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Banc of California Reports Fourth Quarter 2019 Financial Results

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Our average yield on interest-earning assets increased 19 basis points to 4.55% for the year ended December 31, 2019 as compared to 4.36% for the full year of 2018, due to higher average yields on the loan and securities portfolios and an increased mix of loans versus securities. Our average yield on loans was 4.76% for the year ended December 31, 2019, compared to 4.64% for the full year of 2018, primarily attributable to higher average commercial and industrial balances in the portfolio mix and higher average yields on commercial real estate, multifamily and construction loans. Our average yield on securities increased 14 basis points primarily as a result of interest rate resets on our CLOs, partially offset by a decrease in our average balance attributable to the sale and calls of higher yielding CLOs between periods.” data-reactid=”45″>Our average yield on interest-earning assets increased 19 basis points to 4.55% for the year ended December 31, 2019 as compared to 4.36% for the full year of 2018, due to higher average yields on the loan and securities portfolios and an increased mix of loans versus securities. Our average yield on loans was 4.76% for the year ended December 31, 2019, compared to 4.64% for the full year of 2018, primarily attributable to higher average commercial and industrial balances in the portfolio mix and higher average yields on commercial real estate, multifamily and construction loans. Our average yield on securities increased 14 basis points primarily as a result of interest rate resets on our CLOs, partially offset by a decrease in our average balance attributable to the sale and calls of higher yielding CLOs between periods.

Provision for loan losses

Q4 2019 vs Q3 2019.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="During the fourth quarter, we recognized a provision release of $2.7 million driven primarily by $431 million in lower loan balances. The provision release was partially offset by downgrades of several loans. In particular, a $24.9 million commercial and industrial (Camp;I) loan was downgraded during the quarter and classified loan balances increased $14.9 million.” data-reactid=”48″>During the fourth quarter, we recognized a provision release of $2.7 million driven primarily by $431 million in lower loan balances. The provision release was partially offset by downgrades of several loans. In particular, a $24.9 million commercial and industrial (“CI”) loan was downgraded during the quarter and classified loan balances increased $14.9 million.

FY 2019 vs FY 2018.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="During the year ended December 31, 2019, we recognized a loan loss provision of $36.4 million, primarily attributable to a previously reported $35 million charge-off of a line of credit originated in November 2017 to a borrower purportedly the subject of a fraudulent scheme. We are actively evaluating all available sources of recovery, although no assurance can be given that we will be successful in that regard. For the comparable prior year period, $30.2 million of loan loss provisions were recorded, inclusive of a $13.9 million charge-off related to borrower fraud.” data-reactid=”50″>During the year ended December 31, 2019, we recognized a loan loss provision of $36.4 million, primarily attributable to a previously reported $35 million charge-off of a line of credit originated in November 2017 to a borrower purportedly the subject of a fraudulent scheme. We are actively evaluating all available sources of recovery, although no assurance can be given that we will be successful in that regard. For the comparable prior year period, $30.2 million of loan loss provisions were recorded, inclusive of a $13.9 million charge-off related to borrower fraud.

Noninterest income

Q4 2019 vs Q3 2019.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Noninterest income for the fourth quarter was $4.9 million, which represented an increase of $1.7 million, or 55% from the prior quarter. The increase was primarily due to no net loss on the sale of available-for-sale securities during the fourth quarter of 2019 as compared to a $5.1 million net loss during the third quarter of 2019, higher loan servicing income, and higher all other income. In addition, the Company had lower impairment losses on investment securities during the fourth quarter. These increases were partially offset by a lower gain on sale of loans of $5.2 million as the fourth quarter recognized a net loss of $833 thousand compared to a net gain of $4.3 million in the prior quarter.” data-reactid=”53″>Noninterest income for the fourth quarter was $4.9 million, which represented an increase of $1.7 million, or 55% from the prior quarter. The increase was primarily due to no net loss on the sale of available-for-sale securities during the fourth quarter of 2019 as compared to a $5.1 million net loss during the third quarter of 2019, higher loan servicing income, and higher all other income. In addition, the Company had lower impairment losses on investment securities during the fourth quarter. These increases were partially offset by a lower gain on sale of loans of $5.2 million as the fourth quarter recognized a net loss of $833 thousand compared to a net gain of $4.3 million in the prior quarter.

FY 2019 vs FY 2018.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Noninterest income for the year ended December 31, 2019 was $12.1 million, which represented a decrease of $11.8 million, or 49.3% from the prior year. The decrease was primarily attributable to (1) a higher net loss on sale of investment securities of $10.4 million, (2) lower other income of $6.6 million due to the elimination of non-core assets in prior periods and the previously reported $9.6 million loss from interest rate swap agreements entered into in order to offset variability in the fair value of the Freddie Mac securitization completed in 2019, and (3) lower loan servicing income of $3.0 million as a result of the sale of mortgage servicing rights in 2018. These decreases are partially offset by a higher net gain on sale of loans of $5.9 million and a lower impairment loss on investment securities of $2.5 million.” data-reactid=”55″>Noninterest income for the year ended December 31, 2019 was $12.1 million, which represented a decrease of $11.8 million, or 49.3% from the prior year. The decrease was primarily attributable to (1) a higher net loss on sale of investment securities of $10.4 million, (2) lower other income of $6.6 million due to the elimination of non-core assets in prior periods and the previously reported $9.6 million loss from interest rate swap agreements entered into in order to offset variability in the fair value of the Freddie Mac securitization completed in 2019, and (3) lower loan servicing income of $3.0 million as a result of the sale of mortgage servicing rights in 2018. These decreases are partially offset by a higher net gain on sale of loans of $5.9 million and a lower impairment loss on investment securities of $2.5 million.

Noninterest expense

Q4 2019 vs Q3 2019.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Noninterest expense for the fourth quarter was $47.2 million, representing an increase of $3.9 million over the prior quarter. Noninterest expense included: (1) $1.9 million lower salaries and benefits expense primarily related to lower headcount, (2) higher professional fees of $1.1 million, (3) $615 thousand higher regulatory assessments related to the one-time small bank assessment credit recorded in the third quarter, (4) $1.6 million in higher restructuring expense related to severance during the fourth quarter of 2019, and (5) a $2.0 million increase in loss on investments in alternative energy partnerships.” data-reactid=”58″>Noninterest expense for the fourth quarter was $47.2 million, representing an increase of $3.9 million over the prior quarter. Noninterest expense included: (1) $1.9 million lower salaries and benefits expense primarily related to lower headcount, (2) higher professional fees of $1.1 million, (3) $615 thousand higher regulatory assessments related to the one-time small bank assessment credit recorded in the third quarter, (4) $1.6 million in higher restructuring expense related to severance during the fourth quarter of 2019, and (5) a $2.0 million increase in loss on investments in alternative energy partnerships.

FY 2019 vs FY 2018.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Noninterest expense for the year ended December 31, 2019 was $195.9 million, which represented a decrease of $36.9 million, or 15.8% from the prior year. The lower noninterest expense primarily consisted of: (1) lower professional fees of $21.4 million, primarily attributable to $9.6 million of insurance recoveries net of expenses related to securities litigation, indemnification, investigation and other legal expenses, (2) lower salaries and benefits expense of $4.1 million resulting from lower headcount and lower consulting fees, (3) lower advertising costs of $4.2 million, and (4) a $3.4 million decrease in loss on investments in alternative energy partnerships.” data-reactid=”60″>Noninterest expense for the year ended December 31, 2019 was $195.9 million, which represented a decrease of $36.9 million, or 15.8% from the prior year. The lower noninterest expense primarily consisted of: (1) lower professional fees of $21.4 million, primarily attributable to $9.6 million of insurance recoveries net of expenses related to securities litigation, indemnification, investigation and other legal expenses, (2) lower salaries and benefits expense of $4.1 million resulting from lower headcount and lower consulting fees, (3) lower advertising costs of $4.2 million, and (4) a $3.4 million decrease in loss on investments in alternative energy partnerships.

Income taxes

Q4 2019 vs Q3 2019.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Income tax expense totaled $2.8 million for the quarter resulting in an effective tax rate of 16.5%. This compares to a $5.6 million tax benefit for the third quarter and an effective tax benefit rate of 28.5%.” data-reactid=”63″>Income tax expense totaled $2.8 million for the quarter resulting in an effective tax rate of 16.5%. This compares to a $5.6 million tax benefit for the third quarter and an effective tax benefit rate of 28.5%.

FY 2019 vs FY 2018.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Income tax expense totaled $4.2 million for the year ended December 31, 2019, representing an effective tax rate of 15.1%, compared to $6.1 million and 11.9% for 2018. The higher effective tax rate in 2019 is due in part to a reduction in available tax credits generated by the Company compared to 2018. Looking forward, we expect our tax rate to normalize in the range of 22 — 24% as we expect a continued reduction in the generation of tax credits related to investments in alternative energy partnerships.” data-reactid=”65″>Income tax expense totaled $4.2 million for the year ended December 31, 2019, representing an effective tax rate of 15.1%, compared to $6.1 million and 11.9% for 2018. The higher effective tax rate in 2019 is due in part to a reduction in available tax credits generated by the Company compared to 2018. Looking forward, we expect our tax rate to normalize in the range of 22 — 24% as we expect a continued reduction in the generation of tax credits related to investments in alternative energy partnerships.

Balance Sheet

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="At December 31, 2019, total assets were $7.83 billion, which represented a linked quarter decrease of $796.9 million, consistent with our strategic shift towards reducing our balance sheet and focusing on relationship lending. The following table shows selected balance sheet line items as of the dates indicated.” data-reactid=”67″>At December 31, 2019, total assets were $7.83 billion, which represented a linked quarter decrease of $796.9 million, consistent with our strategic shift towards reducing our balance sheet and focusing on relationship lending. The following table shows selected balance sheet line items as of the dates indicated.

 

As of and for the Three Months Ended

 

Amount Change

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

 

December 31,
2018

 

Q4-19 vs. Q3-
19

 

Q4-19 vs. Q4-
18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

Total assets

$

 

7,828,410

 

 

$

 

8,625,337

 

 

$

 

9,359,931

 

 

$

 

9,886,525

 

 

$

 

10,630,067

 

 

$

 

(796,927

)

 

$

 

(2,801,657

)

Securities available-for-sale

$

 

912,580

 

 

$

 

775,662

 

 

$

 

1,167,687

 

 

$

 

1,471,303

 

 

$

 

1,992,500

 

 

$

 

136,918

 

 

$

 

(1,079,920

)

Loans held-for-investment

$

 

5,951,885

 

 

$

 

6,383,259

 

 

$

 

6,719,570

 

 

$

 

7,557,200

 

 

$

 

7,700,873

 

 

$

 

(431,374

)

 

$

 

(1,748,988

)

Loans held-for-sale

$

 

22,642

 

 

$

 

23,936

 

 

$

 

597,720

 

 

$

 

25,191

 

 

$

 

8,116

 

 

$

 

(1,294

)

 

$

 

14,526

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

$

 

2,622,398

 

 

$

 

2,602,011

 

 

$

 

2,510,233

 

 

$

 

2,690,738

 

 

$

 

2,579,000

 

 

$

 

20,387

 

 

$

 

43,398

 

Other core deposits

 

2,794,769

 

 

 

3,074,936

 

 

 

3,301,080

 

 

 

3,575,140

 

 

 

3,629,100

 

 

 

(280,167

)

 

 

(834,331

)

Brokered deposits

 

10,000

 

 

 

93,111

 

 

 

480,977

 

 

 

1,459,054

 

 

 

1,708,544

 

 

 

(83,111

)

 

 

(1,698,544

)

Total Deposits

$

 

5,427,167

 

 

$

 

5,770,058

 

 

$

 

6,292,290

 

 

$

 

7,724,932

 

 

$

 

7,916,644

 

 

$

 

(342,891

)

 

$

 

(2,489,477

)

As percentage of total deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

48.32

%

 

 

45.10

%

 

 

39.89

%

 

 

34.83

%

 

 

32.58

%

 

 

3.22

%

 

 

15.74

%

Other core deposits

 

51.50

%

 

 

53.29

%

 

 

52.46

%

 

 

46.28

%

 

 

45.84

%

 

 

(1.79

)%

 

 

5.66

%

Brokered deposits

 

0.18

%

 

 

1.61

%

 

 

7.64

%

 

 

18.89

%

 

 

21.58

%

 

 

(1.43

)%

 

 

(21.40

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average loan yield

 

4.71

%

 

 

4.75

%

 

 

4.80

%

 

 

4.76

%

 

 

4.74

%

 

 

(0.04

)%

 

 

(0.03

)%

Average cost of interest-bearing deposits

 

1.57

%

 

 

1.78

%

 

 

1.89

%

 

 

1.92

%

 

 

1.77

%

 

 

(0.21

)%

 

 

(0.20

)%

Investments

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Securities available-for-sale was $912.6 million at December 31, 2019, an increase of 17.7% from the previous quarter, primarily due to the purchase of $195.3 million of investment securities, comprised of $128.8 million of agency securities, $53.0 million of municipal bonds and $13.5 million of corporate debt securities during the quarter, partially offset by the sale of $39.4 million of our legacy agency MBS. The funds from the sales of our MBS during the quarter and other available cash balances were reinvested into a mix of security classes, resulting in an overall shorter duration for the securities portfolio. As of December 31, 2019, our securities portfolio included $718.4 million of CLOs, $127.8 million of agency securities, $52.7 million of municipal securities, and $13.6 million of corporate debt securities.” data-reactid=”71″>Securities available-for-sale was $912.6 million at December 31, 2019, an increase of 17.7% from the previous quarter, primarily due to the purchase of $195.3 million of investment securities, comprised of $128.8 million of agency securities, $53.0 million of municipal bonds and $13.5 million of corporate debt securities during the quarter, partially offset by the sale of $39.4 million of our legacy agency MBS. The funds from the sales of our MBS during the quarter and other available cash balances were reinvested into a mix of security classes, resulting in an overall shorter duration for the securities portfolio. As of December 31, 2019, our securities portfolio included $718.4 million of CLOs, $127.8 million of agency securities, $52.7 million of municipal securities, and $13.6 million of corporate debt securities.

Loans

The following table sets forth the composition, by loan category, of our loan portfolio as of the dates indicated:

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

 

December 31,
2018

 

($ in thousands)

Composition of held-for-investment loans

 

 

 

 

 

 

 

 

 

Commercial real estate

$

 

818,817

 

 

$

 

891,029

 

 

$

 

856,497

 

 

$

 

865,521

 

 

$

 

867,013

 

Multifamily

 

1,494,528

 

 

 

1,563,757

 

 

 

1,598,978

 

 

 

2,332,527

 

 

 

2,241,246

 

Construction

 

231,350

 

 

 

228,561

 

 

 

209,029

 

 

 

211,549

 

 

 

203,976

 

Commercial and industrial

 

1,691,270

 

 

 

1,789,478

 

 

 

1,951,707

 

 

 

1,907,102

 

 

 

1,944,142

 

SBA

 

70,981

 

 

 

75,359

 

 

 

80,929

 

 

 

74,998

 

 

 

68,741

 

Total commercial loans

 

4,306,946

 

 

 

4,548,184

 

 

 

4,697,140

 

 

 

5,391,697

 

 

 

5,325,118

 

Single family residential mortgage

 

1,590,774

 

 

 

1,775,953

 

 

 

1,961,065

 

 

 

2,102,694

 

 

 

2,305,490

 

Other consumer

 

54,165

 

 

 

59,122

 

 

 

61,365

 

 

 

62,809

 

 

 

70,265

 

Total consumer loans

 

1,644,939

 

 

 

1,835,075

 

 

 

2,022,430

 

 

 

2,165,503

 

 

 

2,375,755

 

Total gross loans

$

 

5,951,885

 

 

$

 

6,383,259

 

 

$

 

6,719,570

 

 

$

 

7,557,200

 

 

$

 

7,700,873

 

Composition percentage of held-for-investment loans

 

 

 

 

 

 

 

 

 

Commercial real estate

 

13.8

%

 

 

14.0

%

 

 

12.7

%

 

 

11.5

%

 

 

11.3

%

Multifamily

 

25.1

%

 

 

24.5

%

 

 

23.8

%

 

 

30.9

%

 

 

29.2

%

Construction

 

3.9

%

 

 

3.6

%

 

 

3.1

%

 

 

2.8

%

 

 

2.6

%

Commercial and industrial

 

28.4

%

 

 

28.0

%

 

 

29.1

%

 

 

25.2

%

 

 

25.2

%

SBA

 

1.2

%

 

 

1.2

%

 

 

1.2

%

 

 

1.0

%

 

 

0.9

%

Total commercial loans

 

72.4

%

 

 

71.3

%

 

 

69.9

%

 

 

71.4

%

 

 

69.2

%

Single family residential mortgage

 

26.7

%

 

 

27.8

%

 

 

29.2

%

 

 

27.8

%

 

 

29.9

%

Other consumer

 

0.9

%

 

 

0.9

%

 

 

0.9

%

 

 

0.8

%

 

 

0.9

%

Total consumer loans

 

27.6

%

 

 

28.7

%

 

 

30.1

%

 

 

28.6

%

 

 

30.8

%

Total gross loans

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Held-for-investment loans decreased $431 million to $6.0 billion from the prior quarter, due mostly to lower single family residential mortgage loans of $185 million, lower Camp;I loans of $98 million, lower commercial real estate of $72 million, and lower multifamily of $69 million. The decline in single family residential and multifamily is due to mostly to accelerated payoffs as the loans refinance in the lower rate environment. The decline in Camp;I loans is due primarily to the payoff of a few large loans and lower average outstanding balances on credit lines.” data-reactid=”76″>Held-for-investment loans decreased $431 million to $6.0 billion from the prior quarter, due mostly to lower single family residential mortgage loans of $185 million, lower CI loans of $98 million, lower commercial real estate of $72 million, and lower multifamily of $69 million. The decline in single family residential and multifamily is due to mostly to accelerated payoffs as the loans refinance in the lower rate environment. The decline in CI loans is due primarily to the payoff of a few large loans and lower average outstanding balances on credit lines.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Single family residential mortgage and multifamily loans now comprise 51.8% of the total held-for-investment loan portfolio as compared to 59.1% one year ago. Commercial real estate loans comprised 13.8% of the loan portfolio and commercial and industrial loans constituted 28.4%, with average yields of 4.94% and 5.09% for the fourth quarter of 2019.” data-reactid=”77″>Single family residential mortgage and multifamily loans now comprise 51.8% of the total held-for-investment loan portfolio as compared to 59.1% one year ago. Commercial real estate loans comprised 13.8% of the loan portfolio and commercial and industrial loans constituted 28.4%, with average yields of 4.94% and 5.09% for the fourth quarter of 2019.

Deposits

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The following table sets forth the composition of our deposits at the dates indicated.” data-reactid=”79″>The following table sets forth the composition of our deposits at the dates indicated.

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

 

December 31,
2018

 

($ in thousands)

Composition of deposits

 

 

 

 

 

 

 

 

 

Noninterest-bearing checking

$

1,088,516

 

 

$

1,107,442

 

 

$

993,745

 

 

$

1,120,700

 

 

$

1,023,360

 

Interest-bearing checking

1,533,882

 

 

1,503,208

 

 

1,577,901

 

 

1,573,499

 

 

1,556,410

 

Money market

715,479

 

 

695,530

 

 

800,898

 

 

899,330

 

 

873,153

 

Savings

885,246

 

 

1,042,162

 

 

1,061,115

 

 

1,151,442

 

 

1,265,847

 

Non-brokered certificates of deposit

1,204,044

 

 

1,367,284

 

 

1,479,137

 

 

1,684,895

 

 

1,654,605

 

Brokered certificates of deposit

 

 

54,432

 

 

379,494

 

 

1,295,066

 

 

1,543,269

 

Total deposits

$

5,427,167

 

 

$

5,770,058

 

 

$

6,292,290

 

 

$

7,724,932

 

 

$

7,916,644

 

Composition percentage of deposits

 

 

 

 

 

 

 

 

 

Noninterest-bearing checking

20.1

%

 

19.2

%

 

15.8

%

 

14.5

%

 

12.9

%

Interest-bearing checking

28.2

%

 

26.1

%

 

25.1

%

 

20.4

%

 

19.7

%

Money market

13.2

%

 

12.0

%

 

12.7

%

 

11.6

%

 

11.0

%

Savings

16.3

%

 

18.1

%

 

16.9

%

 

14.9

%

 

16.0

%

Non-brokered certificates of deposit

22.2

%

 

23.7

%

 

23.5

%

 

21.8

%

 

20.9

%

Brokered certificates of deposit

%

 

0.9

%

 

6.0

%

 

16.8

%

 

19.5

%

Total deposits

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

  <p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Total deposits decreased $342.9 million during the fourth quarter of 2019 to $5.43 billion due to lower savings balances of $156.9 million, non-brokered certificates of deposit balances of $163.2 million, brokered certificates of deposit balances of $54.4 million, and noninterest-bearing checking of $18.9 million, offset by higher interest-bearing checking of $30.7 million and money market of $19.9 million. The decline in non-brokered certificates of deposit is attributed to a lower amount of renewals for maturing certificates as they reset to lower offer rates. The decline in savings is due to rate sensitive customers lowering balances as this product continues to be priced in to the current rate environment as we focus on building relationship-based deposits. In addition, we reduced our reliance on wholesale funding with no new brokered certificates of deposit acquired in the quarter. Noninterest-bearing deposits totaled $1.09 billion and represented 20.1% of total deposits at year end, which compares to $1.11 billion and 19.2% at September 30, 2019 and $1.02 billion and 12.9% at December 31, 2018.” data-reactid=”82″>Total deposits decreased $342.9 million during the fourth quarter of 2019 to $5.43 billion due to lower savings balances of $156.9 million, non-brokered certificates of deposit balances of $163.2 million, brokered certificates of deposit balances of $54.4 million, and noninterest-bearing checking of $18.9 million, offset by higher interest-bearing checking of $30.7 million and money market of $19.9 million. The decline in non-brokered certificates of deposit is attributed to a lower amount of renewals for maturing certificates as they reset to lower offer rates. The decline in savings is due to rate sensitive customers lowering balances as this product continues to be priced in to the current rate environment as we focus on building relationship-based deposits. In addition, we reduced our reliance on wholesale funding with no new brokered certificates of deposit acquired in the quarter. Noninterest-bearing deposits totaled $1.09 billion and represented 20.1% of total deposits at year end, which compares to $1.11 billion and 19.2% at September 30, 2019 and $1.02 billion and 12.9% at December 31, 2018.

Debt

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Advances from the FHLB decreased $455 million on a linked-quarter basis, or 28%, to $1.20 billion as of December 31, 2019, primarily as a result of the maturity of $300 million in fixed rate-advances and a reduction in overnight advances of $205 million. At the end of the fourth quarter of 2019, the maturity dates of FHLB advances consisted of $465 million of overnight, $74 million maturing in three months or less, and $656 million maturing beyond three months. As of the end of the fourth quarter of 2019, the overnight advance interest rate was 1.66%.” data-reactid=”84″>Advances from the FHLB decreased $455 million on a linked-quarter basis, or 28%, to $1.20 billion as of December 31, 2019, primarily as a result of the maturity of $300 million in fixed rate-advances and a reduction in overnight advances of $205 million. At the end of the fourth quarter of 2019, the maturity dates of FHLB advances consisted of $465 million of overnight, $74 million maturing in three months or less, and $656 million maturing beyond three months. As of the end of the fourth quarter of 2019, the overnight advance interest rate was 1.66%.

Equity

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="At December 31, 2019, total stockholders’ equity increased by $6.3 million to $907.2 million on a linked-quarter basis, while tangible common equity increased by $6.7 million to $676.1 million. The increase in total stockholders’ equity related to net income of $14.3 million, partially offset by the dividends to common and preferred stockholders of $6.8 million and an increase in accumulated other comprehensive loss of $2.3 million as a result of reductions in the fair value of securities available-for-sale.” data-reactid=”86″>At December 31, 2019, total stockholders’ equity increased by $6.3 million to $907.2 million on a linked-quarter basis, while tangible common equity increased by $6.7 million to $676.1 million. The increase in total stockholders’ equity related to net income of $14.3 million, partially offset by the dividends to common and preferred stockholders of $6.8 million and an increase in accumulated other comprehensive loss of $2.3 million as a result of reductions in the fair value of securities available-for-sale.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Capital ratios remain strong with total risk-based capital at 15.90% and a tier 1 leverage ratio of 10.89%. The following table sets forth our regulatory capital ratios at December 31, 2019 and the previous four quarters.” data-reactid=”87″>Capital ratios remain strong with total risk-based capital at 15.90% and a tier 1 leverage ratio of 10.89%. The following table sets forth our regulatory capital ratios at December 31, 2019 and the previous four quarters.

December 31, 2019 capital ratios are preliminary,

Credit Quality

 

 

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

 

December 31,
2018

Asset quality information and ratios

($ in thousands)

Delinquent loans held-for-investment

 

 

 

 

 

 

 

 

 

30 to 89 days delinquent

$

 

 

32,873

 

 

$

 

 

39,122

 

 

$

 

 

34,938

 

 

$

 

 

44,840

 

 

$

 

 

26,684

 

90+ days delinquent

 

24,734

 

 

 

17,220

 

 

 

17,272

 

 

 

14,623

 

 

 

13,846

 

Total delinquent loans

$

 

 

57,607

 

 

$

 

 

56,342

 

 

$

 

 

52,210

 

 

$

 

 

59,463

 

 

$

 

 

40,530

 

Total delinquent loans to total loans

 

0.97

%

 

 

0.88

%

 

 

0.78

%

 

 

0.79

%

 

 

0.53

%

Non-performing assets, excluding loans held-for-sale

 

 

 

 

 

 

 

 

 

Non-performing loans

$

 

 

43,354

 

 

$

 

 

45,169

 

 

$

 

 

28,499

 

 

$

 

 

27,739

 

 

$

 

 

21,585

 

90+ days delinquent and still accruing loans

 

 

 

 

 

275

 

 

 

731

 

 

 

470

 

Other real estate owned

 

 

 

 

 

276

 

 

 

316

 

 

 

672

 

Non-performing assets

$

 

 

43,354

 

 

$

 

 

45,169

 

 

$

 

 

29,050

 

 

$

 

 

28,786

 

 

$

 

 

22,727

 

ALLL to non-performing loans

 

132.97

%

 

 

139.31

%

 

 

206.86

%

 

 

224.40

%

 

 

281.99

%

Non-performing loans to total loans held-for-investment

 

0.73

%

 

 

0.71

%

 

 

0.43

%

 

 

0.38

%

 

 

0.29

%

Non-performing assets to total assets

 

0.55

%

 

 

0.52

%

 

 

0.31

%

 

 

0.29

%

 

 

0.21

%

Troubled debt restructurings (TDRs)

 

 

 

 

 

 

 

 

 

Performing TDRs

$

 

 

6,620

 

 

$

 

 

6,800

 

 

$

 

 

20,245

 

 

$

 

 

5,574

 

 

$

 

 

5,745

 

Non-performing TDRs

 

21,837

 

 

 

14,605

 

 

 

2,428

 

 

 

1,943

 

 

 

2,276

 

Total TDRs

$

 

 

28,457

 

 

$

 

 

21,405

 

 

$

 

 

22,673

 

 

$

 

 

7,517

 

 

$

 

 

8,021

 

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Total delinquent loans increased $1.3 million in the fourth quarter to $57.6 million at December 31, 2019, due to $22.8 million of additions, offset by $7.8 million returning to current status and $13.7 million of principal payments or payoffs. The $22.8 million of additions includes a $9.0 million single family residential mortgage loan with a 38% loan-to-value ratio and a $5.0 million Camp;I loan in process of restructuring. Loans 90+ days delinquent includes single family residential mortgage loans, which account for 75% of the balance.” data-reactid=”95″>Total delinquent loans increased $1.3 million in the fourth quarter to $57.6 million at December 31, 2019, due to $22.8 million of additions, offset by $7.8 million returning to current status and $13.7 million of principal payments or payoffs. The $22.8 million of additions includes a $9.0 million single family residential mortgage loan with a 38% loan-to-value ratio and a $5.0 million CI loan in process of restructuring. Loans 90+ days delinquent includes single family residential mortgage loans, which account for 75% of the balance.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Non-performing loans decreased $1.8 million in the fourth quarter to $43.4 million as of December 31, 2019, due to the sale of $11.9 million of non-performing loans and $4.1 million of loans returning to performing status, offset by $14.3 million of performing loans being placed on nonaccrual status. The year end balance includes two large loans that comprise 54% of our total nonperforming loans, one is a $14.0 million shared national credit and the other is a $9.0 million single family mortgage residential loan, with a loan-to-value ratio of 38%. Aside from those two loans, nonperforming loans total $20 million, of which 48% relates to single family residential mortgage loans. Of the $43.4 million non-performing loans at December 31, 2019, $17.7 million relates to loans in a current payment status.” data-reactid=”96″>Non-performing loans decreased $1.8 million in the fourth quarter to $43.4 million as of December 31, 2019, due to the sale of $11.9 million of non-performing loans and $4.1 million of loans returning to performing status, offset by $14.3 million of performing loans being placed on nonaccrual status. The year end balance includes two large loans that comprise 54% of our total nonperforming loans, one is a $14.0 million shared national credit and the other is a $9.0 million single family mortgage residential loan, with a loan-to-value ratio of 38%. Aside from those two loans, nonperforming loans total $20 million, of which 48% relates to single family residential mortgage loans. Of the $43.4 million non-performing loans at December 31, 2019, $17.7 million relates to loans in a current payment status.

Allowance for Loan Losses