Banc of California (BANC) 20 Apr 232023 Q1 Earnings call transcript

Hello, and welcome to Banc of California's First Quarter Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Today's call is being recorded and a copy of the recording will be available later today on the company's Investor Relations website.

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

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

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

and California's call. first morning, quarter of welcome Banc to Good earnings

in Officer, more call today's Ray our who is results. will Financial talk about Joining me on detail Interim Rindone, quarterly our Chief

Before and for discussing of failures horrible unspeakable recent in performance, our our and an support I'd can unfortunate like these by concerns the banking The those tragic and events. uncertainty clients, that two we displaced express to banks banking. committed and shooting sympathy stability community was and the in have and create, generally. Kentucky to providing our colleagues these to affected unsettled by communities tragedy, events the events understand those remain We to the

We've recent is fundamental of industry, of turmoil four balance key over The been last following. that franchise, our strong of end we the in through all the base sheet client the the manage to including the of banking have the due years. the reflected built as to in quarter, strength franchise effectively able our and metrics first

remain quarter. core bearing at ending at XX%, deposits non-interest strong of X% outflow deposit net Our only for with average overall the quarter around XX% the

uncollateralized were XX% X% A of approximately of and than times and after losses level representing total X.X $XX end. significant securities, less available our which low million available our available excess only and borrowing uninsured unrealized representing have of liquidity for capital capacity, quarter $XXX CETX level with cash tax. sale We with million at of approximately deposits,

X% strong billion the of of sheet. We capital bolstered cash high approximately a capital of approved repurchased balance outstanding our program. shares and have under We on sitting very recently ratios our level common by $X

both We accounts have relationships. and and strong strong operating asset assets classified quality, solid since in [ph] the new with net quarter have inflow deposits which in XX% non-discretionary of we and pipeline seen mid-March, delinquent loans decline of core a includes first

As effect all for been largest events and to tightening several recent quarters, system banks. the said I the categories. the pull mid-sized Fed's The of across have outflow the of out the banks the contract of only some has to deposits deposits for of accelerated economy

of of validated but I Given the that relationships. strength and franchise performed only well backdrop, our the overall, think extremely not our solidity team our deposit

is businesses Those focus value and we service proven on to what that strength have with Our extremely accounts relationships period. and this to continue our we recent on banks. to expertise clients our valuable is clients providing throughout are has rate that unmatched The we have of value focus offer. solutions the that neutral who to other be with

in see many in stronger growth added a one deposit financial to institution, past to clients to looking the several and the for the reduce of move for reaching in who of continue of to where appropriate, ICS We weeks use we programs California who remind out such of we and over proactive were uninsured stability new strength express were slides and presentation financial the the commercial We our accounts. coverage. Bank shows desire like them to exposure clients

the in approximately given borrowings added to conservative $XXX some to deposit end, the largely which the and has overnight more the quarter brought risk uncertainty averaged management, crisis liquidity. banking was approach our and level million of increase environment since past. to macro approximately of we short $X term increased the The have the $XXX deposits been recent at base our While overnight stable billion our began, than balances cash million we broker borrowings

the short believed flexibility broker profitability gives had the our impact nature first quarter, to on borrowings in perspective adjustments we the and our the term an the it deposits actions a of future. quickly us was these and in liability While in make risk prudent management mix from

of and good have bridge verticals terms new In still clients, on, continue including we and in we are capital loan and many real to healthcare, we production, entertainment liquidity that education. the opportunities our focus and media finding serving estate, lending

the and was adjusted yield associated totaling with matured we were not $XX the see ago loans chose saw portfolio that higher loans provide entirely and than Overall, like and three meaningful current quarter, during muted in originated environment in fundings first These due quarter. our renew. attributable we were demand concern renewal rates deposits total loan risk to decline many the that to We recession, the these a which the and we to about C&I didn't prior years didn't lower credits. million of continue potential legacy our to the

also to scrutiny limited relatively with general We and in due as position of exposure areas to very such are stable quality, strong reserves levels credit a high office.

our Our strength limited and exposure investor this to of sector our portfolio. the deck very details

As now on opportunities, earnings we yields to higher investment available. the added we are portfolio, indicated that didn't if would lending see do we our enough given last call we the attractive

portfolio into maturities, grew part as purchases demand strategy, these and economic securities funds the and $XX loan As portfolio give our conditions to redeploy securities will new flexibility of which the X%, or us our short million improve. we loan relatively are this term

expense growth. investing to right One of the our the past objectives our of future has key while to support years few base been size

reduction cost payments on us a in, investing our continues business, have to while of levels, as we X% also previously indicated. our enabling help during in reallocate the which our review we made first savings to will the areas to the such some quarter. staffing to levels, of appropriate processing are FTEs we part proceed timeline effectively This reduction of of manage us regular about As expense

capital have strong maintaining we mentioned levels. on focused I As earlier,

stock Given by cash quarterly the amount while have, level returned dividend were capital during a that market of of by capital we XX% tangible million X% of able our quarter, We repurchase of outstanding, to of the we to value. $XX increasing we approximately were book authorizing take to during advantage shares we that the increase repurchase new which first dislocation to were quarter below much high the also program. to the do able shareholders able

operating stock We'll group to continued that program, capital we continue high while to growth manage challenging implementing of and opportunistic support to levels with the be the current maintain franchise. purchase through environment our the ensuring of respect

we process, built and California of go-to the and in a well focused economic variety interest have Bank sized shareholders value California, businesses sustainable can past institution rate have scenarios. bank small into of building an for that in and the as on creating for the and perform Over and years, deliver both in franchise medium four clients we

banking a times sticky our currently It's We experiencing. truly a through of system the stability provide. clients deeply services for again, stress that typically utilize bank. provides connected Quarter-after-quarter, we are like mentioning be we base worth to true businesses operating are them accounts proven is during has relationship-focused deposit that and even in have that to the the this we

remarks it provide Ray. questions. Then hand before color line performance. over our for on We'll some more open I'll financial to I'll closing Now, have

to are be on review and balance to free Investor as websites sheet some first our to refer our our found investor of Jared. on which I'll of quarter you, deck, Please our with Thank our we'll quarter start comparisons move indicated, Relations the all then highlights statement period XXXX. fourth feel Unless performance. otherwise of can trends. prior with the I income

earnings where comments additional some deal information, so discussion release the areas presentation a provide Our of is investor warranted. and limit of I'll my to great

in was first Net This or share. income quarter $X.X per cost prior on On net share, million for million an of or when quarter diluted of quarter's excluded. per million indemnified diluted for common sale $X.XX per loss common $X.XX totalled $XX.X basis, fourth for adjusted income $X.XX alternative diluted earnings the the adjusted net energy partnerships net the or compared $XX.X and investments a first share legal excluded to The income $XX.X quarter. adjusted the securities. million are

to decreased basis Our net XX interest prior X.XX%. points quarter the from margin

basis earning XX of XX overall partly points. March while deposits attributable overnight to to and our to increased liquidity, margin total broker points during we points yield asset funds by cost X.XX%, basis borrowings which term our temporarily was which increased short the seven Our X.XX%, by basis impacted on increase brought to

the loan points on Our reprice to continue we in securities loans on the the due higher average to X.XX% lower securities basis a increased are yielding of XX we higher sell rates average in basis the yield production. rate portfolio in seeing variable increased The to quarter points X.XX% the and impact repositioning XX did and resets yielding to loan reinvest portfolio and yield proceeds securities. to new prior as

cost basis to average XX increased was up points of while the points the prior Our first same time deposits compared quarter funds the rate for basis average points period. the basis XX fed XXX quarter, over

average deposits to quarter. XXX rate last of the widened funds the basis result, a As from Fed points first the cost difference XXX between the points quarter for of basis our and cost average

in time hold the million billion until intend is we this as $X hold. overall As to we $XXX than depositor Jared which mentioned, are landscape banking see cash normally and more sufficient in confidence. cash, we about approximately such stability carrying in We specifically excess

income acquisition and Mercantile that to Our prior partially other quarter of in securities. and off the the non-interest with sale the loss recovery previously of loan $XXX,XXX. consistent with Pacific quarter to Bank on Other were being a to the million prior variances higher investments the mentioned charged been of non-interest due $X.X acquired most $X.X income had income transaction relatively investment significant increased a income the due equity prior million from areas from on the

mentioned. non-interest first million related to Our staff the in approximately expense expense the in reduction Jared $X severance quarter that included in

to payroll expense adjusted quarter, due Our non-interest the taxes, salaries, the higher quarter. that was impact approximately first prior which benefits and primarily $XXX,XXX increased from

$XXX,XXX an The higher had was of down effective tax FDIC in XX.X% rate expense the also XX.X%. prior now place. that of FDIC first assessments insurance We quarter increase approximately for to in are quarter's the due rate from

annual to XX% be approximately our effective estimate to we rate XXXX, tax XX%. For

X% quarter from our our the to end March Turning billion balance to the position. of of at our of prior liquidity increase approximately assets the due XX, total increase were an sheet, $XX

$XX as million dividends in equity earnings and partially $X.X decreased first $XXX,XXX approximately the stock included of total $XX a AOCI actions, stock. common approximately the Our and were which offset repurchase of during quarter our common both million in by million shift net capital

[ph] runoff and $XX payoffs from to the due had Jared Our primarily million two areas. the was these portfolio This The we loans that loan quarter. the offset in the in see an the opportunities three good by prior in we were portfolio. decline mentioned approximately portfolio was down end of that C&I DSFR targeted increase to in CRE in partially as areas lending continue our

total a with February, our which seeing $XXX The quarter. to Our to focus from deposits of grow end January low outflows rates decreased higher cost relationships. been during we and trend of the deposit of commercial was for saw we due seeking primarily the their had million excess prior decline combined was the client continuation liquidity,

As half of deposits excluding our Jared indicated, total broker the second since have March, deposits. increased,

the quality by loan $XX non-performing XX%. while loans million non-performing our or delinquent had credit declined stable remained and first in balances quarter. solid asset Our We

which credit charge-off in for million, in asset an offset balances. to total we provision our reserve, increase mix a a was While the partially losses general of and primarily in net and loan the $X quality changes by stable, portfolio activity was decrease recorded attributable

of and end first to Our at allowance prior the ratio stood for losses million at end the prior compared million our the X.XX% end allowance total $XX.X of the loans compared to totalled at the quarter, the quarter. to quarter, $XX.X credit at coverage X.XX% of

At Jared. this the presentation to turn I'll back time, over

Thank you, Ray.

prudent will top continue Our the operating challenging. be priority remain management while in risk to environment economic conditions

disruption current are have the right we in done put dislocation work to seeing franchise has to us our capitalize position in the a and way markets. the we our in build However,

a of more than well. of in beginning even net qualities are of current the as both attractive franchise talent the today our new and and adding were clients in of be banking year, ultimately beneficiary industry, banking turmoil at The the terms they to we the scarce expect

management continue to to what do our relationship-oriented opportunities we focus business on going the these treasury strength leverage really well, attractive provided is which in lending We're by capitalize and and to on bring clients. clients

our proposition business the second the and the In new business further offer our enhance value clients improve of payments capabilities. development half that year, processing we will

As solution competitive our environment, be many a current in businesses re-evaluate their light will of payment banking advantage. believe distinct the relationships differentiated we

it are to permanent we we produce to I in. and growth value come in tangible deposits, colleagues believe are efforts build all we by stress continued California thank temporary growing growing earnings will on franchise valuable environment. focused currently on our that margin having environment and and at value. Bank of places out We of of want on fundamentals the this for in creation The to is book continuing which their

We have a team. remarkable

positioned significant strong well We take pride execute foundation for create way With execute, of environment to our in current high our we proven and and are deposits, quality, our we and shareholders. the ahead. the a that effectively excess available that believe for road low-cost capital capitalize credit ability in on long-term we liquidity, levels will can of value solid

ahead and the go open up let's for operator, line that now With questions.

from first go Hi, Wells your from ahead. [Operator Please Fargo. Braziler Timur, comes line instructions] Our is Timur open? question

kind you in had California the other you West like deposits the of in pipeline or of of quantify the banks post that go Coast through pipeline and and of Maybe inflows failure strong. just of like? look subsequent is the you kind competitive mentioned and core looked Valley Jared, stressors inflow landscape March, Silicon strong you if those can the the what has some what can there see

Valley First to been built obviously then that headlines our heavy a in who little Republic ground other of We're names signature the you right some at of here. Silicon give of heavy with for bit some Sure. and in there. Happy color out the a some out the a activity been presence competitors had presence market presence and here all have that's of disruptive quite have the have zero,

from and lot clients lot concern that uninsured means. deposits what So of a of disruption, a around

I really our that bearing non-interest balance that team XX% I first say have remarkable our at out safe competitive job And people's a our proven did sitting so would confidence event think, overall and were explaining safety deposits we're clients the depositor we and and that's I and and think was and about strength sheet confidence giving and the of deposits. again,

stay could the backdrop is so that looks of you -- deposits that outflow to existing growing and where flat not Let's system see had economy just bring on in new I flown shrinking looking the their pipeline, We so shrinking. it bring lose strong here sight you and in to deposits our where to of and were because to from I'm out. out there and number balance sheets a relationships be at your again, were because going deposits more weren't was

growing, if terms terms a in and bringing in lot effective being we're of So new you're in bearing. if flat, of you're relationships of fantastic, non-interest that's you're

were of and thought up Silicon Signature. lot We too been of We turned it There careful. a want So to resolution stuff we We and came lot able our from outflow a a solutions we treasury was management of down. really that position. the large from didn't have end in to concentrated Valley benefited the shine. was

we really overall And about so feel I sit. good where

likely balances But there the from which is was about side. who help If isn't was can have you rate things, they're and for there's first now thing giving And to people providing for extent on a you're be they're about highly probably right already about, the isn't and that problems can them pressure oriented, the depositors rate. if is and demand point. which value they're some only the absolutely the services mutes certain to rate asking second the excess talk other they're to safety If business competitive third a for rate, solve sensitive. them trying rate thing anybody -- you and you're retail more about to accounts,

some be to a on point have excess giving enough balances. At return you decent them

I really So, well. up think holding we're

what we're and to good business be our we going Our very continue job team and remarkable to done is at on the do a that's just focus. side

dollar, loans the that side, the loan opportunities kind versus the to out of the guess with deposit dynamic is kind are near going on deposits? about relationships then incremental incremental up XXX%, had loan and of is than core I extent that the brokerage just, term, of the guess thinking year, you been, but are ticking And what at over in space? you lending looking And to core ability slower or that you're to fund Great. ratio Okay. understand continue at remainder are that growth at those funding I coming from funding as looking how you there here think the do least of they

asking So today loan XXX%. a little in. as number. the year, think in are kind opportunity that We of but just a new was loans opportunity. coming every loan deposits. much obviously Most that's lending earlier where for be XXX% I growth We're of comfortable are we or around over we there with not self-funding, It's around a to going sit a sit moving didn't I said

I to that's and where we we'll end digits As based as going we on now. up see be were single low said, probably what

going out kind old So of trading other. of kind -- we're -- they're it's of loans -- and kind of each new it's replacing kind trading of, into of and loans out

putting it's So not pressure on balance really the sheet.

amount have the same the brokers get which obviously other are and some to higher more would we'd loans mean, to for expensive. the wanted the means really good opportunities because pay have terms we saw we there, weren't If to of it in lever volume which would we brokered, with -- up, if and borrowings because deposits that borrowings, yield, we to or charge on a

kind them, good to of paying which where off are tandem, we if are the But and that be if little right ratio around a I grow to that our is, we're the in bit, of it in moving enough is. deposits replace keep loans and terms think finally -- loans now we it seems loan-to-deposit our to

then sorts picture that's of And I on are in consolidation your arm And again, question, place California? state Okay. for some one broader capitalize meaningful race me there particularly, just activity the your any better that? thoughts in bigger guess on last dislocation place taking in of scale just to taking with one all getting kind is what

of I the out terms it with that woods think think, it's to early Republic what Well, lot think a there's play don't we're And going I depends little and on where out. a in things bit of yet are I fully and First how goes. happens

I think XXth, on that and there they know from are and see of interest they're the supposed to what report kind earnings in of path a as their I here. lot

so there for of think And to happen. things that I lot is are waiting that event a

of like really, There's of capital. our quality of terms that's have consolidation levels sit and really of going levels size about with a we banking what the really lot where appropriate. conversation and future with in like franchise that really good look base a value deposit scarcity from strong are and I we credit and high what to the

us lot want of going what to to a and optionality It's give can do. to how might think grow we about we

the lot and of obviously, a we've an acquirer in shown have that then past. We we've been organic options

smaller the market of of through that talent just if presents a this beneficiary that I a can't disruption the ransactionally, that think right there and might enough and our lot potentially decide both clients I acquisition of organically they to think itself. scale be going and we're in opportunity get are banks through

comes go from ahead. from James. next Spector question Raymond Please Our Eric

appreciate. appreciate David question. on line Spector Eric the I is this taking for you Hey, I Feaster. the

if digit shrink little the particularly just mentioned additional growth helpful? of the the follow possible Is year. I and up you be for where appetite maybe risk Curious the less single good you here. it too, on competitive know would bit you see side. risk throughout don't color have remainder good of returns you're Just that seeing might then returns, credit low kind where environment wanted on to a adjusted you adjusted lending some

and to pretty return Sure, go optimize safe obviously could we X% pretty with There's that value easily getting earnings of when X% and and to going possibility in returns portfolio you're We're and in to shareholder the place. the a we absolutely. short very one close shrink shrink. duration loans

see want So to able adjusted good risk to to a you've got lend be return to today.

are your you to have clients for want proven be make especially You there that times to the this. you're over there to over have lending best and that like sure and at themselves ones again, them,

think at focusing the remain I our our was of But deposit being outlook an We're on market. just just we and that looking to restraint, one of grow we the for grow and we'll not. that's that we a if and the we do we're if really don't see our set to we is not growth that not And we cautious. really clients have It's see strengths have franchise there discretion think I environment anything, beginning lend good franchise that in really and And opportunities. cautious. that's

but volume transaction was We opportunity, in transactional now the next other transaction that's with and of I round estate real everybody's waiting table real the sitting table some for but on is around in are our happening, were terms slow. right senior very, in There a estate the seeing clients activity. of of They activity some our pretty real quiet night some -- and stuff the executives sidelines it held is estate. Bridge some very

because just didn't we C&I was activity adjusted good had actually weren't return would've balances opportunities deposit running the the flat, relatively relationships stuff We loan the we $XX and that's Their well. the our and that were and there good but education, risk putting off they're are not seeing grown, stuff to some we seeing side, some out And for in million, median replacing that's some some just decided think on warehouse. that's We're renew in but volume working there. entertainment area.

of a low very seen little volume So we where we of sit. a market now would've activity kind just bit there. right It's

to touch accounts you commercial on makes like quarter. also XXX about added. wanted That It it. you the then just sense added this Got looks new and

clients over going how non-interest to about California attracting curious, Just like those make think where you're bringing those and you forward? what's relationships bearing balances

Yeah, Eric. so, thanks

to clients able treasury solutions. that need businesses need operating through We bring are that sophisticated those We -- solutions. in management target

on if sufficient their generally -- charges the fees they're keep and credit where the they with So, earnings accounts balances. will earnings r credit analysis offset

want are clients multiple these verticals that and are that Oftentimes but reporting sort need have that four want go and give away too better something needs been I are always, it. in don't how better. differentiate market much others, of of for and there every accounts here, that in there kind some ourselves it's because in with compete gets that have so loans building the certain oftentimes and specialty area and lines year Not been we when credit to the but and I've centralized to against of we years target it we've it's that this just

out missing see all and liquidity uninsured of and was access just or and liquidity and a and that. little like, to chuckle earnings four a it whatever, from that things cared reading nobody that reports caught focus there headline headline me was wasn't in about balance out earnings, When than strength it sheet morning, a levels Armageddon heavy were to so surprise. by ago because penny or two about -- this banking three I that earnings it I came just that weeks and a it the available was was bit on the by like the got was more deposit about One perspective

history quarter the happened with happen the most this and don't to it with annualizing likely in things just It's of is -- has this deposit But one no quarter we in happened the the Republic. the really second First Again, unusual think do but what have I quarter. what thing we'll quarter, be people this stabilized. experience to most was in a my future what of for the and see to is this indicative strength quarters from of in repeat going way what's perspective unless happens

for can I it outlook X% think people So outflow the category. a any deposits, or don't was annualize, one in whatever

kind number or get year. think to I we strength bearing. XX%. It they of expect at that XX% throughout to look very overall XX% we growing over and up I be not but where overall back about And And interest good with could and feel that should down or to maintaining X%, metrics. see and grow time we sit stability the and then

Yeah, interest the touch rate wanted on philosophy and color of I management there. then and just appreciate kind to risk your

You've been rate you what last this cash on And the and quarter. this just very exactly with million the then $XXX the with quarter restructuring you've quarter hedge? elaborate curious active how flow at put you're just your tools managing or to thinking have Can at going sensitivity any hedges derivatives looking about and whether additional forward. rate you're risk this manage you point or hedge

but profitability just jump an the manage margin in sensitive asset we margin. slightly let output trying obviously last point. let introduction. rate at over were going point. give We're to go and you We quarter, our a on We're think but to time. in we have here hedge, we're rate So an We the It's this neutral me on to Ray, at this quarter. neutral don't to where manage is perspective the I'll

there's enough are we pressure yields yields but of margin the on of to really back see grow loan low kind just because pressure. non-interest at not how the then do we going rate slightly overall could I good, lot at where really on it's not rate down a is Obviously things But and depend to this going and are volume there just offset see I point based coming -- quickly bearing it. bottom. how the

We It's seeing something stuff now. loans. just see doing the been make that that love to to it more just to we down. want safe, saw it. lot It There's would've yesterday do a We like right just could time we're not didn't all was time. be it right just we but enough loans I feel turned the it

be. kind little output So, a of active of how an bit just margin's to want of again, we

selectively of Ray We're one we're looking protect but $XXX against that any three years? at in was -- million just hedge, a going the of what it terms rate doing things. was that we all did, kind we're bucketing and on not hedge future changes, or This direction. it In hedge five-year couple a will things was selectively

years? correct. Five That's

years was in that think deposits. idea X.X% five for -- group it, group our years I rate to was, going for is cost year okay, the of was for well money X.X% And deposits a that, idea go the was at of well and that we -- was think locked whole good a five a is of it was for over you, five these we group higher time. thank So, maturing was us. for a it There and okay,

any kind in years. kind so, five environment you borrow for X.X% of And it of

go a money. we're obviously The to said if make If bet still going was of rates -- it based on So not we down, cost kind rates -- still it money curve, trying this a but that hedge, we're model really. not the lot on to of good good a Ford we make more go at time. a up, well was little the were

is -- do lock see where kind little that in might that to at of comfortable got cost maturing be just trying cost you we to the you just we that be the and We're can things bucket time it. fair

I because color, at thought fair a or hope you And so up provides time. was agnostic down, you're the move if that just to Eric. it of kind rates trade it some

Yeah, questions I'll step and that's taking back. for the helpful. Thanks

from D.A. Gary Davidson. question Our ahead. Tenner next Please - comes go

in rate forward? kind ask basis how brokerage about around to balances thinking added for give about a we so I have Can sense, you us in the going right, of those the terms we're a and modelling quarter. the CDs of just, term moving wanted

that? Ray, on color have do you the

Sure.

the optionality those broker on give So, ladder over to durations liquidity expense. manage of we CDs, cost time have manage to us we help to out our and we interest some use various our our that that manage and funds

Gary. They laddered $XXX were We million added about said. Ray as

can I that like broker you rate. XX-month bring they down the if or CD know mostly what because know might we other don't six CD all. to for is duration, were cost But shorter example, Ray, blended an them you have I as the So And broker take is don't right give just now, give, month a and thing we them a a

Right? Those about would the in to X.XX% range. be X%

that in just the terms -- would And see temporarily fine. headcount of thoughts sort what and of in does the will that's be on I reinvesting? appreciate reduction the a kind benefit mentioned, cuts quarter there you initially savings from reinvestment there's or that. annual we Okay, before of second then the

that going I it use to $XX you're see because the going guided kind think don't we're $XX number we're $XX million to think is I $XX going Yeah, million quarterly operating in and expense ways. don't and just and $XX the million mid we're where think million so to think much I to sit. between I -- right now in other We've probably million to of

tracking are where us, have said could you on thanks. you of briefly comments, for mentioned Jared, of and provide kind Okay, or kind your of us are update of And the kind transactions on updated metrics you other you product. things of what us? just things then in kind payment Can schedule, kind very

quarter that. think a Sure. beginning deposits. likely early numbers in this and Well meaningful half XXXX, we'll building where to sit through third onboard by the terms and in intend so And early big clients the common really second be that traction we year, the then little ahead we year, on a will we of one to the the year of a XXXX today of and through our and is hopefully that contributor start end of being in

at we're going run. we're that before way we jog, before walk clients we onboarding we to is The looking

be now it's our it you expect And shortly of we been making sure right. non-live clients in can you much testing and infrastructure we've very so, and that a we're building to as risk onboarding as kind And test because want environment. here

been and and taking we've in approach that to is got And been touch right clients regulators fact, what more one. do, the in then it you the the it's you it's to going you way start very adding bring it, think, does we're think, I to and with some think on system close doing then we've I real going test clients. the as do But you make to the this think sure

bringing add more half a there, we'll the -- fully And certain year. to we clients the I volume I grow of clients have are be obviously in and, start this as Gary, I than, that get second much don't on us don't, to they'll through other they'll year expect be with size and size in and

Please Piper Our next from Sandler. question ahead. go comes Matthew from Clark

have March, some margin the the the front, March of you monthly give happen On rate deposits the and do spot to just at visibility? to end on in margin us

-- don't disclose that we I I we've rated, or think did not? Yeah,

March, We the rate disclose in flat didn't no.

Okay. say that, I generally. would just

of, basis this carrying affects I It's liquidity of to of First that it. seven then Republic So $X XX down, on $X to about we carry choose what expense margin. I sheet seven our expense the to and not interest wait balance until with by, and don't on excess basis it points. to of take see we're million certainly we'll but million margin about XX want happens points it's know, expense and the that we have

were think I other in averaging higher to but definitely the a than so, on benefit they we when get first you March that take quarter. And for were costs can out, there the hand, expect

down maybe points basis And so I points XX XX quarter, being see basis points. could second the basis our in margin to XX

look affect it down. factors might could to where we're don't at that last and of know. I to to going of and non-interest so points that I be. really that's basis see do bearing loan our looking like. it depend we obviously more were to XX just it going Matthew, going we want if borrow whole to on affect but make It's it. know good deposits just And I flow and margin, money and it's can We that, don't opportunities we be it a don't to know to do going what predict there's anybody choose the and night bunch

helps that though. hope color that I So

a and looking I'm of guidepost not chunky can sense you And new there, for that whether deposit of bearing in accounts, growing that anything what whether effect of terms or of Yeah, give you not in accounts some the back was just lag some non-interest whether expect least. witnessed the not in to then but opening or on on there runoff to deposits? the us or some commercial you other front, there's terms see you deposit grew and just at come and encouraging commercial side bringing

lag There's a effect. definitely

new the we not terms accounts, bring get them. it we'll also in in the of time open in that part It although, pretty that's what but volume, After pipeline of you over we quickly. accounts, accounts. So, take fund only see does those to the

In kind or that. terms like of chunkiness of, things

didn't I think any that we lose anything relationships.

hey, really certainly like I've size, our was coming so over we're I me money banks there. wants my it or nobody bank, look, but new we spread that And going here, it this said, money, clients pleased pulling and our saying, got board spread experience we're in we here every to

to come that we opportunity for think there's here. of funds those So some

who infusion somewhere we'd a that's banks. that maybe center client from call primary a definitely of the bank, know money an conversations the else some firm money other to and a I day equity with the has your but are like this And put on this was you private definitely, equity hey, I said, those firm, money, of one private infusion happening.

a people phone. said, with to they us and hey, get their want and on and for that, think the course, advocated Bank California they I of So we'll you call we on get

So bring happening, or this It's us in new we're clients. not all is which to money any that bring losing to of point. the is at back opportunities stuff why, that ahead

well of why so to And our so, did I deposit because all in that's that. see continuing we base grow spite of

weighted a item, this have And you the if just that housekeeping then stock it, you cost of average repurchase great. quarter? Okay,

We have not.

haven't did how It that. of of got lot say the We Matthew, of we and through March. the tangible the book. purchased that we a it bought And number I said below then was after March, we we that we end end it disclosed think, did was, much

might So been. of you can have out where kind we figure

Please comes question from Kelly next Motta go KBW. The from ahead.

the in commentary. for the continued repurchase to question. were thanks Clearly, you Hi, carry and this quarter. on market I'll be the

strong, you bodes your repurchases What's capital going levels in which, management for well maybe forward? for As look here and an ahead, outlook are environment. capital really this appetite

kind Yeah, company our we'll be our to build and mentioned and we strength on we of thanks about sit really and take remarks and, I fact conservative back deposit to focusing opportunity on we're good in think fine. a base and where more to stock. bit little for focus Look, the prepared Kelly. that and our our Absolutely the all here is feel we buy growing reasons the choosing our

million. We for have a authorization repurchase $XX

I is an these we bargain our I be if to be relative opportunistic stock think knowing the wanted it's kind what not to low of we'll our levels, our going don't pretty to at at capital incredibly be and but certainly our stock. we think going buy back environment it here. levels, levels, prudent to look but it's like, to buying these like stock good was in

Understood. over Switching credit… to

thing, HTM highly sale in on also portfolio and -- low duration. of we're just such and to our is know Kelly, terms our sitting our our of that, we liquid levels wait, portfolio low reflect other its that, securities even one in unrealized that for losses in moderate Oh with available to

tangible the And value book through. so have doesn't numbers running our

continue we'll as stock where keep whole opportunistic. to why kind appropriately it's and non-interest buying sits We of so stock and it as down of bunch out of reasons we and I be surprising tangible grow a book so XX% our bearing should long just kind think sticking here, even there's with is the a

view XX-ish And would credit for provide basis color. had any to here? Thanks can had the level what Thanks. as offs? this color with it. puts kind normalized similar we Got charge of this be charge you quarter, as Switching ahead charge you to those you as you in off a would the credit point composed or look a offs? it helpful. be what takes environment, normalizing of Would Any to

We prepared I'm was Yeah, concerned that number did see of was the saw. X.X% was I had on net think It like It the charge a and we for. basically put about. don't was small if we just kind event aside it $XXX I I specific cautious based was off. X%. so was that remember It outlook. what anything correctly,

our very office have, we We exposure. obviously very, disclosed levels low of

I multi-family is to so us. and as general because it too a so very, office office, number we that for CRE break think and technically CRE is talking general is up to CRE small about like very relates

that's so those numbers. lead And we why out

levels this who reserve adequate So, portfolios have we a from a I'm follow they're from problems we perspective not think our to and model going that relative actually appropriate. our predicting quarter, and and this us, similar model felt amount high any forward. others, are we, but modelling And pretty I credit to was

confident Can Thanks you a just feel just what like portfolio? are that feeling for Just, typical that. expand looks size questions why because we credit lot there you multi-family composition upon the on of CRE. like

So on… just any color

office, or multi-family On

mentioned since you Multi-family it.

in example, California over all And, approximately this I've short units shortage that cycles. like infill Yeah, we our they're huge only San Diego in densest multi-family a units housing is the up lending has XX,XXX well bringing They're of with online extremely mentioned and areas about year. portfolio, in XXX,XXX before. housing held a some country primarily for demographic are to the

street loan has might around X%, loan rate X% looking that's in over catch going it We have maturing A changes quickly. loan. up, loan months. the happen. multi-family non-performing that's don't the from the a really sold don't So, on a for lot today Brentwood might X.X% be office a be the conversation that's, to good. up my stress been let's that's sitting multi-family the across say that's of to next depending the XX you building rate going be at very do I is I'm that out not single in And have and or for you And expect X.X% how and

do. they likely options. say, sidelines perspective I are dinner a all of are this interest are There are kept these people going whole years they buildings that rate to that estate with up in people put put if somebody the next where Most have loan bunch with not for over and Well, night. borrower these rents stabilized and is real bunch have up of most those at there's bring them up fully to equity reason outstanding, rates five been GP are to the to the that or on the if have There to going don't other liquidity whole from caught in the -- has four I an then put down equity. sitting of If in of a are, to was to come willing loan. mentioned the some

we technically the They loan's sell sell bank market X% it bring the it a up could Also do easily. pretty a than on bring to to up doesn't before property. the loan to They'd it did X.X%. that. the be would But loan need rate still If we able We X.X%, bring we from X%, rates. to and better up perspective. have at to wouldn't we

is the then and very very, are thing other Freddy active. Fannie And

So Fannie properties right fives. multi-family now low mid the and letting in on are Freddy to

a you there have the outstanding they defeasance longer. some of the terms is don't to people So, the you of have and reason because in go and loan timing flexibility the loan lose leave

So some flexibility. you lose

our will reasons of and think So for housing and for the other all housing shortage any those market, problems the tight these why there reasons, with I have multifamily but but stressors. demand demographics all I don't to lack just of don't, see multifamily, don't were starting the the high in

with conditions that office, such I'm don't which exist office we glad there why is problem have same potential and that's exposure. low I think a is Those for why,

very They're desk. list and just in put we the recourse. general a with we people are office, have have to my loans low well there and liquidity high and Our stats such I some performing to exposure of on

end only year, maturing the that XX of We of XX have about that million is which next is months, months. in next office the $XX through

problem. don't see list a a those and on desk have of I I that's So, one loans my

all color. appreciate really step you. Thank I'll the I back.

ahead. from Janney. next Tim from go comes Please Our Coffey question

CRE can I just if Hey, there. follow up on commentary the

general that the district? central a in on in is of different of the the business breakdowns. office, wondering So, details I'm much property good deck how

no Well, district business central Angeles. there's Los in

Brentwood, Woodland We none we got of got no like desert. Century pockets we Culver we Hills, City, in are are got Downtown, throughout. got Westwood, have There we Monica, we these City. buildings Santa a we -- sitting got There's got

and these all the is loans buildings the part to that what on, would where evaluation have and in able of you process at do the tendencies that Diego, the the would, aptitude get we of is find pocketed is just are that's the understanding San look lend want of our we look at the appraisal and underwrite possible be on we going to Some of might and that's -- would loan in during rents for what we to like when they're turnover loan. attitude duration are that based and foresee the part all of they and tenants to we

all didn't and are hold where the like recourse. We of and that be loans had paid we the to get reason be monitoring So, we borrower going the loan bunch and a is because all. properties why just believe money our at down from put We to our frequent these office again, away hold up It's of that they're don't sufficiently well transition to went going to located up hold But not loan. a to up to We borrowers. do the he we've occupancy. the That's extent going well. office.

our loans a So, loans. by are where people to carry guaranteed the recourse that's that why we wherewithal the we lender have we're --

is Part on continuing And And considered CLOs. Alliance they've I on I what get Western thoughts is to selling was of some of holdings. to your the were your that CLO portfolio? Okay. want thoughts CLO then the de-risking their hold wondering

in a Tim, than bank, you the joined over I we're know think think our a position I I different Western $X.X of their Alliance, remember, don't of number Well, of the perspectives. CLOs. very billion When I size as was in from portfolio. portfolio

We believe million. at $XXX are sitting now, under I

And so it's self-liquidating. kind of

but so more because It's double monitor A -- you now. sensitivity. sensitive we're sell carefully, term and It's It's obviously so COVID that and asset through was in asset right something our trade that's they plans triple tested very on know, one CLOs. of A and something credit and part we they're it any of we don't it's as that's short have to spreads

of gotten a it's reasonable think portfolio our it's to performing overall I well. level down and securities

because position sell We've think else certainly reason pretty to was had -- offers now unrealized we it that to right at do could wouldn't into equivalently it it wouldn't we low at had but -- that. there's sell but, it potentially, a offers and certain gain buy If I would we've it got it's I buy any wouldn't sell loss loss loss. trading certainly we -- the a no I trade a term, it we to at and wouldn't look was at short something because

Okay. time. Those right. you. All are I Thank appreciate questions. the my

at Yeah, feel today. way I but guess I least should never, I never also say say the that's

ahead. go Please from instructions] Stephens. [Operator question from Our comes Andrew next Terrell

seen XX% and it's asked estate of for markets or across kind understand have couple are portion here portfolio. a might loans your office properties answered low and how on underwriting did been have book. curious, Just at Jared, your across incremental the looks I low get was going already. comfortability of value have points reappraised leverage back trying a to and the LTV. commercial I real you Most just a any guys or change how a the of of within leverage either low your I'm the just book solid with sense you property? what get the to recently office

numbers. ours -- and appraised recently are So, recent are it Yeah, We so do recently done. relatively ours these are annually

our portfolio. very about feel I So good

have office primarily and and in way the generally, value So and XX% I loan of was that our properties tell value, kind based has it's that, yes, a and I away but on factors. XX%. the other do ago bunch numbers portfolio. that to of size wouldn't the of location two But well really not the whole appraisal years down our to you of it with it's position property gone take from will That's

any got large. office or got are tremendous don't buildings and you to and there stress. under anchor rise not Large she home somebody pressure the doesn't where, they buildings working B they're under buildings work tremendous We of you suite home those. from have want tenants. to C low based else, it Large got because We CPA are doesn't from amount very want unless work of buildings office long-term have kind and that of

traded which to they're, so, was in square these in And Fargo San building. of given for the replace it are and buildings less foot cost $XXX just buildings large that Wells crazy for replacement Most cost Downtown, so. smaller Francisco selling that building think a would what well I below

Yes.

Okay. like thing recently to on And then service get, similar on often appraisals do number properties? similar coverage; get is how it how debt refreshes? you Is the as that debt service you

each flow that things to buildings because are yeah, No, roles as are need service and that. cash in on obviously depends it's at been looking that look terms conversations, and debt have much understanding of rent in looking loan, stable things quarterly stuff good almost at at it. of It coverage. things with There's higher We're and rent constant we frequent roles more not that this and we're but tenants, low have like performing

of loan feel that like couple some then there's, sheet up kind be anything trim Do else quarters? across makes of were or pruning And be the exited good or for credits could you where looking think that to it I that sold next see three over legacy sense. look might the of nature you quarter in it's to portfolio as on kind out balance $XX you million this so the

comes of up, relationship Yeah, deposit bring there's to to not from tried we're a there made but with where borrow associated of more over got stuff as they company, in the or the look, just for with were saying, this unless loan And to size can't and, necessarily you deposits somebody you're compensating to go sizing bring so just else. time, have is balances to somebody here a before new from request. deposits whole over that have our bunch in have and going you that stuff got I loans the and we've you put didn't relationships them were those them there cause

are once we're is deposits whatever opportunity I looking that's rather And reason loans so bring to made, any haven't so in relationships the committed loan the easiest is been at think it. where able and it's that's today. are a on Everybody won't been more of any for been loan. the those we making but, just specific here it's here period. not knows that renew We deposit loans the since even that true without on relationship I've we way And been

Yes.

non-interest might far? of stability NIB cadence have this. level missed deposit Okay. in the Just trying apologies, Does you like you since as a improved the we XQ And of it of I outflows? NIBs? Can work feel a flows, quarter so to bearing to ran? seen slowdown into of talk Have get that's sense for the kind

right from had there. beginning some size, knew it meltdown sat in where feels the when we quarter at we sit happened, we outflow, but the Yeah. we and some lot expect then and acceleration quarter kind numbers XX%, it grow happened in outflow that of the just, of we not of to where No, end, today, It's coming. back. in that terms but was of came There was of that a early

that in about. we really good got And have now opportunities front good I where a we've of us some pipeline then feel

X% this of And think I economy's are Banc while, had America decline as it, NIBs mentioned been -- the deposits beginning It's a be the to and saying for our think going been -- at in I that growing. of and hard stable shrinking so, is I've of the deposits. I

competing an right the hard now really economy shrinking, and way And of number but so think is are doing our we I ours. a given good it's not team's job big focus it's the pretty unusual and a

really see pretty I'm happens optimistic, little something there. shrink stable there's grow feels else to XX% don't and answer if know know and there's I of But like Right some now our don't going leave. something company money is else could, using then it see back bring all I And it outflow could so in opportunity happens, then the the down and be want services armor the is. But, NIB it I another kind at you banks to we'll to up. kind the and the we'll and and of from is where number's what last to it's be.

Right.

Well the good. questions. Okay. appreciate I Thank very you taking it. for

you, Andrew. Thank Yeah.

presentation. concludes for concluded. has you This today's The Thank attending now question-and-answer session. our conference

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