In This Article:
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Net Income: $47 million or $0.28 per share for the fourth quarter.
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Net Interest Income: $235 million, up 1% from the prior quarter.
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Net Interest Margin (NIM): Increased 11 basis points to 3.04%.
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Noninterest Operating Expenses: Decreased by 36% from a normalized fourth quarter of 2024.
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Loan Production: $1.8 billion, resulting in portfolio growth of 1.5% or about 6% on an annualized basis.
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Cost of Deposits: Declined 28 basis points from 2.54% to 2.26%.
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Noninterest Income: $29 million in the fourth quarter.
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Total Deposits: $27.2 billion, increased by $364 million in the fourth quarter.
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Loan Portfolio Reserve Levels: 1.13% of total loans and 142% coverage of nonperforming loans.
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Commercial New Production Loan Rates: 7.6% for the quarter.
Release Date: January 23, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Banc of California Inc (NYSE:BANC) reported a strong fourth quarter, marking the end of a transformational year with significant progress in executing its strategy and optimizing its balance sheet.
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The company achieved a notable increase in non-interest-bearing deposits (NIB), which grew to 29.1% of total average deposits, up nearly 7% from the previous year.
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Net interest margin (NIM) expanded by 135 basis points year over year, contributing to higher profitability.
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Banc of California Inc (NYSE:BANC) successfully reduced wholesale funding to 10.3% of assets, down from nearly 17% in the previous year.
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The company launched the Banc of California Wildfire Relief & Recovery Fund, donating $1 million to support relief efforts for the Los Angeles wildfires, demonstrating community commitment.
Negative Points
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The company experienced an increase in nonaccrual loans, primarily driven by a single borrower relationship, which could indicate potential credit risk.
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Despite strong performance, the company anticipates seasonal weakness in deposit flows and loan demand in the first quarter of 2025.
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There was a charge-off of two non-performing loans, one in Life Sciences and another in the Civic portfolio, indicating some credit quality issues.
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Banc of California Inc (NYSE:BANC) faces competitive pressure in deposit pricing, although it is starting to see less demand for higher rates.
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The company expects noninterest expenses to increase in the first quarter of 2025 due to seasonal factors such as payroll tax resets and wage inflation.
Q & A Highlights
Q: Can you help us understand the expected expenses for 2025 and the timing of any increases? A: Jared Wolff, CEO, explained that if they achieve the low end of their expense range for 2025, it would represent a 3% savings relative to a normalized 2024. The high end would be a 6% savings. Expenses are expected to increase slightly in the first quarter due to seasonal factors like payroll taxes and benefits resets, but they aim to grow the company and expand margins. Joseph Kauder, CFO, added that they are focused on managing costs while supporting growth.