Banc of California, Inc.

Bank of California. Please go ahead.

Good morning and thank you for joining Bank of California's second quarter earnings call. Today's call is being recorded and a copy of the recording will be available later today on our investor relations website. Today's presentation will also include non-GAAP measures. The reconciliations for these measures and additional required information is available in the earnings press release and earnings presentation, which are available on our investor relations website. Before we begin, we would also like to remind everyone that today's call may include forward-looking statements, including statements about our targets, goals, strategies, and outlook for 2025 and beyond, which are subject to risks, uncertainties, and other factors outside of our control, and actual results may differ materially. For discussion of some of the risks that could affect our results, please see our safe harbor statement on forward-looking statements included in both the earnings release and the earnings presentation, as well as the risk factors section of our most recent 10-K. Joining me on today's call are Jared Wolfe, President and Chief Executive Officer, and Joe Cowder, Chief Financial Officer. After our prepared remarks, we will be taking questions from the analyst community. I would like to now turn the conference call over to Jared.

Thanks, Anne. Good morning, everyone, and welcome to our second quarter call. We delivered a strong second quarter with meaningful growth and core profitability. Pre-tax, pre-provision income, grew 6% quarter over quarter, as solid revenue growth outpaced a slight increase in expenses. Our core earnings drivers, which included loan growth, net interest margin expansion, and disciplined expense management, all remained firmly on track with our strategy. We achieved our third consecutive quarter of robust, broad-based commercial loan production, which helped drive total annualized loan growth of 9%. Our team also continued to make steady progress in attracting new business deposit relationships. During the quarter, we opportunistically engaged in the sales process for approximately $507 million of commercial real estate loans, which we have transferred to held for sale with expected proceeds net of reserve release of 95%. We expect the strategic sales of these loans will further optimize our balance sheet and contribute to delivering high-quality, consistent, sustainable earnings growth for our shareholders. This move also helped to drive improvement across our credit quality metrics the quarter. We will touch on more of this We'll touch on more about the loan sales later in the call. Our strong second quarter earnings helped us achieve our fifth consecutive quarter of growing tangible book value per share to $16.46. Our balance sheet remains strong with capital and liquidity at healthy levels. As mentioned on our first quarter call, we opportunistically repurchased $150 million of common stock or about 6.8% of our shares early in the second quarter. We have $150 million remaining in our buyback program, which can be used toward both common and preferred stock. We will continue to be prudent with the remainder of this program and use it opportunistically. And while our outlook may change, we do not expect to deploy all this remaining capacity in the near future. Our second quarter loan production included unfunded commitments was $2.2 billion and included our highest level of originations of $1.2 billion since the closing of our merger. Strong production levels drove 9% annualized growth in our total loan portfolio, while core held-for-sale loans were up 12% annualized. Growth was broad-based, led by continued momentum in lender finance and fund finance originations, and complemented by expansion in our purchased single-family residential portfolio. Our loan origination volumes reflect strong execution by our team and our ability to capitalize on our attractive market positions. Partially offsetting this growth was a decline in construction loans due to payoffs and completed projects, some of which moved to permanent financing in our CRE portfolio, and some of which were included in the loan sale. We have remained disciplined in our pricing and underwriting standards. The rate on new production averaged 7.29%, which was up from 7.2% in Q1, and that helped drive expansion in our average loan yields and our margins. You've heard us emphasize many times now that proactively managing credit risk and quickly identifying any credit concerns is a key priority for us. In accordance with that philosophy, we took decisive action during the quarter to opportunistically sell the commercial real estate loans that I mentioned earlier. While many of these loans are money good and well collateralized, they exhibited characteristics that contributed to credit migration that were not guaranteed to resolve in the near term. Rather than have the potential overhang while we continue to work through the credits, we took the opportunity to reset and align our balance sheet with our focus on growing high quality, consistent, and sustainable earnings. Our second quarter credit quality metrics improved meaningfully from Q1, mainly driven by the loan sale process, but otherwise our credit was stable. Non-performing loans, classified loans, and special mention loans as a percentage of total loans declined by 1,946 and 115 basis points. respectively from Q1. Second quarter net charge-offs, excluding the impact from the loan sale actions, were at just 12 basis points of loans. Proactive credit risk management will remain a top priority as we strive to maintain strong credit quality metrics. Our headline reserve level is at 107 of total loans, and our economic coverage ratio is substantially higher at 161 of loans, which incorporates the unearned credit mark on the Bank of California loan portfolio acquired in the merger as well as coverage from our credit link notes. Our investor deck does a good job of laying out how our loan portfolio has changed over the last 12 to 18 months, and how our coverage ratios reflect that migration to a much higher percentage of loans with short duration and no historical losses in warehouse, lender finance, and fund finance. Along with SFR, these loans now account for almost 30% of our loan book. While some uncertainties remain in the broader macroeconomic environment, we have been encouraged by the resiliency of the market and continued strong demand from our clients for our products and services. We remain confident that the great work of our team members, our continued execution, strong balance sheet, and differentiated market position will drive growth and profitability, tangible value per share, and long-term value for our shareholders. Now I'll hand it over to Joe, who will provide some additional information and then I'll have some closing remarks before opening up the line for questions.