Banc of California Reports $126.9M Net Earnings in 2024, Assets Decrease to $33.5B

Banc of California, Inc. (BANC) reported total assets of $33.5 billion and total stockholders’ equity of $3.5 billion as of December 31, 2024, compared to $38.5 billion in assets and $3.4 billion in equity at the end of 2023. The decrease in assets primarily resulted from a $2.9 billion reduction in interest-earning deposits in financial institutions and a $1.7 billion decrease in loans and leases held for investment. Total liabilities decreased by $5.1 billion, mainly due to reductions in deposits and borrowings, reflecting balance sheet repositioning actions. Net earnings for 2024 were $126.9 million, a significant improvement from the $1.9 billion net loss in 2023. This improvement was largely attributed to a $1.4 billion goodwill impairment charge recorded in 2023, higher net interest income, and lower operating expenses.

The company's net interest margin expanded to 2.85% in 2024 from 1.98% in 2023, primarily driven by lower funding costs and an improved funding mix. Total loans and leases held for investment decreased to $23.8 billion in 2024 from $25.5 billion in 2023, mainly due to the sale of $1.95 billion in Civic loans. The provision for credit losses decreased to $42.8 million in 2024 from $52.0 million in 2023, reflecting lower loan balances and net charge-off activity, partially offset by higher reserves due to risk rating migration and new loan originations. Noninterest income increased significantly to $77.1 million in 2024 from a loss of $448.3 million in 2023, primarily due to lower losses from securities and loan sales. Noninterest expense decreased to $791.7 million in 2024 from $2.5 billion in 2023, mainly due to the goodwill impairment charge in 2023 and lower acquisition, integration, and reorganization costs.

On November 30, 2023, Banc of California, Inc. completed its merger with PacWest Bancorp, with Banc of California, Inc. as the surviving entity. Concurrently, a $400 million equity capital raise was completed. The merger was accounted for as a reverse merger, resulting in the recognition of $214.5 million in goodwill. As part of a balance sheet repositioning strategy, the combined company sold approximately $6.1 billion in assets and paid down $8.6 billion in high-cost liabilities during 2024. These actions included the sale of $1.95 billion in Civic loans and $742 million in available-for-sale securities, resulting in a pre-tax loss of $60 million.

As of December 31, 2024, Banc of California, Inc. had 1,903 employees, with no employees represented by labor unions. The company's key human capital management objectives are to attract, retain, and develop high-quality talent. The company's minimum starting wage is $20 per hour, and it offers a range of benefits including health insurance, paid and unpaid leaves, and 401(k) benefits. The company's business strategy focuses on being a premier relationship-based commercial bank, delivering outstanding service to clients through customized solutions. The company plans to continue considering acquisitions consistent with its business strategy.

Banc of California, Inc. operates in a highly regulated environment and faces various risks, including credit risk, interest rate risk, liquidity risk, operational risk, and compliance risk. The company's risk management framework is designed to mitigate these risks, but there are inherent limitations. The company's outlook is dependent on various factors, including economic conditions, regulatory changes, and competitive pressures. The company's financial statements include significant accounting estimates and judgments, particularly regarding the allowance for credit losses, goodwill, and deferred tax assets.