Banc of California, Inc. (NYSE:BANC) Q3 2019 Earnings Conference Call Transcript

Oct 23, 2019 • 01:00 pm ET

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Banc of California, Inc. (NYSE:BANC) Q3 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Hello and welcome to Banc of California's Third Quarter Earnings Conference Call. [Operator Instructions]

Today's presentation will also include non-GAAP measures. The reconciliation of which in additional required information is available in the earnings press release. The reference presentation is available on the company's Investor Relations website.

Before we begin, we would like to direct everyone towards the company's safe harbor statement on forward-looking statements included in both the earnings release and the earnings presentation.

I would now like to turn the conference over to Mr. Jared Wolff, Banc of California's President and Chief Executive Officer.

Executive
Jared M. Wolff

Good morning, everyone. Welcome to Banc of California's third quarter 2019 earnings conference call. With me today is Banc of California's CFO, John Bogler, who will talk in more detail about our quarterly results shortly.

We finished the quarter with a net loss to common stockholders of $22.7 million and a diluted loss per common share of $0.45. As you know, the main reason for the quarterly net loss is we incurred a charge-off related to a $35 million line of credit originated by the Bank in November of 2017 to a borrower purportedly the subject of a fraudulent scheme. The effects of this charge-off had a very clear impact on our quarterly earnings. Not withstanding this event, our team continued to make significant progress during the quarter on our core strategic initiatives, which we will discuss momentarily.

Let me first address what we have done to toning [Phonetic] of the fraud. In addition to evaluating the loan itself, and ensuring we are taking the necessary steps to pursue recovery, I wanted to evaluate our existing portfolio to make sure there is nothing else we should be aware of now. Following this event, I directed an extensive review of all loans, C&I relationships, $5 million and above not secured by real estate. Through the use of internal audit and outside parties, we looked at loan, security and collateral documentation for each credit, and confirmed the existence of our collateral if held by a third-party outside of the bank. In addition, I also requested a review of the top 10 relationships in our warehouse lending group, to confirm that we have appropriate documentation in place. While the reviews are not yet complete and we await final confirmations for certain loans, to-date we have not identified any other instances of fraud or concerns that the collateral held by third parties does not exist or material concerns without documentation.

Turning to our overall business. I want to highlight some of the significant accomplishments this past quarter, which are much more indicative of our overall performance. It represent our ability to execute on our strategic plan. As you may recall we set forth three areas of focus for 2019. Reducing our cost of deposits, lowering our quarterly operating expenses and eliminating non-core assets. All of this is intended to create the foundation upon which we will grow in 2020.

We view cost of deposits, is one of the key