Banc of California (BANC) 26 Jul 232023 Q2 Earnings call transcript

Hello, and welcome to the conference call to discuss Banc of California and PacWest Merger and Second Quarter Earnings. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask questions. [Operator Instructions] Please note, this call is being recorded.

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

the Before we begin, and both statement would like investor in presentations forward-looking included press safe everyone statements to on the harbor direct we to releases published today.

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

you us. of PacWest. usual new Thompson With thank Paul the for of today is the announced Back on today. is Each the brief quarter Kevin of and Kauder, call CFO going afternoon, was results Good from joining and second the Bill merger Taylor, California provide me company can that Joe their Banc review a of and spend the that call so we commentary discussing majority with to than financial more limited

Let we me start off announce this thrilled to are by saying how transaction.

excited XXXX when very transformation of tremendous The with value merger the clients, accretion and transaction to the significant accretion million which accelerate are the one savings two investors, will third California, EPS share is very bank have book combined been from and We day stockholders, headquartered will realized. this tangible bring. The accompanied capital largest in colleagues will in per benefits expense communities the in transaction that of to $XXX by sophisticated bank result discuss company.

the be I I this committed efforts have franchise. and an know making transforming time a outstanding amount the powerhouse restructuring job balance successful, this Paul they through in and short and to his will are have sheet of a undertaken. Paul both done team initial

to We have bring it's to closely deal highly going this worked and successful. be together extremely

Let it me to over turn Paul.

took with makes that transformation over about start Banc turned by banks institution other period known Jared the excited sheet a took is that at come each Jared, what's Opus years. short it This ability I we've With you, backdrop, with He and months of the the myself, for few with of has for a the done this around stage to a to saying I've he reposition great has the afternoon, want balance me to many job time. in before I a few compelling on combination. very been impressed led California. deal good and set over off combined so economics, a Thank growth. a with everyone. great Bank, bank Having

We are better clearly together.

merger products having will advancement as of services, I believe stakeholders, expanded clients our part this larger be and set an to institution. of opportunities more for all having beneficial a employees for career of access with

will well market franchise increased and premier The both banking merger be opportunities to customers a creates expanded on broaden a This capitalize banks. offerings. which the an team from assemble and world-class opportunity serves channels scale is product to through and California positioned and

so done they've that the combined I would will the do in this continue hard through thank people day, new to work at organization. and and years like every in to PacWest to of year, all the they come do they

back turn to With Jared. it will that, I

Kauder, our I'm very introduce you Thank pleased much, now to Paul. Joe new CFO.

including to of out more know, He's have this have job, at in we're and certainly together, he their background come seen And tension on candidates. his CFO hundreds search on Wells been positions a served you all wholesale in for time. exciting Fargo course, period and senior had bringing finance his which I many Joe national of of As long time, of conducted billions talented you've third week we in at many, grateful started bank, a assets. just couldn't saw him the having know here. and instrumental as a very top. stood he

Deputy thank CFO. Chief Before Accounting do to really did Officer, CFO Interim and want Ray outstanding I to turning a Joe, truly as over job our Rindone, who

you Ray. very much, thank So

let me to turn it Joe. over now And

Thank you, Jared.

here It very culture I'm a career larger my fantastic caliber banking Banc of impressed fundamentals highly course, I've and high-quality entire excited grounded to that at as Of to delivering California. spent exists is well California with Banc and service in be at exciting has organizations, much as been Having the talent of well clients. been start. at the of that

turn about few quarter's comments me a to Let the financials.

I my Our where earnings free some limit our information, discussion I refer of release investor deck, performance. and as to will which quarter period review indicated, comparisons warranted. so all will Presentation with found deal is to feel quarter areas great additional website to a comments provide the Unless Relations Investor our our Please of first second on otherwise are Investor XXXX. can prior be

diluted per of are or basis, Our prior an per indemnified compared quarter. to million the the income per adjusted $XX.X for quarter This quarter net net $XX.X $XX.X common net excluded. totaled income common share. million diluted second or $X.XX was $X.XX adjusted for costs net legal diluted or for when On million $X.XX share the second share income

margins growth and asset and higher core repricing securities Overall, straightforward our by was remained second improved rates stable. and loan C&I balances warehouse performance quarter deposit fairly driven in the loan our in with and

XX However, quarter interest first during the NIM cash the subsequent repayment saw two carry in to margin of of basis higher we the of a June, the FRB advances. excess strong points to impact prior to months in quarter XX The FHLB the of we and the the associated cost the response recovery recent banking in X.XX%, our and the of that levels due net decreased quarter was basis largely points, from turmoil. liquidity

X.XX%. yield by to increase overall would earning basis XX asset Our points

yielding line increased on Our asset new CLO and was warehouse the securities The average in is rates in portfolio. the to on of mainly X.XX%, largely basis to basis higher yield loan in points which the balances, classes which XX portfolio to highest continuing attributable average loan one to due rate points resets. to loans increased production increase XX reprice yield X.XX%, portfolio the variable

Our increased funds points XX by X.XX%. total basis cost to of

Our -- was basis average second up points the points. quarter, the deposits for points cost of basis for XX XXX

to deck rates, Fed funds XX points which page increased compared over this the in time illustrates interest average drivers basis net presentation margin However, the The information. the same investor period. further

from nonrecurring recovery prior on recognized loan timing primarily decreased and in acquired transaction certain to Our the of of in including noninterest games inclusion quarters, of income the $X.X Pacific first items the quarter, Mercantile the million due CRA investments. a

areas relatively quarter. prior were consistent with other the items, noninterest income those the Excluding of

more offset from noninterest benefit payments processing the the headcount adjusted reduction investment $XXX,XXX prior business. in quarter as of the realized the than the savings decreased areas Our from quarter were last our full expense of and other continued company cost such new made as

sheet. reduction June of and due reduction assets held was end billion at $X.X excess in prior in a Turning Total quarter, X% to were cash approximately to which the from our FHLB FRP XX, borrowings. in balance and corresponding largely liquidity the decrease of the a

common net stock. million by the billion capital by $XX actions, included stock the decreased common $XX both second dividends in of approximately million $X.X as equity of were primarily and repurchase earnings our quarter during offset total which Our

quarter, Our warehouse and our million core to total $XXX prior portfolios. approximately loans C&I primarily of due in from increases increased the end the

prior certificates of the interest-bearing $XX Our and partially total higher offset primarily to deposits from decreased due end million deposit. the noninterest-bearing checking lower deposits, quarter by of

million were quarter However, $XXX our through total moved higher deposits the than balances in initial the after an end-of-period and quarter. decline, increased balances average we our as

And as release, Importantly, deposits earnings our noninterest-bearing we balances. client noted period-end deposits in of relationships. of substantial from inflows were had XX% new our new

and loan quarter. credit the largely Our loans, borrowed both due but C&I and as well this our charge-offs provision replenish small potential recorded reserved solid loans, for was to increases Mercantile for view which have quality Pacific the $X.X other loans credit nonperforming remote. in losses, loss and a acquired included had for of which value, to million, delinquent credit remained reserve largely $X.X we to the second from losses so loans. are asset We loan provision a for in of We low which million was a

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

this the time, will call At turn I over Kevin. to

deemphasize Thanks, light a loans of on franchise we of second in the market. to turmoil Joe. our year, the banking announced We during on executed of funded and community and At businesses. beginning commitments the accelerated discount proud at selling of billion bank very noncore national the that a $X.X the these plan by of Europe's We're in sale to our quarter construction X.X%. $X.X strategic loan the renewed core focus portfolio, the billion efforts

lender unfunded to transferred $XXX finance and We unfunded million X% $X.X a over also commitments sold loans billion $X.X to funding. of of commitments time with buyer be discount billion another as the at of

year, of quarter. million of and our we We down wound $XX commitments also the funded loan Since operations. this the CIVIC of portfolio $XXX unfunded beginning CIVIC million sold the

divestiture, of million. $XX this compensation a and $XX As other also savings anticipate annualized of of expense we savings result million

our a operational and closed our business our We're part improving our subleased of of have As efforts facilities. number we and improve to efficiency, simplifying processes.

of to and team expenses reduce the contracts, quarter our increasing The capital resulted working We actions this our our are and consolidating around we in swift are position. liquidity improving company.

now base very our quarter deposit pleased to are the that in stabilized We grow. begun and has

of uninsured immediately XXX%. of $XX of ratio The coverage to deposits and liquidity loan-to-deposit decreased with a available ratio XX% billion

cash of plan are of sheet the quarter. of use pay funding. a to to at wholesale We holding the Much end we the down large amount balance which, on

dramatically increased in capital from CETX quarter. to Our X.XX% XX.XX% ratio the

the would just Adjusting been share, a per per in loan sales items estimates analysts' earnings of The for earnings the quarter. $X.XX quarter. loss share associated and ahead which onetime is was adjusted for the $X.XX restructuring, of with diluted have

day serve proud are bring every We very our we members as and to communities. the who passion customers loyal work PacWest of team

call I'll that, the to over With turn back Jared.

and We're discuss morning a strategic Thanks Kevin. announced or -- to highly merger should this now we lot, I afternoon. raise this excited capital say the

and great our I'm PacWest few regarding deliver to a Banc transformational significant published and the of minutes merger information to the a today, of going spend of of deck the stakeholders. California combination deal that to discussing value of opportunity provided a highlights unique a and is The on merger. all We've transaction was the investor

we businesses deposits, I that to of restructuring achieved California capital; X.X lending say CEO this We set the do joined had build to had and deposits; nearly California bank level level better of delivering and transformation of and objectives ago, our own prioritize Banc the expected great First, by business and relationship-focused three would two, as deposit three, undertake and our things: completed in to three capital many footprint. of noise. terms most best-in-class, a of core low deposits to in quality. We out high When journey noninterest-bearing healthy years results credit Banc would a and than and being strategies of with faster credit those

As leading with commercial bank in work merger position a enter the a sheet. balance transformational done we and will with put PacWest in this California a well-capitalized us the have into strong, that highly result, liquid to create

We for compelling shareholders. believe this highly both is transaction company's

the significant has accretive and and opportunities value profitability In between risk leading that the franchise, liquidity to book cost two bolsters addition familiarity is combination highly attractive limited the given the tangible and and execution organizations. capital in California savings results EPS to creating

strategy in-market banking robust superior relationship and management to of level with customer focus solutions. a primary providing combined treasury will objective expertise service, Our on continue of

superior utilize lending with As be most of third treasury in largest a California combined management both attract us headquartered commercial the country. services enable banking commercial to of we demonstrated, fund lending to bank expertise paired will opportunities. and is the that basis, we low-cost attractive California, high-quality which providing PacWest Banc markets one deposits will absolutely On the have in

in XX changed California over environment dramatically. the past has As we the months, competitive all know,

pull significantly we from many back this other period, banks exit During time California. completely have either or seen

is high transaction. efficiencies and a of continue and scale, combined we best to level institution sizable will by disruption, the bank experience, and have million a adding As communities. technology, well talent highly Warburg further sophisticated to as share. invest a be and to in even increased $XXX to expertise client concurrently The with a bank signed attract the overall our have investors commercial commitments Centerbridge, two this the will of clients this. with company a And positioned opportunity increasing result, do larger resources elevate to there skilled the for capitalize service with market enhance on invest closing more support and

enable will billion several assets institution. capital of and of The liquidity liquid concurrent designed and selling merger and the create to the enhance strategic us very profile actions cash actions advantage strong excess sheet, $XX a take wholesale of capital balance and down to to funding. utilizing combined include These pay raise

by actions funding the We and to wholesale below will transactions have the to these cash X% and These balance hedges entering maintaining of to a of XX% derisked sheet while close. ratio XX% pricing combined through the protect institution reduce CETX. number assets

expense by repositioning around PacWest sheet XX% run does This have upside on the expenses. in pro transaction of X.XX% We XXXX enhance approximately at XXXX our base achieved, did but rate most upside been that exceeding estimate will equity deposits include XX% in on is core risk immediately EPS annually. to is least XX% We run be produce $X.XX. model. QX and not tangible company be share opportunities forma savings deposits. return when deposit these identified balance book will not driven the additional will also of projections generate XX% will the points the believe return that of a produce expected $X.XX value reduction tangible EPS basis there loan-to-deposit per and We to accretive accretable XXX of the ratio -- execution percent a non-run profile rate to comprised achieving low as have funding of with of we capital noninterest-bearing combined XX-plus This rate and assets of and and will a on

An degree have, important is the and institutions particularly the of merger which believe significantly unique aspect risk. of two this high minimizes that familiarity we execution our

and degree success to One do high the of of is deals case confidence with a in the our in transaction, certainly where M&A guiding we transaction. this in principles have only is of the this

previously Western during I I know, there, you served as years Pacific my of President than more of plus lead acquisitions. to most As XX Bank, and helped XX

organization number Dyck, Pacific a at their Bank. have Credit know Chief the including depth Western other Officer that and Banc have Accordingly, we the true of worked who Officer, at leadership exists operate. organization and talent tremendous businesses the of also our who have respect PacWest, or We was Chief the culture the know of that executives of Credit roles for employees. We at California they Bob at

evaluation the During deeper will the integration to merger projected this degree was of will the process and clients and our for transaction, shareholders commercial capitalize the synergies of issues a enhance foundation to the lead ability smooth company. discuss effectively very high familiarity diligence on for level a on evident. trust to believe to and and value our of additional We serve the combined enable us ability that create of

With that, let Paul. over me turn to the call

of off there. I Thanks, couldn't get Jared. mute

Sorry about that.

forward believe our this for our Over company, is best path clients, the a months, our tremendous the time of great and and a PacWest, merger have the few evaluating for spent opportunity past employees deal shareholders. we we

quarters, the profitability. within and few reliance plan last reduce to putting combined This plan strength our stand-alone the into we've meaningfully increase on our position accelerates wholesale a out Over capital while merger funding, the improve company a market. of laid

team we that we quickly a to this project believe be from combination realize our of needs enable for capital the increased that serve will similar the value and and of synergies robust companies, will franchises, will have nature along will management able senior transaction. scale, expanded be complementary to that shared our smooth the the better With given And and vision the both executives liquidity, integration a capabilities that we cultures, we clients. with of us

having this what created Simply could opportunities greater to advancement stakeholders, of importantly, beneficial put, create a PacWest. and we more stronger we all set be believe a with will believe services, a products for and to as merger than clients being value access for shareholder having part of most stand-alone as extent expanded an institution long-term we career employees

to With that, you. it Jared, I'll turn back

work Thanks, more anticipate we and for real truly begin rest couldn't process, been management it's Paul. you PacWest to team all be we It's and through a our at this been organizations excited together two to bring collaborative a of to add, the the I pleasure process. our with realizing stakeholders. would benefits just like the and that

We our tremendous the hard are colleagues fortunate banking together. all to attracted colleagues have of forward and to dedication the to work. and bringing all in you most talented Thank look for them

Operator, now the be to and open we'd lines. any happy answer questions up

Thank you.

Piper first ahead. with the Today's We go question-and-answer Please Clark Instructions] [Operator Matthew begin will comes Sandler. now from question session.

a Hi. the have from basis. all just it million, might a coming just coming able the franchises Or Can that it everyone. is stand-alone of there for thinking on $XXX first a predominantly me, give on low legacy PacWest some $XXX seems legacy to saves, where to sense you Good little us is legacy what afternoon Maybe bank? extract million out their also from? just PacWest? cost through been Is

Well, expense our there's two really savings for assumptions. buckets

there runoff while the exist some of that elevated higher some The for at PacWest a have and have portfolio expenses identified, exited, legacy that temporary first that FDIC closing to businesses for run that are of assessment consultants the they've down will with do CIVIC. is costs little they the including including

company that there's expense lot Additionally, for forward. the we've a combined of identified saving going overlap

is very as modeled getting ratio, result, that XXX we on we so we expense which a X.XX model, very and believe achievable. believe to And -- the conservative,

basis. conservative Matthew, going that's in we and a that's comfortable the like modeling more there, be to we there what highly So felt isn't on but output

-- have $XX a billion PacWest make you it you to you do kind leverage has above for while, any that feel you a $XX has then there under any or do cross been billion, guys but done? you what related investments have been PacWest can like are of And Okay. question,

you previously. $XX over We were billion mentioned as

infrastructure there really built was a We the that to have organization. large

us, I folks think transition think two substantial going leadership the team organization, we're a integration combined so team to of be going there. of be within have And between and we'll good to I we're fine. and the

you And the after of -- assume of left not this is and what any this, volume And family term all you maybe fair to it is have strategic longer thinking whether will to not there going loan like front lending are merits can in once combined? be looks I'm in and with you're bank on or is to just legacy some multi-family. Okay. that think It I once resi, single be speak you'll sales kind business. national still kind that

Yes, of Kevin And of is team and great the exited a bank progress done and community franchise. couple the the has heart largely combined niches, had they the to but job into businesses other building with company converting lending be national a strong Paul towards lending of going bank community the a PacWest already.

its at businesses. have California is national lending don't a We of heart any community franchise. Banc banking

franchise continue two like. these together California a to serve. to really really in we that both the make we strong some markets in have that that are So we partnership niches going There are

have We side. the some deposit on niches

a strong. that Lynden that leads DeTata that Sean really They're very They they fund have to low We we funding business credit. interesting Alan do low have business gather that deposits, are a loan-to-deposit have finance businesses some and with they verticals use leads, great venture and HOA too.

positioned a to be think funding think ratio the the to the franchise. sure reduce holding long look funding. forma worth is And those one avoid businesses we're it's going I as last liquidity, we with going pro the have, that. strong I over XX% low that experienced make deposit loan and that that we our very going on all to the as concentration means to banks it's This several do believe years. within with to bank very can low day going to have, we to live risk We're to that be capital And well concentration. we we excess wholesale so wholesale be And

merger... the on just then And Okay.

question had SFR. there You about another

outcome. sheet, we that plan not put we've are So as we but restructuring the -- they may and be, not sell, will the to of the but ones which to part in protect sell, of determined place assets these the hedges likely we we identified balance have

of And SFR sale includes at California, for multi-family billion are securities securities. and $X.X so for are PacWest it billion available of California, at available Banc $X.X our portfolio and those our portfolio Banc sale

liquidity to wholesale And to us so and at so, in able we're less pay close. create ending originate PacWest wholesale on down funding of of doing amount than and the with Neither going institution, be combined a at XX% funding single-family today. tremendous

in was done that had a to add So just rate environment. assets low we that purchases

really down I sell them borrowings. this portfolios well. we and think performed those design, in pay But down would

capital it Great. the Okay. like but on mean raise capital of high, the cost and out merger just deal-related hedging and stripped if hedging, look then And I relative it number the to and of costs deal cost a includes raise. the value? the what looks little would that the charge, you

X.X% about cost some we these up X% is savings, which to end things deals and looked where comparable of at. being that It's

were it the two substantial. So Those combined with it's elevated which capital highly were things associated cost well you're hedging has the as as right, raise the substantial. costs, because

process? And the were this in other is most Okay. part? bidders two there for then Or just any you it

a be to is I but the in going get to be going proxy we're merger, combination description excited it about fantastic, background think the the and Well, this of to done. there robust is

Great. Okay. you. Thank

Thank you.

The ahead. next KBW. Please Chris McGratty comes from question with go

is, you I just think NIBs give that I companies, if deposits, noninterest-bearing the mix, the the a get to some deposit growth Slide slightly for from two a getting the starting assuming guess moment. combine you're quarter. what to for I of point XX different I'm core Thanks. Great. and into deposits. Slide dig XX after wanted XX% second assumptions to

there commentary So in Thanks. interested I'm start, to please.

We both Yes. to I mean know bit. what there's little expecting a going do. be to we're

to we expect to course. early close, to on QX This that, approximately it close. And because so (ph) XX% We be at we we pro QX, plan the close forma exceed and [X/XX] noninterest-bearing we, is are is hope X/XX. late based expecting to of

on credit. today. sheet. a has volatility marking or you Maybe on Okay. comment see then historically PacWest not bit maybe a in the credit numbers their how a two had portfolio balance And little you're the question

is second banks bit the there but combined color in migration think of a little the assumed quarter, maybe like a I on just on rates basis. loss

Sure. I'm before did to want going we're all? diligence kind we forward. of or the happy on about talk we robust that, and Kevin modeling at do But to quarter guys what comment Paul, the do you

bet. You

we portfolio count initiatives, sheet First, sale. to selling I'll mention bit part little those losses on since credit deterioration. of loss rules, that had lending the CIVIC national loss of a had some, portfolio sale rather accounting than a a our According GAAP a to executed balance number on we restructuring as credit as including with of portfolios on

So that shows up in our provision.

on that but your to true that in provision, our of to those just that it bit sales in charge-offs point, mind. create geography. does are Chris, losses happen losses noise little in a So They're be

then a perspective and in are there loans quarter, downs. are ups due some credit Past the And from down.

because nonaccruals loans. of Our are up specific

Our throughout. get mentions down, special classified are

think quality. out as a But profile So normal the bank. it some in for did adds that credit even I credit But sell over a portfolio, national better our construction we'll see we is which ins time. very are reminder, and combined

we've of term. pay. for portfolio they're that a loan, past always to CIVIC dues, our push more ever it's It's seem It They a sloppy since on of involvement then the more slow lack And CIVIC. a in will seen better of to just mention pace. important

portfolio. we're concerned or So a not anything trend that that in systemic there's

So let in... me jump just

That's helpful.

Chris. ahead, Go Yes,

sorry I'm keep interrupt. going, No, no, to Jared.

substantial of at diligence carefully are other, substantial you but transactions on Yes, that potential no portfolio. these really to sorts sure the we of course, each got in those of very the mean, things make risk. I problem. because credit diligence look I did mean on the you

that through of undertook, PacWest would had risky, not sheet. exposure of has larger balance First say that I loans that sales loss had were there that necessarily balance even the excellent and deposits if content. portfolios pressure de-risking they they And were sheet no I but the to they national the on all, lending done those their where say some job generate put portfolios think -- and didn't the was an

So I think of before risk, that is more and in they've that. the started portfolio was job it engaging reducing done they far granular loan an excellent remaining than

some relates I runoff we loans over time. are that have in to we've but It's -- a primarily $X portfolio, consumer for in seen it's it transactions And those we've CIVIC, acts more rental though to it pays. billion-plus very As that of And third that are It transaction even not. seen parties. going as like mentioned, delinquency, diligence. did deep We housing. brought it's

both banks, we to that's As did they substantial a on in think very other. and of each sophisticated about investors did been these were able as portfolios we both the And two feel came that in this deal diligence credit well. leverage comfortable put I in lot that of committed, very money

be on to not we with niche going will some say in forward, it's the that types lending to bank other its I community never, is its said, but do market do in I be of a And lending to to Like more going lending bank portfolio primarily. this the both think lending is footprint opportunity never basis. core, at akin

about that. we feel good So

to ratios, perspective, extra coverage obviously from can going but theirs. that have XXX coverage a going what typically there. the numbers to CECL, is modeling the a of have get XX to we ours can't you be, ratio were numbers for to tell but there's to of closer -- assumed plenty going And are run I terms we PacWest to to run Obviously, that basis we in than the this we're was prejudge to closer us through support points. we In XXX

just maybe Great. then I a to one full a pro just $X.XX number. that's wanted forma to $X.XX, confirm, that's And then The year. more. And I think

million goes that the Just savings. I noise the So assume correct through the -- in you is me I'm $XXX the kind color any the think, cadence just of I accretable interested and on that get of loan, yield, accretion if that's And XXXX? life the I'm there? marks as of wrong,

has I'm comment on else put that earnings. -- helpful going would the estimate in is $X.XX, to be to somebody an it But advanced our who out thought of degree. the for XXXX we estimated marks, let $X.XX terms to

of are cadence the there, of full getting you're year. terms of savings to, the to earlier not get year the expense In in end going year, benefit the the obviously, at going

PacWest mature at of expire facility XX% XX% or example, the For facilities, end their charges, with their of costs associated XXXX.

termination, any XXXX. think assess realize closed at wait going savings estimate like until the the we terminate stuff estimates or end some our have We going to They'll we pay end out and But it's get just early we'll we're be to to they that expire. XXXX. fee whether of without want the of through we're benefit to that, of that whole them by do So then.

or take that XXXX do accounting out you I estimated Joe numbers that? to to enough $X.XX Joe, the figure So $X.XX are. you is want Kevin. time for EPS. to guys gave what Hopefully,

Yes.

So to clarify like I'd just specifically question. your

-- the earnings then, Slide the yes. million, into that of timing $XXX accreted the there's guess XX, back I gets that? usually And mark

a deposit intangible That's That's back Yes. core comes over over that six in years. years. six

Pardon?

the loan the portfolios And you about marks, to so Cal loan, then of we most loan intend sell. think of the if it, Banc

CDI. into on accretions be not back the all earnings, So those accretive will the

million. yield only the is $XXX The accredible

Okay.

Yes.

million non-PCD and marks. the as that had well, be you rate loans will $XXX the accretable And

Thanks.

with Andrew Stephens. comes go ahead. The question Please Andrew. next from Terrell

Hey, good afternoon.

Hi, Andrew.

of with hedged asset planned you've And just volatility and quickly to forward potential for now rate the of of discount in assumptions the comfortability close. Just non-rate-related into you make the the or the you'd on put discuss terms expect asset kind sales maybe between place contracts pro can in fully baked what's discount? forma sure sales, just any of the on then

sales rate things. have So we we to potential which for in over right. have And turn is the he's for and something risk. accounted because we've variation. for but to timing the our expert let rate I'm hedges, hedged couple model That's within the Joe The is mention me on a interest it of But control. risk, hedged going of our interest

purposes, have rate value Again, down you So numbers to, make supply don't done. it funding, wholesale higher in but in through later. we could the demand, our projections. wanted below at we've if We moment. noninterest that that if hit that getting targeting But we Joe, there's to walk sell XX% do timing exactly sell we of what and we we are kind could sure to to to we're keep for a dislocation want

Yes.

that if the and some of portfolio, credit of sale the we reason, loan assets, -- the protect top the there's those did were there. spread on what was single-family so and contract was entered and on the doesn't the of of we rate It's between contract capital mark, or no balance our which into hedging a really forward mark the $X.X transaction. event, in the rest a interest close was between survive our incremental close on to So close, largely for contingent at rate which about terminates but right is not And deal right entity contingent then now agreement. billion, that now sheet, the the on risk

just tenor were appropriate that those swaptions, which protected. could of we so portfolios we the So make sure to that were we the used calibrated interest rate

Understood. forma back take assumptions account for both would XX run And X.X% that funding then any slide the Page companies out the for not just planned way, does here? costs, increase modeling restructuring? pro funding cost the funding costs the So another on of rate XQ and on then said incremental from deck,

We do I into perspective you have do on any that? current curve -- Kevin, the it using yield correct. does yield current believe the -- other account projection curve. take that's

I what missed was that apologize. the question? Andrew, part. I

cost of Just of X.XX% deposit does forma the structure. half on does back pro then or and the use incremental forma XQ year? any funds, it pro just increases Or in cost the that cost the assume for funding

does it it the it. has forward No, Joe's curve have -- right, yes, in

That's hike. rate So right. there's expected one

some it in don't really I mean, the remarks, and you And expenses. its and additional assumptions like, here a include just earnings in you pro that sounds then, additional made prepared comment upside the forma earlier maybe Jared,

identified just outside could could talk achieving if be you've that of the presentation. of was curious here? are earnings You're areas opportunities kind being about expense that or you other fairly sources I optimistic of that upside saves

more were rate that they of other in because other that, longer then terms great forward. they cost expense was franchise it balance run number. that how way themselves and normal job targeting in to would ratio and both stand-alone a all thought be core to run thought de-risking were that then look, you conservative, as it they expenses easy has your get With the sheet achievable. would being cost efficient we the the business, to highly do at plan pretty going savings were would we that XXX large go identified merger and Well, easily done terms no to just going where PacWest a provider away was savings look the handle in has of a it had that you with a a already of

exceptional, -- I think don't I it's but XXX is that's So good. think and

think probably we to I is term. XXX is where that to get longer like would below and

certainly that's a think expense the on we there's So side, lot.

the in growth forward. very conservative assumptions were we the side going On revenue side, on and our

seeing and ahead, brake don't pressing gas Looking the economy where on like is I'm now the right I lights slow.

XXXX. projecting what And inflation XXXX. not target so And growth see ton to of we're listen he into says, you doesn't going hitting until if a Powell

been come that. going economy going when be of it's be some shrinkage we're We'll things has the to PacWest I this of they've There's just of down, trying number done all think because not their ahead portfolio. much doing. that we're been rates opportunity and as in has mean to probably have are get the is to to We that the So grow. going wondering been demand but lending not the -- as runoff to slow.

a unless picks we support to we're the it's have institution, And opportunities up to there it. some be as to and deposits to going lend, are see starting. not think the growth when economy I back but expansive combined going So then XXXX is

double to we And much there growth was reason why with single probably our that, no loan digits, higher. single-digit bank and -- franchise high digits historically, project low PacWest probably can't there's low do run maybe this And growth. projected or with we but lower would end but and would we try

that's I you say already at And do the PacWest model, Jared that There's as decision whether due is our I higher with economy demand. below liquidity as said to have just reiterate that, issues much, and But a it this we look the got sort the mean, much year, our you mean, to what growth would everything. of to forecast demand I overall is had well we've in it there. -- our is in than is plan. And

it. Got

the you for question the deal. Okay. Thank on congrats and

Thanks, Andrew.

Gary Tenner Davidson. comes Please question ahead. next The go D.A. from with

afternoon. Good Thanks.

again, pretax, delta clarification. Just earnings. points effectively the at of couple a single-family of the fair million you that highlight where $XXX that's On Slide locked goes value and closing? multi-family sale the that million marks, into Is XX, $XXX the on in discount

there. you're selling because Yes, a portfolios loan the of number

accreted earnouts. laps So back being are the those are into

note closing. secondly, to $X wanted -- where clarify at to want And Slide just I generated additional on you. you an of XX, billion cash Okay. then Thank it.

Just generation? of with mechanics the cash out that help me

So PacWest...

got Jared. Go You've ahead, this.

take ahead, Go please it. ahead. Go Kevin,

we operating sell working high this levels would securities say sale cash both of has level excess after sheet. side, plan as of at to on do Okay. for I balance quite some and our of one available well much we hold PacWest as as our closing some cash,

end. million So the excess that $X us there at leaves

Got Guys, it. taking in of was third question the you. And answered. was had then questions. I my question terms -- Thank just for actually, you the thanks that

you. Thank

Tim next The comes ahead. Coffey Janney. from Please go with question

Yes. Good morning, gentlemen.

Good afternoon, Tim.

received this laid assurances within bit the talk kind merger happen the of that of timing -- that you've the you can out? given Jared, a timeframe at little any approval, have

in that So the QX of documents transaction at we've the QX. close we or to are early end looking for said the

previewed on regulators. transaction, the those that transaction this conversations Of achievable. course, and with specifics is we believe timeframe this we And based of

believe not through process, They we're out, down. regulators the So that, timeframe look, have we laid that process and going is that is well their achievable. but to to pin go

comment on you Can you regulators long ago in? Okay. bought how the

from a aware this regulators process the made very phase. early of have We

charge, enough. fair And change that include going includes That's Okay. does back to on, -- that $XXX then million the control? in pretax

have number. changing people So on both our severance, have that a as and based in parties would for are contracts, of severance double-trigger estimates that the we control. numbers don't got there's Most people to who paid plug part terminated be right? a We've there have So normal deal. in but

of thoughts or nature? any then banking venture limits And customers establish terms your right. that concentration planning just on That's things capital of business. are you Okay. Jared, in to kind or the of

think think some it and they related limit well. banking bank more topic me you to or of this. these every above single issue start of have I concentration fund level generally, And banks. they is lend they're all customer about is very legal group limits, finance, lending an your percentage what on do me know doing, the a great concentration all a Let do say, say, very, very they're that customers has venture business But doing in of it off have capital. they across that I without feelings concentration. cannot way a exactly strong We that certain But is, any let the because way pause I the

no to There's by the need on overly and our corollary that concentrated sure make asset the deposit either within and live we're means on customers the side, we side. all not liability or

of favor of in makes do I'm you sense. where reducing a And it So couple it ways. concentration can in

pull money without have it can't time-based, or they obligations giving making so that You can by contractual their do notice. some you that sure they're

have with a contract that them. time-based in something deposits So of at you more can acts we are like that stuff California. with larger deposit. markets do There but convert the institutions, some a of We liquid with Banc money

it scheduled So out -- scheduled can it. for to if would it to the be plan money and wanted leave was we leave, time over

something would But PacWest exact I at that's that think or better is or overall. manage tell manage HOA or entire overall, they to bank, look or Diego throughout the way. something all have But we'll obviously not to feel something San venture We that you, just risk I to are at. And region concentration the same And going it's that forward. manage to banks going the have it we or believe L.A. Bank region anywhere. just the Community have

question Okay. And last for me. then

Jared. You're right on,

Sorry, Paul, please.

I Jared. No, Yes. think right you're on,

then much customer institutions? between how sense you your And Paul, have overlap for and of any Jared two

I math, Just, know anecdotally, done this we we market. mean, but is massive the -- some haven't a that it's

much where together given going have you're here, my today, do not So that done share. customers work some the a deep people and And overlap I on have business we still are business we've history too because left. those customers. are couple there's and share such for just that course, there there really learned to customers have again, with banking, I but that PacWest, some respect There I at and significant of of we

I Jared. spoke this call, to right before our one customers of

Well, did? You Great. great.

Thank you my are much. questions. very Those

Thanks, Tim.

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

the Hi. Congrats deal. on

Kelly. you, Thank

been have you And your circle some disclosures wanted with there. on to outlook deposits you've of some know HOA Deepstack and coming a I for total implies kept do slight growth. I working on. you're I for I Jared, them that and level. things focus back know and deposits XX% your think on nice DDAs a at

color gives helpful. Just your confidence maybe bank would at growing wondering any around be in of very legacy to terms to that and get at PacWest you're And trends able seeing being XX% what level those in you both what modestly potentially DDAs?

Sure.

which are stabilize first magnitude, kind for a and a the We through have California, deposits. high-value all, both of quarter. And high-value looks Banc primarily quarter line last it treasury, and experienced not we noninterest-bearing deposits new doing really what different then stable. this banks I people solutions, both initial but are with of shock And of we from in the And we customers serving obviously So at -- lot are cost primarily but our and been money treasury high highly strategies both management of certainly, deposits. like. know deploy experienced brought

came up of And at PacWest to excellent We're the core very currently got at XX%. Banc deposit for high XX% or XX% a of of and they a longest XX% terms building to had in When time, I were percentage non-interest-bearing has right an base. noninterest-bearing now. always deposits. franchise it we we had California,

deposits Everything is and noninterest-bearing our It's the heart up DDA. and set we're achieve low-cost sure and PacWest franchises, that. we'll up just the way growth about drive that set of in that way at greater of will that both make that, the we

to they fundamentally do have I the are community PacWest fantastic. a business, HOA very I business is tools think it's bank pulled under of the going and strong that at loaned. mean the Some that really is they've well. core together But

strong good other deposits lending L.A. in but loans, areas really Coast some Central or they've and great the in areas have You in where you're and got but San they're loaned. really, really Diego, under

deck, based but in market. you you when and banks center know presence the to have XXX back be in but and look at to massive to we're deposit chart to we top in I the believe Based many too, the highly And on I visible. the able below that First think banks of looked of here. from growth But the in, dominant going market going dominant is PacWest, not very is this franchise to HSR the if prospects get them, are banks money this be we're of standpoint, Citizens do that top at leaders both the four some First in an terms we're at going the talked with not There terms I've first, something Citizens who I we in dominant have is is in be well. well, they're there, remember,

the look the center National, are think West East and you to money deposits bring based of are to if compete us the larger that and so to banks where well City here, all And I going over. against and at able be banks us, banks

Appreciate that I’ll color. step back.

Thanks, Kelly.

Timur from Please comes ahead. question Fargo. with Wells go next The Braziler

Hi. Good afternoon.

really a short was of Timur. coverage, suspension That

back? are You

Yes. Back than and better ever.

of does magnitude means Deepstack what that on this of and the guess, the I commentary how integration? Deepstack And you the can on rollout for kind Deepstack the provide up affect of contribution? Following any deal commentary, this combination

Yes.

track on second Deepstack. quarter, with end get So all, first we'd early the that's of happening. or that we're said quarter live this it and of We

lined So we've got up. customers

slow. have our pipeline. We going We're

I making like I sure mentioned, right, so seeing. As but risk and would we're XX, do. able I'm plus with of we up thought and to build progress we transaction what monitoring started monitoring We're do out we've to that people all teams we we get the XX the been

combined with have is this to are opportunity businesses nicely that thread What's really really going the exciting to about Deepstack. PacWest

direct a opposed to clients would the solution So in-house venture their be party. able tech they businesses, HOA or some And whether love need of an this. to and like they to solution clients to third its as

to get so to accelerate going of to continue get sure monitoring, is that year. go Deepstack. slow next contribute a combined right. believe great we year. the both it going got And transaction do thought right? this as this be and progress to basis. that end income fee plan it we it is for But we earnings make on And talked And Again, through would to about, next we the We're it to going the we meaningfully to will

the of there. of quite maybe just like in you'd book, loan that Or this then bit the SFR of repositioning a else California look of anything strength then an And I to kind PacWest And as given SFR trim there? is standpoint, is to the I'm to Southern on that less make back that the sale decision of guess their multi-family seems books, just more wondering kind there in the on little divest I sale a or sense. it. rationale is the from complete? portfolio indication market. additional you restructuring was sell or at the side the multi-family Got surprised

not portfolios and you of things and banks any makes of multi-family. at looking two just top but single-family much it's back, what given -- fixed giving the you're Multi-family the to longer sell, it's the them has transaction look at they're the without to this both term a would -- were loan transaction-based Every to the with And factors allows other in decide portfolios that up bank rate, to rate deposits. are and were So build happen. this like those the sense that they're be really easy on. low market, relationship it

you punitive. two But So I together, and stand-alone it kind with either think a balance to would relationships thing sheets like basis, shed. And it's when on the it's will. and affect bit a the clients lower-yielding the delever to opportunity SFR perfect portfolios, create way little to de-risk you put can bridge be going not of on stuff the

done In that, and well. terms roadmap. really, exiting, They've the really has of things the at I done PacWest to they've other roadmap already left think look

running CIVIC is So off.

talked been we that is they've remote, if there. got there's par. we there's at third spikes close think about, on As and every something And a they've it kind up, to it that they, party time content able off don't to lay loss of pretty

that think well. laid of So out it pretty I they've kind

Great. And for me. then just lastly

just adjustments runoff. make want I other in of that's $XXX else anything embedded million the that there in Looking security the the does Or comprise sure sales, to at Slide sales. the XX, number? that loan Is entirety?

might other in there. stuff Kevin? think some I it have

down down PacWest it It just would and would portfolios have the PacWest. wound time. legacy we'll add, we've emphasize some have that I'll some wind legacy that over

Thanks and Great. the on congratulations questions Okay. deal. for the

you very Timur. much, Thank Okay.

Thank you.

coverage, Welcome guess. I back to

Thanks.

ahead. go question The James. David next with Raymond Please comes from Feaster

Hi. everybody. the deal. on Congrats Good afternoon,

David. Thanks,

I M&A can you kind just the that of alignment. lenders both obviously, some hoping bit to And aligned, you And of up you talent, well, maybe talked could seamless guardrails elaborate personnel on These I but transactions, or place types hoping about compelling, disruption as be how the just intimately you've but of lot tough but you touch on past, and know, retain that alluded the minimize was integration to. put then done strategies help cultures was ensure know you the these, maybe cultural they perspective. a and in lock on and are from really obviously, a a close Jared, of in cultural this a financially I of

Sure.

the me of first. Let half take back that

and I say piece, retention the transactions structured that what could put be is would we these sure involve that around all identifying risk on at this you guardrails unique that. of it. So making in that transaction

over will stock all and to So restricted staying continue outstanding is invest time.

So stock not deal. either any restricted side are accelerating of we on this

people keep it that restricted wanted And so because initially to stock the the people that given them. are were obviously have you

others. do already about sense be there's so make at looking exists, we're And we'll what that protect to tool that an smart franchise embedded we judicious, that sure and a and basis. the be retention on feel and We'll we'll it go-forward makes

Credit President about Blake, who enough the are and But overlap I including uniqueness portfolio that that PacWest familiarity of know of David, Credit We with other. management. say we the each this each other both Chris He terrific of can I guy. lieutenants the start have are a mean report on all Chief the him, years job then and very He's cannot Officer is Officer with top I doing there. very, was Community well, credit and were CEO his capital. I of great that who's of Chief Bob the regional came I there management back when key Officer was a Corsini, Bryan we his together. going to that of and mean Dyck Credit we're out Bank Bank; XX all work there PacWest the and Bob the and Chief together. presidents

Matt can the they for and but just on this have bad I of just time. because an they managers. of be And different really to headlines could bolted deposit getting looking was what saying, fit bank and the of they derisked It and to is run I go I a generators could franchise. lot wasn't a out can people, more sympathetic. think bank individual things that of at did And have down it and And I the fundamentally amount job caught exemplary of made us. screen And because a look, up credit it's on in to an dramatically. I problems. the is to exceptional and it franchise really because couldn't that they build happened deposits, say way that some have over have toward very It's lot layered the anybody. happened It get years are I wasn't that people is list and I think good also, while a perspective many though, for and down not which a the the was shareholders a screen had actual, a money John headlines. on a different. were liquidity It today, venture today, because somebody pieces done really changed that to And any good many, mean going that and they've franchise I moved go community understand long are some on would came

them we're terms focused of on just very frequently know culture, lending with In to mean, and way on And kind of serve day-to-day a we relationship I I clients. high-touch this because deals. compete

little C&I. than estate, a XX% and they bit XX% little C&I They is diversify to market. do real higher a more We've been estate It's able California Southern have fundamentally a real concentration. bit have.

of the deposits. gives and it is out of this a in that out. better And and terms charts overall deal I loans So mix one lay us think balances of does us both kind the things of that

deals the between I and a has and all lot I've deals that never have the in I of here. done, two So seen there's can I've because on amount say can't I on deal the think don't done, a go fit commonality that this about there been cultural of that been that, institutions. but one overlap

you for about you I do kind think just see have entity? them But support initiative Obviously, That's big of platform? and guess you you your core on infrastructure could respective really been technology the has platform the need do question talk color. And together? larger as a office on quick technology there, and you do much And the in systems, helpful. the then about a appreciate you conversion a that platforms touch just both. how maybe back how the the to you I --

ends come when because April both you to have notice We in to Fiserv at today, well core an you're October look at as it services think broadly that IT We're clients. have look They're contracts core than system looking tech as more you XXXX I operating bank. XXXX. a at So pretty FIS up infrastructure provides contract bank. that the actually Their with similar timeframes. in the

So opportunity there, as things and that. I mentioned, in terms of termination like fees

transition ground. kind at the our give We're we it made from leadership and going going to organizations look be define team and forward leadership the have a of be key decisions to of to up both integration that doing which teams, on direction those talented will will organization

But most staying a are the it's big core, not from there second, look, to so really and looking on when us deploy APIs And of to at you're you're looking beyond relying core, because integrating today Fiserv also clients. services how just good outside or from a at you're solutions FIS opportunity. for your

the You're no delivering that that and out not -- longer at package alone. taking you're as just looking

on other bolted that things your to deliver things clients. You've

our perhaps to Volante. are away. of they than better and things it's up that are one-stop a have because through be shop. than I are Fiserv realized can't faster hub lot And most that partner and APIs credit we give to Deepstack, payments we're There through a there -- things doing a to opened they've push So

best forward. that figure be we'll so try at out is to going what looking closely and really And solution the

in be mean cloud to the we're highly I that make and we're side, architecture then which And is in, on changing the we first. IT mobile. that right can us environment sure both have support the trying that infrastructure

they've of a solutions think their done how providing about to I be thinking of clients. forward great to tech in terms job

There going keep that of we tons we're the growth think I are to support as we to There's clients. that And as deposit for to that growth well. specific our build our delivery class unique. of punch well sure it that I We've the they think been to there. systems through that's have on see technology going the in sure -- make have above and have we're HOA terms we weight system to that HOA make we

solutions initial and we've say begins. made now, but of they real that, technology starting going are obviously ideas, we some And one have the attempts some obviously So very, at be is very going to to initial those decisions assessing as work important. we're

about I'm last big institution. Deepstack a just me. think forward. to But institution. then some a fees you play just much one of curious, regard. think become either especially the about can you curious part think how about fee. generation, it. you revenue Got larger And Obviously, revenues going been how that haven't into Fee fee for The I'm as

it terms fee right? earning I lot we we're -- job the in did more did side, up were not better PacWest a both because Yes. a we than were. than And of had they for they making having mean

made it So up for it.

is cards and Deepstack They issuer think generate some of be. going fees to I an are there. they

of We the to beginning be quarter. in an cards are issuer going fourth

And so I think good to that's for opportunity degeneration. going be a

initial Deepstack, building is issuing place the probably to partner fee through see BaaS company. than where the and faster payments of going through we're we're income through and payments grow around the I think the that through business programs ecosystem to be, going parts other

That’s everybody. helpful. appreciate I it. Thanks

David. you, Thank

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

now disconnect. may You