EX-99.4 6 d35268dex994.htm EX-99.4

EX-99.4

bancofcal.com

ACQUISITION OF PACIFIC MERCANTILE BANCORP

March 2021

Exhibit 99.4

2

Forward Looking Statements

Forward Looking Statements

This investor presentation includes forward-looking information about Banc of California, Inc. (“BoC”), Pacific Mercantile Bancorp (“PMB”) and the combined company after the close of

the transaction that is intended to be covered by the “Safe-Harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are necessarily subject to risk

and uncertainty and actual results could differ materially from those anticipated due to various factors, including those set forth from time to time in the documents filed or furnished by

BoC and PMB with the Securities and Exchange Commission (“SEC”). The following factors, among others, could cause actual results to differ from those set forth in the forward-

looking statements: (i) the possibility that the merger does not close when expected or at all because required regulatory, shareholder or other approvals, financial tests or other

conditions to closing are not received or satisfied on a timely basis or at all; (ii) changes in BoC’s or PMB’s stock price before closing, including as a result of its financial performance

prior to closing, or more generally due to broader stock market movements, and the performance of financial companies and peer group companies; (iii) the risk that the benefits from

the transaction may not be fully realized or may take longer to realize than expected, including as a result of changes in general economic and market conditions, interest and

exchange rates, monetary policy, laws and regulations and their enforcement, and the degree of competition in the geographic and business areas in which BoC and PMB operate; (iv)

the ability to promptly and effectively integrate the businesses of BoC and PMB; (v) the reaction to the transaction of the companies’ clients, employees and counterparties; (vi)

diversion of management time on merger-related issues; (vii) lower than expected revenues, credit quality deterioration or a reduction in real estate values or a reduction in net

earnings; and (viii) other risks that are described in BoC’s and PMB’s public filings with the SEC. You should not place undue reliance on forward-looking statements and BoC and

PMB undertake no obligation to update any such statements to reflect circumstances or events that occur after the date on which the forward-looking statement is made.

Additional Information About the Merger and Where to Find It

Investors and security holders are urged to carefully review and consider each of BoC’s and PMB’s public filings with the SEC, including but not limited to their Annual Reports on

Form 10-K, their proxy statements, their Current Reports on Form 8-K and their Quarterly Reports on Form 10-Q. The documents filed by BoC with the SEC may be obtained free of

charge at our website at www.bancofcal.com or at the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from BoC by requesting them in writing

to Banc of California, Inc., 3 MacArthur Place, Santa Ana, CA 92707; Attention: Investor Relations, by submitting an email request to ir@bancofcal.com or by telephone at (855) 361-

2262.

The documents filed by PMB with the SEC may be obtained free of charge at PMB’s website at www.pmbank.com or at the SEC’s website at www.sec.gov. These documents may

also be obtained free of charge from PMB by requesting them in writing to Pacific Mercantile Bancorp, 949 South Coast Drive, Suite 300, Costa Mesa, CA 92626; Attention: Investor

Relations, or by telephone at 714-438-2500.

BoC intends to file a registration statement with the SEC which will include a joint proxy statement of BoC and PMB and a prospectus of BoC, and each party will file other documents

regarding the proposed transaction with the SEC. Before making any voting or investment decision, investors and security holders of BoC and PMB are urged to carefully read the

entire registration statement and joint proxy statement/prospectus, when they become available, as well as any amendments or supplements to these documents, because they will

contain important information about the proposed transaction. A definitive joint proxy statement/prospectus will be sent to the shareholders of BoC and PMB seeking any required

shareholder approvals. Investors and security holders will be able to obtain the registration statement and the joint proxy statement/prospectus free of charge from the SEC’s website

or from BoC or PMB by writing to the addresses provided for each company set forth in the paragraphs above.

BoC, PMB, their directors, executive officers and certain other persons may be deemed to be participants in the solicitation of proxies from BoC and PMB shareholders in favor of the

approval of the transaction. Information about the directors and executive officers of BoC and their ownership of BoC common stock is set forth in the proxy statement for BoC’s 2020

annual meeting of stockholders, as previously filed with the SEC. Information about the directors and executive officers of PMB and their ownership of PMB common stock is set forth

in the proxy statement for PMB’s 2020 annual meeting of shareholders, as previously filed with the SEC. Shareholders may obtain additional information regarding the interests of such

participants by reading the registration statement and the joint proxy statement/prospectus when they become available.

3

Strategic Rationale

•

Quality deposit franchise:

•

47% noninterest-bearing deposits (“NIBD”)

•

0.27% total cost of deposits (spot rate @ 12/31/2020)

•

Commercially-focused client base; 100% of PMBC’s top business clients utilize account analysis

•

Efficient branches in BANC’s existing markets

•

Liquid balance sheet with 89% loan-to-deposit ratio

•

Accelerates shift towards lower-cost deposit mix; increases BANC’s

NIBD

/

total deposits from 26% to 30% ¹

•

100% overlap with all acquired branches within two miles of existing BANC branches

•

Increased scale of pro forma Company will allow for better servicing of clients

•

BANC management has significant transaction execution and integration experience

•

Experienced and compatible management teams with shared focus on relationship-based business banking

•

Complementary business models & cultural fit provide opportunity to foster and expand relationships with SoCal

customers

•

PMBC’s Horizon Analytics technology broadens the value-added services available to BANC’s

existing customers

•

12.9% EPS accretion in first full year post-closing (2022)

•

Tangible book value earnback

of 2.3 years using crossover method

•

IRR of 15%+

•

Adds $5 million+ recurring noninterest income annually

•

Pro forma capital ratios well in excess of regulatory minimums

•

Conservative cost savings assumptions of 35%

Improves

Deposit

&

Liquidity

Position

(Financial Data

as of Q4

2020)

Low Risk

&

Significant

Efficiency

Opportunities

Compelling

Financial

Metrics

1)

Pro forma excludes purchase accounting adjustments

4

Pacific Mercantile Bancorp Overview

1)

Source: FDIC Summary of Deposits as of June 30, 2020

2)

Information as of or for the period ended December 31, 2020

3)

Branch map only includes banking branches, non-banking offices not pictured

Company

•

NASDAQ Listed: PMBC

•

Headquarters: Costa Mesa, CA

•

7 Locations: 3 banking branches and 4 non-

banking offices spread across Los Angeles,

Orange County, Inland Empire, and San Diego

•

Focus: Commercial Banking

Q4

2020     

Financial    

Highlights   

•

Total Assets: $1.6 Billion

•

Gross Loans: $1.2 Billion

•

PPP Loans: $230 Million

•

Deposits: $1.4 Billion

•

ROAA: 0.93%

•

ROAE: 9.3%

•

Efficiency Ratio: 60.4%

•

NIM: 3.31%

Business     

Highlights ²

•

Attractive core deposit franchise

•

93% core deposit funded

•

47% noninterest-bearing deposits

•

0.27% cost of deposits

•

89% loan-to-deposit ratio

•

46% C&I loans (incl. PPP)

•

Established presence in Los Angeles market

Southern California Branch Map ³

Orange County –

Deposits in Market ¹

Los Angeles County –

Deposits in Market ¹

Number of

Deposits in

Market

Rank

Institution (ST)

Branches

Market ($M)

Share (%)

1

Bank of America Corporation (NC)

86

27,145

18.1

2

Wells Fargo & Co. (CA)

89

26,712

17.8

3

JPMorgan Chase & Co. (NY)

98

21,481

14.3

4

Pacific Premier Bancorp (CA)

9

8,300

5.5

5

Mitsubishi UFJ Financial

41

7,634

5.1

19

Pacific Mercantile Bancorp (CA)

2

1,308

0.9

Number of

Deposits in

Market

Rank

Institution (ST)

Branches

Market ($M)

Share (%)

1

Bank of America Corporation (NC)

239

85,573

16.5

2

JPMorgan Chase & Co. (NY)

282

71,852

13.9

3

Wells Fargo & Co. (CA)

228

67,502

13.0

4

Mitsubishi UFJ Financial

63

44,391

8.6

5

CIT Group Inc. (NY)

45

43,159

8.3

79

Pacific Mercantile Bancorp (CA)

1

125

0.0

PMBC (3):

PMBC (3):

5

Pro Forma Metrics and Footprint

1)

Excludes banks and thrifts not headquartered in CA, Source: FDIC Summary of Deposits as of June 30, 2020

2)

Does not include impact of purchase accounting or branch closures

3)

BANC adjusted PPNR

excludes the impact of terminating the Los Angeles Football Club agreement, gains/losses on alternative energy

investments, realized/unrealized gains/losses on the residual held for sale loan portfolio and net indemnified legal costs

Pro Forma Footprint

California Deposit Market Share as of June 30, 2020¹

Number of

Deposits in

Market

Rank

Institution

Branches

Market ($M)

Share (%)

1

Wells Fargo & Co.

935

309,686

17.1

2

SVB Financial Group

17

71,969

4.0

3

First Republic Bank

59

65,766

3.6

4

East West Bancorp Inc.

79

33,495

1.9

5

Pacific Premier Bancorp Inc.

48

15,439

0.9

6

PacWest Bancorp

71

14,289

0.8

7

Cathay General Bancorp

38

12,609

0.7

8

CVB Financial Corp.

58

11,014

0.6

9

Hope Bancorp Inc.

32

10,872

0.6

10

Pro Forma ²

32

7,532

0.4

12

Banc of California Inc.

29

6,099

0.3

40

Pacific Mercantile Bancorp

3

1,433

0.1

BANC (29):

PMBC (3):

BANC (29):

PMBC (3):

Combination Leverages Existing Market

Presence and Strengthens Core Franchise

Pro Forma Company is 10th

Largest Exchange-

Traded Bank Headquartered in CA by Assets

Financial Highlights as of December 31, 2020

($ in millions)

BANC

PMBC

% of

% of

Pro

Standalone

Pro Forma

Standalone

Pro Forma

Forma ²

Assets

$7,877

83%

$1,588

17%

$9,465

Gross Loans HFI (incl. PPP)

5,898

83%

1,227

17%

7,125

Deposits

6,086

81%

1,383

19%

7,469

Tangible Common Equity

673

81%

158

19%

831

2020 PPNR

44

68%

21

32%

65

2020 Adjusted PPNR ³

71

77%

21

23%

92

6

Pro Forma Loan and Deposit Composition

Loan       

Composition 

Deposit     

Composition 

PMBC ($1.2B)

MRQ Yield

on Loans:

4.39%

BANC ($5.9B)

Pro Forma ¹ ($7.1B)

PMBC ($1.4B)

BANC ($6.1B)

Pro Forma ($7.5B)

MRQ Yield

on Loans:

4.55%

Cost

of Deposits:

0.27%

Cost

of Deposits:

0.29%

Cost

of Deposits:

0.29%

1)

Pro forma excludes purchase accounting adjustments

Note: Balances as of December 31, 2020; Loan yields shown for the quarter ended December 31, 2020; Cost of deposits represents spot rate as of December 31,

2020; Sum of each composition may not add to 100% due to rounding

C&I (Ex. PPP)

35%

PPP

6%

CRE

17%

Multifamily

20%

Consumer

2%

SFR

17%

C&D

3%

Non-Int.

Bearing

30%

Int. Bearing

Checking

30%

MMDA &

Sav.

27%

CDs

13%

C&I (Ex.

PPP)

27%

PPP

19%

CRE

32%

Multifamily

13%

Consumer

7%

SFR

1%

C&D

1%

C&I (Ex. PPP)

36%

PPP

4%

CRE

14%

Multifamily

22%

Consumer

1%

SFR

21%

C&D

3%

Non-Int.

Bearing

47%

Int. Bearing

Checking

9%

MMDA

& Sav.

28%

CDs

15%

Non

-

Int.

Bearing

26%

Int. Bearing

Checking

35%

MMDA

& Sav.

27%

CDs

13%

MRQ Yield

on Loans:

4.58%

7

Transaction Overview

Capital       

Ratios       

At           

Close ³

BANC       

Financial     

Impact       

Transaction   

Valuation     

Transaction   

Summary    

•

Per Share Purchase Price¹:

•

Aggregate Transaction Value¹:

•

Consideration Mix:

•

Treatment of In-The-Money Options, RSUs, & RSAs:

•

Fixed Exchange Ratio:

•

PMBC

Pro Forma Ownership:

•

Anticipated Closing:

•

Price / 2022E EPS:

•

Price / Tangible Book Value:

•

Core Deposit Premium²:

•

2022E EPS Accretion:

•

Pro Forma TBVPS

Dilution at Close:

•

Tangible Book Value Earnback

•

IRR:

•

TCE / TA Ratio:

•

Tier 1 Leverage:

•

Tier 1 Capital Ratio:

$9.77

$235 million

100%

BANC common stock

Cashed-out at close

0.50 shares of BANC common stock for each share of

PMBC

common stock

~19%

Q3

2021

15.1x

1.46x

5.9%

12.9%

2.9%

2.3 years

15%+

8.8%

9.8%

13.0%

1)

Implied based on BANC closing stock price of $19.54 as of March 22, 2021. Value at close will be calculated using a volume weighted average price measured over 20 trading days

2)

Core deposit premium is calculated as the aggregate transaction value less tangible common equity as a percentage of total deposits less jumbo time deposits, measured as of December 31, 2020

3)

Capital ratios include the impact of redemption of Series D preferred stock in Q1 2021

Governance   

•

Two PMBC

Directors to join the BANC Board of Directors

•

Key PMBC

management to support BANC in ensuring a successful integration

8

Key Transaction Assumptions

Other         

Fair Value     

Marks -

Net Earnings   

Impact        

Cost Savings/  

Restructuring  

Charge        

•

Cost savings equal to 35% of PMBC’s

standalone noninterest expense base

•

75% phased-in in 2021

•

100% phased-in in 2022 and thereafter

•

Pre-tax restructuring charge of $18.1 million, ~7.7% of aggregate transaction value

•

Total loan mark of $16.8 million pre-tax (inclusive of rate mark), or ~1.5% of PMBC

gross loans at close

•

$6.0 million positive rate mark amortized straight line into earnings over 5 years

•

$11.4 million PCD

credit mark

•

$11.4 million Non-PCD

credit mark accreted straight line into earnings over 5 years

•

Non-PCD

CECL

reserve of $11.3 million established day 2 through provision expense (represents “double count”

of the Non-PCD

credit mark)

•

Combined ALLL

coverage ratio of 1.3% at close

•

CDI equal to 0.50% of PMBC’s

non-maturity deposits (total deposits, excluding time-based deposits); amortized

sum-of-years’ digits over 10 years

•

25% effective tax rate

•

Anticipated closing in Q3

2021

Transaction   

Structure     

•

100% Common Stock

•

Fixed Exchange Ratio of 0.50x BANC common shares per PMBC share

•

PMBC to merge with and into BANC

9

Pro Forma Balance Sheet & Capital Ratios

1)

Pre-tax transaction expenses equal to $18.1M; in-the-money options, RSUs, and RSAs

cashed out at close; loan

credit mark of $22.8M; loan rate mark of $6.0M; Non-PCD

reserve of $11.3M established on Day 2; $5.8M CDI;

transaction adjustments shown for illustrative purposes

Financial Data and Pro Forma Adjustments as of December 31, 2020 for Illustrative Purposes

2)

Pro forma capital ratios calculated by combining December 31, 2020 BANC regulatory capital

with estimated PMBC consolidated regulatory capital information; includes impact of transaction

related and purchase accounting adjustments as outlined above

($ in Millions)

Standalone

Pro Forma Adjustments ¹

Transaction

Merger

BANC

PMBC

Costs

Adjustments

Pro Forma

Assets

Cash & Securities

$1,452.3

$338.0

($14.2)

($4.2)

$1,771.9

Gross Loans (incl. HFS)

5,899.8

1,227.0

(5.4)

7,121.5

Loan Loss Reserve

(81.0)

(17.5)

(5.3)

(103.8)

Net Loans

$5,818.8

$1,209.6

($10.7)

$7,017.7

Property, Plant & Equipment

$121.5

–

–

$121.5

Total Intangible Assets

39.8

0.4

83.8

124.0

DTAs

46.0

8.5

0.3

54.8

Other Assets

399.0

31.2

–

430.2

Total Assets

$7,877.3

$1,587.6

($14.2)

$69.3

$9,520.0

Liabilities & Shareholders' Equity

Total Deposits

$6,085.8

$1,383.3

–

$7,469.1

Wholesale Borrowings

539.8

10.0

–

549.8

Senior Notes

171.3

–

–

171.3

Subordinated Debt

85.0

–

–

85.0

Trust Preferred

–

17.5

–

17.5

Other Liabilities

98.2

18.0

–

116.2

Total Liabilities

$6,980.1

$1,428.8

–

$8,681.3

Preferred Equity

$184.9

–

–

$184.9

Common Equity

712.3

158.7

(14.2)

69.3

926.2

Total Shareholders' Equity

$897.2

$158.7

($14.2)

$69.3

$1,111.0

Total Liabilities and Shareholders' Equity

$7,877.3

$1,587.6

($14.2)

$69.3

$9,520.0

Consolidated Capital Ratios ²

TCE / TA Ratio

8.6%

8.5%

Common Equity Tier 1 Capital Ratio

11.2%

11.1%

Tier 1 Leverage Ratio

10.9%

10.7%

Tier 1 Capital Ratio

14.3%

14.0%

Total Capital Ratio

17.0%

16.4%