets			165,559				151,014				146,496				152,933				155,298
Assets of discontinued operations		—				—					19,490				20,290				26,415
Total assets		$	9,359,931			$	9,886,525			$	10,630,067			$	10,260,822			$	10,319,280
LIABILITIES AND STOCKHOLDERS’ EQUITY
Noninterest-bearing deposits		$	993,745			$	1,120,700			$	1,023,360			$	1,061,557			$	1,005,032
Interest-bearing deposits			5,298,545				6,604,232				6,893,284				6,340,185				6,130,762
Total deposits			6,292,290				7,724,932				7,916,644				7,401,742				7,135,794
Advances from Federal Home Loan Bank			1,825,000				935,000				1,520,000				1,640,000				1,805,000
Notes payable, net			173,257				173,203				173,174				173,096				173,017
Reserve for loss on repurchased loans			2,478				2,486				2,506				2,575				3,149
Lease liabilities			25,457				25,893			—				—				—
Due on unsettled securities purchases		—				—				—					17,500				132,546
Accrued expenses and other liabilities			77,905				76,686				72,209				79,231				81,086
Total liabilities			8,396,387				8,938,200				9,684,533				9,314,144				9,330,592
Commitments and contingent liabilities
Preferred stock			231,128				231,128				231,128				231,128				269,071
Common stock			520				518				518				518				517
Common stock, class B non-voting non-convertible			5				5				5				5				4
Additional paid-in capital			627,306				626,608				625,834				624,789				623,372
Retained earnings			146,039				136,943				140,952				140,971				143,880
Treasury stock			(28,786	)			(28,786	)			(28,786	)			(28,786	)			(28,786	)
Accumulated other comprehensive loss, net			(12,668	)			(18,091	)			(24,117	)			(21,947	)			(19,370	)
Total stockholders’ equity			963,544				948,325				945,534				946,678				988,688
Total liabilities and stockholders’ equity		$	9,359,931			$	9,886,525			$	10,630,067			$	10,260,822			$	10,319,280

Banc of California, Inc.
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited)
		Three Months Ended
		June 30, 2019				March 31, 2019				December 31, 2018				September 30, 2018				June 30, 2018
Interest and dividend income
Loans, including fees		$	89,159			$	90,558			$	88,258			$	84,795			$	81,307
Securities			12,457				17,841				19,882				20,599				21,455
Other interest-earning assets			2,424				2,313				2,990				2,380				2,423
Total interest and dividend income			104,040				110,712				111,130				107,774				105,185
Interest expense
Deposits			28,598				31,443				28,972				25,154				20,315
Federal Home Loan Bank advances			8,289				9,081				9,068				8,996				9,539
Securities sold under repurchase agreements			16				18				25				47				211
Notes payable and other interest-bearing liabilities			2,357				2,362				2,383				2,385				2,356
Total interest expense			39,260				42,904				40,448				36,582				32,421
Net interest income			64,780				67,808				70,682				71,192				72,764
(Reversal of) provision for loan and lease losses			(1,987	)			2,512				6,653				1,410				2,653
Net interest income after provision for loan and lease losses			66,767				65,296				64,029				69,782				70,111
Noninterest income
Customer service fees			1,434				1,515				1,786				1,446				1,491
Loan servicing income			121				118				22				439				948
Impairment loss on investment securities		—				—					(3,252	)		—				—
Net gain on sale of securities available for sale		—					208			—					13				278
Net gain on sale of loans			2,826				1,553				873				279				821
All other income (loss)			(6,671	)			2,901				3,019				2,647				4,523
Total noninterest income			(2,290	)			6,295				2,448				4,824				8,061
Noninterest expense
Salaries and employee benefits			27,506				28,439				24,587				24,832				29,440
Occupancy and equipment			7,955				7,686				8,064				8,213				7,883
Professional fees (reimbursement)			(2,903	)			11,041				6,206				11,966				6,303
Data processing			1,672				1,496				1,733				1,884				1,678
Advertising			2,048				2,057				3,371				3,152				2,864
Regulatory assessments			2,136				2,482				1,252				2,138				2,196
Reversal of provision for loan repurchases			(61	)			(116	)			(122	)			(360	)			(218	)
Amortization of intangible assets			621				620				644				693				827
Restructuring (reversal) expense			(158	)			2,795				(105	)			553				3,983
All other expenses			5,126				3,385				3,153				5,322				5,775
Total noninterest expense excluding loss (gain) on investments in alternative energy partnerships			43,942				59,885				48,783				58,393				60,731
(Gain) loss on investments in alternative energy partnerships			(355	)			1,950				786				2,484				1,808
Total noninterest expense			43,587				61,835				49,569				60,877				62,539
Income from continuing operations before income taxes			20,890				9,756				16,908				13,729				15,633
Income tax expense			4,308				2,719				6,117				3,301				1,779
Income from continuing operations			16,582				7,037				10,791				10,428				13,854
Income from discontinued operations before income taxes		—				—					347				924				1,281
Income tax expense		—				—					100				256				355
Income from discontinued operations		—				—					247				668				926
Net income			16,582				7,037				11,038				11,096				14,780
Preferred stock dividends			4,308				4,308				4,308				4,970				5,113
Income allocated to participating securities			271			—				—				—					86
Participating securities dividends			94				202				203				202				203
Impact of preferred stock redemption		—				—				—					2,307			—
Net income available to common stockholders		$	11,909			$	2,527			$	6,527			$	3,617			$	9,378
Basic earnings per common share
Income from continuing operations		$	0.23			$	0.05			$	0.12			$	0.06			$	0.17
Income from discontinued operations		—				—					0.01				0.01				0.02
Net income		$	0.23			$	0.05			$	0.13			$	0.07			$	0.19
Diluted earnings per common share
Income from continuing operations		$	0.23			$	0.05			$	0.12			$	0.06			$	0.16
Income from discontinued operations		—				—					0.01				0.01				0.02
Net income		$	0.23			$	0.05			$	0.13			$	0.07			$	0.18
Weighted average number of common shares outstanding
Basic			50,857,137				50,676,722				50,651,805				50,656,076				50,593,429
Diluted			50,964,956				50,846,722				50,812,874				50,899,464				50,919,091
Dividends declared per common share		$	0.06			$	0.13			$	0.13			$	0.13			$	0.13

Banc of California, Inc.
Selected Financial Data
(Unaudited)
		Three Months Ended
		June 30, 2019			March 31, 2019			December 31, 2018			September 30, 2018			June 30, 2018
Profitability and other ratios of consolidated operations
Return on average assets(1)		0.69	%		0.28	%		0.43	%		0.43	%		0.58	%
Return on average equity(1)		6.91	%		2.98	%		4.56	%		4.40	%		5.92	%
Return on average tangible common equity(2)		7.43	%		1.91	%		4.19	%		2.49	%		6.03	%
Dividend payout ratio(3)		26.09	%		260.00	%		100.00	%		185.71	%		68.42	%
Net interest spread		2.50	%		2.47	%		2.56	%		2.62	%		2.75	%
Net interest margin(1)		2.86	%		2.81	%		2.88	%		2.93	%		3.01	%
Noninterest income (loss) to total revenue(4)		(3.66	)%		8.49	%		3.60	%		7.42	%		11.16	%
Noninterest income (loss) to average total assets(1)		(0.10	)%		0.25	%		0.10	%		0.22	%		0.36	%
Noninterest expense to average total assets(1)		1.82	%		2.43	%		1.92	%		2.38	%		2.45	%
Efficiency ratio(2)(5)		69.75	%		83.44	%		67.47	%		79.15	%		76.17	%
Adjusted efficiency ratio including the pre-tax effect of investments in alternative energy partnerships(2)(5)		67.84	%		83.00	%		67.09	%		77.88	%		73.50	%
Average loans held-for-investment to average deposits		104.38	%		100.45	%		97.40	%		97.00	%		98.63	%
Average securities available-for-sale to average total assets		13.58	%		17.00	%		19.85	%		21.28	%		22.27	%
Average stockholders’ equity to average total assets		10.02	%		9.29	%		9.38	%		9.85	%		9.78	%

(1)		Ratios are presented on an annualized basis.
(2)		The ratios are determined by methods other than in accordance with U.S. generally accepted accounting principles (GAAP). See Non-GAAP measures section for reconciliation of the calculation.
(3)		The ratio is calculated by dividing dividends declared per common share by basic earnings per common share.
(4)		Total revenue is equal to the sum of net interest income before provision for loan and lease losses and noninterest income (loss).
(5)		The ratios are calculated by dividing noninterest expense by the sum of net interest income before provision for loan and lease losses and noninterest income (loss).

Banc of California, Inc.
Selected Financial Data, Continued
(Dollars in thousands)
(Unaudited)
		June 30, 2019				March 31, 2019				December 31, 2018				September 30, 2018				June 30, 2018
Loans and ALLL by loan origination type
Loan breakdown by origination type
Originated loans		$	6,181,583			$	6,991,056			$	7,105,171			$	6,683,683			$	6,446,127
Acquired loans not impaired at acquisition			537,987				566,144				595,702				569,610				589,877
Total loans		$	6,719,570			$	7,557,200			$	7,700,873			$	7,253,293			$	7,036,004
ALLL breakdown by origination type
Originated loans		$	58,135			$	63,003			$	61,256			$	56,672			$	55,534
Acquired loans not impaired at acquisition			1,388				882				937				1,110				1,144
Total ALLL		$	59,523			$	63,885			$	62,193			$	57,782			$	56,678
Discount on acquired loans not impaired at acquisition		$	10,680			$	11,184			$	11,645			$	12,311			$	12,932
Percentage of ALLL to:
Originated loans			0.94	%			0.90	%			0.86	%			0.85	%			0.86	%
Originated loans and acquired loans not impaired at acquisition			0.89	%			0.85	%			0.81	%			0.80	%			0.81	%
Total loans			0.89	%			0.85	%			0.81	%			0.80	%			0.81	%

Banc of California, Inc.
Average Balance, Average Yield Earned, and Average Cost Paid
(Dollars in thousands)
(Unaudited)
		Three Months Ended
		June 30, 2019									March 31, 2019										December 31, 2018
		Average							Yield		Average							Yield			Average							Yield
		Balance				Interest			/ Cost		Balance				Interest			/ Cost			Balance				Interest			/ Cost
Interest earning assets
Loans held-for-sale (1)		$	47,233			$	265		2.25	%	$	31,374			$	228		2.95	%		$	33,243			$	221		2.64	%
SFR mortgage			2,059,704				21,390		4.17	%		2,312,900				24,062		4.22	%			2,260,205				23,585		4.14	%
Commercial real estate, multifamily, and construction			3,406,672				39,659		4.67	%		3,387,698				38,117		4.56	%			3,246,860				37,403		4.57	%
Commercial and industrial, SBA, and lease financing			1,872,289				26,940		5.77	%		1,920,220				27,235		5.75	%			1,791,708				26,219		5.81	%
Other consumer			59,806				905		6.07	%		62,558				916		5.94	%			68,479				990		5.74	%
Gross loans and leases			7,445,704				89,159		4.80	%		7,714,750				90,558		4.76	%			7,400,495				88,418		4.74	%
Securities			1,304,876				12,457		3.83	%		1,751,509				17,841		4.13	%			2,032,632				19,882		3.88	%
Other interest-earning assets			342,908				2,424		2.84	%		321,823				2,313		2.91	%			318,419				2,990		3.73	%
Total interest-earning assets			9,093,488				104,040		4.59	%		9,788,082				110,712		4.59	%			9,751,546				111,290		4.53	%
Allowance for loan losses			(63,046	)								(61,924	)									(58,099	)
BOLI and non-interest earning assets			580,133									575,559										544,302
Total assets		$	9,610,575								$	10,301,717									$	10,237,749
Interest-bearing liabilities
Savings		$	1,083,571			$	4,950		1.83	%	$	1,201,802			$	5,480		1.85	%		$	1,279,155			$	5,663		1.76	%
Interest-bearing checking			1,580,165				4,554		1.16	%		1,554,846				4,525		1.18	%			1,666,884				4,916		1.17	%
Money market			853,007				3,902		1.83	%		887,538				4,128		1.89	%			803,157				3,168		1.56	%
Certificates of deposit			2,537,060				15,192		2.40	%		2,982,980				17,310		2.35	%			2,759,665				15,225		2.19	%
Total interest-bearing deposits			6,053,803				28,598		1.89	%		6,627,166				31,443		1.92	%			6,508,861				28,972		1.77	%
FHLB advances			1,287,121				8,289		2.58	%		1,422,100				9,081		2.59	%			1,447,348				9,068		2.49	%
Securities sold under repurchase agreements			2,173				16		2.95	%		2,350				18		3.11	%			3,116				25		3.18	%
Long-term debt and other interest-bearing liabilities			174,161				2,357		5.43	%		174,230				2,362		5.50	%			174,281				2,383		5.42	%
Total interest-bearing liabilities			7,517,258				39,260		2.09	%		8,225,846				42,904		2.12	%			8,133,606				40,448		1.97	%
Noninterest-bearing deposits			1,034,205									1,021,741										1,054,790
Non-interest-bearing liabilities			96,179									97,430										89,111
Total liabilities			8,647,642									9,345,017										9,277,507
Total stockholders’ equity			962,933									956,700										960,242
Total liabilities and stockholders’ equity		$	9,610,575								$	10,301,717									$	10,237,749
Net interest income/spread						$	64,780		2.50	%					$	67,808		2.47	%						$	70,842		2.56	%
Net interest margin									2.86	%								2.81	%									2.88	%
Ratio of interest-earning assets to interest-bearing liabilities			120.97	%								118.99	%									119.89	%
Total deposits		$	7,088,008			$	28,598		1.62	%	$	7,648,907			$	31,443		1.67	%		$	7,563,651			$	28,972		1.52	%
Total funding (2)		$	8,551,463			$	39,260		1.84	%	$	9,247,587			$	42,904		1.88	%		$	9,188,396			$	40,448		1.75	%

(1)		Includes loans held-for-sale of discontinued operations for the three months ended December 31, 2018.
(2)		Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.

		Three Months Ended
		September 30, 2018										June 30, 2018
		Average							Yield			Average							Yield
		Balance				Interest			/ Cost			Balance				Interest			/ Cost
Interest earning assets
Loans held-for-sale (1)		$	42,754			$	263		2.44	%		$	54,791			$	328		2.40	%
SFR mortgage			2,222,602				23,461		4.19	%			2,223,608				22,790		4.11	%
Commercial real estate, multifamily, and construction			3,091,706				35,838		4.60	%			2,989,014				33,736		4.53	%
Commercial and industrial, SBA, and lease financing			1,739,711				24,382		5.56	%			1,707,478				23,664		5.56	%
Other consumer			69,600				981		5.59	%			80,188				978		4.89	%
Gross loans and leases			7,166,373				84,925		4.70	%			7,055,079				81,496		4.63	%
Securities			2,163,037				20,599		3.78	%			2,279,416				21,455		3.78	%
Other interest-earning assets			335,160				2,380		2.82	%			392,342				2,423		2.48	%
Total interest-earning assets			9,664,570				107,904		4.43	%			9,726,837				105,374		4.35	%
Allowance for loan losses			(56,730	)									(54,903	)
BOLI and non-interest earning assets			554,636										565,224
Total assets		$	10,162,476									$	10,237,158
Interest-bearing liabilities
Savings			1,231,696				5,122		1.65	%			1,055,693				3,886		1.48	%
Interest-bearing checking			1,789,679				5,054		1.12	%			1,822,856				4,182		0.92	%
Money market			966,165				3,455		1.42	%			1,134,280				3,689		1.30	%
Certificates of deposit			2,332,181				11,523		1.96	%			2,079,932				8,558		1.65	%
Total interest-bearing deposits			6,319,721				25,154		1.58	%			6,092,761				20,315		1.34	%
FHLB advances			1,528,674				8,996		2.33	%			1,827,307				9,539		2.09	%
Securities sold under repurchase agreements			6,418				47		2.91	%			29,907				211		2.83	%
Long-term debt and other interest-bearing liabilities			174,361				2,385		5.43	%			174,296				2,356		5.42	%
Total interest-bearing liabilities			8,029,174				36,582		1.81	%			8,124,271				32,421		1.60	%
Noninterest-bearing deposits			1,023,890										1,004,502
Non-interest-bearing liabilities			108,593										107,529
Total liabilities			9,161,657										9,236,302
Total stockholders’ equity			1,000,819										1,000,856
Total liabilities and stockholders’ equity		$	10,162,476									$	10,237,158
Net interest income/spread						$	71,322		2.62	%						$	72,953		2.75	%
Net interest margin									2.93	%									3.01	%
Ratio of interest-earning assets to interest-bearing liabilities			120.37	%									119.73	%
Total deposits		$	7,343,611			$	25,154		1.36	%		$	7,097,263			$	20,315		1.15	%
Total funding (2)		$	9,053,064			$	36,582		1.60	%		$	9,128,773			$	32,421		1.42	%

(1)		Includes loans held-for-sale of discontinued operations.
(2)		Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.

Banc of California, Inc.
Consolidated Operations
Non-GAAP Measures
(Dollars in thousands, except per share data)
(Unaudited)

Under Item 10(e) of SEC Regulation S-K, public companies disclosing financial measures in filings with the SEC that are not calculated in accordance with GAAP must also disclose, along with each non-GAAP financial measure, certain additional information, including a presentation of the most directly comparable GAAP financial measure, a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure, as well as a statement of the reasons why the company's management believes that presentation of the non-GAAP financial measure provides useful information to investors regarding the company's financial condition and results of operations and, to the extent material, a statement of the additional purposes, if any, for which the company's management uses the non-GAAP financial measure.

Return on average tangible common equity and efficiency ratio, as adjusted, tangible common equity to tangible assets, and tangible common equity per common share constitute supplemental financial information determined by methods other than in accordance with GAAP. These non-GAAP measures are used by management in its analysis of the Company's performance.

Tangible common equity is calculated by subtracting preferred stock, goodwill, and other intangible assets from stockholders' equity. Tangible assets is calculated by subtracting goodwill and other intangible assets from total assets. Banking regulators also exclude goodwill and other intangible assets from stockholders' equity when assessing the capital adequacy of a financial institution.

Adjusted efficiency ratio is calculated by subtracting loss on investments in alternative energy partnerships from noninterest expense and adding total pre-tax return, which includes the loss on investments in alternative energy partnerships, to the sum of net interest income and noninterest income (total revenue). Management believes the presentation o these financial measures adjusting the impact of these items provides useful supplemental information that is essential to a proper understanding of the final results and operating performance of the Company.

This disclosure should not be viewed as a substitute for results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.

The following tables provide reconciliations of the non-GAAP measures with financial measures defined by GAAP.

		June 30, 2019				March 31, 2019				December 31, 2018				September 30, 2018				June 30, 2018
Tangible common equity, and tangible common equity to tangible assets ratio
Total assets		$	9,359,931			$	9,886,525			$	10,630,067			$	10,260,822			$	10,319,280
Less goodwill			(37,144	)			(37,144	)			(37,144	)			(37,144	)			(37,144	)
Less other intangible assets			(5,105	)			(5,726	)			(6,346	)			(6,990	)			(7,683	)
Tangible assets(1)		$	9,317,682			$	9,843,655			$	10,586,577			$	10,216,688			$	10,274,453
Total stockholders' equity		$	963,544			$	948,325			$	945,534			$	946,678			$	988,688
Less goodwill			(37,144	)			(37,144	)			(37,144	)			(37,144	)			(37,144	)
Less other intangible assets			(5,105	)			(5,726	)			(6,346	)			(6,990	)			(7,683	)
Tangible equity(1)			921,295				905,455				902,044				902,544				943,861
Less preferred stock			(231,128	)			(231,128	)			(231,128	)			(231,128	)			(269,071	)
Tangible common equity(1)		$	690,167			$	674,327			$	670,916			$	671,416			$	674,790
Total stockholders' equity to total assets			10.29	%			9.59	%			8.89	%			9.23	%			9.58	%
Tangible equity to tangible assets(1)			9.89	%			9.20	%			8.52	%			8.83	%			9.19	%
Tangible common equity to tangible assets(1)			7.41	%			6.85	%			6.34	%			6.57	%			6.57	%
Common shares outstanding			50,397,769				50,315,490				50,172,018				50,180,607				50,142,955
Class B non-voting non-convertible common shares outstanding			477,321				477,321				477,321				477,321				403,778
Total common shares outstanding			50,875,090				50,792,811				50,649,339				50,657,928				50,546,733
Tangible common equity per common share(1)		$	13.57			$	13.28			$	13.25			$	13.25			$	13.35
Book value per common share		$	14.40			$	14.12			$	14.10			$	14.13			$	14.24

(1)

NonGAAP measure.

Banc of California, Inc.
Consolidated Operations
Non-GAAP Measures, Continued
(Dollars in thousands, except per share data)
(Unaudited)
		Three Months Ended
		June 30, 2019				March 31, 2019				December 31, 2018				September 30, 2018				June 30, 2018
Return on tangible common equity
Average total stockholders' equity		$	962,933			$	956,700			$	960,242			$	1,000,819			$	1,000,856
Less average preferred stock			(231,128	)			(231,128	)			(231,128	)			(260,822	)			(269,071	)
Less average goodwill			(37,144	)			(37,144	)			(37,144	)			(37,144	)			(37,144	)
Less average other intangible assets			(5,503	)			(6,128	)			(6,731	)			(7,412	)			(8,110	)
Average tangible common equity(1)		$	689,158			$	682,300			$	685,239			$	695,441			$	686,531
Net income		$	16,582			$	7,037			$	11,038			$	11,096			$	14,780
Less preferred stock dividends and impact of preferred stock redemption			(4,308	)			(4,308	)			(4,308	)			(7,277	)			(5,113	)
Add amortization of intangible assets			621				620				644				693				827
Add impairment on intangible assets		—				—				—				—				—
Less tax effect on amortization and impairment of intangible assets			(130	)			(130	)			(135	)			(146	)			(174	)
Net income available to common stockholders(1)		$	12,765			$	3,219			$	7,239			$	4,366			$	10,320
Return on average equity			6.91	%			2.98	%			4.56	%			4.40	%			5.92	%
Return on average tangible common equity(1)			7.43	%			1.91	%			4.19	%			2.49	%			6.03	%
Statutory tax rate utilized for calculating tax effect on amortization and impairment of intangible assets			21.00	%			21.00	%			21.00	%			21.00	%			21.00	%
		Three Months Ended
		June 30, 2019				March 31, 2019				December 31, 2018				September 30, 2018				June 30, 2018
Adjusted efficiency ratio including the pre-tax effect of investments in alternative energy partnerships
Noninterest expense		$	43,587			$	61,835			$	49,578			$	60,977			$	62,554
Gain (loss) on investments in alternative energy partnerships			355				(1,950	)			(786	)			(2,484	)			(1,808	)
Adjusted noninterest expense(1)		$	43,942			$	59,885			$	48,792			$	58,493			$	60,746
Net interest income		$	64,780			$	67,808			$	70,842			$	71,322			$	72,953
Noninterest income			(2,290	)			6,295				2,644				5,718				9,168
Total revenue			62,490				74,103				73,486				77,040				82,121
Tax credit from investments in alternative energy partnerships			1,680			—				—					412				1,912
Deferred tax expense on investments in alternative energy partnerships			(176	)		—				—					(43	)			(211	)
Tax effect on tax credit and deferred tax expense			426			—					26				180				631
Gain (loss) on investments in alternative energy partnerships			355				(1,950	)			(786	)			(2,484	)			(1,808	)
Total pre-tax adjustments for investments in alternative energy partnerships			2,285				(1,950	)			(760	)			(1,935	)			524
Adjusted total revenue(1)		$	64,775			$	72,153			$	72,726			$	75,105			$	82,645
Efficiency ratio(1)			69.75	%			83.44	%			67.47	%			79.15	%			76.17	%
Adjusted efficiency ratio including the pre-tax effect of investments in alternative energy partnerships(1)			67.84	%			83.00	%			67.09	%			77.88	%			73.50	%
Effective tax rate utilized for calculating tax effect on tax credit and deferred tax expense			22.07	%			27.00	%			27.42	%			32.81	%			27.07	%

(1)

NonGAAP measure.

Banc of California, Inc.
Consolidated Operations
Non-GAAP Measures, Continued
(Dollars in thousands, except per share data)
(Unaudited)
		Noninterest Expense				Q2 2019 non-core adjustments				Q2 Core Operating Expense(1)
Salaries and employee benefits		$	27,506			$	—			$	27,506
Occupancy and equipment		7,955				(797		)		7,158
Professional fees (reimbursement)		(2,903		)		6,214				3,311
Data processing		1,672				—				1,672
Advertising		2,048				—				2,048
Regulatory assessments		2,136				—				2,136
Reversal of provision for loan repurchases		(61		)		—				(61		)
Amortization of intangible assets		621				—				621
Restructuring (reversal) expense		(158		)		158				—
All other expenses		5,126				—				5,126
Total noninterest expense excluding loss (gain) on investments in alternative energy partnerships		43,942				5,575				49,517
(Gain) loss on investments in alternative energy partnerships		(355		)		—				(355		)
Total noninterest expense		$	43,587			$	5,575			$	49,162

(1)

Non-GAAP measure.

 

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