BANC OF CALIFORNIA, INC. Q4 FY2024 earnings call

• Supported wildfire relief in Los Angeles by launching a relief fund and donating $1 million. - Achieved progress in merger integration, including cost synergies, balance sheet repositioning, leading to growth in core profitability. - NIM expanded 135 basis points YoY, non-interest operating expenses decreased 36% from normalized Q4 2023. - Loan production in the quarter was $1.8 billion, resulting in portfolio growth of 1.5% or ~6% annualized. - Cost of deposits declined 28 basis points, with average NIB as a percentage of total deposits growing to 29.1%.

For the fourth quarter, NIB was 29.1% of total average deposits, up nearly 7% from a year ago. Wholesale funding was reduced to 10.3% of assets compared to over 17% in Q4 2023. C&I loans grew to 30.1% of the core loan portfolio from 25.6% a year ago. Net interest margin expanded 135 basis points year-over-year. Non-interest operating expenses decreased by 36% from a normalized Q4 2023 as cost targets from the merger were achieved.

• Targets mid to upper-single-digit loan growth in 2025 assuming stable economic environment. - NIM outlook for 2025 is a range of 3.20% to 3.30% assuming no further Fed rate cuts in 2025. - Targets deposit growth in the mid to upper-single digits in 2025. - Aims for NIB to be over 30% of the total deposit base in 2025.

• Wildfires could potentially impact loan portfolio or collateral, though no material impact identified yet. - Credit risk from specific borrowers, including a single borrower relationship that led to increase in problem loan categories. - Interest rate risks related to balance sheet mix and potential impact on net interest margin. - Competition in deposit gathering and potential impact on cost of deposits.

Q: Timur Braziler with Wells Fargo asked about expenses and loan growth guidance.

A: Jared Wolff and Joe Kauder discussed that expenses will bounce back in Q1 but still expect savings through 2025, and loan growth is expected in mid to upper-single digits with net growth in mind.

Q: Chris McGratty at KBW asked about NII and ECR.

A: Jared Wolff and Joe Kauder talked about NII growth trends, ECR-related expenses, and directional impact of rate cuts on ECR costs.

Q: Matthew Clark at Piper Sandler asked about capital buyback and ECR deposits.

A: Jared Wolff mentioned considering capital buyback opportunities, and Joe Kauder provided information on average ECR deposits.

Q: Gary Tenner at D.A. Davidson asked about HOA business and deposit beta.

A: Jared Wolff and Joe Kauder discussed HOA business seasonality, deposit beta at ~54%, and plans to grow HOA business.

Q: Andrew Terrell with Stephens asked about HTM securities, tax rate impact, and non-accrual loans.

A: Jared Wolff spoke about repositioning HTM securities, tax benefit impact, and details on non-accrual loans from specific borrowers.

Q: David Feaster with Raymond James asked about loan and deposit timing, and expenses investments.

A: Jared Wolff responded on loan and deposit flow in concert, marginal cost of new core deposits, and investments in people, systems, and business teams.

Q: Jared Shaw with Barclays Capital asked about capital deployment and loan spreads.

A: Jared Wolff and Joe Kauder discussed capital deployment options, including repaying preferred shares, and loan spread trends in different segments.

Q: Chris McGratty at KBW asked about margin guide accretion.

A: Joe Kauder stated the guide is the baseline accretion with no accelerated factors