Banc of California posts Q2 earnings and revenue miss, but makes progress on NII expansion

LOS ANGELES – Banc of California , Inc. (NYSE: NYSE:), parent company of wholly-owned subsidiary Banc of California (the Bank), today reported a decline in earnings and revenue for the second quarter ended June 30, 2024. BANC stock was up 1.15% in premarket trading Tuesday.

The financial institution recorded net earnings available to common and equivalent stockholders of $20.4 million, or $0.12 per diluted common share, a slight decrease from $20.9 million, or $0.12 per diluted common share, in the first quarter of 2024. This performance fell short of analysts’ expectations, with earnings per share (EPS) $0.07 below the estimated $0.19. Revenue also missed the mark, coming in at $259.28 million against the projected $270.28 million by analysts.

The bank’s net interest margin improved, rising 14 basis points from 2.66% in the first quarter to 2.80% in the second quarter, attributed to a decrease in the average total cost of funds and an increase in average noninterest-bearing deposits. Average noninterest-bearing deposits grew by $196.5 million, or 3%, from the first quarter.

Additionally, the bank reported high liquidity levels, with available on-balance sheet liquidity and unused borrowing capacity totaling $16.9 billion at the end of the quarter, which was 2.5 times greater than uninsured and uncollateralized deposits.

Jared Wolff, President & CEO of Banc of California, commented on the quarter’s performance, stating, “During the second quarter, we continued to make solid progress executing on our plan, strengthening our franchise, and improving our core earnings power.” He highlighted the bank’s efforts in reducing the cost of funds, expanding the net interest margin, and growing average noninterest-bearing deposits in a challenging rate environment.

Wolff also remarked on the recent sale of $1.95 billion of CIVIC loans, which positively impacted the bank’s capital and liquidity ratios, stating, “We intend to use the proceeds primarily to pay down higher-cost brokered deposits and borrowings.”

The bank’s capital ratios remained strong, with an estimated 16.57% Total risk-based capital ratio and a 10.27% CET1 capital ratio, both well above regulatory thresholds for “well capitalized” banks.

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