Executive Summary

Q4 2024 delivered net earnings available to common of $47.0M and diluted EPS of $0.28 as net interest margin expanded 11 bps QoQ to 3.04% on sharply lower funding costs; total revenue rose to $264.3M from $216.7M in Q3 despite softer noninterest income from CRA equity marks .
Deposits increased $364M QoQ to $27.2B; average noninterest-bearing deposits reached 29.1% of average deposits vs. 27.7% in Q3 and 22.6% in 4Q23, reinforcing funding mix improvement and margin trajectory .
Credit costs rose: provision for credit losses was $12.8M and annualized net charge-offs were 0.45% (vs. 0.04% in Q3), driven by a specific commercial exposure and one Civic loan; nonperforming loans increased to 0.80% of loans, though management highlighted collateral coverage and an economic coverage ratio of 1.72% (non-GAAP) .
2025 guidance targets: NIM 3.20–3.30 (assumes no further Fed cuts), quarterly NIE $190–$195M, customer-related expenses $27–$29M/quarter, ROAA ~1.1%+, ROTCE ~13%+, NIB >30%, wholesale funding 10–12%; common dividend of $0.10 declared post-quarter .
Catalysts: continued deposit repricing (achieved ~54% beta to recent cuts), potential capital actions (buybacks/preferred), and technology investments; watch ECR sensitivity and credit migration trends for stock reaction .

What Went Well and What Went Wrong

What Went Well

“Strong fourth quarter results reflect continued momentum and consistent execution… decline in funding costs… expansion in our net interest margin… increases in our net income, earnings per share, and level of returns” — Jared Wolff, CEO .
NIM expanded to 3.04% (+11 bps QoQ) on 27 bps decline in total cost of funds, with average NIB deposits up to 29.1% of average deposits; net interest income rose to $235.3M (+$3.1M QoQ) .
Operating efficiency: total noninterest expense fell 7.6% QoQ to $181.4M, with compensation, customer-related, insurance/assessments, and occupancy down; book value per share increased to $17.78 and TBVPS to $15.72 .

What Went Wrong

Credit metrics pressured: provision for credit losses increased to $12.8M and annualized net charge-offs rose to 0.45% (vs. 0.04% Q3), largely due to a specific commercial exposure and one Civic loan; NPLs rose to 0.80% of loans .
Noninterest income softer QoQ after prior quarter’s securities repositioning benefit; CRA equity marks weighed, contributing to lower dividends and gains vs. Q3 .
Nonaccruals increased (~$21M QoQ) partly due to a deceased borrower’s estate (multifamily and medical office); management expects repayment but flagged near-term disruption .

Financial Results

Metric	Q4 2023	Q3 2024	Q4 2024
Total Revenue ($USD Millions)	$(249.4)	$216.7	$264.3
Diluted EPS ($)	$(4.55)	$(0.01)	$0.28
Net Interest Income ($USD Millions)	$151.1	$232.2	$235.3
Net Interest Margin (%)	1.69%	2.93%	3.04%
Avg Total Cost of Deposits (%)	2.94%	2.54%	2.26%
Avg Total Cost of Funds (%)	3.68%	2.82%	2.55%
Provision for Credit Losses ($USD Millions)	$47.0	$9.0	$12.8
Annualized Net Charge-offs / Avg Loans (%)	0.22%	0.04%	0.45%
ACL / Loans (%)	1.22%	1.20%	1.13%
NPLs / Loans (%)	0.29%	0.72%	0.80%

KPIs and Balance Sheet Snapshot

KPI	Q4 2023	Q3 2024	Q4 2024
Loans & Leases HFI ($USD Billions)	$25.49	$23.53	$23.78
Total Deposits ($USD Billions)	$30.40	$26.83	$27.19
CET1 (%) (HoldCo)	10.14%	10.45%	10.55%
Book Value / Share ($)	$17.12	$17.75	$17.78
Tangible BV / Share ($)	$14.96	$15.63	$15.72
Avg NIB Deposits / Avg Deposits (%)	22.6%	27.7%	29.1%
Wholesale Funding Ratio (%)	16.6%	10.7%	10.3%

Loan Composition (% of Loans)

Category	Dec 31, 2023	Sep 30, 2024	Dec 31, 2024
Commercial RE Mortgage	20%	19%	19%
Multifamily	23%	25%	26%
Other Residential	20%	12%	12%
Total RE Mortgage	63%	56%	57%
RE Construction & Land (Commercial)	3%	4%	3%
RE Construction & Land (Residential)	9%	11%	10%
Total RE Construction & Land	12%	15%	13%
Asset-based	9%	9%	9%
Venture Capital	6%	6%	6%
Other Commercial	8%	12%	13%
Total Commercial	23%	27%	28%
Consumer	2%	2%	2%

Additional KPIs

KPI	Q3 2024	Q4 2024
Loan Originations + Purchased + Unfunded New Commitments ($USD Billions)	$1.6, WA rate 8.29%	$1.8, WA rate 7.02%
Uninsured & Uncollateralized Deposits (% of Deposits)	25%	26%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Interest Margin	FY 2025	n/a	3.20%–3.30% (assumes no further 2025 cuts)	New
Noninterest Expense (Quarterly Avg)	FY 2025	n/a	$190–$195M per quarter	New
Customer-related Expenses (Quarterly Avg)	FY 2025	n/a	$27–$29M per quarter	New
Wholesale Funding Ratio	FY 2025	n/a	10%–12%	New
Loans/Deposits	FY 2025	n/a	85%–93%	New
Loan Growth	FY 2025	n/a	Mid to high single digit	New
Deposit Growth	FY 2025	n/a	Mid to high single digit; NIB >30%	New
ROAA	FY 2025	n/a	~1.1%+	New
ROTCE	FY 2025	n/a	~13%+	New
Effective Tax Rate	FY 2025	n/a	27%–28%	New
Noninterest Income Run-rate	FY 2025	n/a	$10–$12M per month (core)	New
Dividend – Common	Next Payable	n/a	$0.10 per share (payable Apr 1, 2025)	Announced
Dividend – Preferred Series F	Next Payable	n/a	$0.4845 per depositary share (payable Mar 3, 2025)	Announced

Earnings Call Themes & Trends

Topic	Q2 2024 (Prior-2)	Q3 2024 (Prior-1)	Q4 2024 (Current)	Trend
Deposit Costs & ECR	Avg cost of deposits fell; detailed mix shifts; HOA ECR disclosed as significant	~50% deposit beta to rate cuts; HOA ECR tied to Fed funds; aiming further repricing	~54% beta achieved; customer-related (ECR) expenses down 8% QoQ to $27.4M; continued repricing opportunity	Improving cost trajectory, ECR sensitive to Fed
Balance Sheet Repositioning	Transferred/sold $1.95B Civic; liquidity and capital up	Repositioned $742M AFS; margin guide to 3.0–3.10% for Q4; BTFP paydown	Full-quarter benefit realized; NIM 3.04% and cost of funds down 27 bps QoQ	Benefits visible in margin
Loan Growth Drivers	Fundings $382.5M, WA rate 7.80%	Production + utilization $1.8B; warehouse/fund finance strength; WA production ~8.29%	$1.8B originations/commitments; warehouse and fund finance strong; WA production 7.02%	Growing volume; rates lower with cuts
Credit Quality	NPL and NPAs declined QoQ with Civic sale; ACL 1.19%	NPLs up on 2 commercial + 1 Civic; ACL 1.20%; cautious stance	NPLs higher (0.80%); net charge-offs up; specific cases (estate)	Elevated watch; collateral support
Capital Actions	—	Margin guide; efficiency targets; exploring future repositioning	Considering buybacks/preferred; evaluating HTM repositioning; CET1 up to 10.55%	Increasing optionality
Technology Initiatives	Core conversion scheduled	Core conversion completed; efficiency gains	Investing in Encino, Salesforce, digital account opening, cloud/data modernization	Building digital capabilities
Wildfire Impact	—	—	$1M donation; no material portfolio impact; monitoring collateral	Community engagement; minimal financial impact

Management Commentary

CEO: “Our strong fourth quarter results reflect continued momentum… significant decline in our funding costs… helped drive an expansion in our net interest margin and increases in our net income, earnings per share, and level of returns” .
CFO: “Net interest margin… increased 11 basis points to 3.04% due to a 27 basis point decline in our cost of funds, partially offset by a 15 basis point decrease in the yield on average earning assets… We expect continued expansion in our net interest margin as we reduce our cost of funds” .
Strategy: 2025 priorities aim to strengthen core earnings through NIB deposit and loan growth, prudent expenses, and revenue diversification; target NIM 3.20–3.30 and wholesale funding ratio 10–12% .
Wildfires: “We are not aware of any material impact on our loan portfolio or collateral… launched the Banc of California Wildfire Relief & Recovery Fund with a $1 million donation” .

Q&A Highlights

Expenses: Q1 seasonality expected to lift compensation; 2025 quarterly NIE guided to $190–$195M; continued operating leverage as NIM and growth improve .
Loan growth: Net growth targeted mid to high single digits; warehouse/fund finance/lender finance as key drivers; payoffs will accompany rising activity .
Deposit costs: Less pricing competition; spot cost near/below Q4 average (2.26%); brokered CDs rolling at lower rates to further reduce costs .
Capital & HTM: Evaluating HTM repositioning and buybacks/preferred actions; CET1 need not reach 11% if peers and regulators comfortable .
Credit specifics: Nonaccrual increase largely one borrower estate ($34M MF/medical office); 4Q net charge-offs ~ $27.7M with ~$14M Life Sciences, rest Civic .

Estimates Context

Consensus estimates from S&P Global were unavailable due to access limits at the time of this analysis; therefore, we cannot quantify a formal beat/miss vs Street for Q4 2024. Management’s 2025 guidance (NIM, expenses, ROAA/ROTCE, tax rate, noninterest income run-rate) provides directional inputs for analysts’ forward models .
Note: We attempted to fetch “Primary EPS Consensus Mean” and “Revenue Consensus Mean” for recent quarters; data access was restricted at this time.

Key Takeaways for Investors

Margin trajectory positive: deposit repricing (~54% beta to recent cuts) and improved funding mix support further NIM expansion into 2025 (target 3.20–3.30%) .
Funding improvements sticky: average NIB deposits at 29.1% and wholesale funding ratio down to 10.3% (from 16.6% in 4Q23) underpin lower cost of funds .
Credit watch items manageable: higher nonaccruals and net charge-offs largely idiosyncratic; collateral coverage and economic coverage ratio (1.72%) provide buffers (non-GAAP) .
Operating leverage: NIE reductions realized; 2025 expense range implies scalable growth with investments in tech and teams (Encino, Salesforce, cloud/data) .
Capital flexibility rising: CET1 at 10.55% with optionality for buybacks/preferred actions; monitoring potential HTM securities repositioning for earnings uplift .
Community/ESG engagement: active wildfire relief; minimal financial impact noted to date, supports brand and regional relationships .
Near-term trading lens: focus on deposit cost trajectory, NIM realization vs guidance, credit migration updates, and any announced capital actions; watch CRA equity mark volatility in noninterest income .

BANC OF CALIFORNIA, INC. (BANC)·Q4 2024 Earnings Summary