The following is a summary of the Banc of California, Inc. (PACW) Q1 2024 Earnings Call Transcript:

Financial Performance:

• Banc of California reported Q1 net interest income of $239.1 million due to favorable changes in assets and reduced costs of wholesale funding.

• Non-interest income was $33.8 million, and non-interest expense was $210.5 million.

• There was an increase in net interest margin to 2.78% from 1.69% in Q4 2023, driven by better yields on interest-earning assets and lower average cost of funds.

• Although total loans remained flat, the average loan yield rose by 41 basis points from the previous quarter.

Business Progress:

• The company reported significant progress due to balance sheet repositioning post the merger with PacWest.

• The bank is focusing on reducing interest expense and operating expenses, and the deposit pipeline looks promising.

• The institution expects that new loan production for 2024 will cover the runoff in non-core portfolios and will continue contributing to the margin.

• Banc of California remains focused on proper capital management and sees stable accretion going forward.

• The company is considering selling parts of its non-core portfolio and has already seen inquiries indicating potential interest in Civic loans.

• Banc of California is on track to achieve quarter four goals, despite potential risks. The company reports a balance sheet value of approximately $125 million with the majority of deposit runoffs in the quarter being intentional.

• The bank is also focusing on building non-interest bearing deposits, citing success in their past approach to this initiative.

• The Bank intends to manage the $2.3 billion Civic loans by either letting it run-off over time or seek a favorable exit.

• The institution is expanding teams by hiring across departments and is also diversifying its services by issuing credit cards directly to clients and assisting transaction processing for other parties.

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