Business Wire | Jul 23, 2020 06:00AM EDT

Banc of California Reports Second Quarter 2020 Financial Results

Jul. 23, 2020

SANTA ANA, Calif.--(BUSINESS WIRE)--Jul. 23, 2020--Banc of California, Inc. (NYSE: BANC) today reported net loss available to common stockholders for the second quarter of 2020 of $21.9 million, or diluted loss per common share of $0.44. Financial results for the second quarter of 2020 included a one-time pre-tax charge of $26.8 million related to the termination of the Company's multi-year naming rights agreements, entered into in 2017 with the Los Angeles Football Club ("LAFC"). The buyout of the agreement and restructuring of the relationship will result in estimated pre-tax cost savings of approximately $89 million over the next 12.5 years, or approximately $7 million per year.

Highlights for the second quarter included:

* Noninterest-bearing deposit balances increased $135.4 million during the quarter and represented 23% of total deposits at June 30, 2020, up from 16% a year earlier * Total checking balances increased $409.7 million during the quarter and represented 54% of total deposits at June 30, 2020, up from 40% a year earlier * Net interest margin increased 12 basis points from the prior quarter to 3.09% * Average cost of total deposits declined 40 basis points from the prior quarter to 0.71%, with period-end cost of deposits at 0.59% * Allowance for credit losses strengthened to 1.68% of total loans * Common Equity Tier 1 capital at 11.68%

Jared Wolff, President & CEO of Banc of California, commented, "Our second quarter was highlighted by our expanding net interest margin, growth in noninterest-bearing deposits, reduction in our deposit costs, and the sustained improvement in operating leverage and core pre-tax, pre-provision earnings. While we continue to build on these elements to enhance franchise value, we are positioned with significant excess capital, healthy reserves and a conservatively underwritten loan portfolio, 66% of which is secured by residential real estate and with limited exposure to higher risk industries. As we help our clients manage through the impact of the pandemic, the current public health and economic crisis has not impeded our overall progress on implementing our strategic initiatives that is building long-term value for shareholders."

Mr. Wolff continued, "Notably, we also had the opportunity to accelerate our transformation through the restructuring of our agreement with LAFC. Our buyout will save the Company approximately $7 million in annual expenses and enhance our future operating leverage. Given the uncertainty of the economic environment, we intend to remain conservative by protecting capital and building core deposits, although we expect our results in the second half of the year to continue to reflect the increased operating leverage and growing earnings power that we have been building at the Company."?

Lynn Hopkins, Chief Financial Officer of Banc of California, said, "The positioning of our balance sheet entering the pandemic has helped us to effectively manage through this crisis. We continue to have a high level of capital and a loan portfolio that it is heavily weighted towards conservatively underwritten real estate loans with low loan-to-values. While net income was negatively impacted by the one-time costs associated with the restructuring of our partnership with LAFC, we are pleased with the positive trends we experienced throughout most areas of our operations, including a 40 basis point decline in our average cost of total deposits and a 12 basis point increase in our net interest margin from the prior quarter. Notwithstanding our net loss for the quarter of $18.4 million, these positive trends helped drive a 31.7% increase in our adjusted pre-tax pre-provision income of $16.0 million compared to the prior quarter, which excludes the impact of provision for credit losses and certain other non-core income and expenses. We continue to build momentum in our core underlying earnings power and we believe we can continue that progress in the second half of 2020."

COVID-19 Operational Update

We continue to operate 25 of our 31 branches as we temporarily consolidated some overlapping areas to ensure an adequate balance between employee and client safety and business continuity to meet our clients' banking needs. We participated in the Paycheck Protection Program (PPP) created by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), deploying resources to this program in support of our clients and others seeking financial relief under the program. As of June 30, 2020, we estimate we helped businesses that represent an aggregate workforce of more than 25,000 jobs through approvals of $262 million in PPP funds. While we focused on serving existing clients with our high-touch model, we also used our framework to attract new clients and used the PPP to differentiate ourselves by showing how true service can make a meaningful difference. As a result, we added many new clients who are consistent with the type of commercial customers that we target in our traditional business development efforts. During the three months ended June 30, 2020, we collected $7.5 million in fees on PPP loans originated during the quarter, which will be recognized over their estimated life of 9 months. While we have started the loan forgiveness process with a number of clients, we expect this will continue into the first half of next year.

We are also actively engaged with our borrowers seeking payment relief. Refer also to the Credit Quality discussion for details regarding loans that have requested relief under the CARES Act.

Termination of LAFC Agreement

As previously disclosed, during the second quarter, we terminated our naming rights agreements with LAFC, which the Company had entered into in 2017. We incurred a pre-tax, one-time charge to operations of $26.8 million and we expect aggregate pre-tax expense savings of $89 million over the remaining 12 1/2 year life of our former agreements with LAFC, or approximately $7 million per year. The amended agreements allow LAFC to expand its roster of sponsors and partners into categories that were previously exclusive to us under the original agreements. In connection with the termination, we will step away from our naming-rights position on LAFC's soccer stadium, but we will continue to serve as LAFC's primary banking partner, subject to any new sponsor in the financial services space that offers banking services, and remain as a partner on a number of other collaborations. We paid LAFC a $20.1 million termination fee and will not have any continuing payment obligations to LAFC after December 31, 2020.

IncomeStatementHighlights

Three Months Ended Six Months Ended

June 30, March 31, December 31, September 30, June 30, June 30, June 30, 2020 2020 2019 2019 2019 2020 2019

($ in thousands)

Totalinterest and $ 72,697 $ 74,714 $ 83,702 $ 92,657 $ 104,040 $ 147,411 $ 214,752 dividendincome

Totalinterest 17,382 22,853 27,042 33,742 39,260 40,235 82,164 expense

Net interest 55,315 51,861 56,660 58,915 64,780 107,176 132,588 income

Totalnoninterest 5,528 2,061 4,930 3,181 (2,290 ) 7,589 4,005 income (loss)

Total revenue 60,843 53,922 61,590 62,096 62,490 114,765 136,593

Totalnoninterest 72,770 46,919 47,483 43,240 43,500 119,689 105,749 expense

Pre-tax /pre-provision (11,927 ) 7,003 14,107 18,856 18,990 (4,924 ) 30,844 (loss) income

Provision for(reversal of) 11,826 15,761 (2,976 ) 38,607 (1,900 ) 27,587 198 credit losses

Income tax(benefit) (5,304 ) (2,165 ) 2,811 (5,619 ) 4,308 (7,469 ) 7,027 expense

Net (loss) $ (18,449 ) $ (6,593 ) $ 14,272 $ (14,132 ) $ 16,582 $ (25,042 ) $ 23,619 income



Net (loss)incomeavailable to $ (21,936 ) $ (9,694 ) $ 10,415 $ (22,722 ) $ 11,909 $ (31,630 ) $ 14,555 commonstockholders^(1)

Balance represents the net (loss) income available to common stockholders after subtracting preferred stock dividends, income allocated to(1) participating securities, participating securities dividends and impact of preferred stock redemption from net (loss) income. Refer to the Statement of Operations for additional detail on these amounts.

Net interest income

Q2-2020 vs Q1-2020

Net interest income increased $3.5 million to $55.3 million for the second quarter due mostly to lower funding costs and higher average interest-earning assets, offset by a lower yield on average earning assets. Compared to the prior quarter, average interest-earning assets increased by $165.1 million to $7.20 billion, due to higher average securities of $111.0 million and other interest-earning assets of $127.3 million, offset by lower average loans of $73.2 million. The average interest-earning assets growth was funded by higher average noninterest-bearing deposits of $216.4 million and interest-bearing deposits of $251.7 million, offset by lower average FHLB advances of $219.9 million.

The net interest margin increased 12 basis points to 3.09% for the second quarter from 2.97% for the prior quarter. The increase was due to the 42 basis point decline on the average cost of interest-bearing liabilities, outpacing the 21 basis point decline in the average yield on interest-earning assets. The decrease in the average interest-earning asset yield from 4.27% for the first quarter to 4.06% for the second quarter was due to lower yields on most interest-earning asset classes and the change in the mix of interest-earning assets. The lower yields on total loans, securities and other interest-earning assets was due to originating new business and repricing variable rate loans and investments in the lower interest rate environment given the rate cuts by the Federal Reserve in March of 2020. Our average yield on loans declined 8 basis points to 4.48% and our average yield on securities decreased 35 basis points to 2.95%. The second quarter includes $1.7 million of PPP fee income, which increased the net interest margin by 3 basis points. The lower securities yield is due mostly to a 38 basis point decrease in the collateralized loan obligations (CLOs) yield to 3.22% for the second quarter from 3.60% for the first quarter as these CLOs reprice quarterly.

The average cost of funds decreased 39 basis points to 1.03% for the second quarter from 1.41% for the first quarter. This decrease was driven by the lower average cost of interest-bearing liabilities and improved funding mix, including higher average noninterest-bearing deposits. We have reduced our reliance on high cost transaction accounts, non-brokered certificates of deposits, and wholesale funds as we continue to execute on our relationship-focused business banking strategy. The 42 basis point decline in the average cost of interest-bearing liabilities to 1.29% for the second quarter from 1.71% for the first quarter was driven by the lower average cost of interest-bearing deposits. The average cost of interest-bearing deposits declined 48 basis points to 0.93% from the prior quarter due to actively managing down deposit rates in response to the interest rate cuts by the Federal Reserve in March of 2020. Additionally, average noninterest-bearing deposits increased by $216.4 million and represented 23.4% of total average deposits in the second quarter compared to 21.4% of total average deposits for the first quarter. Our total cost of average deposits decreased 40 basis points to 0.71% for the second quarter. The spot rate of total deposits at the end of the second quarter of 2020 was 0.59%.

YTD 2020 vs YTD 2019

Net interest income for the six months ended June 30, 2020 decreased $25.4 million to $107.2 million from $132.6 million for the same 2019 period. This increase was due to lower average interest-earning assets, as a result of targeted sales of securities and loans during 2019, in line with our strategy of remixing the loan portfolio towards relationship based-lending, offset by a higher net interest margin. For the six months ended June 30, 2020, average interest-earning assets declined $2.33 billion to $7.11 billion, and the net interest margin increased 20 basis points to 3.03% for the six months ended June 30, 2020 compared to 2.83% for the same 2019 period.

Our average yield on interest-earning assets decreased 42 basis points to 4.17% for the six months ended June 30, 2020 as compared to 4.59% during the same 2019 period. The decrease in yield was primarily attributable to lower average yields on the loan and securities portfolios, offset by an increased mix of loans versus securities. Our average yield on loans was 4.52% for the six months ended June 30, 2020, compared to 4.78% for the same 2019 period, primarily due to lower market interest rates and a lower percentage of higher-yielding commercial and industrial balances in the portfolio. Our average yield on securities decreased 88 basis points due mostly to CLOs repricing into the lower rate environment and a decrease in average CLO balances.

The average cost of funds decreased to 1.22% for the six months ended June 30, 2020 from 1.86% for the same 2019 period. This decrease was driven by the lower average cost of interest-bearing liabilities and the improved funding mix, including higher average noninterest-bearing deposits. The 61 basis point decline in the average cost of interest-bearing liabilities to 1.50% for the six months ended June 30, 2020 from 2.11% for the same 2019 period was driven by the lower average cost of interest-bearing deposits and the rates paid on our FHLB term advances. The average cost of interest-bearing deposits declined 75 basis points to 1.16% from the prior period due to actively managing down deposit rates in response to the interest rate cuts by the Federal Reserve in March of 2020 and a lower reliance on brokered deposits. Additionally, average noninterest-bearing deposits increased by $213.5 million when compared to the same 2019 period. Our cost of average total deposits decreased 74 basis points to 0.90% for the six months ended June 30, 2020 when compared to the same 2019 period.

Provision for credit losses

Q2-2020 vs Q1-2020

We recognized a provision for credit losses of $11.8 million during the second quarter, compared to $15.8 million during the first quarter. Our provision for credit losses during the second quarter included $307 thousand related to unfunded commitments, compared to $1.1 million during the first quarter. The second quarter provision for credit losses is comprised of $5.0 million of general reserves and $6.8 million related to specific reserves, primarily related to a previously reported nonaccrual shared national credit. The general provision is due to a continued deterioration in key macro-economic forecast variables, such as unemployment and gross domestic product and loan risk rating downgrades, offset by lower period end loan balances.

YTD 2020 vs YTD 2019

During the six months ended June 30, 2020, we recognized a provision for credit losses of $27.6 million under the CECL model, compared to $198 thousand under the incurred loss model during 2019. Our provision for credit losses included $1.4 million related to unfunded commitments during the six months ended June 30, 2020, compared to provision release of $327 thousand during the six months ended June 30, 2019. The higher provision for credit losses was driven by using the new CECL model, the estimated future impact of the health crisis on our loans, net charge-offs, and increase in specific reserves partially offset by lower period end loan balances of $1.09 billion.

Noninterest income

Q2-2020 vs Q1-2020

Noninterest income increased $3.5 million, or 168%, to $5.5 million for the second quarter. The increase was primarily due to a gain of $2.0 million on the sale of $20.7 million in securities, primarily corporate securities; there were no sales in the prior quarter. In addition, the first quarter included a $1.6 million charge to reflect the reduction in fair value of loans held for sale compared to a $25 thousand increase in the fair value in the second quarter.

YTD 2020 vs YTD 2019

Noninterest income for the six months ended June 30, 2020 increased $3.6 million, or 89.5%, to $7.6 million compared to the prior year. The increase was primarily attributable to (1) a higher net gain on sale of investment securities of $1.8 million, and (2) higher other income of $8.4 million as the second quarter of 2019 included a previously reported $9.6 million unrealized loss from interest rate swap agreements entered into in order to offset variability in the fair value of the Freddie Mac securitization completed during the third quarter of 2019. These increases were partially offset by (1) lower net gain on sale of loans of $4.3 million, (2) a $1.6 million loss due to decreases in the fair value of loans held for sale, and (3) lower customer fees of $629 thousand.

Noninterest expense

Q2-2020 vs Q1-2020

Noninterest expense increased $25.9 million to $72.8 million for the second quarter compared to the prior quarter. The increase was primarily due to: (i) the aforementioned $26.8 million one-time charge related to the termination of our LAFC naming rights agreements, (ii) a $2.5 million debt extinguishment fee associated with the early repayment of certain FHLB term advances, and (iii) higher salaries and benefits expense of $824 thousand due mostly to higher incentive accruals. These increases were offset by: (i) lower professional fees of $1.4 million as a result of the timing of certain indemnified legal costs and recoveries compared to the prior quarter, (ii) a $2.1 million decrease in loss on investments in alternative energy partnerships, and (iii) a $599 thousand decrease in advertising costs. Total operating costs, defined as noninterest expense adjusted for certain non-core items (refer to section Non-GAAP Measures), decreased $558 thousand to $42.8 million for the second quarter compared to $43.3 million for the prior quarter.

YTD 2020 vs YTD 2019

Noninterest expense for the six months ended June 30, 2020 increased $13.9 million, or 13.2%, to $119.7 million compared to the prior year. The increase was primarily due to: (i) the aforementioned $26.8 million one-time charge related to the termination of our LAFC naming rights agreements, and (ii) a $2.5 million debt extinguishment fee associated with the early repayment of certain FHLB term advances. These increases were offset by: (i) lower professional fees of $2.4 million, due to overall reductions in indemnified legal fees, net of insurance recoveries, (ii) lower consulting fees for bank projects and initiatives, and lower legal expenses related to the now resolved SEC investigation and various other litigations, (iii) lower salaries and benefits expense of $8.2 million resulting from lower headcount, (iv) lower advertising costs of $1.2 million due to reductions in overall events and media spending, and (vi) lower regulatory assessments of $3.4 million due to changes in our asset size and an FDIC assessment credit.

Income taxes

Q2-2020 vs Q1-2020

Income tax benefit totaled $5.3 million for the second quarter resulting in an effective tax benefit rate of 22.3%. This compares to a $2.2 million benefit for the first quarter and an effective tax benefit rate of 24.7%. The full year estimated effective tax rate for 2020 is expected to be approximately 23%.

YTD 2020 vs YTD 2019

Income tax benefit totaled $7.5 million for the six months ended June 30, 2020, representing an effective tax rate of 23.0%, compared to a $7.0 million expense and an effective tax rate of 22.9% for six months ended June 30, 2019.

Balance Sheet

At June 30, 2020, total assets were $7.77 billion, which represented a linked-quarter increase of $107.5 million. The following table shows selected balance sheet line items as of the dates indicated.

As of and for the Three Months Ended Amount Change

June 30, March 31, December 31, September 30, June 30, Q2-20 vs. Q1- Q2-20 vs. Q2- 2020 2020 2019 2019 2019 20 19



($ in thousands)

Total assets $ 7,770,138 $ 7,662,607 $ 7,828,410 $ 8,625,337 $ 9,359,931 $ 107,531 $ (1,589,793 )

Securities $ 1,176,029 $ 969,427 $ 912,580 $ 775,662 $ 1,167,687 $ 206,602 $ 8,342 available-for-sale

Loans $ 5,627,696 $ 5,667,464 $ 5,951,885 $ 6,383,259 $ 6,719,570 $ (39,768 ) $ (1,091,874 ) held-for-investment

Loans held-for-sale $ 19,768 $ 20,234 $ 22,642 $ 23,936 $ 597,720 $ (466 ) $ (577,952 )



Demand deposits $ 3,238,202 $ 2,828,470 $ 2,622,398 $ 2,602,011 $ 2,510,233 $ 409,732 $ 727,969

Other core deposits 2,619,502 2,515,703 2,794,769 3,074,936 3,301,080 103,799 (681,578 )

Brokered deposits 179,761 218,665 10,000 93,111 480,977 (38,904 ) (301,216 )

Total Deposits $ 6,037,465 $ 5,562,838 $ 5,427,167 $ 5,770,058 $ 6,292,290 $ 474,627 $ (254,825 )

As percentage of total deposits

Demand deposits 53.64 % 50.85 % 48.32 % 45.10 % 39.89 % 2.79 % 13.75 %

Other core deposits 43.39 % 45.22 % 51.50 % 53.29 % 52.46 % (1.83 ) % (9.07 ) %

Brokered deposits 2.98 % 3.93 % 0.18 % 1.61 % 7.64 % (0.95 ) % (4.66 ) %



Average loan yield 4.48 % 4.56 % 4.71 % 4.75 % 4.80 % (0.08 ) % (0.32 ) %

Average cost ofinterest-bearing 0.93 % 1.41 % 1.57 % 1.78 % 1.89 % (0.48 ) % (0.96 ) %deposits

Average cost of 0.71 % 1.11 % 1.27 % 1.48 % 1.62 % (0.40 ) % (0.91 ) %total deposits

Investments

Securities available-for-sale increased $206.6 million to $1.18 billion at June 30, 2020. This increase was due to $175.2 million in purchases of corporate and government agency securities and lower unrealized net losses of $54.7 million due mostly to credit spreads tightening during the quarter for a positive change on our CLO portfolio pricing, offset by $20.7 million in sales of mainly corporate securities. As of June 30, 2020, our securities portfolio included $668.4 million of CLOs, $306.7 million of agency securities, $57.2 million of municipal securities, and $143.6 million of corporate debt securities. Our CLO portfolio, which is comprised only of AA and AAA rated securities, comprises 56.8% of our securities portfolio and the carrying value includes an unrealized net loss of $35.3 million at June 30, 2020 compared to an unrealized net loss of $80.0 million at March 31, 2020.

Loans

The following table sets forth the composition, by loan category, of our loan portfolio as of the dates indicated:

June 30, March 31, December 31, September 30, June 30, 2020 2020 2019 2019 2019

($ in thousands)

Composition ofheld-for-investment loans

Commercial real $ 822,694 $ 810,024 $ 818,817 $ 891,029 $ 856,497 estate

Multifamily 1,434,071 1,466,083 1,494,528 1,563,757 1,598,978

Construction 212,979 227,947 231,350 228,561 209,029

Commercial and 1,436,990 1,578,223 1,691,270 1,789,478 1,951,707 industrial

SBA 310,784 70,583 70,981 75,359 80,929

Total commercial 4,217,518 4,152,860 4,306,946 4,548,184 4,697,140 loans

Single-familyresidential 1,370,785 1,467,375 1,590,774 1,775,953 1,961,065 mortgage

Other consumer 39,393 47,229 54,165 59,122 61,365

Total consumer 1,410,178 1,514,604 1,644,939 1,835,075 2,022,430 loans

Total gross loans $ 5,627,696 $ 5,667,464 $ 5,951,885 $ 6,383,259 $ 6,719,570

Compositionpercentage of held-for-investmentloans

Commercial real 14.6 % 14.3 % 13.8 % 14.0 % 12.7 %estate

Multifamily 25.5 % 25.9 % 25.1 % 24.5 % 23.8 %

Construction 3.8 % 4.0 % 3.9 % 3.6 % 3.1 %

Commercial and 25.5 % 27.9 % 28.4 % 28.0 % 29.1 %industrial

SBA 5.5 % 1.2 % 1.2 % 1.2 % 1.2 %

Total commercial 74.9 % 73.3 % 72.4 % 71.3 % 69.9 %loans

Single-familyresidential 24.4 % 25.9 % 26.7 % 27.8 % 29.2 %mortgage

Other consumer 0.7 % 0.8 % 0.9 % 0.9 % 0.9 %

Total consumer 25.1 % 26.7 % 27.6 % 28.7 % 30.1 %loans

Total gross loans 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %

Held-for-investment loans decreased $39.8 million to $5.63 billion from the prior quarter, due mostly to lower single-family residential mortgage loans of $96.6 million, lower commercial and industrial (C&I) loans of $141.2 million, and lower multifamily loans of $32.0 million. The decline in single-family residential is attributed to payoffs as the loans refinance away in the lower rate environment and these proceeds are invested in other core business loans. The decline in C&I loans is primarily in response to strategically reducing certain credit facilities in response to the changed economic landscape and corresponding lower outstanding balances. These decreases were partially offset by a $240.2 million increase in SBA loans, which is attributable to the funding of the loans under the SBA's PPP. As we dedicated resources to processing PPP loans, this tempered other loan production in addition to the impact of the COVID-19 pandemic in the market and we did not experience any significant increase in credit line usage.

We continue to remix our real estate loan portfolio toward relationship-based multifamily, bridge, light infill construction, and commercial real estate loans. Single-family residential mortgage and multifamily loans comprised 49.9% of the total held-for-investment loan portfolio as compared to 53.0% one year ago. Commercial real estate loans comprised 14.6% of the loan portfolio and commercial and industrial loans constituted 25.5%. Currently, loans secured by residential real estate (single-family, multifamily, single-family construction, and warehouse credit facilities) represent approximately 66% of our total loans outstanding.

The C&I portfolio has limited exposure to certain business sectors undergoing severe stress, as demonstrated by the following (as a percentage of total outstanding C&I loan balances):

June 30, 2020

Amount % of Portfolio

($ in thousands)

C&I Portfolio by Industry

Finance and insurance (includes Warehouse $ 777,015 54 %lending)

Real estate and rental leasing 201,630 14 %

Gas stations 76,510 5 %

Manufacturing 60,128 4 %

Healthcare 43,256 3 %

Wholesale trade 39,740 3 %

Other retail trade 37,699 3 %

Television/motion pictures 33,590 2 %

Food services 30,216 2 %

Professional services 14,975 1 %

Transportation 5,363 - %

Accommodations 1,496 - %

All other 115,372 8 %

Total $ 1,436,990 100 %

Deposits

The following table sets forth the composition of our deposits at the dates indicated.

June 30, March 31, December 31, September 30, June 30, 2020 2020 2019 2019 2019

($ in thousands)

Composition of deposits

Noninterest-bearing $ 1,391,504 $ 1,256,081 $ 1,088,516 $ 1,107,442 $ 993,745 checking

Interest-bearing 1,846,698 1,572,389 1,533,882 1,503,208 1,577,901 checking

Money market 765,854 575,820 715,479 695,530 800,898

Savings 939,018 877,947 885,246 1,042,162 1,061,115

Non-brokeredcertificates of 924,630 1,071,936 1,204,044 1,367,284 1,479,137 deposit

Brokeredcertificates of 169,761 208,665 - 54,432 379,494 deposit

Total deposits $ 6,037,465 $ 5,562,838 $ 5,427,167 $ 5,770,058 $ 6,292,290

Compositionpercentage of deposits

Noninterest-bearing 23.0 % 22.6 % 20.1 % 19.2 % 15.8 %checking

Interest-bearing 30.6 % 28.3 % 28.2 % 26.1 % 25.1 %checking

Money market 12.7 % 10.3 % 13.2 % 12.0 % 12.7 %

Savings 15.6 % 15.8 % 16.3 % 18.1 % 16.9 %

Non-brokeredcertificates of 15.3 % 19.3 % 22.2 % 23.7 % 23.5 %deposit

Brokeredcertificates of 2.8 % 3.7 % - % 0.9 % 6.0 %deposit

Total deposits 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %

Total deposits increased $474.6 million during the second quarter of 2020 to $6.04 billion due to higher noninterest-bearing checking balances of $135.4 million, interest-bearing checking balances of $274.3 million, money market balances of $190.0 million, and savings balances of $61.1 million, offset by lower non-brokered certificates of deposit balances of $147.3 million and brokered certificates of deposit balances of $38.9 million. We continue to focus on growing relationship-based deposits, strategically augmented by wholesale funding, as we proactively reduce our deposit costs in response to the interest rate cuts by the Federal Reserve in March of 2020. Noninterest-bearing deposits totaled $1.39 billion and represented 23.0% of total deposits at June 30, 2020 compared to $1.26 billion and 22.6% at March 31, 2020 and $993.7 million and 15.8% one year ago.

Debt

Advances from the FHLB decreased $360.8 million, or 37%, to $617.2 million, as of June 30, 2020, due in part to a $90.0 million reduction in overnight borrowings to $0 at June 30, 2020 and a $164.0 million reduction in short-term advances to $213.0 million at June 30, 2020. We repaid a $100.0 million FHLB term advance with weighted average interest rate of 2.07% and incurred a $2.5 million extinguishment fee that is included in other noninterest expense. Additionally, in June 2020 we refinanced $111.0 million of FHLB term advances to take advantage of the rapid decline in market interest rates. As a result of this refinancing, our weighted average effective interest rate on such FHLB term advances changed from 2.81% to 2.02% and the weighted average life extended from 2.52 years to 5.18 years. At the end of the second quarter, FHLB advances included no overnight borrowings, $58.0 million maturing within three months, and $566.0 million maturing beyond three months with a weighted average life of 4.1 years and weighted average interest rate of 2.39%.

Equity

At June 30, 2020, total stockholders' equity increased by $12.0 million to $847.0 million and tangible common equity increased by $15.0 million to $621.5 million on a linked-quarter basis. The increase in total stockholders' equity was a result of a lower net accumulated other comprehensive loss of $38.6 million related to the higher fair values of CLOs and other securities available-for-sale, offset by the net loss of $18.4 million, dividends to common and preferred stockholders of $6.6 million, and redemption of preferred stock of $2.6 million. Tangible book value per share increased to $12.37 as of June 30, 2020 from $12.11 at March 31, 2020.

Capital ratios remain strong with total risk-based capital at 16.35% and a tier 1 leverage ratio of 10.56%. The following table sets forth our regulatory capital ratios at June 30, 2020 and the previous four quarters. The interim capital relief related to the adoption of CECL increased the Bank's leverage ratio approximately 12 basis points at June 30, 2020.

June March December September June 30, 31, 31, 30, 30, 2020 2020 2019 2019 2019

Capital Ratios^(1)

Banc of California, Inc.

Total risk-based capital 16.35 % 16.16 % 15.90 % 14.37 % 15.00 %ratio

Tier 1 risk-based capital 15.10 % 14.91 % 14.83 % 13.32 % 14.03 %ratio

Common equity tier 1 11.68 % 11.58 % 11.56 % 10.34 % 10.50 %capital ratio

Tier 1 leverage ratio 10.56 % 11.20 % 10.89 % 9.84 % 9.62 %

Banc of California, NA

Total risk-based capital 18.19 % 18.21 % 17.46 % 15.65 % 16.70 %ratio

Tier 1 risk-based capital 16.94 % 16.96 % 16.39 % 14.60 % 15.73 %ratio

Common equity tier 1 16.94 % 16.96 % 16.39 % 14.60 % 15.73 %capital ratio

Tier 1 leverage ratio 11.86 % 12.67 % 12.02 % 10.75 % 10.80 %

(1) June 30, 2020 capital ratios are preliminary.

Credit Quality

June 30, March 31, December September June 30, 2020 2020 31, 30, 2019 2019 2019

Asset qualityinformation and ($ in thousands)ratios

Delinquent loans held-for-investment

30 to 89 days $ 49,810 $ 56,338 $ 32,873 $ 39,122 $ 34,938 delinquent

90+ days delinquent 45,384 28,632 24,734 17,220 17,272

Total delinquent $ 95,194 $ 84,970 $ 57,607 $ 56,342 $ 52,210 loans

Total delinquentloans to total 1.69 % 1.50 % 0.97 % 0.88 % 0.78 %loans

Non-performingassets, excluding loans held-for-sale

Non-performing $ 72,703 $ 56,471 $ 43,354 $ 45,169 $ 28,499 loans

90+ days delinquentand still accruing - - - - 275 loans

Other real estate - - - - 276 owned

Non-performing $ 72,703 $ 56,471 $ 43,354 $ 45,169 $ 29,050 assets

ALL tonon-performing 124.30 % 138.55 % 132.97 % 139.31 % 206.86 %loans

Non-performingloans to total 1.29 % 1.00 % 0.73 % 0.71 % 0.43 %loansheld-for-investment

Non-performingassets to total 0.94 % 0.74 % 0.55 % 0.52 % 0.31 %assets

Troubled debtrestructurings (TDRs)

Performing TDRs $ 5,597 $ 6,100 $ 6,620 $ 6,800 $ 20,245

Non-performing TDRs 20,275 20,852 21,837 14,605 2,428

Total TDRs $ 25,872 $ 26,952 $ 28,457 $ 21,405 $ 22,673

Total delinquent loans increased $10.2 million in the second quarter to $95.2 million at June 30, 2020, due to $43.3 million of additions, offset by $27.6 million returning to current status and $5.5 million of principal payments or payoffs. Our delinquent loans increased due primarily to one lending relationship well-secured by commercial real estate and single-family residential properties totaling $11.5 million. Delinquent loans included primarily legacy single-family residential loans, which accounted for 74% of the balance at quarter end and represented a decrease of $1.1 million quarter over quarter. Excluding delinquent single-family residential loans, delinquent loans totaled $24.9 million, or 0.59% of total loans, excluding single-family residential loans, at June 30, 2020.

Non-performing loans totaled $72.7 million as of June 30, 2020, of which $21.9 million, or 30% of the balance relates to loans in a current payment status. The $16.2 million increase during the second quarter was primarily due to $18.6 million of loans being placed on nonaccrual status, offset by cured loans and payoffs. The quarter-end balance includes three large loan relationships totaling $36.9 million, or 51% of our total nonperforming loans, which consist of one $16.4 million legacy shared national credit, a $9.1 million single-family mortgage residential loan with a loan-to-value ratio of 58%, and an $11.5 million legacy relationship well-secured by commercial real estate and single-family residential properties with an average loan-to-value ratio of 51%. Aside from those three loan relationships, non-performing single-family residential loans totaled $19.4 million and the remaining non-performing loans totaled $16.4 million.

In light of the pandemic, during the quarter we provided support to clients by granting loan deferments or forbearance. As of June 30, 2020, in our single-family residential portfolio, we had 142 loans on active forbearance for $164 million of principal balances, or approximately 12% of this loan portfolio. With respect to the remaining loan portfolio excluding the single-family residential portfolio, as of June 30, 2020, we had 156 active deferments on $440 million of principal balances, or 10% of this portion of the loan portfolio. As with our entire portfolio, we will continue to actively monitor and manage our lending relationships in a manner that supports our clients and protects the Bank.

Allowance forCredit Losses

Three Months Ended

June 30, March 31, December 31, September June 30, 2020 2020 2019 30, 2019 2019

($ in thousands)

Allowance for loan losses (ALL)

Balance at $ 78,243 $ 57,649 $ 62,927 $ 59,523 $ 63,885 beginning of period

Adoption of ASU - 7,609 - - - 2016-13 ^(1)

Loans charged off - (2,076 ) (2,706 ) (35,546 ) (2,451 )

Recoveries 608 350 106 410 76

Net recoveries 608 (1,726 ) (2,600 ) (35,136 ) (2,375 ) (charge-offs)

Provision for(reversal of) loan 11,519 14,711 (2,678 ) 38,540 (1,987 ) losses

Balance at end of 90,370 $ 78,243 $ 57,649 $ 62,927 $ 59,523 period

Reserve forunfunded loan commitments

Balance at 3,888 4,064 4,362 4,295 4,208 beginning of period

Adoption of ASU - (1,226 ) - - - 2016-13 ^(1)

Provision for 307 1,050 (298 ) 67 87 credit losses

Balance at end of 4,195 3,888 4,064 4,362 4,295 period

Allowance for $ 94,565 $ 82,131 $ 61,713 $ 67,289 $ 63,818 credit losses (ACL)



ALL to total loans 1.61 % 1.38 % 0.97 % 0.99 % 0.89 %

ACL to total loans 1.68 % 1.45 % 1.04 % 1.05 % 0.95 %

Annualized net loancharge-offs(recoveries) to (0.04 ) % 0.12 % 0.17 % 2.19 % 0.13 %average total loansheld-for-investment



Reserve for loss on repurchased loans

Balance at $ 5,601 $ 6,201 $ 6,561 $ 2,478 $ 2,486 beginning of period

Initial provisionfor loan - - - 4,415 53 repurchases

Reversal ofprovision for loan (34 ) (600 ) (360 ) (123 ) (61 ) repurchases

Utilization ofreserve for loan - - - (209 ) - repurchases

Balance at end of $ 5,567 $ 5,601 $ 6,201 $ 6,561 $ 2,478 period

Represents the impact of adopting ASU 2016-13, Financial Instruments - Credit Losses on January 1, 2020. As a result of adopting ASU 2016-13, our(1) methodology to compute our allowance for credit losses is based on a current expected credit loss methodology, rather than the previously applied incurred loss methodology.

The allowance for expected credit losses, which includes the reserve for unfunded loan commitments, totaled $94.6 million, or 1.68% of total loans at June 30, 2020 compared to $82.1 million or 1.45% at March 31, 2020. The $12.4 million increase in the allowance for expected credit losses was due to: (i) $6.8 million provided for specific reserves, primarily related to one previously reported nonaccrual shared national credit, (ii) $5.0 million provided for general reserves related to the continued deterioration in key macro-economic forecast variables, offset by the impact of lower loan balances, and (iii) net recoveries of $608 thousand. The ACL coverage of non-performing loans was 130% at June 30, 2020 compared to 145% at March 31, 2020 and 142% at December 31, 2019.

Our ACL methodology and resulting provision continues to be impacted by the current economic uncertainty and volatility caused by the COVID-19 pandemic. Our ACL methodology uses a nationally recognized, third-party model that includes many assumptions based on our historical and peer loss data, our current loan portfolio risk profile including risk ratings, and economic forecasts including macroeconomic variables ("MEVs"). As of June 30, 2020, we used economic forecasts released by our model provider during June 2020. Similar to the late March 2020 forecasts, these June 2020 forecasts reflect the onset of the pandemic, its impact on the MEVs and the future economic recovery. These forecasts published by our model provider have deteriorated since the end of the first quarter, with June baseline unemployment rate forecasts for 2020 and 2021 increasing and real GDP growth rates decreasing. Similar to the first quarter of 2020, we incorporated qualitative factors to account for certain loan portfolio characteristics that are not taken into consideration by our third-party model including underlying strengths and weaknesses in the loan portfolio. As is the case with all estimates, we expect the ACL to be impacted in future periods by economic volatility, changing economic forecasts, and underlying model assumptions, all of which may be better than or worse than our current estimate.

The Company will host a conference call to discuss its second quarter 2020 financial results at 10:00 a.m. Pacific Time (PT) on Thursday, July 23, 2020. Interested parties are welcome to attend the conference call by dialing (888) 317-6003, and referencing event code 0284271. A live audio webcast will also be available and the webcast link will be posted on the Company's Investor Relations website at www.bancofcal.com/investor. The slide presentation for the call will also be available on the Company's Investor Relations website prior to the call. A replay of the call will be made available approximately one hour after the call has ended on the Company's Investor Relations website at www.bancofcal.com/investor or by dialing (877) 344-7529 and referencing event code 10145608.

About Banc of California, Inc.

Banc of California, Inc. (NYSE: BANC) is a bank holding company with approximately $7.8 billion in assets and one wholly-owned banking subsidiary, Banc of California, N.A. (the "Bank"). The Bank has 39 offices including 31 full-service branches located throughout Southern California. Through our dedicated professionals, we provide customized and innovative banking and lending solutions to businesses, entrepreneurs and individuals throughout California. We help to improve the communities where we live and work, by supporting organizations that provide financial literacy and job training, small business support and affordable housing. With a commitment to service and building enduring relationships, we provide a higher standard of banking. We look forward to helping you achieve your goals. For more information, please visit us at www.bancofcal.com.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the "Safe-Harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are necessarily subject to risk and uncertainty and actual results could differ materially from those anticipated due to various factors, including those set forth from time to time in the documents filed or furnished by Banc of California, Inc. with the Securities and Exchange Commission. In addition to those, statements about the potential effects of the COVID-19 pandemic on the business, financial results and condition of Banc of California, Inc. and its subsidiaries may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond the control of Banc of California, Inc., including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on Banc of California Inc. and its subsidiaries, their customers and third parties. You should not place undue reliance on forward-looking statements and Banc of California, Inc. undertakes no obligation to update any such statements to reflect circumstances or events that occur after the date on which the forward-looking statement is made.

Banc of California,Inc.

ConsolidatedStatements ofFinancial Condition(Unaudited)

(Dollars inthousands)

June 30, March 31, December 31, September 30, June 30, 2020 2020 2019 2019 2019

ASSETS

Cash and cash $ 420,640 $ 435,992 $ 373,472 $ 526,874 $ 313,850 equivalents

Securities 1,176,029 969,427 912,580 775,662 1,167,687 available-for-sale

Loans held-for-sale 19,768 20,234 22,642 23,936 597,720

Loans 5,627,696 5,667,464 5,951,885 6,383,259 6,719,570 held-for-investment

Allowance for loan (90,370 ) (78,243 ) (57,649 ) (62,927 ) (59,523 ) losses

Federal Home LoanBank and other bank 46,585 57,237 59,420 71,679 76,373 stock

Servicing rights, 1,753 2,009 2,299 2,407 2,715 net

Other real estate - - - - 276 owned, net

Premises and 125,247 127,379 128,021 128,979 129,227 equipment, net

Investments inalternative energy 26,967 27,347 29,300 27,039 26,633 partnerships, net

Goodwill 37,144 37,144 37,144 37,144 37,144

Other intangible 3,292 3,722 4,151 4,605 5,105 assets, net

Deferred income 48,288 63,849 44,906 45,950 42,798 tax, net

Income tax 13,094 7,198 4,233 4,459 2,547 receivable

Bank owned lifeinsurance 110,487 110,397 109,819 108,720 108,132 investment

Right of use assets 19,408 20,882 22,540 23,907 24,118

Due from unsettled - - - 334,769 - securities sales

Other assets 184,110 190,569 183,647 188,875 165,559

Total assets $ 7,770,138 $ 7,662,607 $ 7,828,410 $ 8,625,337 $ 9,359,931



LIABILITIES ANDSTOCKHOLDERS' EQUITY

Noninterest-bearing $ 1,391,504 $ 1,256,081 $ 1,088,516 $ 1,107,442 $ 993,745 deposits

Interest-bearing 4,645,961 4,306,757 4,338,651 4,662,616 5,298,545 deposits

Total deposits 6,037,465 5,562,838 5,427,167 5,770,058 6,292,290

Advances fromFederal Home Loan 617,170 978,000 1,195,000 1,650,000 1,825,000 Bank

Notes payable, net 173,537 173,479 173,421 173,339 173,257

Reserve for loss on 5,567 5,601 6,201 6,561 2,478 repurchased loans

Lease liabilities 20,531 22,075 23,692 25,210 25,457

Accrued expensesand other 68,909 85,612 95,684 99,181 77,905 liabilities

Total liabilities 6,923,179 6,827,605 6,921,165 7,724,349 8,396,387

Commitments andcontingent liabilities

Preferred stock 185,037 187,687 189,825 189,825 231,128

Common stock 522 520 520 520 520

Common stock, classB non-voting 5 5 5 5 5 non-convertible

Additional paid-in 632,117 631,125 629,848 628,774 627,306 capital

Retained earnings 85,670 110,640 127,733 120,221 146,039

Treasury stock (40,827 ) (40,827 ) (28,786 ) (28,786 ) (28,786 )

Accumulated othercomprehensive loss, (15,565 ) (54,148 ) (11,900 ) (9,571 ) (12,668 ) net

Total stockholders' 846,959 835,002 907,245 900,988 963,544 equity

Total liabilitiesand stockholders' $ 7,770,138 $ 7,662,607 $ 7,828,410 $ 8,625,337 $ 9,359,931 equity

Banc ofCalifornia, Inc.

ConsolidatedStatements ofOperations(Unaudited)

(Dollars inthousands,except per sharedata)

Three Months Ended Six Months Ended

June 30, March 31, December 31, September 30, June 30, June 30, June 30, 2020 2020 2019 2019 2019 2020 2019

Interest and dividend income

Loans, including $ 63,642 $ 65,534 $ 73,930 $ 80,287 $ 89,159 $ 129,176 $ 179,717 fees

Securities 7,816 7,820 7,812 10,024 12,457 15,636 30,298

Otherinterest-earning 1,239 1,360 1,960 2,346 2,424 2,599 4,737 assets

Total interestand dividend 72,697 74,714 83,702 92,657 104,040 147,411 214,752 income

Interest expense

Deposits 10,205 14,611 18,247 22,811 28,598 24,816 60,041

Federal HomeLoan Bank 4,818 5,883 6,396 8,519 8,289 10,701 17,370 advances

Notes payableand other 2,359 2,359 2,399 2,412 2,373 4,718 4,753 interest-bearingliabilities

Total interest 17,382 22,853 27,042 33,742 39,260 40,235 82,164 expense

Net interest 55,315 51,861 56,660 58,915 64,780 107,176 132,588 income

Provision for(reversal of) 11,826 15,761 (2,976 ) 38,607 (1,900 ) 27,587 198 credit losses

Net interestincome afterprovision for 43,489 36,100 59,636 20,308 66,680 79,589 132,390 (reversal of)credit losses

Noninterest income

Customer service 1,224 1,096 1,451 1,582 1,434 2,320 2,949 fees

Loan servicing 95 75 312 128 121 170 239 income

Income from bankowned life 591 578 599 588 580 1,169 1,105 insurance

Impairment losson investment - - - (731 ) - - - securities

Net gain (loss)on sale ofsecurities 2,011 - 3 (5,063 ) - 2,011 208 available forsale

Fair valueadjustment on 25 (1,586 ) 30 16 59 (1,561 ) 60 loans held forsale

Net (loss) gain - (27 ) (863 ) 4,310 2,767 (27 ) 4,319 on sale of loans

All other income 1,582 1,925 3,398 2,351 (7,251 ) 3,507 (4,875 ) (loss)

Totalnoninterest 5,528 2,061 4,930 3,181 (2,290 ) 7,589 4,005 income (loss)

Noninterest expense

Salaries andemployee 24,260 23,436 24,036 25,934 27,506 47,696 55,945 benefits

Naming rights 26,769 - - - - 26,769 - termination

Occupancy and 7,090 7,243 7,900 7,767 7,955 14,333 15,641 equipment

Professionalfees 4,596 5,964 2,611 1,463 (2,903 ) 10,560 8,138 (reimbursement)

Data processing 1,536 1,773 1,684 1,568 1,672 3,309 3,168

Advertising 1,157 1,756 2,227 2,090 2,048 2,913 4,105

Regulatory 725 484 1,854 1,239 2,136 1,209 4,618 assessments

Reversal of loanrepurchase (34 ) (600 ) (360 ) (123 ) (61 ) (634 ) (177 ) reserves

Amortization ofintangible 430 429 454 500 621 859 1,241 assets

Restructuringexpense - - 1,626 - (158 ) - 2,637 (reversal)

All other 6,408 4,529 4,412 3,742 5,039 10,937 8,838 expenses

Totalnoninterestexpenseexcluding loss(gain) on 72,937 45,014 46,444 44,180 43,855 117,951 104,154 investments inalternativeenergypartnerships

Loss (gain) oninvestments inalternative (167 ) 1,905 1,039 (940 ) (355 ) 1,738 1,595 energypartnerships

Totalnoninterest 72,770 46,919 47,483 43,240 43,500 119,689 105,749 expense

(Loss) incomefrom operations (23,753 ) (8,758 ) 17,083 (19,751 ) 20,890 (32,511 ) 30,646 before incometaxes

Income tax(benefit) (5,304 ) (2,165 ) 2,811 (5,619 ) 4,308 (7,469 ) 7,027 expense

Net (loss) (18,449 ) (6,593 ) 14,272 (14,132 ) 16,582 (25,042 ) 23,619 income

Preferred stock 3,442 3,533 3,540 3,403 4,308 6,975 8,616 dividends

Income allocatedto participating - - 224 - 271 - 153 securities

Participatingsecurities 94 94 93 94 94 188 295 dividends

Impact ofpreferred stock (49 ) (526 ) - 5,093 - (575 ) - redemption

Net (loss)income available $ (21,936 ) $ (9,694 ) $ 10,415 $ (22,722 ) $ 11,909 $ (31,630 ) $ 14,555 to commonstockholders



(Loss) earningsper common share:

Basic $ (0.44 ) $ (0.19 ) $ 0.21 $ (0.45 ) $ 0.23 $ (0.63 ) $ 0.29

Diluted $ (0.44 ) $ (0.19 ) $ 0.20 $ (0.45 ) $ 0.23 $ (0.63 ) $ 0.29

Weighted averagenumber of common sharesoutstanding

Basic 50,030,919 50,464,777 50,699,915 50,882,227 50,857,137 50,247,848 50,767,428

Diluted 50,030,919 50,464,777 50,927,978 50,882,227 50,964,956 50,247,848 50,895,190

Dividendsdeclared per $ 0.06 $ 0.06 $ 0.06 $ 0.06 $ 0.06 $ 0.12 $ 0.19 common share

Banc of California, Inc.

Selected Financial Data

(Unaudited)

Three Months Ended

June 30, March December September June 30, 2020 31, 31, 30, 2019 2020 2019 2019

Profitability and otherratios of consolidated operations

Return on average assets (0.96 ) (0.35 ) 0.71 % (0.64 )% 0.69 %^(1) % %

Return on average equity (8.69 ) (2.89 ) 6.20 % (5.83 )% 6.91 %^(1) % %

Return on average ) )tangible common equity^ (13.77 % (5.44 % 6.46 % (12.49 )% 7.43 %(2)

Dividend payout ratio^ (13.64 ) (31.58 ) 28.57 % (13.33 )% 26.09 %(3) % %

Net interest spread 2.77 % 2.56 % 2.65 % 2.47 % 2.50 %

Net interest margin^(1) 3.09 % 2.97 % 3.04 % 2.86 % 2.86 %

Noninterest income )(loss) to total revenue^ 9.09 % 3.82 % 8.00 % 5.12 % (3.66 %(4)

Noninterest income )(loss) to average total 0.29 % 0.11 % 0.25 % 0.15 % (0.10 %assets^(1)

Noninterest expense to 3.78 % 2.50 % 2.37 % 1.97 % 1.82 %average total assets^(1)

Adjusted noninterestexpense to average total 2.22 % 2.30 % 2.41 % 2.13 % 2.06 %assets^(1)

Efficiency ratio^(2)(5) 119.60 % 87.01 % 77.10 % 69.63 % 69.61 %

Adjusted efficiencyratio including thepre-tax effect of 119.55 % 86.54 % 74.51 % 70.00 % 67.70 %investments inalternative energypartnerships^(2)(5)

Average loansheld-for-investment to 98.51 % 108.54 % 108.50 % 105.92 % 104.38 %average deposits

Average securitiesavailable-for-sale to 13.75 % 12.60 % 10.48 % 12.71 % 13.58 %average total assets

Average stockholders'equity to average total 11.04 % 12.11 % 11.47 % 11.06 % 10.02 %assets

(1) Ratios are presented on an annualized basis.

The ratios are determined by methods other than in accordance with U.S.(2) generally accepted accounting principles (GAAP). See Non-GAAP measures section for reconciliation of the calculation.

(3) The ratio is calculated by dividing dividends declared per common share by basic earnings per common share.

(4) Total revenue is equal to the sum of net interest income before provision for credit losses and noninterest income (loss).

The ratios are calculated by dividing noninterest expense by the sum of(5) net interest income before provision for credit losses and noninterest income (loss).

Banc of California, Inc.

Average Balance, AverageYield Earned, and AverageCost Paid

(Dollars in thousands)

(Unaudited)

Three Months Ended

June 30, 2020 March 31, 2020 December 31, 2019

Average Yield Average Yield Average Yield

Balance Interest / Cost Balance Interest / Cost Balance Interest / Cost

Interest earning assets

Loans held-for-sale $ 19,967 $ 155 3.12 % $ 22,273 $ 220 3.97 % $ 23,527 $ 221 3.73 %

SFR mortgage 1,416,358 14,187 4.03 % 1,532,967 15,295 4.01 % 1,689,228 16,788 3.94 %

Commercial real estate,multifamily, and 2,524,477 29,459 4.69 % 2,564,485 30,223 4.74 % 2,633,342 32,763 4.94 %construction

Commercial andindustrial, SBA, and 1,706,120 19,392 4.57 % 1,613,324 19,157 4.78 % 1,821,064 23,381 5.09 %lease financing

Other consumer 40,697 449 4.44 % 47,761 639 5.38 % 54,088 777 5.70 %

Gross loans and leases 5,707,619 63,642 4.48 % 5,780,810 65,534 4.56 % 6,221,249 73,930 4.71 %

Securities 1,063,941 7,816 2.95 % 952,966 7,820 3.30 % 833,726 7,812 3.72 %

Other interest-earning 424,776 1,239 1.17 % 297,444 1,360 1.84 % 330,950 1,960 2.35 %assets

Total interest-earning 7,196,336 72,697 4.06 % 7,031,220 74,714 4.27 % 7,385,925 83,702 4.50 %assets

Allowance for loan losses (78,528 ) (60,470 ) (61,642 )

BOLI and noninterest 622,398 592,192 630,308 earning assets

Total assets $ 7,740,206 $ 7,562,942 $ 7,954,591



Interest-bearing liabilities

Savings $ 905,997 $ 2,718 1.21 % $ 890,830 $ 3,296 1.49 % $ 981,346 $ 3,889 1.57 %

Interest-bearing checking 1,710,038 2,186 0.51 % 1,520,922 3,728 0.99 % 1,546,322 4,234 1.09 %

Money market 592,872 850 0.58 % 608,926 1,760 1.16 % 743,695 2,593 1.38 %

Certificates of deposit 1,214,939 4,451 1.47 % 1,151,518 5,827 2.04 % 1,332,911 7,531 2.24 %

Total interest-bearing 4,423,846 10,205 0.93 % 4,172,196 14,611 1.41 % 4,604,274 18,247 1.57 %deposits

FHLB advances 819,166 4,818 2.37 % 1,039,055 5,883 2.28 % 1,020,478 6,396 2.49 %

Securities sold under 1,024 2 0.79 % - - - % 2,223 15 2.68 %repurchase agreements

Long-term debt and otherinterest-bearing 173,977 2,357 5.45 % 174,056 2,359 5.45 % 174,092 2,384 5.43 %liabilities

Total interest-bearing 5,418,013 17,382 1.29 % 5,385,307 22,853 1.71 % 5,801,067 27,042 1.85 %liabilities

Noninterest-bearing 1,349,735 1,133,306 1,108,077 deposits

Noninterest-bearing 118,208 128,282 132,698 liabilities

Total liabilities 6,885,956 6,646,895 7,041,842

Total stockholders' 854,250 916,047 912,749 equity

Total liabilities and $ 7,740,206 $ 7,562,942 $ 7,954,591 stockholders' equity



Net interest income/ $ 55,315 2.77 % $ 51,861 2.56 % $ 56,660 2.65 %spread

Net interest margin 3.09 % 2.97 % 3.04 %



Ratio of interest-earningassets to 132.82 % 130.56 % 127.32 % interest-bearingliabilities

Total deposits $ 5,773,581 $ 10,205 0.71 % $ 5,305,502 $ 14,611 1.11 % $ 5,712,351 $ 18,247 1.27 %

Total funding ^(1) $ 6,767,748 $ 17,382 1.03 % $ 6,518,613 $ 22,853 1.41 % $ 6,909,144 $ 27,042 1.55 %

Total funding is the sum of interest-bearing liabilities and(1) noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.

Three Months Ended

September 30, 2019 June 30, 2019

Average Yield Average Yield

Balance Interest / Cost Balance Interest / Cost

Interest earning assets

Loans held-for-sale $ 216,746 $ 1,894 3.47 % $ 47,233 $ 265 2.25 %

SFR mortgage 1,866,103 19,179 4.08 % 2,059,704 21,390 4.17 %

Commercial realestate, 2,717,609 33,343 4.87 % 3,406,672 39,659 4.67 %multifamily, andconstruction

Commercial andindustrial, SBA, 1,840,202 24,970 5.38 % 1,872,289 26,940 5.77 %and lease financing

Other consumer 58,652 901 6.09 % 59,806 905 6.07 %

Gross loans and 6,699,312 80,287 4.75 % 7,445,704 89,159 4.80 %leases

Securities 1,105,499 10,024 3.60 % 1,304,876 12,457 3.83 %

Otherinterest-earning 362,613 2,346 2.57 % 342,908 2,424 2.84 %assets

Totalinterest-earning 8,167,424 92,657 4.50 % 9,093,488 104,040 4.59 %assets

Allowance for loan (55,976 ) (63,046 ) losses

BOLI andnoninterest-earning 584,190 580,133 assets

Total assets $ 8,695,638 $ 9,610,575



Interest-bearing liabilities

Savings 1,055,086 4,722 1.78 % 1,083,571 4,950 1.83 %

Interest-bearing 1,511,432 4,483 1.18 % 1,580,165 4,554 1.16 %checking

Money market 755,114 3,093 1.63 % 853,007 3,902 1.83 %

Certificates of 1,750,970 10,513 2.38 % 2,537,060 15,192 2.40 %deposit

Totalinterest-bearing 5,072,602 22,811 1.78 % 6,053,803 28,598 1.89 %deposits

FHLB advances 1,333,739 8,519 2.53 % 1,287,121 8,289 2.58 %

Securities soldunder repurchase 1,922 13 2.68 % 2,173 16 2.95 %agreements

Long-term debt andother 174,111 2,399 5.47 % 174,161 2,357 5.43 %interest-bearingliabilities

Totalinterest-bearing 6,582,374 33,742 2.03 % 7,517,258 39,260 2.09 %liabilities

Noninterest-bearing 1,047,858 1,034,205 deposits

Noninterest-bearing 103,667 96,179 liabilities

Total liabilities 7,733,899 8,647,642

Total stockholders' 961,739 962,933 equity

Total liabilitiesand stockholders' $ 8,695,638 $ 9,610,575 equity



Net interest income $ 58,915 2.47 % $ 64,780 2.50 %/spread

Net interest margin 2.86 % 2.86 %



Ratio ofinterest-earningassets to 124.08 % 120.97 % interest-bearingliabilities

Total deposits $ 6,120,460 $ 22,811 1.48 % $ 7,088,008 $ 28,598 1.62 %

Total funding ^(1) $ 7,630,232 $ 33,742 1.75 % $ 8,551,463 $ 39,260 1.84 %

Total funding is the sum of interest-bearing liabilities and(1) noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.

Six Months Ended

June 30, 2020 June 30, 2019

Average Yield Average Yield

Balance Interest / Cost Balance Interest / Cost

Interest earning assets

Loans held-for-sale $ 21,120 $ 376 3.58 % $ 39,340 $ 493 2.53 %

SFR mortgage 1,474,663 29,481 4.02 % 2,185,608 45,452 4.22 %

Commercial realestate, 2,544,480 59,682 4.72 % 3,397,241 77,776 4.62 %multifamily, andconstruction

Commercial andindustrial, SBA, 1,659,722 38,550 4.67 % 1,896,122 54,175 5.76 %and lease financing

Other consumer 44,229 1,087 4.94 % 61,174 1,821 6.00 %

Gross loans and 5,744,214 129,176 4.52 % 7,579,485 179,717 4.78 %leases

Securities 1,008,454 15,636 3.12 % 1,526,959 30,298 4.00 %

Otherinterest-earning 361,110 2,599 1.45 % 332,424 4,737 2.87 %assets

Totalinterest-earning 7,113,778 147,411 4.17 % 9,438,868 214,752 4.59 %assets

Allowance for (69,499 ) (62,488 ) credit losses

BOLI andnoninterest earning 607,296 577,858 assets

Total assets $ 7,651,575 $ 9,954,238



Interest-bearing liabilities

Savings 898,414 6,013 1.35 % 1,142,360 10,429 1.84 %

Interest-bearing 1,615,480 5,915 0.74 % 1,567,575 9,079 1.17 %checking

Money market 600,899 2,610 0.87 % 870,177 8,031 1.86 %

Certificates of 1,183,229 10,278 1.75 % 2,758,789 32,502 2.38 %deposit

Totalinterest-bearing 4,298,022 24,816 1.16 % 6,338,901 60,041 1.91 %deposits

FHLB advances 929,110 10,701 2.32 % 1,354,238 17,370 2.59 %

Securities soldunder repurchase 512 2 0.79 % 2,261 34 3.03 %agreements

Long-term debt andother 174,017 4,716 5.45 % 174,195 4,719 5.46 %interest-bearingliabilities

Totalinterest-bearing 5,401,661 40,235 1.50 % 7,869,595 82,164 2.11 %liabilities

Noninterest-bearing 1,241,521 1,028,008 deposits

Noninterest-bearing 123,244 96,801 liabilities

Total liabilities 6,766,426 8,994,404

Total stockholders' 885,149 959,834 equity

Total liabilitiesand stockholders' $ 7,651,575 $ 9,954,238 equity



Net interest income $ 107,176 2.67 % $ 132,588 2.48 %/spread

Net interest margin 3.03 % 2.83 %



Ratio ofinterest-earningassets to 131.70 % 119.94 % interest-bearingliabilities

Total deposits $ 5,539,543 $ 24,816 0.90 % $ 7,366,909 $ 60,041 1.64 %

Total funding ^(1) $ 6,643,182 $ 40,235 1.22 % $ 8,897,603 $ 82,164 1.86 %

Total funding is the sum of interest-bearing liabilities and(1) noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.

Banc of California, Inc. Consolidated Operations Non-GAAP Measures (Dollars in thousands, except per share data) (Unaudited)

Under Item 10(e) of SEC Regulation S-K, public companies disclosing financial measures in filings with the SEC that are not calculated in accordance with GAAP must also disclose, along with each non-GAAP financial measure, certain additional information, including a presentation of the most directly comparable GAAP financial measure, a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure, as well as a statement of the reasons why the company's management believes that presentation of the non-GAAP financial measure provides useful information to investors regarding the company's financial condition and results of operations and, to the extent material, a statement of the additional purposes, if any, for which the company's management uses the non-GAAP financial measure.

Return on average tangible common equity and efficiency ratio, as adjusted, tangible common equity, tangible common equity to tangible assets, tangible common equity per common share, and pre-tax pre-provision income constitute supplemental financial information determined by methods other than in accordance with GAAP. These non-GAAP measures are used by management in its analysis of the Company's performance.

Tangible common equity is calculated by subtracting preferred stock, goodwill, and other intangible assets from stockholders' equity. Tangible assets is calculated by subtracting goodwill and other intangible assets from total assets. Banking regulators also exclude goodwill and other intangible assets from stockholders' equity when assessing the capital adequacy of a financial institution.

Adjusted efficiency ratio is calculated by subtracting loss on investments in alternative energy partnerships from noninterest expense and adding total pre-tax return, which includes the loss on investments in alternative energy partnerships, to the sum of net interest income and noninterest income (total revenue). Pre-tax pre-provision income is calculated by adding total revenue and subtracting noninterest expense. Management believes the presentation of these financial measures adjusting the impact of these items provides useful supplemental information that is essential to a proper understanding of the final results and operating performance of the Company.

This disclosure should not be viewed as a substitute for results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.

The following tables provide reconciliations of the non-GAAP measures with financial measures defined by GAAP.

June 30, March 31, December 31, September 30, June 30, 2020 2020 2019 2019 2019

Tangible commonequity, andtangible common equity totangible assetsratio

Total assets $ 7,770,138 $ 7,662,607 $ 7,828,410 $ 8,625,337 $ 9,359,931

Less goodwill (37,144 ) (37,144 ) (37,144 ) (37,144 ) (37,144 )

Less otherintangible (3,292 ) (3,722 ) (4,151 ) (4,605 ) (5,105 )assets

Tangible assets $ 7,729,702 $ 7,621,741 $ 7,787,115 $ 8,583,588 $ 9,317,682 ^(1)



Totalstockholders' $ 846,959 $ 835,002 $ 907,245 $ 900,988 $ 963,544 equity

Less goodwill (37,144 ) (37,144 ) (37,144 ) (37,144 ) (37,144 )

Less otherintangible (3,292 ) (3,722 ) (4,151 ) (4,605 ) (5,105 )assets

Tangible equity 806,523 794,136 865,950 859,239 921,295 ^(1)

Less preferred (185,037 ) (187,687 ) (189,825 ) (189,825 ) (231,128 )stock

Tangible common $ 621,486 $ 606,449 $ 676,125 $ 669,414 $ 690,167 equity^(1)



Totalstockholders' 10.90 % 10.90 % 11.59 % 10.45 % 10.29 %equity to totalassets

Tangible equityto tangible 10.43 % 10.42 % 11.12 % 10.01 % 9.89 %assets^(1)

Tangible commonequity to 8.04 % 7.96 % 8.68 % 7.80 % 7.41 %tangible assets^(1)



Common shares 49,750,958 49,593,077 50,413,681 50,406,763 50,397,769 outstanding

Class Bnon-votingnon-convertible 477,321 477,321 477,321 477,321 477,321 common sharesoutstanding

Total commonshares 50,228,279 50,070,398 50,891,002 50,884,084 50,875,090 outstanding



Tangible commonequity per $ 12.37 $ 12.11 $ 13.29 $ 13.16 $ 13.57 common share^(1)

Book value per $ 13.18 $ 12.93 $ 14.10 $ 13.98 $ 14.40 common share

(1) Non-GAAP measure

Banc ofCalifornia,Inc.

ConsolidatedOperations

Non-GAAPMeasures,Continued

(Dollars inthousands,except pershare data)

(Unaudited)

Three Months Ended

June 30, March 31, December September June 30, 2020 2020 31, 30, 2019 2019 2019

Return ontangible common equity

Average totalstockholders' $ 854,250 $ 916,047 $ 912,749 $ 961,739 $ 962,933 equity

Less averagepreferred (185,471 ) (189,607 ) (189,824 ) (213,619 ) (231,128 )stock

Less average (37,144 ) (37,144 ) (37,144 ) (37,144 ) (37,144 )goodwill

Less averageother (3,574 ) (4,003 ) (4,441 ) (4,935 ) (5,503 )intangibleassets

Averagetangible $ 628,061 $ 685,293 $ 681,340 $ 706,041 $ 689,158 common equity^(1)



Net (loss) $ (18,449 ) $ (6,593 ) $ 14,272 $ (14,132 ) $ 16,582 income

Lesspreferredstockdividends and (3,393 ) (3,007 ) (3,540 ) (8,496 ) (4,308 )impact ofpreferredstockredemption

Addamortization 430 429 454 500 621 of intangibleassets

Less taxeffect onamortizationand (90 ) (90 ) (95 ) (105 ) (130 )impairment ofintangibleassets

Net (loss)incomeavailable to $ (21,502 ) $ (9,261 ) $ 11,091 $ (22,233 ) $ 12,765 commonstockholders^(1)



Return on ) ) )average (8.69 % (2.89 % 6.20 % (5.83 % 6.91 %equity

Return onaverage ) ) )tangible (13.77 % (5.44 % 6.46 % (12.49 % 7.43 %common equity^(1)



Statutory taxrate utilizedforcalculating 21.00 % 21.00 % 21.00 % 21.00 % 21.00 %tax effect onamortizationof intangibleassets

Three Months Ended

June 30, March 31, December September June 30, 2020 2020 31, 30, 2019 2019 2019

Adjustedefficiencyratio includingthe pre-taxeffect of investments inalternativeenergypartnerships

Noninterest $ 72,770 $ 46,919 $ 47,483 $ 43,240 $ 43,500 expense

(Loss) gain oninvestments inalternative 167 (1,905 ) (1,039 ) 940 355 energypartnerships

Totalnoninterestexpenseexcluding loss(gain) on $ 72,937 $ 45,014 $ 46,444 $ 44,180 $ 43,855 investments inalternativeenergypartnerships^(1)



Net interest $ 55,315 $ 51,861 $ 56,660 $ 58,915 $ 64,780 income

Noninterest 5,528 2,061 4,930 3,181 (2,290 )income

Total revenue 60,843 53,922 61,590 62,096 62,490

Tax credit frominvestments inalternative - - 1,689 77 1,680 energypartnerships

Deferred taxexpense oninvestments in - - (177 ) (8 ) (176 )alternativeenergypartnerships

Tax effect ontax credit and - - 267 7 426 deferred taxexpense

(Loss) gain oninvestments inalternative 167 (1,905 ) (1,039 ) 940 355 energypartnerships

Total pre-taxadjustments forinvestments in 167 (1,905 ) 740 1,016 2,285 alternativeenergypartnerships

Adjusted total $ 61,010 $ 52,017 $ 62,330 $ 63,112 $ 64,775 revenue^(1)

Efficiency 119.60 % 87.01 % 77.10 % 69.63 % 69.61 %ratio^(1)

Adjustedefficiencyratio includingthe pre-taxeffect of 119.55 % 86.54 % 74.51 % 70.00 % 67.70 %investments inalternativeenergypartnerships^(1)

Effective taxrate utilizedfor calculatingtax effect on 22.90 % 24.03 % 15.00 % 9.36 % 22.07 %tax credit anddeferred taxexpense

(1) Non-GAAP measure

Banc ofCalifornia,Inc.

ConsolidatedOperations

Non-GAAPMeasures,Continued

(Dollars inthousands,except pershare data)

(Unaudited)

Three Months Ended

June 30, March 31, December 31, September June 30, 2020 2020 2019 30, 2019 2019

Totalnoninterest $ 5,528 $ 2,061 $ 4,930 $ 3,181 $ (2,290 ) income

Adjustmentsfor non-core items:

Net (gain)loss onsecurities (2,011 ) - (3 ) 5,794 - available forsale

Fair valueadjustment on (25 ) 1,586 (30 ) (16 ) (59 ) loans held forsale

Total non-coreadjustments - (2,036 ) 1,586 (33 ) 5,778 (59 ) noninterestincome

Adjustednoninterest $ 3,492 $ 3,647 $ 4,897 $ 8,959 $ (2,349 ) income^(1)



Totalnoninterest $ 72,770 $ 46,919 $ 47,483 $ 43,240 $ 43,500 expense

Adjustmentsfor non-core items:

Naming rights (26,769 ) - - - - termination

Extinguishment (2,515 ) - - - - of debt

Data - - - - (797 ) processing

Professionalfees (875 ) (1,678 ) 3,557 2,615 6,214 (recoveries)

Restructuring(expense) - - (1,626 ) - 158 reversal

Other expenses - - - (131 ) -

Total non-coreadjustments - (30,159 ) (1,678 ) 1,931 2,484 5,575 noninterestexpense

(Loss) gain oninvestments inalternative 167 (1,905 ) (1,039 ) 940 355 energypartnerships

Totaladjustments - (29,992 ) (3,583 ) 892 3,424 5,930 noninterestexpense

Adjustednoninterest $ 42,778 $ 43,336 $ 48,375 $ 46,664 $ 49,430 expense^(1)

Three Months Ended

June 30, March 31, December 31, September June 30, 2020 2020 2019 30, 2019 2019

Net interest $ 55,315 $ 51,861 $ 56,660 $ 58,915 $ 64,780 income

Noninterest 5,528 2,061 4,930 3,181 (2,290 ) income

Total revenue 60,843 53,922 61,590 62,096 62,490

Noninterest 72,770 46,919 47,483 43,240 43,500 expense

Pre-taxpre-provision $ (11,927 ) $ 7,003 $ 14,107 $ 18,856 $ 18,990 income^(1)



Net interest $ 55,315 $ 51,861 $ 56,660 $ 58,915 $ 64,780 income

Noninterest 5,528 2,061 4,930 3,181 (2,290 ) income

Totalnon-coreadjustments - (2,036 ) 1,586 (33 ) 5,778 (59 ) noninterestincome

Adjustednoninterest 3,492 3,647 4,897 8,959 (2,349 ) income^(1)

Total revenue 58,807 55,508 61,557 67,874 62,431

Noninterest 72,770 46,919 47,483 43,240 43,500 expense

Totaladjustments - (29,992 ) (3,583 ) 892 3,424 5,930 noninterestexpense

Adjustednoninterest 42,778 43,336 48,375 46,664 49,430 expense^(1)

Adjustedpre-tax $ 16,029 $ 12,172 $ 13,182 $ 21,210 $ 13,001 pre-provisionincome^(1)

(1) Non-GAAP measure

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CONTACT: Investor Relations Inquiries: Banc of California, Inc. (855) 361-2262 Jared Wolff, (949) 385-8700 Lynn Hopkins, (949) 265-6599