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Sep 30, 2024
Banc of California Q3 2024 Earnings Report
Banc of California reported a net loss for the third quarter of 2024, but adjusted net earnings showed a profit, driven by balance sheet repositioning and strategic actions.
Key Takeaways
Banc of California reported a net loss of $1.2 million for Q3 2024, or a loss of $0.01 per diluted common share. However, on an adjusted basis, net earnings were $41.4 million, or $0.25 per diluted common share. The results were impacted by $60 million in pre-tax losses from repositioning a portion of the securities portfolio. The company highlighted strategic balance sheet repositioning actions, including the sale of Civic loans and the reduction of higher-cost funding, which led to net interest margin expansion and an increased tangible book value per share.
Closed the sale of $1.95 billion of Civic loans in July, generating net proceeds of $1.91 billion, increasing capital ratios and liquidity.
Repositioned $742 million of available-for-sale securities, resulting in a pre-tax loss of $60 million, but expected to increase interest income by approximately $4.8 million per quarter.
Net interest margin increased to 2.93%, up 13 basis points from the second quarter, driven by lower funding costs.
Total noninterest expense decreased to $196.2 million, down $7.4 million, or 4%, from the second quarter, achieving Q4 2024 cost targets ahead of schedule.
Banc of California
Banc of California
Forward Guidance
Banc of California is shifting its focus from internal infrastructure to external growth, capitalizing on its strengthened franchise and balance sheet. The company aims to expand existing relationships and attract new clients, expecting profitable growth as economic conditions improve.
Positive Outlook
- Strategic balance sheet repositioning actions completed.
- Civic loans sale positively impacted capital and liquidity.
- Higher cost funding significantly reduced.
- Net interest margin expansion achieved.
- Tangible book value per share and capital position increased.
Challenges Ahead
- Changes in general economic conditions
- Changes in the interest rate environment
- Credit risks of lending activities
- Fluctuations in the demand for loans
- Quality and composition of our securities portfolio