Banc of California's Strong First Quarter Performance Drives Growth and Capital Deployment
Banc of California, a leading financial institution, has reported strong first quarter earnings that reflect its ability to execute on its strategy and capitalize on its attractive market position. The company's first quarter results show positive trends in core earnings, including net interest margin expansion, strong loan growth, and prudent expense management.
During the quarter, Banc of California achieved its second consecutive quarter of broad-based commercial loan production, while continuing its steady growth in attracting new NIB deposit relationships. As a result, the company built up capital during the quarter and increased both book value and tangible book value per share while maintaining strong liquidity levels.
"We showed positive trends in our core earnings, including net interest margin expansion, strong loan growth and prudent expense management," said Jared Wolff, President and Chief Executive Officer of Banc of California. "Our team's strong execution and attractive market position enabled us to deliver these results."
The company also announced a $150 million share buyback program during the first quarter, which was completed opportunistically repurchasing 6.8% of its shares. The company has since upsized this program with an additional $150 million to $300 million and will expand it to cover both common and preferred stock.
"We benefited from market volatility and opportunistically repurchased a significant portion of our shares," said Wolff. "We will be prudent with this program and use it opportunistically, while maintaining strong liquidity levels."
The company's loan production, including unfunded commitments, was $2.6 billion in the first quarter, up from $1.8 billion in the fourth quarter. This represents a 6% annualized growth rate, driven by strong growth in warehouse, lender finance, and fund finance areas.
"Much of our loan growth came late in the quarter, and it has continued so far in Q2," said Wolff. "This will provide a benefit to our net interest income in the second quarter."
However, the company did experience a decline in construction loans due to payoffs on completed projects, which moved to permanent financing in its multifamily portfolio. While this offset some of the loan growth, the company is maintaining its disciplined pricing and underwriting criteria while growing its loan portfolio.
The company's average rate on new production was 7.2%, which helped its average loan yields and margin. Importantly, the company has adopted a conservative posture on risk-weighted loans, resulting in some additional credit downgrades during the quarter.
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