Good day, ladies and gentlemen and welcome to the Banc of California Inc., Third Quarter 2014 Earnings Call. My name is [indiscernible] [0:00:13] and I will be your operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions). I would now like to turn the conference over to your host for today’s Mr. Tim Sedabres, Director of Investor Relations with the Banc of California. Please proceed.

Thank you and good morning everyone. Thank you for joining us today for today’s third quarter 2014 earnings conference. With me today on the call is Banc of California's President and Chief Executive Officer, Steven Sugarman; Chief Financial Officer, Ronald Nicolas; and Chief Risk Officer, Hugh Boyle. I'd like to remind everyone today that today's call is being recorded and a copy of the recording will be available later on our Company's website under the Investors section. We’ve also furnished a presentation that management will reference on today's call and that presentation is also available on the website under the Investor Relations section. Before I turn it over to Steve, I'd like to remind everyone that as always, elements of this presentation are forward-looking and based on our best view of the world and our businesses as we see them today. Those elements can change as the world changes, please interpret them in that way. The forward-looking statements are outlined on Slide 1 of today's presentation which apply to our comments today. We will provide an opportunity for Q&A at the end of the presentation. And with that, I'll turn it over to President and CEO, Steven Sugarman.

Thank you, Tim. I'd like to welcome everyone to Banc of California's third quarter 2014 earnings call. Banc of California continues to make strong progress in building California's bank, the leading full-service bank catering to California's diversed private businesses, entrepreneurs and homeowners. We've now successfully grown our business organically and through strategic acquisitions and we will be greater than $5.5 billion in assets pro forma with the close of the Popular branch acquisition, which we expect to be next Friday. This is a significant milestone for our company. Next week we will reach the threshold level of the scale required to drive robust returns on capital for our shareholders. We've been able to achieve our growth while maintaining our discipline to underwriting standards and strong governance in a controlled environment. As we look forward, we'll remain confident in the trajectory of Banc of California, and our ability to achieve our long-term operating targets. I'd now like to turn to third quarter results, which demonstrate steady progress towards achieving our financial targets. Let me begin by providing a few key highlights from the quarter. First, the company earned $0.31 per share on a fully diluted basis. Second, the company earned a 13% annualized return on tangible common equity. Third, the company earned a 1% ROAA return on average assets. Fourth, the company finished the quarter with $4.5 billion of total assets and approximately $5.5 billion of pro forma assets inclusive of the pending Popular Community Bank acquisition. And fifth, the company has secured the common equity and needs to fund its business plan for the foreseeable future. Importantly during the second quarter, we saw strong underlying performance across our business, as both our traditional banking operations, our mortgage banking operations and our registered advisory – investment advisory business, each have strong revenue and financial performance. I'm particularly thankful to the work of Jeff Seabold and Ted Ray and their team helping to guide our bank home loans mortgage division through its restructuring earlier this year and having another strong quarter of financial performance and continued origination growth. We remain enthusiastic about our acquisition of the Popular branch network, which is both strategically and financially compelling. This strengthens our footprint in Los Angeles and Orange County and enhances our ability to serve the fastest growing and where we believe to be the most attractive market segments in our territory, the Latino segment. We think Banco Popular, our community partners and our regulators, each of who's efforts have enabled us to achieve our previously stated goal of our fourth quarter close. Now I will turn it over to Ron Nicolas, our CFO, to discuss the third quarter in more detail.

Thanks, Steve and good morning, everyone. I will be directing my comments to the supplemental presentation that accompanied our release focusing primarily on the comparison to the second quarter of 2014 starting with the highlights for the third quarter on slide two. Today, we reported net income of $11.2 million and net income to common shareholders of $10.3 million or $0.31 per share, per diluted share with an average return on tangible equity of just over 13%. We continue to experience strong loan growth during the third quarter, with total loans increasing by a $141 million or 4% from the second quarter. Originations remained strong during the third quarter in both residential mortgage and commercial and particularly on multi-family. On a year-to-date basis, we have originated almost $3.8 billion in total loans punctuating the strength of our origination capability. Equally deposits grew as well during the third quarter by $284 million or 8% compared to the prior quarter commensurate with our – funding our loan growth. Net interest income expanded by 7% from the second quarter driven by an increase of the average interest earning assets of $370 million compared to the second quarter. Our consolidated net interest margins finished the quarter at 3.58%, down from 3.7% at the second quarter. As we guided during the second quarter, our net interest margin compressed during the third quarter as we deployed capital into shorter duration assets and grew our securities book by $89 million on average compared to the prior quarter in advance of closing the Popular transaction. Non-interest grew by $8.7 million compared to the second quarter. And was largely driven by an increase in net gain on sale of loans, up on a $50 million seasoned SFR pool sale, as well as stronger fee income from the palace age…

Thank you, Ron. I will spend a few minutes on asset quality and then touch on methodology enhancements to our ALLLmodel and the integration of Popular Community Bank’s California loans and deposits. On Slide 13, we outlined our asset quality metrics. Total HFI loans grew by $110 million or 4.2% in Q3, reflecting strong growth across most of our business channel. Two notable exceptions this quarter were non multi-family commercial real estate and construction loans, which experienced a 3.3% decline in the quarter, largely due to maturities, pay-offs and a lower short-term origination emphasis in front of the integration of Popular Community Bank’s largely CRE and C&I portfolio. Single family HFI residential mortgages also declined quarter-over-quarter by 1.7% reflecting our business practice of holding most of our current residential mortgage production in held for sale status. Consistent with one of our central themes in our strategic plan to diversify our loan portfolio and business platform, we are scheduled to close on approximately $1.1 billion in loans and deposits representing Popular Community Bank’s California portfolio. The acquisition of these loans quickly repositions and diversified Banc of California's loan portfolio and reduces the bank's historical reliance on mortgage banking revenue. In addition to the acquired loans, our internal loan generation capabilities continue to be robust. A particular note this quarter is the growth in our multi-family and leasing businesses. As a result of our diversification initiatives as of September 30th, single-family residential mortgages that fall into 43.9% of total HFI loans down from 46.6% on June 30th. Correspondingly, total commercial loans registered at 50.25% of total loans on September 30th. On our asset quality advantage point, all of our credit risk metrics improved quarter-over-quarter. This quarter's improvement is a result of a number of factors, but two were predominant. First, earlier this…

Thank you, Hugh; and thank you, Ron. Now turning to slide 14, I'm pleased with the operating performance of the company over the last year since much of the senior management team at our subsidiary bank has been restructured. As you know since the fourth quarter of last year, almost all senior executive positions at our Bank have been newly appointed. On Slide 14, our progress towards our publicly disclosed financial targets since that time. We continue to make very good progress towards achieving these targets including a year-over-year increase in net income of approximately $28 million compared to the four quarters prior to this restructuring. Importantly, our efficiency ratio also continues to come down. The marginal efficiency ratio for the quarter compared to the prior quarter was 62% and excluding the $2.4 million of non-recurring expenses the marginal quarterly efficiency ratio was approximately 41%. We believe this range is consistent with the long-term efficiency ratio, investors can expect for future growth. With respect to return on average assets and return on average common equity – tangible common equity, we were pleased with our progress towards to achieving our goals during the quarter. We expect the full earnings power of our franchise to continue to be demonstrated as we move into 2015 following the closing of the Popular Community Bank acquisition. That now completes our prepared remarks this morning. Operator, we are now ready for questions.

(Operator Instructions) Your first question comes from the line of Andrew Liesch, Sandler O'Neill & Partners. Andrew Liesch – Sandler O'Neill & Partners: Could you guys hear me?

Yes, we received now Andrew. Andrew Liesch – Sandler O'Neill & Partners: Okay. So my first question, just looking at the mortgage banking line and what rates have done over the last couple weeks, have you seen an increase in refinance activity in the last couple of weeks?

Yes. Andrew Liesch – Sandler O'Neill & Partners: Could you elaborate beyond that? I mean, is $27 million like a good run rate we should expect for the fourth quarter. I mean, I would imagine that there is some seasonality here that that will be come down a little bit in the fourth quarter?

There is typically a seasonality in the fourth quarter. Many industry folks suggests that fourth quarters can see decline of up to 30% or so in terms of production volumes. And I wouldn't imagine we're immune from that. That being said, we traditionally have a higher percentage of purchase volume in our business than average. With the recent activity in the interest rate market and just the economy, as a whole, the fourth quarter gotten off to a start that has not reflected that decline in volumes and has been very positive. The real test for the fourth quarter will – is often between that Thanksgiving and Christmas season, so it's still premature to hone in on the full quarterly effect. But as we say here today, the fourth quarter has been a very positive, cut off to a very positive start. Andrew Liesch – Sandler O'Neill & Partners: Gotcha. And then the salaries and benefits line, that was up a couple of million. It seems like only a little bit of that was from – a little bit of the increases from variable comp expense. If mortgage does fall there, I mean, should we see a decrease in that line item in the fourth quarter?

Yes, our non-interest line item is very correlated to mortgage production volumes. That's a meaningful part of our overall full-time employee base. And the variable expenses within that line item do rise and fall with mortgage production. So it is important to look at efficiency ratios overall in the marginal efficiency ration with our growth, as I discussed in my prepared remarks, in order to evaluate our expenses as increased volumes would typically be a good thing, but it would be associated with rising compensation expense within the mortgage division. Andrew Liesch – Sandler O'Neill & Partners: Then the $3.8 million or so of the other like – the BSA and the Sarbanes-Oxley audit, are those expected to continue at the same rate?

And I believe there are few things that Ron discussed within that $3.8 million category. One is, some of the new locations that are coming online here. Those expenses other than the construction portion of them would expect to continue. And then we've had some elevated expenses from accounting and Sarbox, which through the end of the year will continue. That being said, a lot of the extra activity within accounting stocks and other parts of professional fees in the fourth quarter will be part of our prior guidance relating to costs associated with the transaction and are consistent with all kind of the transactions when you go through a lot of these mechanics on the accounting and operational side. Andrew Liesch – Sandler O'Neill & Partners: Okay. Thanks for taking my questions.

Thank you.

Your next question comes from the line of Jackie Chimera with KBW. Please proceed. Jackie Chimera – Keefe, Bruyette & Woods, Inc.: Hi. Good morning, guys.

Good morning, Jackie.

Good morning. Jackie Chimera – Keefe, Bruyette & Woods, Inc.: Looking to the held for sale portfolio, and maybe I have this incorrect in my notes, but I feel like that the last couple of quarters you've been guiding to that portfolio coming down as sales outpaced originations and that doesn't seem to be happening. What's causing that?

I think both sides of the equation have caused that. And I think that your recollection is correct. This past quarter, our sales and our originations were pretty close. But the volume of sales were a little bit below our expectations relating to some delayed transactions that we hope you will see are reflected in the fourth quarter as we move forward. And then secondly, we continue to see very robust loan demand for the products that we offer. And so our demand continues to be very good on the loan side and on the – for sale side, we just saw some delays and some portfolios that we would hope to have sold. Jackie Chimera – Keefe, Bruyette & Woods, Inc.: When you look at the portfolio and I know there is about 80% jumbo right now, is there a level of jumbo and then single-family loans that you're guiding to or is it a particular mix that you'd like to see in that portfolio from an internal standpoint?

Yes, I think we've given guidance that we'd like to see a single-family loans in our portfolio, represent about a third of our overall interest income. And if you look to slide nine in the deck, where we're very proud of the fact that our bank has now represented by a majority of commercial loans, I believe, for the first time. And we continue to see our commercial loan growth outpacing our single-family growth, in particular in the HFI category. And so, we continue to drive our overall income mix to a more diversified and more commercial focused loan portfolio. Jackie Chimera – Keefe, Bruyette & Woods, Inc.: So is that fair to assume then that over time an understanding that these sales are not as easy as just your typical conforming single-family sales that the jumbo will come down; in the held for sale portfolio, single-family will be about a third, jumbo will remain about two-thirds and then it'll just be more consistent going forward.

I think it's fair to assume that, yes, our jumbo sale process continues to improve every month. And I think that there is and I'm not concerned about the ability to sell these loans or the ability to find very profitable and good counter parties. We're seeing a lot of interest and appetite for our loans that are – what we believe to be attractive pricing, but yes, it's a little bit less standardized on the process. There will be certain peaks and valleys in it, but over time we'd like to see our loan sales, generally match our loan originations in the held for sale category (technical difficulty). Operator, is there Brett available?

Yes. Brett Villaume – FIG Partners: Hi, you there?

Sorry, it looks like there is some trouble with the line, but I can hear you now. Brett Villaume – FIG Partners: Okay. Terrific. Good morning. How are you?

Good. Brett Villaume – FIG Partners: I wanted to ask on the net interest margin. If you guys can identify an amount that was attributable to yield accretion due to acquired loans?

In terms of the current quarter? Brett Villaume – FIG Partners: Yes, sir, 3.58%. Is there – perhaps like a basis point contribution, which you can identify?

We don't have that number available here. For our acquired loans the vast preponderance of them and the early material part is within our PCI and SOP-03-3 category, which you'll recall as a mark-to-model category, given the meaningful discount, we bought those loans at, it's a little bit different than what you might find sometimes on the acquired portfolio, but within 10Q and you’ll find our accretable yield on number, which is – which reflects the anticipated value of the loans over the carrying value of the loans and that number is a little bit over $90 million. Brett Villaume – FIG Partners: Okay. That's helpful. Thank you. And then I wanted to ask you, you've mentioned that multi-family growth was particularly good this quarter. Do you have a ballpark figure for me about what kind of rates those were being added at?

Yes, the multi-family growth comes in around 4%. So the biggest variable on that product is duration. As we look at the interest rate markets and their credit curves, we actively manage kind of the duration which were originating those products. So as we shorten our duration that's where you could see some effect of reducing the average yield on a product like the multi-family. Brett Villaume – FIG Partners: Okay. And finally just on the valuation allowance of the DTA, do you have any expectations on the timing of when that could potentially be brought in, if you care to comment?

Sure, I mean we evaluated each quarter and with a meaningful transaction like the Popular Community Bank branch acquisition, which we expect to close next week, it’s prudent to evaluate it following the close and to evaluate kind of whether the anticipated additional earnings that we're projecting becomes cognizable to the extent that will happens, our target termination would probably change as we became confident that the acquisition puts our business at a scale to drive kind of the profitability that we believe it well. Brett Villaume – FIG Partners: Thank you, Steve.

Your next question comes from the line of Kevin Reynolds with Wunderlich Securities. Please proceed. Kevin B. Reynolds – Wunderlich Securities Inc.: Thank you. Good morning, Steve. How you're doing?

Good morning, Kevin. Kevin B. Reynolds – Wunderlich Securities Inc.: My question is – good quarter and all. And I think you guys have made a very good progress last couple of quarters and I was just thinking with the branch deal closing here and you may have answered part of this already, but as the phone's been cutting out, so I apologize. But with this deal closing in November, I know you get passed that $5 billion threshold and on a quarterly basis your ROAs at 1%, but I know there are some moving parts here this quarter. Are you – where you need to be after the branch acquisition just sort of live ended the financial targets that’s you have out there longer-term as the business kind of normalizes out there? Or are there other things that you need to do, other changes to the bank maybe acquisitions, divestitures, et cetera, balance sheet that would get you to the point where – I know there is always going to be an improvement process going on, but I'm just sort of the bigger picture and pieces of the puzzle. Where they need to be after this branch acquisition closes?

I think the answer to that is, yes. From a capital perspective, from an absolute size perspective and from a mix perspective, we feel very good that this acquisition gets us to where we need to get to begin to achieve our financial targets. That being said, it is dependent on our operational focus and excellence, it's something that we spend a lot of time working on here and there are improving things around here. And as you hypothesized in your question, as we move through 2015, our expectation is that you’ll see kind of this constant progress towards each of our key financial targets as there is integration and operational initiatives that they would come on the heels of the technical close, but I think beginning in the first quarter of next year and improving each quarter thereafter would be our target and having our shareholders begin to, on a recurring and consistent basis, see achievement of our financial targets is our number one goal. Kevin B. Reynolds – Wunderlich Securities Inc.: Okay. Thanks a lot and most of my other questions have been answered.

There are no further questions in queue.

Well, thank you for everyone's who have dialed in this morning. I understand there was some difficulty with the phone line. If anyone has further questions, they can reach at Tim to get them to answer we appreciate your participation this morning.

Ladies and gentlemen that concludes today’s conference. Thank you for your participation. You may now disconnect. Have a great day.