Banc of California Inc. Chief Executive Jared Wolff is the latest high ranking OC banking executive who is bullish on the West Coast economy.
“Everything locally seems very, very strong, and notwithstanding the variant which kind of slowed things down at the beginning of the year and the end of last year,” Wolff told analysts on a late January conference call. “With omicron, everybody seems to be pushing through it now, and things seem pretty robust.”
Wolff’s comments follow similar remarks by Pacific Premier Bancorp CEO Steve Gardner, who said on Jan. 20 that “the fundamental underpinnings to the economy are strong, particularly in our West Coast markets.”
Pacific Premier is Orange County’s largest bank, with $21.1 billion in assets. Banc of California ranks No. 2 with $9.4 billion in assets.
See the Jan. 31 print edition of the Business Journal for more on Pacific Premier.
Earnings Miss
Despite the optimism from Wolff, his company ended 2021 on a disappointing note.
Banc of California (NYSE: BANC) on Jan. 25 reported fourth-quarter results that didn’t impress Wall Street. Its adjusted profit of 23 cents a share missed the Zacks Consensus Estimate of 29 cents.
The bank’s shares fell 9.3% in the subsequent three trading sessions after its results came out. As of late last week, it counted a market cap of $1.2 billion. Its shares are still up about 10% year-over-year.
Despite the earnings miss, Wolff told analysts that “we are quite proud of what we accomplished in 2021.”
The bank reported 2021 net income climbed almost 400% to $62.3 million.
During the quarter, it completed the acquisition of locally based Pacific Mercantile Bancorp for $225.4 million.
The deal added $1.5 billion in total assets, $962.9 million in loans and $1.3 billion in deposits. However, its non-performing loans increased 15% to $52.6 million because of loans acquired in the Pacific Mercantile acquisition.
Its commercial real estate portfolio jumped 62% to $1.3 billion; it now represents 18% of its total $7.25 billion in loans.
Deposit Costs Cut
Another accomplishment for the Santa Ana institution: Wolff is well on his way to reducing the costs of deposits at Banc of California, one of his key areas of focus since taking over the top spot at the bank about three years ago.
He told analysts that non-interest bearing deposits increased to 37% of total deposits, up from 15% when Wolff joined the company in early 2019.
Reducing the bank’s reliance on costly certificates of deposits for funding has been a long-stated goal of Wolff; in 2019 he told the Business Journal that “if you look at the valuations of banks in California, the most highly valued banks are the ones with the lowest costs of deposits,” he said. “That’s the hardest thing to do—gather low costs of deposits.”
“With interest rates expected to rise in 2022, we think we’ll be in a good position to benefit from the improvements we’ve made in the composition of our balance sheet over the past few years that have made us more asset sensitive,” Wolff told analysts late last month.
Media Hire
Separately, the bank announced the hiring of Guillaume de Chalendar in the new position of SVP, head of media and entertainment, responsible for bank’s growth in the television, film, music and entertainment industries.
De Chalendar spent over nine years at Bank Leumi where he was global head of media and entertainment.
Most recently, de Chalendar led similar efforts at Alvarium Investments, a multifamily office headquartered in London.
