The following is a summary of the Banc of California, Inc. (PACW) Q1 2024 Earnings Call Transcript:
Financial Performance:
Banc of California reported Q1 net interest income of $239.1 million due to favorable changes in assets and reduced costs of wholesale funding.
Non-interest income was $33.8 million, and non-interest expense was $210.5 million.
There was an increase in net interest margin to 2.78% from 1.69% in Q4 2023, driven by better yields on interest-earning assets and lower average cost of funds.
Although total loans remained flat, the average loan yield rose by 41 basis points from the previous quarter.
Business Progress:
The company reported significant progress due to balance sheet repositioning post the merger with PacWest.
The bank is focusing on reducing interest expense and operating expenses, and the deposit pipeline looks promising.
The institution expects that new loan production for 2024 will cover the runoff in non-core portfolios and will continue contributing to the margin.
Banc of California remains focused on proper capital management and sees stable accretion going forward.
The company is considering selling parts of its non-core portfolio and has already seen inquiries indicating potential interest in Civic loans.
Banc of California is on track to achieve quarter four goals, despite potential risks. The company reports a balance sheet value of approximately $125 million with the majority of deposit runoffs in the quarter being intentional.
The bank is also focusing on building non-interest bearing deposits, citing success in their past approach to this initiative.
The Bank intends to manage the $2.3 billion Civic loans by either letting it run-off over time or seek a favorable exit.
The institution is expanding teams by hiring across departments and is also diversifying its services by issuing credit cards directly to clients and assisting transaction processing for other parties.
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