Earnings call transcript: Banc of California Q2 2025 reports EPS beat, stock dips

Banc of California (market cap: $2.46 billion) reported its second-quarter earnings for 2025, surpassing EPS expectations but missing revenue forecasts. The company posted an adjusted EPS of $0.31, beating the forecast of $0.26 by 19.23%. However, revenue came in at $272.85 million, slightly below the expected $277.5 million, resulting in a 1.68% shortfall. Following the earnings release, Banc of California’s stock fell by 3.19% in after-hours trading, closing at $14.59 from a previous $15.07. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value calculations, with five analysts recently revising their earnings estimates upward.

Key Takeaways

• Adjusted EPS surpassed expectations by 19.23%, reaching $0.31.
• Revenue fell short of forecasts by 1.68%, totaling $272.85 million.
• Stock declined by 3.19% in after-hours trading.
• Net interest income increased by 3.4% quarter-over-quarter.
• The company transferred $476.2 million in loans to held-for-sale.

Company Performance

Banc of California demonstrated robust performance in Q2 2025, with notable growth in net interest income and loan yields. The bank’s net interest income rose to $240 million, a 3.4% increase from the previous quarter. Loan yields improved to 5.93%, and total loans grew by 9% on an annualized basis. The company’s impressive 150.32% year-over-year revenue growth, as reported by InvestingPro, underscores its strong momentum, though the recent revenue shortfall slightly dampened the overall performance. InvestingPro subscribers can access additional insights through the comprehensive Pro Research Report, which details the bank’s growth trajectory and valuation metrics.

Financial Highlights

• Revenue: $272.85 million, down 1.68% from forecasts
• Adjusted EPS: $0.31, up 19.23% from forecasts
• Net interest income: $240 million, up 3.4% quarter-over-quarter
• Net interest margin: 3.1%
• Loan yields: 5.93%
• Total loans growth: 9% annualized

Earnings vs. Forecast

Banc of California’s adjusted EPS of $0.31 exceeded the forecast of $0.26, marking a significant positive surprise of 19.23%. However, the revenue of $272.85 million was below the expected $277.5 million, missing the mark by 1.68%. This mixed performance reflects a strong earnings capacity offset by a slight revenue underperformance.

Market Reaction

The market reacted negatively to the earnings announcement, with Banc of California’s stock dropping by 3.19% in after-hours trading. The stock closed at $14.59, moving away from its 52-week high of $18.08 but still above its 52-week low of $11.52. This decline suggests investor concerns over the revenue miss and potential future challenges.

Outlook & Guidance

Looking ahead, Banc of California anticipates mid-single-digit earning asset growth in the second half of 2025. The company targets a net interest margin of 3.2% to 3.3% in Q4 2025 and expects quarterly provisions of $10 million to $12 million. The bank projects accelerated earnings growth and aims for a return on equity of 13% in the future. With a current dividend yield of 2.56% and a notably low PEG ratio of 0.19, InvestingPro analysis suggests the stock offers attractive value relative to its growth prospects. InvestingPro has identified several additional bullish indicators, available to subscribers through their detailed financial analysis tools.

Executive Commentary

CEO Jared Wolfe highlighted the company’s strategic focus, stating, "We are growing adjusted EPS at a double-digit rate quarter over quarter." He added, "Our loan engine is working, and we are moving out credits to try to eliminate noise for the benefit of future earnings." Wolfe also emphasized the bank’s ability to "capitalize on the dislocation in California’s banking landscape."

Risks and Challenges

• Revenue shortfall could indicate potential market share loss.
• High competition in the California banking sector may pressure margins.
• Economic uncertainties could impact loan demand and credit quality.
• Regulatory changes may affect operational strategies.
• Dependence on loan sales for revenue growth poses risks if market conditions shift.

Q&A

During the earnings call, analysts inquired about the bank’s loan sales strategy and balance sheet optimization. Executives addressed concerns regarding deposit cost dynamics and highlighted growth opportunities in various lending segments. The potential for mergers and acquisitions was also discussed, reflecting strategic interest in expanding market presence.

This comprehensive analysis reveals Banc of California’s strengths in earnings growth and interest income, while also acknowledging the challenges posed by revenue shortfalls and market reactions.

Full transcript - Banc of California Inc (BANC) Q2 2025:

Conference Operator: Good day, and welcome to the Bank of California Second Quarter twenty twenty five Earnings Call. All participants will be in listen only mode. After today’s presentation, there will be an opportunity to ask questions. Please note this I would now like to turn the conference over to Ann DeVries, Head of Investor Relations at Banc of California. Please go ahead.

Ann DeVries, Head of Investor Relations, Banc of California: Good morning, and thank you for joining Banc of California’s second quarter earnings call. Today’s call is being recorded and a copy of the recording will be available later today on our Investor Relations website. Today’s presentation will also include non GAAP measures. The reconciliations for these measures and additional required information is available in the earnings press release and earnings presentation, which are available on our Investor Relations website. Before we begin, we would also like to remind everyone that today’s call may include forward looking statements, including statements about our targets, goals, strategies and outlook for 2025 and beyond, which are subject to risks, uncertainties and other factors outside of our control, and actual results may differ materially.

For a discussion of some of the risks that could affect our results, please see our Safe Harbor statement on forward looking statements included in both the earnings release and the earnings presentation as well as the Risk Factors section of our most recent 10 ks. Joining me on today’s call are Jared Wolfe, President and Chief Executive Officer and Joe Cauter, Chief Financial Officer. After our prepared remarks, we will be taking questions from the analyst community. I would like to now turn the conference call over to Jared.

Jared Wolfe, President and Chief Executive Officer, Banc of California: Thanks, Ann. Good morning, everyone, and welcome to our second quarter call. We delivered a strong second quarter with meaningful growth in core profitability. Pretax, pre provision income grew 6% quarter over quarter as solid revenue growth outpaced a slight increase in expenses. Our core earnings drivers, included loan growth, net interest margin expansion and disciplined expense management, all remain firmly on track with our strategy.

We achieved our third consecutive quarter of robust broad based commercial loan production, which helped drive total annualized loan growth of 9%. Our team also continued to make steady progress in attracting new business deposit relationships. During the quarter, we opportunistically engaged in the sales process for approximately $5.00 $7,000,000 of commercial real estate loans, which we have transferred to held for sale with expected proceeds net of reserve release of 95%. We expect the strategic sales of these loans will further optimize our balance sheet and contribute to delivering high quality consistent sustainable earnings growth for our shareholders. This move also helped to drive improvement across our credit quality metrics the quarter.

We will touch on more of this we will touch on more about the loan sales later in the call. Our strong second quarter earnings helped us achieve our fifth consecutive quarter of growing tangible book value per share to 16.46 Our balance sheet remains strong with capital and liquidity at healthy levels. As mentioned on our first quarter call, we opportunistically repurchased $150,000,000 of common stock or about 6.8% of our shares early in the second quarter. We have $150,000,000 remaining in our buyback program, which can be used toward both common and preferred stock. We will continue to be prudent with the remainder of this program and use it opportunistically.

And while our outlook may change, we do not expect to deploy all this remaining capacity in the near future. Our second quarter loan production included unfunded commitments, 2,200,000,000.0 and included our highest level of originations of $1,200,000,000 since the closing of our merger. Strong production levels drove 9% annualized growth in our total loan portfolio, while core held for sale loans were up 12% annualized. Growth was broad based, led by continued momentum in lender finance and fund finance originations and complemented by expansion in our purchased single family residential portfolio. Our loan origination volumes reflect strong execution by our team and our ability to capitalize on our attractive market position.

Partially offsetting this growth was a decline in construction loans due to payoffs and completed projects, some of which moved to permanent financing in our CRE portfolio and some of which were included in the loan sale. We have remained disciplined in our pricing and underwriting standards. The rate on new production averaged 7.29%, which was up from 7.2% in Q1, and that helped drive expansion in our average loan yields and our margin. You’ve heard us emphasize many times now that proactively managing credit risk and quickly identifying any credit concerns is a key priority for us. In accordance with that philosophy, we took decisive action during the quarter to opportunistically sell the commercial real estate loans that I mentioned earlier.

While many of these loans are money good and well collateralized, they exhibited characteristics that contributed to credit migration that were not guaranteed to resolve in the near term. Rather than have the potential overhang while we continue to work through the credits, we took the opportunity to reset and align our balance sheet with our focus on growing high quality, consistent and sustainable earnings. Our second quarter credit quality metrics improved meaningfully from Q1, mainly driven by the loan sale process, but otherwise our credit was stable. Non performing loans, classified loans and special mention loans as a percentage of total loans declined by nineteen point four six and one hundred and fifteen basis points respectively from Q1. Second quarter net charge offs excluding the impact from the loan sale actions were just 12 basis points of loans.

Proactive credit risk management will remain a top priority as we strive to maintain strong credit quality metrics. Our headline reserve levels at 107 of total loans and our economic coverage ratio is substantially higher at one sixty one of loans, which incorporates the unearned credit mark on the Bank of California loan portfolio acquired in the merger as well as coverage from our CreditLink notes. Our investor deck does a good job of laying out how our loan portfolio has changed over the last twelve to eighteen months and how our coverage ratios reflect that migration to a much higher percentage of loans with short duration and no historical losses in warehouse, lender finance, and fund finance. Along with SFR, these loans now account for almost 30% of our loan book. While some uncertainties remain in the broader macroeconomic environment, we have been encouraged by the resiliency of the market and continued strong demand from our clients for our products and services.

We remain confident that the great work of our team members, our continued execution, strong balance sheet and differentiated market position will drive growth and profitability, tangible book value per share and long term value for our shareholders. Now I’ll hand it over to Joe who will provide some additional information and then I’ll have some closing remarks before opening up the line for questions. Joe? Thank

Joe Cauter, Chief Financial Officer, Banc of California: you, Jared. For the second quarter, we reported net income of $18,400,000 or $0.12 per share and adjusted net income of $48,400,000 or $0.31 per share. Adjustments this quarter included $20,200,000 after tax provision expense related to the sales process of $5.00 $7,000,000 of commercial real estate loans with expected proceeds net of reserve release of 95%. During the quarter, we completed sales totaling 30,400,000 with the remaining $476,200,000 transferred to held for sale. The loss we took during the quarter through the provision line item is the net mark on the loans that were either sold or transferred to held for sale, and reflects our estimate of market value based on either active bids or other market inputs.

We anticipate $243,000,000 of loan sales to close in 3Q and expect the remaining $233,000,000 of loans to be sold over the next several quarters. We also recorded a one time non cash income tax expense of $9,800,000 primarily related to the revaluation of deferred tax assets following changes to California state tax apportionment methodology. This change in methodology positively impacts our tax rate going forward and retrospective to the beginning of twenty twenty five. However, day one impact of the lower tax rate on our deferred tax asset position resulted in the negative charge. Going forward, we expect our effective tax rate to be approximately 25%.

Moving to our core results. Net interest income of $240,000,000 was up 3.4% from the prior quarter, driven by strong growth on loan balances and higher loan yields. Net interest margin expanded in the quarter to 3.1%, driven by a three basis point increase in average loan yields to 5.93%. The increase in loan yields was due to the full quarter impact of strong growth in higher yielding loan categories. The rates on new loan production averaged 7.29%, and total loans grew by 9% annualized, led by growth in lender finance, fund finance, and purchased single family residential loans.

As of quarter end, our spot loan yield was 5.94%. Total cost of funds of 2.42% remained flat quarter over quarter, as a 41 basis point decline in average cost of borrowings to 4.93 was offset by a one basis point increase in cost of deposits to 2.13%. The decline in borrowing costs was driven by the redemption of $174,000,000 of 5.25% senior notes, which we replaced with lower cost long term FHLB borrowings. Average core deposits were up 5% annualized, and the average cost of deposits increased slightly as the need to fund strong loan growth drove a mix shift towards interest bearing deposits. While we continue to steadily grow the number of new NIB business relationships, the average balance per account has been under pressure, which we believe is attributable to both seasonal and macroeconomic factors.

As of June 30, our spot cost of deposits was 2.12%, and our spot net interest margin was approximately 3.11%. The interest rate sensitivity of our balance sheet for net interest income remains largely neutral, as the current repricing gap is balanced when adjusted for repricing betas. From a total earnings perspective, however, we remain liability sensitive due to the impact of rate sensitive ECR cost on HOA deposits, which are reflected in non interest expense. We expect fixed rate asset repricing to continue to benefit NIM as we remix the balance sheet with high quality and higher yielding loans. We have $1,800,000,000 of total loans maturing or resetting through the end of twenty twenty five, with a weighted average coupon rate of 5%, offering good repricing upside.

Our multifamily portfolio, which represents 26% of our loan portfolio, has approximately $3,200,000,000 repricing or maturing over the next two and a half years at a weighted average rate that will offer significant repricing upside. Total non interest income was $32,600,000 down 3% from the prior quarter, primarily due to mark to market fluctuations on CRA related equity investments and credit linked notes. Noninterest income remained in line with our normalized run rate of 10,000,000 to $12,000,000 per month. Noninterest expense of $185,900,000 increased $2,200,000 from Q1, or remaining below our target range of 190,000,000 to $195,000,000 per quarter. The quarter over quarter increase was primarily driven by a $2,100,000 increase in insurance and assessments and a $1,900,000 increase in compensation expense, which were lower in 1Q due to a one time FDIC expense reversal related to prior periods and 1Q compensation expense reversals related to some staff exits.

Looking ahead, we expect our quarterly expenses in the 2025 to settle into the low end of the aforementioned range of 190,000,000 to $195,000,000 as we increase comp expense and invest in our infrastructure to support growth. However, we do expect positive operating leverage to continue, as higher expenses are expected to be more than offset by continued revenue growth. Excluding the impact of loan sales actions, our core provision for credit losses totaled $12,300,000 an increase of $3,000,000 quarter over quarter. We added to the quantitative reserve to reflect updates to our economic forecast and also increased the qualitative reserve related to our office loan portfolio. As our loan portfolio continues to expand, our credit reserves remain well aligned with the risk profile of that growth.

As Jared mentioned, we’ve seen meaningful shifts towards loan categories with historically lower losses, including warehouse, fund finance, lender finance, and residential mortgages. These lower loss loan portfolios as a percentage of our total loans increased to 29% of total loans, up from 26% in Q1 and 20% a year ago. Under CECL, these portfolios require lower reserves due to the historically low loss content and shorter duration, and their growing share will continue to influence overall reserve levels. Excluding these lower risk categories, the remaining portfolio would carry an ACO coverage ratio of 1.44% compared to 1.07% for the total portfolio. Including the impact of credit linked notes and purchase accounting marks, our total economic coverage ratio stands at 1.61%.

And we believe the assumptions and economic scenarios embedded in our ACO models remain appropriately conservative. Our 2Q results reflect the substantial progress we have made in successfully growing core profitability through our consistent and strong execution. We have continued to strengthen core earnings drivers, including high quality loan growth, stable funding and deposit cost, net interest margin expansion, and prudent expense and risk management. We remain on track with our 2025 guidance with tweaks to our outlook for margin and NIB percentage. We see good balance sheet and earnings growth continuing, with mid single digit growth in average earning assets for the back half of the year.

We also expect mid single digit increases quarterly net interest income in the 2025 and achieving our margin target range in Q4. As we look forward for the second half of twenty twenty five, we expect to continue to drive consistent and meaningful growth in our core profitability. And at this time, I’ll turn the call back over to Jared.

Jared Wolfe, President and Chief Executive Officer, Banc of California: Thanks, Joe. Our second quarter results clearly demonstrate our success in pivoting our business toward profitable growth following our substantial transformation last year. We are growing adjusted EPS at a double digit rate quarter over quarter. Our loan engine is working, and we are moving out credits to try to eliminate noise for the benefit of future earnings. We’re expanding our lending relationships in areas that have historically lower areas of loss where we have some great niches, and we are bringing new relationships to the bank.

Our loan to deposit ratio has remained very comfortable. We have been opportunistically growing all types of deposits to fund our loan growth. NIB did not expand this past quarter, but as I’ve shared in the past, it’s not necessarily a straight line. We are doing the right things the right way for the long term, and we have confidence that our results will pay off over time. To that end, we’ve continued to expand market share in key attractive markets, particularly California, which is now the fourth largest economy in the world.

We’re continuing to capitalize on the dislocation in California’s banking landscape and are the go to business bank for people, including clients who wanna bank with us and talented individuals who wanna join our team. Our teams execute with consistency and discipline, bringing

Gary Tenner, Analyst, D.A. Davidson: in

Jared Wolfe, President and Chief Executive Officer, Banc of California: new deposit relationships and originating high quality loans while maintaining prudent operating and risk management practices. We continue to move the ball down the field every day, growing our profitability, scaling our business and providing high quality reliable earnings growth. We are optimistic about our growth trajectory for the remainder of 2025. And indeed, our estimates for 2026 are only growing higher. I want to take a moment to thank our exceptional team at Bank of California.

Their unwavering commitment to our clients, communities, and our shareholders is remarkable. I’m very proud to work alongside such a dedicated and talented team. Thank you. And with that, let’s open up the line for questions.

Conference Operator: We will now begin the question and answer session. And your first question comes from Matthew Clark with Piper Sandler. Please go ahead.

Matthew Clark, Analyst, Piper Sandler: Hey, good morning, everyone. Thank you.

Jared Wolfe, President and Chief Executive Officer, Banc of California: Good morning.

Matthew Clark, Analyst, Piper Sandler: Just on the loan sales, the loan sitting in held for sale, looks like they’re kind of range in that 5.3% to 6% yield range. I guess what’s the plan on the other side of the balance sheet? What do you plan to unwind and at what rate?

Jared Wolfe, President and Chief Executive Officer, Banc of California: Matthew, I’m not sure I fully understand what you’re asking when you say on the other side of the balance sheet. You’re talking about the deposits that we plan to maybe just clarify a little bit.

Matthew Clark, Analyst, Piper Sandler: Now with the loan sales, I assume you’re going to unwind some wholesale funding as well.

Jared Wolfe, President and Chief Executive Officer, Banc of California: Well, we’ve been we’ve been growing. Right? We’ve been growing pretty fast. And so I don’t know that, we kind of match funded it that way. We also are providing some leverage on those loans that we’re selling.

And so we don’t need there’s not a really a one to one relationship. I’ll let Joe comment on that as well to see if there’s anything specific that I missed. But let me just say as well, you know, I I got a couple questions offline about what we sold and whether it was a rate mark or a credit mark. And I would say that I think we were pretty pleased with with a 95 price for the loans. I think that reflects probably, you know, it’s truly in the hands of the buyer to decide whether, you know, what the the purpose of their their price was.

But from our perspective, it was really more rate than credit. As I mentioned in my comments, we just didn’t want to hold the loans on our balance sheet for as long as we would have to. Many of them were close to 300,000,000 were kind of construction projects that were completed, and we had appraisals as is that were above the value of our loan substantially, but they were taking much longer to lease up. And so there are private credit out there who have much longer duration and willing to work with it, and we provided them some leverage and, you know, the rates on the on the notes themselves, the underlying notes allowed them to get a good return. So we feel good about the 95% that we got.

Specifically to your question about funding that 500,000,000, Joe, is there anything specific that we’re letting go related to that 500?

Joe Cauter, Chief Financial Officer, Banc of California: No, I think you hit the nail on the head. We intend to provide leverage on these transactions, will of offset some of the balance sheet impact. For example, the one deal that we closed by June 30, was a $30,000,000 tranche, we provided leverage in the 80% to 85% range, just to give you an example.

Matthew Clark, Analyst, Piper Sandler: Got it. Okay. That’s helpful. And so your loan growth guide, is that kind of all in or is that just HFI?

Jared Wolfe, President and Chief Executive Officer, Banc of California: That is held for investment.

Matthew Clark, Analyst, Piper Sandler: Okay. Okay. And then on the expense run rate guide, the kind of low end of the range of 190,000,000 195,000,000 came in well below that this quarter. It sounds like you continue to make investments. But on the ECR side, I know you’re not assuming any rate cuts in your outlook, which obviously would help.

But it did look like the rate on those ECRs did come down. Just can you speak to what you did there and what your plan is going forward?

Jared Wolfe, President and Chief Executive Officer, Banc of California: Mean, we’re just we work it hard. I mean, we’re trying to manage those costs as much as we can. On the ECR, you’re right. We don’t have any cuts in our forecast. But each 25 basis point cut provides 6 to 7,000,000 in annual pretax income from a reduction in ECR.

And, you know, the ECR shows up really the quarter after the cut is announced since, you know, you’re not gonna get the full benefit in the quarter. So the impact of two cuts fully baked in in a quarter would be reducing ECR costs, of about 3,000,000 per quarter. So there’s a lot of benefit there for us should rates get cut, although we don’t have it in our forecast.

Joe Cauter, Chief Financial Officer, Banc of California: Yeah. Matthew, the decrease, we do work at HardJared is exactly right, but some of that decrease was just the timing of the way the rate cuts that happened at the ’4 flowed through, the way some of the contracts worked, there’s a little bit of a delay until we get the benefit, so that was just full quarter benefit of some of those rate cuts in 2Q.

Matthew Clark, Analyst, Piper Sandler: Understood, thank you.

Conference Operator: And your next question comes from Ben Gurlinger with Citi. Please go ahead.

Ben Gurlinger, Analyst, Citi: Hi. That’s a beat a dead horse quick. For the loan sale, I know you guys gave quite a bit of commentary, and there’s it’s kind of broken up the remaining $2.33 over the next several quarters. Is is the is it like, you have a buyer in this is the timing? Or is it just held for sale hoping to find a buyer?

Jared Wolfe, President and Chief Executive Officer, Banc of California: We don’t we have not identified buyers for every we had bids on all of it. Some of the stuff we decided to put out for sale rather than sell it to an individual buyer, and some we actually have contracted or is we’re drafting the contract now. We have determined who the buyer is or we’ve drafted the contract and, you know, we will sell it. But we wanted to provide ourselves more time to sell some of the other ones. But we think our we think our mark is you know, look, we we we marked it at 95.

We think that’s conservative. We might end up at 96. We could end up at 94, but I think it’s it’s it’s the range is right. It’s it’s gonna be around there.

Ben Gurlinger, Analyst, Citi: Gotcha. Okay. And then it looks like a majority was construction. Were these bank loans or potentially Pac West loans? I’m just kinda curious who underwrote them originally.

Jared Wolfe, President and Chief Executive Officer, Banc of California: Yeah. So they were I don’t the reason I don’t wanna differentiate is because as a company, we’ve worked really hard to make sure that we all own everything today. And so, let me just say that these were larger loans. I’m not sure we would do these size loans again. You know, two of the loans were industrial construction out out of out of California.

They’re projects that have really big sponsors behind them. They have we have as is appraisals that are well above our loan value. There’s tons of equity in the projects, but they’re competing for lease up and it was gonna take a while. And so while we weren’t gonna lose any money, they were gonna sit there as kind of, you know, classified loans. And we just took the opportunity to move them off our balance sheet.

We didn’t think we’re gonna lose money, but why why not free up the capital and and use them for something else? So that’s kind of a common theme with a lot of the loans that we let go.

Ben Gurlinger, Analyst, Citi: Gotcha. That’s helpful. And then if I could sneak one more in. Expenses came in under guide again. You guys kind of reiterated the range.

Should we expect to tick up or is it conservatism? I’m just curious, you’re beating your own guide, are you previewing expenses going up?

Jared Wolfe, President and Chief Executive Officer, Banc of California: Yeah, Joe, you want to address that?

Joe Cauter, Chief Financial Officer, Banc of California: Yeah, I think we’ve, as I said in my remarks, we do expect to settle in the lower end of the range, the 190 to 195 range, and really it’s just making investments both comp and infrastructure really to support our growth going forward. And we were pretty disciplined in the first half of the year in terms of the timing of some of that, but the plan was always a little back end loaded, and so I think we’ll see a little bit of increase here in the back David, half of the I’ll give you

Jared Wolfe, President and Chief Executive Officer, Banc of California: little more color there. So through last year, I was approving every single hire in the company. Just I wanted to see it. I wanted to make sure it was necessary. I wanted to challenge people.

This year, we gave all of our business unit leaders and all of our functionaries, we gave them their own budget and said, go hire whoever you want. Just stay within your budget. And if you’re growing faster, you, you know, you can have more expenses. If you’re going slower, then we expect your expenses to be down. The teams are just doing a really good job of managing their budgets.

Our revenues are higher, but their expenses are coming in and it’s some of it’s timing and some of it is just discipline. And so the reason we’re coming in lower is not because we intended to really. It’s because our teams are doing a really good job. And so some of it is timing.

Ben Gurlinger, Analyst, Citi: That’s helpful. Thank you.

Jared Wolfe, President and Chief Executive Officer, Banc of California: Yep. Thanks.

Conference Operator: And your next question comes from Jared Shaw with Barclays. Please go ahead.

Jared Shaw, Analyst, Barclays: Hey, guys. Good morning. So, should we assume that there’s no more sort of loan restructurings coming out of the portfolio and that you’re focused on growth opportunities from here almost exclusively?

Jared Wolfe, President and Chief Executive Officer, Banc of California: I think that’s right, Jared. We we certainly tried to take as much as possible in the quarter. What I don’t wanna say is kind of we’ve cleared the decks because stuff always comes up. Right? You’re you know, that’s just gonna bite you.

So we have to leave space for the idea that something else could pop up somewhere. But we certainly tried to take the opportunity to make this a one time event, and and hopefully it is.

Jared Shaw, Analyst, Barclays: Okay. Alright. And then on the on the growth, I mean, guys are now the hometown bank or one of the hometown banks of a really strong large economy. Are you is your growth optimism, is that coming from taking market share or are you just seeing your customers be a little more optimistic and starting to do more work? What’s sort of driving that growth optimism?

Yeah.

Jared Wolfe, President and Chief Executive Officer, Banc of California: It feels like the split is 50% existing customers, you know, and 50% new relationships to the bank. Our teams are working really hard to bring in new relationships, and then our existing customers are out there just doing more stuff. In the in the lender finance area, that’s all new customers to the bank today, but they’re old relationships that our lender finance team had. You know, fund finance and warehouse are are growing. They’re bringing in new logos and and new clients, and there’s some expansion from existing clients too.

In our commercial and community bank, which is kind of our platform in California, our 80 branches plus Colorado and North Carolina, we’re just Things are going really well and our teams are working really hard. So far this quarter, deposits are way up. I just don’t know if that’s gonna hold. So when when I talk to my comments about it being timing, that’s kinda why, you know, you’re you’re seeing the loan growth. Okay.

Maybe deposits aren’t there. You’re funding it with, you know, a different mix that you got. You’re pulling in wholesale, but that’s temporary. And when good deposits come in, you’ll let it go and you’ll reduce your costs. But we wanna certainly be there to fund the loan growth and keep our loan to deposit ratios in check.

And we have a lower wholesale funding level than historically the bank had, so we have the flexibility to do that. I I would say just in California, we seem to be growing our market share pretty meaningfully though. It’s it’s pretty exciting to see see what’s going on here. Our team is really jazzed.

Jared Shaw, Analyst, Barclays: And then if I could just sneak one more in, you know, I mean, with that back up, you so you’ve improved the credit profile with, with this loan sale. You feel good about growth. And with your stock at these valuations below tangible book, why wouldn’t you just be buying more stock here? It sounds like you a good price earlier on, but I mean, know, why not be a little more aggressive with the buyback in the near term?

Jared Wolfe, President and Chief Executive Officer, Banc of California: We might. Do We that. You know, I certainly don’t expect stock to be at these levels. I mean, we are growing tax pre provision at a really good annualized clip. Core EPS is growing double digits quarter over quarter, and we see our earnings expanding going forward.

You know, our our NIM guide came down a little bit, but we’re only doing that because we’re we’re growing and we’re acknowledging the mix shift. And we don’t have any rate cuts built in. So we we’re we’re Our internal numbers keep getting guided higher for earnings, which we feel really good about, and 2026 is gonna be gonna be a great year. And obviously, we’re ending you know, our momentum in 2025 is really strong. Our loan volumes are really strong.

So I I don’t expect our stock to be at these levels, but if it is, we wouldn’t hesitate to do what’s necessary while keeping an eye on our capital levels. We’ve got to make sure our capital is within the right range. And assuming it is, we wouldn’t hesitate to be an active buyer.

Joe Cauter, Chief Financial Officer, Banc of California: Great. Thanks.

Conference Operator: And your next question comes from Andrew Terrell with Stephens. Please go ahead.

Andrew Terrell, Analyst, Stephens: Hey, good morning.

Ben Gurlinger, Analyst, Citi: Good morning.

Andrew Terrell, Analyst, Stephens: I wanted to ask a question around the single family resi growth this quarter. I think in the prepared remarks, mentioned some was purchased single family. Do you have the dollar amount of what was purchased? And can you just describe kind of the I mean, sounds like and clearly growth is strong in other verticals. Just curious like what would drive the strategy of purchasing single family here?

Jared Wolfe, President and Chief Executive Officer, Banc of California: Well, first of all, as I think I’ve mentioned in the past, Andrew, we only purchase single family. We don’t have a single family origination platform. We have access to single family through We’re a good sized mortgage warehouse lender. We lend to non bank lenders, non bank, you know, mortgage lenders. We are secured by the individual mortgages on all of those lines.

So, you know, we might have a $150,000,000 line or a $75,000,000 line that they’re making 800,000 or $3,000,000 mortgages. We we secured by each of those individual mortgages, and we’re taken taken out by usually, it gets securitized or there’s a forward purchase contract, but they’re all hedged or have a forward contract. So we see all those mortgages, and we have the opportunity from time to time to buy those off the lines. We already like the credit. We can give our our warehouse borrower more capacity when we buy those credits.

What we’ll do when we come into an agreement with them to buy those credits, we’ll give them more capacity on their line. We won’t count that purchase against them, so they have more freedom, which they appreciate. And then we get a good deal on the loans. The coupons right now on the single family that we’re buying is pretty good. It’s, you know, we’re getting stuff in, let me just say around seven.

And these are non QM mortgages. They’re often thirty year fixed. Really high credit quality. Really, you know, mid 700 FICOs. A lot of California, low debt to income.

And importantly, these are owner occupied loans, owner occupied homes. They’re not very low percentage of second homes or investor homes, which I think carry a lot more risk and usually don’t get paid from a coupon standpoint. So we like that profile. We don’t really have a lot of exposure to consumers, being a business bank. And therefore, we thought that it would be healthy to have some exposure to consumer.

And this is the way that we chose to do it. We’ve had a very strong history with the mortgages, so we know how they perform. And they’ve held up really well, and we like the risk adjusted return. We also buy them from partners that we have. It could be, you know, a large national bank that originates mortgages and things like that.

And every now and then we’ll look at pools. But that that’s why we do it is because we think that that’s a good, way to to balance out our portfolio. Also, warehouse has the ability to, you know, balloon up and down. Less so now with the size that we are, but it has in the past. And so having single family that’s got a little more duration on it is a hedge against kind of the warehouse portfolio, which could go up and down.

So that’s why we do it. In terms of the volume of single family in the quarter, and by the way, the resi production portfolio yield, excuse me, production yield in the quarter was seven fifty nine. So I said seven, it’s much higher than that. I was trying to be conservative. And Ann, I think the number was around four fifty in the quarter?

400, okay. Thanks Joe.

Joe Cauter, Chief Financial Officer, Banc of California: Yeah, was a little bit north of Warden. Was right around 400 during the quarter. And Andrew, we’re at 13, you know, the resi mortgage is about 13% of our portfolio. You know, we could see that increasing a little bit, 14, 15%. I don’t think we’d be upset if it went up to 15%.

Jared Wolfe, President and Chief Executive Officer, Banc of California: Yeah, excluding the purchases, which were higher this quarter than prior quarters, we were still north of $700,000,000 of production. I mean, we had a very, very strong production quarter. Our teams just did a great job.

Andrew Terrell, Analyst, Stephens: Understood. Okay. Thank you for all the color. I appreciate it. Then on the loans that were transferred to HFS, the $5.00 $7,000,000 do you have how much of that was previously sitting and criticized?

I’m looking at the decline in criticized sequentially. It was a little bit less than that $5.00 7 figure. So I was just wondering if you had the criticized amount, HFS.

Jared Wolfe, President and Chief Executive Officer, Banc of California: We can get you that. I don’t have it off the top my head. Ann or Joe, would you just look that up? Thanks.

Andrew Terrell, Analyst, Stephens: Thanks for taking the questions.

Jared Wolfe, President and Chief Executive Officer, Banc of California: Yep. Thanks, Andrew.

Conference Operator: And your next question comes from Gary Tenner with D. A. Davidson. Please go ahead.

Gary Tenner, Analyst, D.A. Davidson: Thanks. Good morning.

Andrew Terrell, Analyst, Stephens: Good morning. I wanted

Gary Tenner, Analyst, D.A. Davidson: to go back to some of the commentary around deposits and the kind of cost this quarter versus last quarter. And I appreciate, Jared, the commentary around kind of the need to fund growth and kind of the timing of deposits versus loan growth. But on an absolute basis, the rate paid on interest checking and on money market moved up quarter over quarter. So just as we’re thinking about the back half of the year, and certainly you could pay that and still put loans on that are accretive to the overall margin, I get that. But just thinking about those kind of rates paid, do you think those still trend higher over the back half of year?

Is there a competitive dynamic that has made that has kind of stabilized? No.

Jared Wolfe, President and Chief Executive Officer, Banc of California: It’s a it’s a good question. So interest bearing checking went up almost nine basis points in the quarter, and money markets went up about two basis points. CDs surprisingly went down by 13 basis points and savings went down by about seven basis points. So overall, we saw a little bit of an uptick in the cost of deposits. It’s very, very competitive right now.

I approve because I wanna see We have a committee that approves pricing exceptions on deposits for relationships, and I get involved if there’s a lending relationship and stuff like that. And so I I’m seeing the request that are coming in. And our teams are doing a great job. It is more competitive than we’ve ever seen. And or I should say in a long time.

I we just haven’t seen this kind of, and so there’s obviously a demand for liquidity out there. I think part of it is that there’s less liquidity and a lot of demand for loans. And so all banks are kind of looking for the same stuff. We are getting our share of loans better than others, I think, because we have a solution that that really works and and that’s bearing itself out. You’re not gonna grow deposits as fast as loans.

You’re just not gonna do it unless it’s a slow growth environment and then you’re gonna outpace with deposits, which is what we did last year in anticipation of this year. So we saw that coming a little bit and prepared ourselves for it. Obviously, we think the the kind of heat around deposits is gonna slow down when rates come down. If they come down, although we don’t have it in our forecast. But for some reason right now, the dynamics are are really competitive.

And we generally will get some rate benefit. We we you know, our teams do a good job of of trying to hold deposits. We’re seeing some, you know, uptick in deposits. People are have money markets and they’re waking up, believe it or not, that they were at at at 2%. They’re like, hey, why aren’t they at three and a half?

We’re trying to hold the line, and say, look, you know, we’re not gonna pay you four, which some banks are absolutely doing, but we’re gonna try to keep it in the threes and hopefully the mid threes for those clients who have more rate sensitive relationships. Not every deposit in the bank is, you know, is is operating accounts. We we wanna have that and we focus on that. And our teams are doing a great job. But as Joe also mentioned in his comments, we are tracking average balances.

And average balances are actually down in accounts themselves. So if we’re staying flat, we’re kinda winning. Or if we’re able to grow, great. But average account balances are down. People aren’t closing their accounts.

Just liquidity is falling out of the system for some reason. And and hopefully, it comes back.

Gary Tenner, Analyst, D.A. Davidson: Appreciate that. And then as it relates to the loan sale and your comment about offering or providing back leverage for private credit buyers, etcetera, much of the amount that you have scheduled to sell in the third quarter, how much of that do you think comes back to HFI just in a different part of the loan portfolio?

Jared Wolfe, President and Chief Executive Officer, Banc of California: I think you could you could assume, you know, 50 to 60% is probably fair. Could be could be 70, but I don’t I don’t know that it’s gonna be much above that. Hard to hard to tell because some of the stuff’s just gonna go without leverage. But you know, we we have relationships with private credit with with non bank lenders through our lender finance group and our our team, our chief credit officer, and our head of lender finance, and and and people on the lender finance team have great relationships, they were able to to suggest and bring in this stuff, which I thought was was good. We have it modeled that we’re gonna have more leverage than that, but I don’t know that we’re gonna get there.

So to be conservative, would say it’s it’s less.

Gary Tenner, Analyst, D.A. Davidson: Okay. And then last last question. In terms of that loan transfer, you’ve talked

Jared Wolfe, President and Chief Executive Officer, Banc of California: about Gary, on that point, like, we don’t need it because we’re growing loans fast otherwise, and so it doesn’t really matter to me either way. It’s only a couple $100,000,000, but but but to be conservative, that’s why we’re saying it’s less. But we we certainly would be willing to offer it to the right to the right buyer. Sorry to interrupt you.

Gary Tenner, Analyst, D.A. Davidson: Yeah. No. No problem at all. I just wanted to clarify one thing. You’ve talked about, you know, marking these at 95%.

But if you consider the charge offs of $37,000,000 specific to these loans, that’s about that’s almost 7.5%. So are you only thinking of the kind of incremental provision that went through the P and L this quarter related to the loan

Jared Wolfe, President and Chief Executive Officer, Banc of California: signing We or we we released the reserve as well. So the net is is the 5% is the charge off, but then you have to add back the reserve that we held against loans that we released. Joe, am I do I have that math right?

Joe Cauter, Chief Financial Officer, Banc of California: Yeah. You have it right. There’s also some small amount of FAS 91 fees and, you know, deferred fees on it as well, but I think Jared has it right.

Ben Gurlinger, Analyst, Citi: Okay, thank you.

Jared Wolfe, President and Chief Executive Officer, Banc of California: Yeah, FAS 91 never factors into my math, I need to brush up on that. Thank you. Thanks, Gary.

Conference Operator: And your next question comes from Timur Braziler with Wells Fargo. Please go ahead.

Timur Braziler, Analyst, Wells Fargo: Hi, good morning.

Jared Wolfe, President and Chief Executive Officer, Banc of California: Good morning.

Timur Braziler, Analyst, Wells Fargo: Looking at the margin outlook and that kind of 3.2 to 3.3% 4Q, assumes some level of acceleration here in the back end of the year. Can you just talk me through what the driver is? Is that mostly on the fixed asset repricing side? You assuming some mix shift benefit with just the deposit growth earlier in the quarter? And I’m just wondering if we do get some rate cuts, is that going to be beneficial at this point?

Or is that going be maybe a little detrimental towards that guide?

Jared Wolfe, President and Chief Executive Officer, Banc of California: So rate cuts would be beneficial because we would immediately move down deposit costs. And I think that’s gonna move a little bit faster because we’re originating loans so fast. I think we’re gonna get, you know, loans don’t move down as fast from my perspective. And so I think we’ll be okay there. In terms of, I’ll let Joe comment on the components of, our margin expansion.

But before I do, one thing that we haven’t seen this year, which we expected to see, was accelerated accretion. And that can have, you know, a meaningful impact on our margin. And we haven’t seen any really at all, even though we saw a good amount last year. So if we get rate cuts, we’re gonna see accelerated accretion as well, which is gonna help our margin. But that’s not what we have planned here.

So Joe, what is the, how would you describe kind of where we see margin expansion coming from?

Joe Cauter, Chief Financial Officer, Banc of California: Yeah, the margin expansion is primarily coming on the loan side. So as we showed in our remarks and in the deck, we’re putting large amounts of loans on at very good rates. We also have a fair amount, we have the page where we talk about how much loans are rolling While those loans are rolling off at lower rates, that loan roll on, roll off is going to have a significant benefit to us. And then on the cost of deposits, we’re pretty conservative on that in our forecasting estimate. We’re assuming it’s going be pretty flat.

I would agree with Jared that we’ve basically taken out the accelerated accretion in our forecast, and we have no rate cut. We stand to benefit if either of those two things would happen.

Timur Braziler, Analyst, Wells Fargo: Okay, thanks for that. And just looking again at the loan transfer, I’m just wondering how much this accelerates the asset quality trends at the bank. As you’re looking ahead, can you just give us a level of internal expectations for provisioning and charge offs going forward?

Jared Wolfe, President and Chief Executive Officer, Banc of California: Yeah. Well, so this quarter on a normalized basis, we provisioned a little over 12,000,000. And I think at the level of loan growth that we had, that’s probably a fair estimate going forward. But the the difficulty is that it’s it really matters what type of loans that we’re growing. I don’t think fund finance is gonna keep growing at the same pace.

I think we’re gonna get more kind of traditional commercial loans out of the commercial community bank. And so those are gonna carry a weighting that’s a little bit higher. And therefore, I think that 12,000,000 is probably, Joe, is that kind of where we’re guiding to, 10 to 12,000,000 a quarter on the provision?

Joe Cauter, Chief Financial Officer, Banc of California: Yeah, a little bit at the low end of that. Think we’re right in the middle of that.

Jared Wolfe, President and Chief Executive Officer, Banc of California: So 10 to 12,000,000 is kind of fair estimate there. Yeah. Yeah. We certainly feel good about the opportunity that we have ahead of us on the loan side. Things seem to be working right now and our teams are doing a great job.

Timur Braziler, Analyst, Wells Fargo: Okay. And then just last for me. We’ve seen a frenzy of kind of M and A conversation reenter the regional bank sector here in recent weeks. I’m just wondering, you guys are not really the only game left in town in Southern California. I’m just wondering how you guys are thinking about maintaining independence here and maybe what considerations would be needed in order for you guys to consider partnering with a larger institution.

Jared Wolfe, President and Chief Executive Officer, Banc of California: Well, what I’m really proud of is how hard our teams are working at growing the bank organically, and we’re doing that. And we have a huge opportunity in front of us to grow this bank organically. I mean, we’re showing it, right? And so I think the bar is very high for us. But we’re a public company.

We’re out there every day. And I think it’ll be interesting to watch how these dynamics change over the next several quarters and over the next twelve months. I mean, there’s a lot of noise out there, obviously. I think the environment is very frothy right now. The regulatory environment is turning favorable from an M and A standpoint, and I think that people are excited about that.

I would expect us to have the opportunity to go buy somebody when we have a normalized multiple on our stock, which I expect to get there soon as a reflection of our consistent growth in earnings. And you know, we’re building up tangible book value pretty fast. And as you point out, we’ve kind of, we’ve got a very valuable franchise here in California. We’re sitting here at 35,000,000,000 in assets, the largest independent bank really in California that is not, you know, that is not focused on a niche. I think East West might be, considered a little bit more nichey.

They’re a tremendous tremendous bank, but not for not for all all types of, partners. And so we’re really pleased with what we got here and we’re just gonna keep our head down and keep working. And I think things will take care of themselves. Great. Thanks for the questions.

Thank you.

Conference Operator: And your next question comes from Christopher McGratty with KBW. Please go ahead.

Jared Wolfe, President and Chief Executive Officer, Banc of California: Great. Thanks. Jared, just more of a

Gary Tenner, Analyst, D.A. Davidson: big picture question for you.

Ann DeVries, Head of Investor Relations, Banc of California0: The 13 ROE that’s been out there and the timing still in the future. I’m interested in your just giving you the mic for a minute and just the takes and how you get there. What kind of environment does that look like? Obviously, there’s a numerator and denominator impact. Any update would be great.

Thanks.

Jared Wolfe, President and Chief Executive Officer, Banc of California: Yeah. So I don’t have a date to put out there, as you can imagine. But I think what we’re doing right now, growing core earnings at a pretty fast clip is gonna is gonna, you know, result in that happening sooner rather than later. We keep growing tangible book value, but we’re growing earnings faster. And we’re gonna be efficient with our capital to make sure we’re carrying the right amount and wanna make sure that we have a good return on our capital for for our shareholders.

So I don’t know if there’s anything specific that you’d wanna you want me to answer regarding that, Chris, other than when I look at our earnings profile, you know, we keep pushing up what we have internally as our forecast quarter over quarter and year over year because it’s just it seems to be working right now. I feel like our our pace of growth is gonna expand quite a bit given how quickly, you know, now our earnings are probably gonna expand. Know, we’re getting some real operating leverage. Our earnings are growing faster than our revenues because our expenses are in check. And so we’re I expect that to continue.

Conference Operator: And your next question comes from David Feaster with Raymond James. Please go ahead.

Ann DeVries, Head of Investor Relations, Banc of California1: Hey, good morning everybody.

Jared Wolfe, President and Chief Executive Officer, Banc of California: Good morning.

Ann DeVries, Head of Investor Relations, Banc of California1: I just wanted to follow-up maybe on the growth side and some of your comments there. I mean, obviously, the the

Ben Gurlinger, Analyst, Citi: increase David, in your production can I pause

Jared Wolfe, President and Chief Executive Officer, Banc of California: you just for one second? I apologize. Yep. Chris, if you’re still on, I don’t know if you got cut off too early and if you had another question, so please just jump back in the queue if you’re still on, and we’ll come back to you after David. But maybe you were done.

Sorry to interrupt you, David.

Jared Shaw, Analyst, Barclays: Oh, it’s okay.

Ann DeVries, Head of Investor Relations, Banc of California1: Yeah. Shifting gears back to kind of the growth side. I mean, the increase in production is extremely encouraging, especially with the rates that you guys are getting. Just first of all, I’m kind of curious how the pipeline is shaping up heading into the third quarter and how the complexion of the pipeline is? You touched on maybe seeing a lit a bit less opportunity in the fund finance side.

Just kinda curious how the complexion of the pipeline’s shifting as well.

Gary Tenner, Analyst, D.A. Davidson: Yeah. We’re

Jared Wolfe, President and Chief Executive Officer, Banc of California: seeing so in the quarter, kind of the breakdown, we we had about half as much multifamily in the first in the second quarter as we did in the first quarter. But CRE kind of bridge lending was was up. Construction was kind of flat. This is production. Obviously, we had a big uptick in in resi.

You know, venture venture was up quarter over quarter. Warehouse was flattish. Equipment lending was kinda doubled quarter over quarter. Fund finance was just another strong production, and lender finance was just another strong production. I would expect lender finance to continue.

Fund finance, think they had. They’re maybe hitting the high water mark here, that might come down a little bit. Warehouse, I think, has room to expand. And then just general commercial, you know, and good lending from our commercial and community bank, I I expect to to pick up here. We’re seeing some traditional mini perms and things like that that seem to be taking hold now.

If rates come down at all, I think you’re gonna see even more lending. I think people are holding out a little bit. But it’s pretty broad based, David. I’ve been very happy with what our teams have been doing. I really, really have.

Ann DeVries, Head of Investor Relations, Banc of California1: That’s great. And and maybe shifting gears back to deposits. I mean, you’ve alluded to the competitive landscape for deposits. I’m curious, where do you see the most opportunity to drive core deposit growth? Are are there is is there any segments that you see more opportunity?

I know you guys are always working to drive NIB and core deposits. You know, we’ve talked in the past even about growing ECR deposits potentially. I’m just kinda curious where you’re focused on, today and where you see the most opportunity.

Jared Wolfe, President and Chief Executive Officer, Banc of California: So our teams across the bank are focused on bringing in business relationships where we can serve them better than where they’re being served now. And there’s still the opportunity to bring in, and we are being successful here, clients that ended up at US Bank or ended up at JPMorgan from banks that have been acquired or kind of went under. And those are big targets for us, and we’re not hearing a lot of people who are a mid sized client who are really happy with the transition to JPMorgan. They’re a great competitor for and great bank for many clients, but they can’t be everything to everybody. And so, you know, we’re we’re we still see a lot of opportunity there.

And then from a niche perspective, you know, single one of our business units is focused on bringing in deposits even if they haven’t in the past. We’re about to launch this quarter. We have a new digital platform for onboarding deposits digitally through Salesforce. And when that digital account opening goes live, it’s gonna give us even more capacity to bring in deposits nationwide for clients that that want our services. So, you know, traditionally, when you’re doing an SBA client, we have a nationwide platform for SBA.

We ask for the deposits. We get deposits, but it’s not as easy if, you know, there’s not branches nearby and things like that. But this digital account opening is gonna really accelerate some stuff for us, so we’re excited about that. And I think, that’s gonna go really, really well.

Ann DeVries, Head of Investor Relations, Banc of California1: Okay. That’s great. And then maybe just last one. You know, touching on the credit side, exclusive of the loan transfer. Look.

Look. The past couple of quarters have been a bit noisy. You guys have been very proactive, you know, managing and addressing potential issues. I’m just curious, you know, exclusive of the transfer, like, is there anything on the credit side that you’re seeing that you’re cautious on? Or do you think the kind of the active management in the, is like, the the worst is behind us, and we should see pretty solid credit leverage going forward.

Jared Wolfe, President and Chief Executive Officer, Banc of California: I really believe that, David. I think that we got ahead of it as I as I suggested we would, and and we proactively moved this stuff out. I don’t see any big warning signs for me. These are some pretty large credits that we were sitting on our balance sheet that we were able to move away. And I give our team all the credit for proactively, you know, coming up with this solution, working through it.

It was a lot of work in the quarter and they did a phenomenal job with a phenomenal result. And so I feel really good about where we are. Stuff pops up though, you know, it does and you know, but I I I feel like the things that we were most concerned about, we’ve had now the opportunity to move. And that that that feels really good. You know, our charge off rate was 12 basis points, I think, excluding all this stuff, which was low.

And I think our ratios now are pretty healthy. And I certainly feel good about our coverage from a reserve standpoint. So I feel really good about where we are.

Ann DeVries, Head of Investor Relations, Banc of California1: Terrific. Alright. Thanks everybody.

Jared Wolfe, President and Chief Executive Officer, Banc of California: Thank you very much. Appreciate it.

Conference Operator: This concludes our question and answer session and today’s conference call. Thank you for attending today’s presentation. You may now disconnect.

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