Banc of California (BANC) Q2 2024 earnings summary

Executive summary

• Net earnings available to common stockholders were $20.4 million ($0.12 per share) for Q2 2024, flat sequentially, with improved net interest margin and strong capital ratios.

• Completed core system conversion, integrating nearly 20,000 clients and over 55,000 accounts, finalizing PacWest merger and unifying operations.

• Sale of $1.95 billion in CIVIC loans post-quarter boosted liquidity, capital ratios, and enabled paydown of high-cost funding.

• Focused on balance sheet optimization, expense reduction, and building sustainable profitability for 2025.

• Core fundamentals improved despite a challenging economic and rate environment, with NIM expanding and noninterest-bearing balances up.

Financial highlights

• Net interest income was $229.5 million for Q2 2024, up slightly quarter-over-quarter, with net interest margin rising to 2.80% from 2.66%.

• Pre-tax pre-provision income increased to $55.6 million; EPS remained at $0.12; ROAA at 0.34%; ROATCE at 4.1%.

• Noninterest income was $29.8 million, down due to lower mark-to-market adjustments and equity investment gains.

• Total noninterest expense was $203.6 million, down from Q1, reflecting lower acquisition and compensation costs but elevated FDIC and other expenses.

• Total deposits declined to $28.8 billion, with noninterest-bearing deposits at 27% of total.

Outlook and guidance

• Management expects NIM to reach 2.90%–3.00% by Q4 2024, with cost of funds declining 20–25 bps.

• Noninterest expense projected at $195–$200 million in Q4, with cost savings from merger synergies and lower regulatory assessments.

• Focus remains on deposit growth, cost control, and credit quality, with priorities on increasing customer deposits and maintaining strong capital ratios.

• Sale of CIVIC loans expected to increase CET1 capital ratio by over 30 basis points and proceeds will be used to pay down higher-cost funding.

• Margin expansion and operating leverage anticipated to drive profitability in 2025.