Banc of California in Irvine is ready to put its best foot forward.
The $10.4 billion-asset company is in the early stages of “reorienting” itself, CEO Doug Bowers told attendees at a Tuesday banking conference in New York hosted by Keefe, Bruyette & Woods.
Bowers, a former Bank of America executive who took the helm in May, said management is focused on reducing its reliance on brokered deposits, booking more loans and hiring new staff.
Any hint that Banc of California is ready to play offense is notable given the struggles it has faced in the past year. Certain investors last year accused executives and directors of questionable insider dealings, including a potential conflict of interest tied to the company’s decision to buy the naming rights to a soccer stadium.
Steven Sugarman
Several corporate governance changes ensued. Directors separated the chairman and CEO roles and added representatives from several investors to the board. An independent investigation launched by the board
During Tuesday's presentation, Bowers portrayed the company as one that is now focused on the future. He said he wants to turn Banc of California into more of a “spread-based” institution in a period of rising interest rates.
“Simply put, core deposit growth is foremost on my mind,” Bowers said, adding that he wants to lower the company’s cost of funds. The company’s cost of deposits in the second quarter rose by 24 basis points from a year earlier, to 0.73%
Banc of California reduced its balance of brokered deposits by $576 million during the second quarter. It also sold $414 million of mortgage-backed securities and lower-yielding residential mortgage loans.
The company, which also sold its mortgage business earlier this year, has remained profitable through the process, although its second-quarter profit fell by 54% from a year earlier to $12.3 million.
Banc of California wants to bring in more commercial deposits, including funds from commercial real estate firms, Bowers said.
Bowers said that he also wants to see more progress with loan growth, and that the company had lacked a necessary “kind of energy and intent.” He vowed to produce increased origination in coming quarters.
Banc of California, which aims to take advantage of market fluctuations by stepping up hiring efforts, has received a “considerable number of resumes” recently, Bowers said. In many ways, the company is “a blank canvas” after spending months addressing past issues.
When it comes to hiring, the company plans to be selective.
“I’m pretty upbeat,” Bowers said. “I’ve interviewed a lot. I’ve hired very little.”
