Banc of California Inc. anticipates its securities portfolio to decline year over year, following the sale of its mortgage platform, according to an investor presentation included in a Form 8-K filed April 10.
The first quarter is expected to see various nonrecurring items, related to the recently completed sale of its mortgage business, optimization and restructuring items. Expenses for the first quarter are also expected to rise as the company hastens the implementation of its cost efficiency plan, including reduction of employees by 50%, driving the efficiency ratio lower and closer to peers by year-end. Noninterest expenses will decrease by more than $170 million annually.
Because of this, the bank will focus on improving its core, sustainable earnings between the second quarter and the fourth quarter. However, the bank expects no capital raise will be needed in 2017.
By the fourth quarter, Banc of California projects an adjusted efficiency ratio of less than 60% due to the efforts to save costs. It also expects its return on average assets to be greater than 0.90%, with around $12 billion in assets, by the fourth quarter.