Hello, welcome to the conference call to discuss Banc of California and PacWest merger and second quarter earnings. All participants will be in listen-only mode. I would now like to turn the conference call over to Mr. Jared Wolff, Banc of California's Chairman, President, and Chief Executive Officer. Good afternoon, thank you for joining us. With me on the call today is Joe Kauder, the new CFO of Banc of California, and Paul Taylor, Kevin Thompson, and Bill Black from PacWest. Each company is going to provide a brief review of their second quarter financial results with more limited commentary than usual, so that we can spend the majority of the call discussing the merger that was announced today. Let me start off by saying how thrilled we are to announce this transaction. We are very excited to discuss the tremendous benefits to stockholders, clients, communities, and colleagues that this merger will bring. The transaction will result in the third-largest bank headquartered in California, with day one tangible book value per share accretion and significant EPS accretion in 2024, when expense savings have been realized. The transaction is accompanied by $400 million of capital from two very sophisticated bank investors, which will accelerate the transformation of the combined company. Paul and his team have done an outstanding job transforming the balance sheet in a short amount of time through the initial restructuring efforts they have undertaken. Paul and I are both committed to making this successful, and I know this will be a powerhouse franchise. We have worked extremely closely to bring this deal together, and it's going to be highly successful. Let me turn it over to Paul. Thank you, Jared. Good afternoon, everyone. I wanted to start off by saying what a great job Jared has done with the Banc of California. He took over bank a few months before I took over Opus Bank, so we've known each other for many years. Having turned around a few banks myself, I've been impressed with the transformation he has led at that institution in a short period of time. With that backdrop, it makes me excited about what's to come with this combination. This is a great deal. With very compelling economics, the ability to reposition the combined balance sheet and set the stage for growth. We are clearly better together. I believe this merger will be beneficial for all of our stakeholders, with clients having access to an expanded set of products and services, employees having more opportunities for career advancement as part of a larger institution. The merger creates a premier California banking franchise, which will be well-positioned to capitalize on market opportunities and broaden the channels and customers it serves through increased scale and expanded product offerings. This is an opportunity to assemble a world-class team from both banks. I would like to thank of the hard work people at PacWest, that they do every day, and they've done through this year, and they will continue to do so in the years to come in the new combined organization. With that, I will turn it back to Jared. Thank you very much, Paul. I'm now pleased to introduce Joe Kauder, our new CFO. As you know, we conducted a national search and saw many, many talented candidates. Of course, he stood out on top. I know you've all seen his background, having served in very senior finance positions at Wells Fargo for a long period of time, including as CFO of their wholesale bank, which had hundreds of billions in assets. Joe just started his third week on the job. He couldn't have come at a more exciting time. He's been instrumental in bringing this transaction together. We're certainly grateful to have him here. Before turning it over to Joe, I really do want to thank our Deputy CFO and Chief Accounting Officer, Ray Rendon, who did a truly outstanding job as Interim CFO. Thank you very much, Ray. Let me now turn it over to Joe. Thank you, Jared. Of course, I'm very excited to be here at Banc of California. Having spent my entire career at much larger organizations, I've been highly impressed with the caliber of talent at Banc of California, as well as the culture that exists that is well-grounded in banking fundamentals and delivering high-quality service to clients. It's been a fantastic and exciting start. Let me turn to a few comments about the quarter's financials. Our earnings release and investor presentation provide a great deal of information, so I will limit my comments to some areas where additional discussion is warranted. Please feel free to refer to our investor deck, which can be found on our investor relations website, as I review our second quarter performance. Unless otherwise indicated, all prior period comparisons are with the first quarter of 2023. Our net income for the second quarter was $17.9 million, or $0.31 per diluted share. On an adjusted basis, net income totaled $18.4 million for the second quarter, or $0.32 per diluted common share, when net indemnified legal costs are excluded. This compared to adjusted net income of $21.7 million, or $0.37 per diluted common share for the prior quarter. Overall, our second quarter performance was fairly straightforward, with loan growth in core C&I and warehouse, and improved asset margins driven by loan and securities repricing into higher rates, and our deposit balances remained stable. Our net interest margin decreased 30 basis points from the prior quarter to 3.11%, largely due to the impact of the higher levels of cash that we carried during the first two months of the quarter in response to the recent banking turmoil. The cost of the excess liquidity in the quarter was 12 basis points, and we saw a strong NIM recovery in June, subsequent to repayment of the associated FHLB and FRB advances. Our overall earning asset yield increased by 21 basis points to 5.20%. Our average loan yield increased 21 basis points to 5.28%, which was largely attributable to variable rate loans in the portfolio continuing to reprice, higher rates on new loan production, and the increase in warehouse line balances, which is one of the highest yielding asset classes in the portfolio. The average yield on securities increased 17 basis points to 4.83%, mainly due to CLO portfolio resets. Our total cost of funds increased by 52 basis points to 2.20%. Our average cost of deposits was 167 basis points for the second quarter, up 45 basis points. However, compared to the average fed funds rates, which increased 48 basis points over the same time period. The net interest margin drivers page in the investor presentation deck further illustrates this information. Our non-interest income decreased to $1.8 million from prior quarters, primarily due to the inclusion of certain non-recurring items in the first quarter, including recovery of a loan acquired in the Pacific Mercantile transaction and the timing of gains recognized on the CRA investments. Excluding those items, the other areas of non-interest income were relatively consistent with the prior quarter. Our adjusted non-interest expense decreased to $825,000 from the prior quarter, as the full benefit of cost savings from the headcount reduction made last quarter were realized and more than offset the continued investment in other areas of the company, such as our new payments processing business. Turning to our balance sheet, total assets were $9.4 billion at June 30, a decrease of approximately 7% from the end of the prior quarter, which was largely due to the reduction in excess liquidity held in cash and a corresponding reduction in FHLB and FRB borrowings. Our total equity decreased by $1.9 billion during the second quarter, as $18 million in net earnings were offset primarily by capital actions, which included both common stock dividends and the repurchase of approximately $16 million of our common stock. Our total loans increased approximately $102 million from the end of the prior quarter, primarily due to increases in our core C&I and warehouse portfolios. Our total deposits decreased $81 million from the end of the prior quarter, due primarily to lower interest-bearing checking and non-interest-bearing deposits, partially offset by higher certificates of deposit. After an initial decline, total deposits increased as we moved through the quarter, and our end-of-period balances were $102 million higher than our average balances in the quarter. Importantly, our non-interest-bearing deposits were 36% of period-end balances. As noted in our earnings release, we had substantial inflows of new deposits from new client relationships. Our credit quality remained solid in the second quarter. We had increases in both delinquent loans and non-performing loans. This was largely due to our SFR loans, which are well reserved for and have low loan to values. We view the loss potential as remote. We recorded a provision for credit losses of $1.9 million, which included a $1.7 million provision for credit losses, which was largely to replenish the reserve for charge-offs of a loan acquired from Pacific Mercantile and other small C&I loans. Our allowance for credit losses at the end of the second quarter totaled $84.9 million, compared to $8.9 million at the prior quarter. Our allowance to total loss coverage ratio stood at 1.19%, compared to 1.27% at the end of the quarter. At this time, I will turn the call over to Kevin. Thanks, Joe. At the beginning of the year, we announced a renewed strategic plan to focus on our core community bank franchise and to de-emphasize non-core businesses. We accelerated these efforts during the second quarter in light of the turmoil in the banking market. We're very proud that we were able to execute on the sale of our national construction loan portfolio, selling $2.6 billion of loans and $2.3 billion of unfunded commitments at a discount of 4.5%. We also sold $2.1 billion of lender finance loans and $200 million of unfunded commitments at a 3% discount, with another $1.1 billion of unfunded commitments to be transferred over time to the buyer as funding occurs. Since the beginning of the year, we also wound down our civic operations. We sold $521 million of funded and $24 million of unfunded commitments of the civic loan portfolio this quarter. As a result of this divestiture, we also anticipate annualized compensation savings of $53 million and other expense savings of $17 million. As part of our efforts to improve our operational efficiency, we have closed and subleased a number of our facilities. We're simplifying and improving our business processes, we are consolidating contracts, and we are working to reduce expenses around the company. The swift actions of our team this quarter resulted in increasing our capital and improving our liquidity position. We are very pleased that our deposit base stabilized in the quarter and has now begun to grow. The loan-to-deposit ratio decreased to 81%, with immediately available liquidity of $18 billion, and a coverage ratio of uninsured deposits of 335%. We are holding a large amount of cash on the balance sheet at the end of the quarter, much of which we plan to use to pay down wholesale funding. Our CET1 capital ratio increased dramatically from 9.21% to 11.16% in the quarter. The diluted earnings per share was a loss of $1.75 in the quarter. Adjusting for one-time items associated with loan sales and restructuring, the adjusted earnings would have been $0.22 per share, which is just ahead of analyst estimates for the quarter. We are very proud of the PacWest team members who bring passion to their work every day as we serve our loyal customers and communities. With that, I'll turn the call back over to Jared. Thanks a lot, Kevin. We're now excited to discuss the highly strategic merger and capital raise we announced this morning, or I should say this afternoon. We've provided a great deal of information regarding the transaction in the investor deck that was published today. I'm going to spend a few minutes discussing the highlights of the merger. The merger of Banc of California and PacWest is a transformational combination and a unique opportunity to deliver significant value to all of our stakeholders. When I joined Banc of California as CEO nearly four and a half years ago, we had to undertake our own restructuring and journey to build a relationship-focused business bank that would prioritize three things. First, a high level of non-interest-bearing deposits and core deposits. Two, a healthy level of capital, and three, low credit noise. We set out to do this by being best in class, delivering great deposit strategies and lending to businesses in our footprint. We achieved those three objectives and completed the transformation at Banc of California faster than most had expected, and many would say with better results in terms of deposits, capital, and credit quality. As a result, the work we have done put us in a position to enter into this transformational merger with PacWest that will create the leading commercial bank in California with strong, well-capitalized, and a highly liquid balance sheet. We believe this transaction is highly compelling for both company shareholders. In addition to creating the leading California franchise, the combination bolsters capital and liquidity, is highly accretive to EPS and tangible book value, results in attractive profitability, and has limited execution risk, given that significant cost savings opportunities and the familiarity between the two organizations. Our combined strategy will continue to focus on in-market relationship banking, with a primary objective of providing superior level of customer service, expertise, and robust treasury management solutions. As both Banc of California and PacWest have demonstrated, providing superior treasury management services paired with lending expertise will enable us to attract low-cost commercial deposits that we utilize to fund high-quality lending opportunities. On a combined basis, we will be the third-largest commercial bank headquartered in California, which is absolutely one of the most attractive banking markets in the country. As we all know, over the past 18 months, the competitive environment in California has changed dramatically. During this time period, we have seen many other banks either completely exit or significantly pull back from California. As a result, there is a sizable opportunity for a skilled commercial bank with a high level of service and expertise to capitalize on this disruption by adding clients and increasing market share. As a larger institution with increased scale, we will have even more resources to invest in technology, continue to attract the best talent, and further elevate the client experience, enhance overall efficiencies, and support our communities. Warburg and Centerbridge, two highly sophisticated bank investors, have signed commitments to invest $400 million concurrently with the closing of the transaction. The merger and concurrent capital raise will enable us to take advantage of several strategic actions designed to create a very strong balance sheet and enhance the capital and liquidity profile of the combined institution. These actions include selling liquid assets and utilizing excess cash to pay down $13 billion of wholesale funding. We have de-risked these transactions by entering a number of hedges to protect the balance sheet and pricing through close. These actions will reduce the wholesale funding ratio of the combined institution to below 10%, while maintaining 8% cash to assets and 10% CET1. It will also enhance our funding profile with a pro forma loan-to-deposit ratio of approximately 85% and a deposit base that will be comprised of 90% core deposits and 30% non-interest-bearing deposits. This transaction is immediately accretable to tangible book value per share and 20%+ accretive to EPS on 2024 expected EPS of $1.65-$1.80. We believe there is low execution risk in achieving these projections, as most of the upside will be driven by the balance sheet repositioning and reduction of PacWest non-run rate expenses. We estimate the combined company will produce a run rate return on assets exceeding 1.10% around the fourth quarter in 2024, when the expense savings have been achieved. Return on tangible equity of at least 13% and generate 100 basis points of capital annually. This does not include additional upside opportunities that we have identified but did not model. An important and particularly unique aspect of this merger is the high degree of familiarity that our two institutions have, which we believe significantly minimizes the execution risk. One of our guiding principles in M&A is to only do deals where we have a high degree of confidence in the success of the transaction, and this is certainly in the case with this transaction. As most of you know, I previously served as president of Pacific Western Bank, and during my 12 years plus there, I helped to lead more than 20 acquisitions. We also have a number of other executives at Banc of California who held leadership roles or worked at PacWest, including our Chief Credit Officer, Bob Dyke, who was Chief Credit Officer at Pacific Western Bank. Accordingly, we know the culture of the organizations and the businesses that they operate. We know the true depth of talent that exists at the organization and have tremendous respect for their employees. During the diligence process and evaluation of the transaction, our ability to discuss issues on a deeper level was evident. We believe the high degree of familiarity and the foundation of trust will lead to a very smooth integration and enable us to effectively capitalize on the projected synergies for this merger that will enhance our ability to serve commercial clients and create additional value for shareholders of the combined company. With that, let me turn the call over to Paul. Thanks, Jared. I couldn't get off mute there. Sorry about that. Over the past few months, we have spent a great deal of time evaluating the best path forward for PacWest, we believe this merger is a tremendous opportunity for the company, our clients, our employees, and our shareholders. Over the last few quarters, we've laid out a plan to reduce our reliance on wholesale funding, increase capital, and improve profitability. This merger, meaningfully accelerates our standalone plan while putting the combined company into a position of strength within the market. With the increased scale, expanded capabilities, and robust capital and liquidity, we will be able to better serve the needs of our clients. Given the complementary nature of our franchises, similar cultures, shared value and vision, along with the senior management team, that will be a combination of executives from both companies. We believe that we will have a smooth integration that will enable us to quickly realize the synergies that we project for this transaction. Simply put, we believe this merger will be beneficial for all stakeholders, with clients having access to an expanded set of products and services, employees having more opportunities for career advancement as part of a stronger institution, and most importantly, long-term shareholder value being created to a greater extent than what we could believe we could create as a standalone PacWest. With that, Jared, I'll turn it back to you. Thanks, Paul. I would just like to add, it's been a real pleasure to work with you and the rest of the management team at PacWest through this process. It's been a truly collaborative process, and we couldn't be more excited to bring our two organizations together and begin realizing the benefits that we all anticipate for our stakeholders. We are fortunate to have attracted the most talented colleagues in banking and look forward to bringing them all together. Thank you to all of our colleagues for the tremendous dedication and hard work. Operator, we'd now be happy to answer any questions and open up the lines. Thank you. We will now begin the question and answer session. Today's first question comes from Matthew Clark with Piper Sandler. Please go ahead. Hey, good afternoon, everyone. Good afternoon. Maybe just first on the cost saves, the $130 million. It seems a little low to me, just thinking through, you know, what, you know, what legacy PacWest might have been able to extract from their franchise on a standalone basis. Can you just give us a sense for where that $130 million is coming from? Is it predominantly all legacy PacWest, or is there also some coming out of Legacy Bank? There's really two buckets for our expense savings assumptions. The first is there are temporary elevated expenses that exist at PacWest that they have identified, including higher FDIC assessment, consultants, and some legacy costs that will run for a little while, that have to do with the closing down of some of the businesses they've exited, including the run-off portfolio for Civic. Additionally, there's a lot of expense-saving overlap that we've identified for the combined company going forward. As a result, we believe that, you know, on the model, we model getting to a 1.90% expense ratio, which we believe is very conservative and very achievable. There isn't going to be more in there, Matthew, but that's what we felt comfortable modeling, and we like the output that's, you know, on a highly conservative basis. Okay. Kind of a related question. You guys have been under $10 billion, but PacWest has been above it for a while. Are there any investments you need to make to cross 10, or do you feel like you can leverage what PacWest has done? Well, we were over 10, as you mentioned previously. We have the infrastructure that really was there to build to a larger organization. I think between the two of us, we're going to be fine. you know, we're going to have a substantial transition leadership team and integration team combined of folks from both organizations. I think we'll be good there. Okay. Just the thinking kind of longer term and the strategic merits and kind of what you're left with after all this. Is it fair to assume that there won't be any national lending, once this is You know, once you're combined? Can you maybe speak to, I think, single-family resi, multifamily, it looks like, Legacy Bank is going to have some loan sales on that front and whether or not, you'll still be in that business. The, the heart of the combined company is going to be the community banking franchise. Paul and Kevin and the team have done a great job of building progress toward converting bank PacWest into a strong community bank with a couple other lending niches, but they had largely exited the national lending businesses already. Banc of California, at its heart, is a community banking franchise. We don't have any national lending businesses. These two franchises together are going to make a really strong partnership in California, in the markets that we continue to serve. There are some niches that we both have that we really like. We have some niches on the, you know, on the, on the deposit side. We have some interesting verticals that we use to gather deposits, and they do, too. They have a great HOA business that Alan DeTata leads. They have a fund finance and venture funding business that Sean Lynden leads, that are really strong. They're very low loan-to-deposit businesses with low credit. We believe that it's worth holding on to those businesses as long as we can live within our means and reduce concentration. You know, this bank pro forma day one is going to be 85% loan-to-deposit with very low wholesale funding, and I think it's going to be a, you know, a very strong franchise. We're going to make sure that we look to avoid the concentration risk that I think all banks experienced over the last several years. With the low wholesale funding ratio that we have, the capital we have, the excess liquidity, we're going to be well positioned to do that. Okay. You had another question there about SFR. Oh, right. As part of the restructuring of the balance sheet, we plan to sell. These are not, we've identified the assets that we may sell, but we have not determined which ones they will be, but we've put in place hedges to protect the likely outcome. It includes our SFR portfolio at Banc of California, our multifamily portfolio at Banc of California. Those are $1.8 and $1.6 billion, are available for sale securities and PacWest available for sale securities. In doing so, we're going to create a tremendous amount of liquidity and be able to pay down wholesale funding at PacWest and on the combined institution, ending with less than 10% wholesale funding at close. Neither of us originate single family today, so that was just, you know, purchases that we had done to add assets. In a low rate environment, I think those portfolios performed really well. In this design, we would sell them down and pay down borrowings. Okay, great. Then just on the merger charge, it looks a little high, but it includes the cost of hedging and deal-related costs and the capital raise. I mean, if you stripped out the cost of the capital raise and hedging, you know, what would that number look like, you know, relative to the deal value? It's about 1.5%-2% of the cost savings, which is where these things end up being and some comparable deals that we looked at. You're right, it's highly elevated because it has the costs associated with the capital raise as well as the hedging costs, which were substantial. Those two things combined were substantial. Okay. Were there any other bidders in this process, or was it just you two with for the most part? Well, there's going to be a robust description in the proxy about the background of the merger, but I think this combination is going to be fantastic, and we're excited to get it done. Okay, great. Thank you. Thank you. The next question comes from Chris McGraty with KBW. Please go ahead. Oh, great. Thanks. I just want to dig into the deposit assumptions for a moment. Slide 10 and slide 20 give a slightly different starting point for the core deposits. I guess what I'm getting after is if you combine the two companies' non-interest-bearing deposits, I think to get to that 30% mix, you're assuming some growth of NIBs from the second quarter. I'm interested in commentary there to start, please. Thanks. Yeah, I mean, there's going to be a little bit. We both know what we're expecting to do. We're expecting to you know, this is pro forma 9/30, because we expect to close late fourth quarter, early quarter one, so we based it on 9/30. The plan is to be approximately 30% non-interest-bearing, at close, and we hope to exceed that, of course. Okay. Then maybe a question on credit. You know, PacWest has historically had a little bit of volatility in the credit numbers, and you're not marking their balance sheet. Maybe a comment or two on how you see the portfolio today. I think there was a little bit of migration like banks in the second quarter, but just color on the assumed loss rates, maybe on a combined basis. Thanks. Sure. I'm happy to talk about the robust diligence we did and kind of what we're modeling going forward. Before we do that, Kevin or Paul, do you guys want to comment on the quarter at all? You bet. First, I'll mention, you know, we executed on a number of balance sheet restructuring initiatives, including selling national lending portfolios. As part of that, with our civic portfolio, since the portfolio had some, a little bit of credit deterioration, according to GAAP accounting rules, we had to count those losses on sale as a credit loss rather than a loss on sale. That shows up in our provision. To your point, Chris, it does create a little bit of noise in that provision, but those aren't true losses, charge loss in our mind. They're just losses on sale that happen to be in that geography. From a credit perspective, in the quarter, there are some ups and downs. Past due loans are down, our non-accruals are up because of some civic loans. Our special mentions are down, yet classifieds are up. Some of our normal ins and outs that we'll see over time. As a reminder, we did sell our national construction portfolio, which was very high credit quality, but I think adds even a better credit profile to the combined bank. I think it's important to mention on the civic portfolio that we've seen ever since our involvement in civic, you know, it'll push past dues. It'll, you know, they're more of a sloppy loan, for lack of a better term. They seem to always pay. It's just more of a slow pay. We're not, we're not concerned that there's a systemic trend or anything in that portfolio. Let me just jump in. All right. Yeah. Go ahead, Chris. No, no, keep going, Jared. I'm sorry to interrupt. Yeah, no problem. I mean, we did substantial diligence on each other, of course, but substantial diligence on the credit portfolio. I mean, those are the things that you got to really make sure you look at very carefully in these sorts of transactions because of the potential risk. First of all, I would say that PacWest has done an excellent job of de-risking their balance sheet and through the sales that they undertook. Not to say that those portfolios were necessarily risky, but they were the national lending portfolios that I think were larger loans, didn't generate deposits and put some pressure on the balance sheet. You know, had exposure even if there was no loss content. I think they've done an excellent job of reducing that risk, and the remaining loan portfolio is far more granular than it was before they started engaging in that. As it relates to Civic, it's, you know, $2 billion plus of loans that are in runoff that are primarily for rental housing. It acts more like a consumer portfolio, even though it's not. It's going to have some delinquency, but it pays. We've seen those transactions over time, and as I mentioned, we did very deep diligence. We brought in, you know, third parties, as did these very two sophisticated investors came in that put in a lot of money in this deal that's been committed. They did substantial diligence on both banks, we were able to leverage that as well. I think we both feel very comfortable about the credit portfolios of each other. Like I said, going forward, you know, the portfolio is gonna be more akin to the community bank lending that we both do, lending in market, with some opportunity to do other types of lending on a niche basis. It's not to say never is never, but I think at its core, this bank will be lending in its footprint primarily. We feel good about that. In terms of the coverage ratios, you know, we typically run $120-$125. PacWest is closer to, you know, 90 basis points. Obviously, we can't prejudge what the numbers are gonna be, but I can tell you from a modeling perspective, we assumed that we were gonna have a coverage ratio that was closer to ours than theirs. We're obviously gonna have to run this through CECL. There's plenty of extra support in the numbers for us to get there. Great. Maybe just one more. The $165-$180, I just wanted to confirm. That's a pro forma number, and I think that's a full year. I'm interested kind of, you know, the cadence of that as you get the savings. I think, correct me if I'm wrong, the $140 goes through the accretion, accretable yield. Is that life of loan, I assume, not just 2024? Just any color on the marks and the noise there. Thanks. I'm gonna let somebody else comment on the marks, who has a, you know, an advanced degree. In terms of the $165-$180, We thought it would be helpful to put out an estimate for 2024 estimated earnings. In terms of the cadence of getting there, obviously, expense savings are gonna, you know, you're gonna get the full year benefit at the end of the year, not earlier in the year. For example, you know, 18% of PacWest's facility charges, their costs associated with their facilities, 18% mature or expire at the end of 2024. Without any termination, you know, we'll have to assess whether we wanna terminate them early and pay some fee or just wait till they expire. It's stuff like that that we're gonna realize at the end of 2024. We do estimate that we think we're gonna get the full benefit of our savings estimates through the end of 2024. They'll be closed out by then. That $165-$180 is for 2024 estimated EPS. Hopefully, I gave you guys enough time to figure out what the accounting numbers are. Joe or Kevin. Joe, you want to take that? Yeah. I'd just like to clarify specifically your question. I guess the 140, the mark that it's slide 22, gets accreted back into earnings. Yeah. I guess the timing of that. That's. There's usually, yeah. Yeah, that's over six years. That's the core deposit intangible, that comes back in over six years. Pardon? The loan marks, if you think about it, most of those, the Banc of Cal loan portfolios we intend to sell, those will not be accreted back in to earnings. All the accretion is on the CDI. Okay. The only accretable yield is the one forward. Okay. Yeah. You have the non-PCD loans that will be accretable as well, and the 145 rate marks. Thanks. Okay. The next question comes from Andrew Terrell with Stephens. Please go ahead. Hey, good afternoon. Hey, Andrew. Jared, just quickly on the planned asset sales. Just to make sure, have the forward contracts you've put in place fully hedged for the potential of rate volatility between now and close? Can you discuss just the comfortability with any kind of discount you'd expect on the asset sales or maybe what's baked into the pro forma assumptions in terms of non-rate related discount? We have hedged for interest rate risk. That's right. I'm going to turn it over to Joe because he's the expert on the hedges, but we have hedged for interest rate risk, and we've accounted in our model for potential variation. Let me mention a couple things. The timing of the sales is something which is within our control. If there's a non-interest rate dislocation in value, supply and demand, we don't have to sell at that moment. We could sell later. Again, we're getting down to below 10% wholesale funding, but we could keep it higher if we wanted to, for timing purposes, to make sure that we hit the numbers that we are targeting in our projections. Joe, you want to walk through kind of exactly what we've done? Yeah. On our single-family loan portfolio, which is about $1.8 billion, we entered into a contingent forward sale agreement. It's contingent that if for some reason, the deal did not close, the contract terminates, and doesn't survive that event. The contract was right at, right on top of our mark on those assets, which was largely a rate mark. There's no incremental, you know, credit or spread really in there. On the rest of the balance sheet, you know, what we were hedging is the interest rate risk between now and close to protect the capital of the entity between now and the close of the transaction. Those were just interest rate options, which we used, you know, calibrated to the tenor of the appropriate portfolios so that we could make sure that we were protected. Understood. Thank you. Then on modeling assumptions, on page 13 of the slide deck, the 2.4% pro forma funding costs, does that just take the second quarter run rate funding costs for both companies and then back out the planned restructuring? Said another way, would not account for any incremental funding cost increase from here? I believe that's correct. It does take into account the current yield curve of projection using the current yield curve. Kevin, do you have any other perspective on that? I apologize. I missed that part. I don't know, what was the question? Just on the 240 pro forma cost of funds, does that assume any incremental funding costs or deposit cost increases in the back half of the year, or does it just use second quarter and then pro forma for? No, it does have the. Yeah, Joe's right. It has the forward curve in it. Oh. There's one expected rate hike. Okay. That's right. Jared, it sounds like, I mean, you made a comment earlier in the prepared remarks, just additional upside and maybe some additional earnings that you don't really include in the pro forma assumptions here. It sounds like expenses, you're fairly optimistic about achieving the expense saves that are being discussed in the presentation. I was just curious if you could talk kind of outside of that, other opportunities or areas you've identified that could be sources of earnings upside here. Well, look, in terms of being highly conservative, we were targeting an expense ratio that we thought was, you know, easily achievable. You know, PacWest has done a great job of de-risking the balance sheet, and when it had a standalone plan that had already identified both cost savings that were going to go away because they were no longer run rate, and then other cost savings that they thought would be more efficient, you know, in terms of how they would handle themselves as a franchise going forward. Layering on top of that with, you know, just the way you would do it in a normal merger, where you look at, you know, your core provider and all the other large expenses that, to run the business, it was pretty easy to get to a 190 number. I think, and 190 is, you know, I don't think that's exceptional, but it's good. I think, you know, 185 is probably, you know, and below that is where we would like to get to longer term. That's certainly on the expense side, we think there's a lot. On the growth side, you know, and on the revenue side, we were very conservative in our assumptions going forward. You know, looking ahead, I don't like pressing on the gas when I'm seeing brake lights, and the economy right now is slow. We're not projecting a ton of growth, you know, going into 2024. If you listen to what Powell says, he doesn't see hitting target inflation until 2025. It's, you know, we're all wondering when rates are going to come down, but we're not trying to get ahead of that. We just think that the economy is going to be slow. There's going to be some shrinkage and runoff in the portfolio. We'll have the opportunity to grow. I mean, this PacWest has not been lending as much as their probably demand has been because of the number of things that they've been doing. I think as a combined institution, we're going to have some opportunities to lend, but it's not going to be expansive unless the economy picks back up and the deposits are there to support it. 2025 is when we see growth starting. Historically, you know, we would run our bank with low single digits, but probably we would project, excuse me, high single digit loan growth and probably end up with low double digits, and PacWest was there, maybe higher, and there's no reason why this franchise can't do that, but we projected much lower growth. I would say that as you look at the overall model, I mean, that's got PacWest's forecast in there. Due to our liquidity issues we've had this year, I mean, just to sort of reiterate what Jared already said, is that, our growth is well below our demand. You know, there's a decision as to whether you do it with the economy and everything, but, it is demand is much, much higher than we have in the plan. Got it. Okay. Thank you for the questions, and congrats on the deal. Thanks, Andrew. The next question comes from Gary Tenner with D.A. Davidson. Please go ahead. Thanks. Good afternoon. Just a couple of points of clarification. On that slide 22 again, where you highlight the fair value marks, the $500 million pre-tax, $140 goes into earnings. Is that delta the multifamily and single-family discount that's locked in effectively on the sale at closing? Yes, because you're selling a number of the loan portfolios there, so those are less, are being accreted back into earnings. Okay. I just wanted to clarify that. Thank you. Secondly, on slide 12, where you note an additional $2 billion of cash generated at closing, just help me out with the mechanics of that cash generation? So You got PacWest. Go ahead, Jared. Go ahead, Kevin, please take it. Go ahead. Okay. PacWest, on our side, we do plan to sell some of our available-for-sale securities, after closing, as well as we'll have some excess cash. We both hold high levels of operating cash, we'll be quite as much at this level of balance sheet. That leaves us with $2 billion excess there at the end. Got it. Thank you. Actually, that question was answered. Guys, thank you for taking my questions. Thank you, Gary. The next question comes from Tim Coffey with Janney. Please go ahead. Thank you. Good afternoon, gentlemen. Good afternoon, Tim. Hey, Jared, given the talking about at the time of the merger approval, have you received any assurances that this can happen within that kind of time frame you've laid out? You know, we've said in the documents that we're looking for to close the transaction at the end of Q4 or early Q1. Of course, we previewed this transaction with the regulators, and based on those conversations and the specifics of this transaction, we believe that time frame is achievable. Look, we're not going to pin the regulators down. They have to go through their process, and that process is well laid out, but we believe that that time frame is achievable. Okay. Can you comment on how long ago you brought the regulators in? We have made the regulators aware of this process from a very early phase. Okay. It's fair enough. Then on going back to the $200 million pre-tax charge, does that include change in control? Both parties have a double trigger change in control. We've got a plug in there for severance that would be paid to people who are terminated as part of the deal. Most people don't have contracts, right? There's normal severance, but we have, you know, based on our estimates, numbers in that number. Okay. All right. Just can I get your thoughts on the venture banking business? Sure. Are you planning to establish any kind of concentration limits, in terms of customers or capital or things of that nature? Let me start off on the concentration limit topic generally, because I have very strong feelings about this. Let me say, without any pause, that I think the venture business is a great business, and the way that they do it, the way they do fund finance, I think they know exactly what they're doing, and they're doing it very, very well. Concentration is an issue in banking across all banks, and every bank has some level of concentration. You know, we all have these legal lending limits that say you cannot lend more to a single customer or a group of related customers above a certain% of your capital. There's no corollary on the deposit side, and we all need to live within our means. Make sure that we're not overly concentrated by customers, either on the asset or the liability side. I'm in favor of reducing concentration where it makes sense, and, you know, you can do it in a couple of ways. You can do it by making sure that they're time-based or have some contractual obligation so that they can't pull their money without giving you notice. You can convert, you know, liquid stuff into something that acts more like a time-based deposit. We do that with some of the larger deposits at Banc of California. They're money markets with institutions, but we have a contract with them, so if the money wanted to leave, it would be scheduled to leave out over time, and we can plan for it. Overall, I believe that, you know, concentration risk is something we have to manage throughout the entire bank, not just at, you know, Venture or HOA or, you know, or Community Bank or the San Diego region or the L.A. region or anywhere. We just have to manage it overall. You know, it's something that obviously we'll look at. I think PacWest would tell you they feel the exact same way, and that's something that all banks are going to have to manage better going forward. Mm-hmm. Okay. Then there's one last question. I think you're right on, Jared. Sorry. Sorry, Paul, please. Yeah, no, I think you're right on, Jared. Okay. Thank you. For Jared and Paul, any sense of how much customer overlap you have between your two institutions? I mean, you know, we haven't done the math, but anecdotally, we know that it's some. This is a massive market, so you're not going to have significant overlap because there's just too much business here. We do share some customers today, and we've done business together on a couple of customers. Of course, given my history at PacWest, where I really learned banking, and I again, I have such deep respect for the people I worked with there that are still there and those that have left. There are some customers that, you know, that we share. Okay. I spoke to one of our customers, right before this call, Jared. Oh, you did? Oh, great. Yep. Love it. Well, great. Thank you. Thank you very much. Those are my questions. Thanks, Tim. The next question comes from Kelly Motta with KBW. Please go ahead. Hi, congrats on the deal. Thank you, Kelly. I wanted to circle back on your outlook for deposits and your disclosures there. Jared, I know DDAs have been a focus for you, and you've kept them at a nice level. I do think that 30% of total deposits implies some slight growth, and I know you're working on some things with DeepStack and the HOA coming on. Just wondering, you know, what gives you confidence in being able to get to that 30% level, potentially, modestly growing those DDAs, and maybe any color around what you're seeing in terms of trends, both at your bank and at Legacy PacWest, would be very helpful. Sure. First of all, deposits at both banks have been highly stable. You know, we both experienced obviously different magnitude, but we both experienced, you know, kind of the initial shock and then, deployed strategies and stabilized deposits. Certainly for Banc of California, you know, I know what our pipeline looks like, and we brought in, you know, a lot of money from new customers, you know, this quarter and last quarter. We're doing it primarily through, you know, serving people with really high-value treasury, not high cost, but high-value treasury management solutions, which are primarily non-interest-bearing deposits. PacWest has always had an excellent franchise in terms of building a core deposit base, and for the longest time, they had a very high percentage of non-interest-bearing deposits. When I came to Banc of California, we were at 12% or 13% non-interest-bearing. We got it up to 40%. We're currently at 36% right now. Everything about the way that PacWest is set up and the way that we're set up will drive greater growth in non-interest-bearing deposits and low-cost DDA. It's just at the heart of both of our franchises. We'll make sure that we achieve that. Some of the tools that they have are fantastic. I mean, the HOA business that they've pulled together is really a strong business. I think it's going to do very well. The core community bank at PacWest is fundamentally underloaned. You have some really strong, you know, lending areas in L.A. and in San Diego, but, you know, you're in the central coast to other areas where they've got great loans, but really, really good deposits, and they're underloaned. Based on the prospects that I've looked at with them, and I've talked to many of the leaders at PacWest, who I know well, I think we both believe that deposit growth is something we're going to be able to do well. Remember, this franchise is going to be very dominant in the market that we're in. Not dominant from a HSR standpoint, but dominant in terms of, you know, we're going to be highly visible. There are some massive banks in this market, but when you cut back the top 250, and, you know, First Citizens is in there too. You know, if you look at the top four banks in terms of presence, you know, below the money center banks, First Citizens is first. We have the chart in the deck, but they're not based here. If you look at the banks that are based here, it's City National, East West, and us. I think all of us are going to be able to compete well against the money center banks and the larger banks to bring deposits over. Appreciate the color. I'll step back. Thanks, Kelly. The next question comes from Timur Braziler with Wells Fargo. Please go ahead. Hi, good afternoon. That was really short suspension of coverage, Timur. You're back? Yes, back and better than ever. Love it. You know, following up on the DeepStack commentary, I guess, how does this deal affect the rollout of DeepStack and that integration? Any kind of commentary you can provide on what this combination means for the magnitude of the DeepStack contribution? Yeah. First of all, we, you know, we're on track with DeepStack. We said that we would get it live, you know, at the end of second quarter or early this quarter, and that's happening. We've got, we've got customers lined up. We have our pipeline. We're going slow. As I mentioned, we're making sure we get all of the risk monitoring and transaction monitoring right. I like the progress that I'm seeing. We're up to 20 people plus. You know, we started with 11, so we've been able to build out the teams and do what we thought we would do. What's really exciting about this opportunity to combine is, you know, the businesses that PacWest have are gonna, are gonna thread really nicely with DeepStack. Whether it's HOA or the clients of their venture and tech businesses, they need a solution like this. They would love to be able to direct clients to an in-house solution as opposed to some third party. We both believe that this is gonna accelerate the progress for DeepStack. Again, we got to get the transaction monitoring right, and, you know, that plan is gonna continue through the end of this year. We're gonna go slow and make sure we get it right. As we talked about, we thought it would contribute meaningfully to fee income next year. You know, it'll be great to do it on a combined basis. Yeah. Then, you know, the decision to sell SFR in the multifamily books, the SFR sale seems to make quite a bit of sense. I guess I was a little surprised on the sale of the multifamily book, just given kind of the strength of that portfolio in the Southern California market. I'm just wondering kind of the rationale there. Then as you look at additional repositioning from PacWest standpoint, is this an indication that their restructuring is more or less complete, or is there anything else that you'd like to divest or maybe trim back on the loan side there? If you were to look at, you know, the loan portfolios of both banks and just decide, you know, what makes sense without looking at any other factors to sell, the top two things would be the single family and the multifamily. Multifamily are, you know, they're longer term fixed rate. They're transaction-based with low, you know, relationship deposits. Every bank has them in this market, but it's really easy to build back, and you're not, you're not giving up much, given the rate that those were on. You know, it's a transaction like this that allows it to happen. On a standalone basis, it would be a little bit punitive, but when you put two balance sheets together and you can create the opportunity to de-risk and kind of delever the lower-yielding portfolios, I think it's the perfect thing to shed. You know, it's not gonna affect relationships with clients. Like SFR won't either, the way Bridge stuff will. In terms of other things to, you know, look at exiting, I think PacWest has already done that, and they've left the roadmap. They've done the roadmap really, really well, you know, Civic is running off. You know, as we talked about, we don't think there's loss content there, you know, and if it is, it's remote. They've you know, every time there's kind of something that spikes up, they've got a third party that they've been able to lay it off on at pretty close to par. I think that they've kind of laid it out pretty well. Great. Then just lastly for me, looking at slide 14, the $155 million of other adjustments and run off, I just wanna make sure that's the loan sales, the security sales. Is there anything else embedded in that number, or does that comprise the entirety? I think it might have some other stuff in there. It would have some legacy PacWest. I'll just add, it would have some legacy PacWest portfolios that, we've wound down and de-emphasized, that we're winding down over time. Okay, great. Thanks for the questions, and congratulations on the deal. Hey, thank you very much. Thank you. Thank you. Welcome, welcome back, welcome back to coverage, I guess. Thanks. The next question comes from David Feaster with Raymond James. Please go ahead. Hey, good afternoon, everybody. Congrats on the deal. Thanks, David. Thank you. These types of transactions, obviously, look, they could be really financially compelling, but tough from a cultural and a personnel perspective. I know, Jared, you talked on this about how close the cultures are aligned, but I was hoping. You intimately know both of these, obviously, and you've done a lot of M&A in the past, but I was hoping you could maybe elaborate a bit on the cultural alignment, and then maybe just touch on some of the guardrails or strategies that you've put in place to help retain talent, lock up lenders, and just kind of ensure that seamless integration, and minimize disruption as you alluded to. Sure. Let me take the back half of that first. On, on the retention piece, you know, all of these transactions involved identifying what could be at risk and making sure that you put guardrails around that. I would say that this transaction is unique in that we structured it, so all restricted stock is staying outstanding and will continue to vest over time. We are not accelerating any restricted stock on either side of this deal. The people that have the restricted stock are people that, you know, obviously were given it initially because you wanted to keep them. We feel that there's already an embedded retention tool that exists, and we'll be looking at others. We'll be smart about it and make sure that we're judicious, we'll do what makes sense to protect the franchise on a go-forward basis. David, I cannot say enough about, you know, the uniqueness of this overlap and the familiarity that we both have with each other. I mean, I can start with, you know, Chris Blake, who is the President CEO of the community bank, and, you know, his key regional presidents that reports to him. We all work together. I mean, we're going back 20 years together. Bob Dyke was the Chief Credit Officer of PacWest, and then Chief Credit Officer of the bank. Brian Corsini, who's the Chief Credit Officer of PacWest, was there when Bob and I were there. He came out of Capital Source. He's a terrific guy. We all know each other very, very well, including, you know, his top lieutenants that are there, that are doing a great job on portfolio management and credit management. I mean, I can just go down the list because I can go down to the individual people. Also I would say that, you know, Matt and John have just really done an exceptional job over many, many years to build what I think was an exemplary franchise. While I understand that today people are looking at things and saying, "Look, this is different, it's changed dramatically," I have a different perspective, and it's not sympathetic. It's actual, which is that, you know, getting caught in the headlines could have happened to any bank, and, you know, a liquidity run could have happened to anybody. It wasn't because they had credit problems. It wasn't because they were bad managers. It was because somebody did a screen of, you know, venture deposits, and they came up on a screen, and they couldn't get out of the headlines. A lot of shareholders made a lot of money on that franchise for a very long amount of time. Fundamentally, though, today, I think the way that they've de-risked the franchise and moved it more toward a community bank and bolted on some pieces that are really good deposit generators, is gonna be a really good fit for us. In terms of, you know, just kind of day-to-day culture, I mean, we're very focused on relationship lending and a high-touch way to serve clients. I know this because we compete with them frequently on deals. You know, Southern California is fundamentally a real estate market. It's 70% real estate, 30% C&I. We've been able to diversify into a little bit more C&I than they have. They have a little bit higher concentration. One of the things that this deal does is it, you know, kind of balances out both of us and gives us a better mix overall in terms of loans and deposits, and I think the charts lay that out. I can go on and on about the cultural fit here. I don't think there's been a deal that. You know, I can't say that because there have been a lot of deals done. In all the deals that I've done, I've never seen one that has, you know, this amount of overlap and, you know, commonality between two institutions. Got it. That's helpful. I appreciate that color. Maybe just a quick question on the technology platform and the conversion there. Could you just touch on kind of the respective platforms and how you see those coming together? Obviously, technology's been a big initiative for you both, but I guess as you think about the core back office in your systems, you know, how do you think about the platform? Do you have the infrastructure to really support a much larger entity? I think when you look at tech today, you have to look at it more broadly than core, because you're looking at IT infrastructure as well as the core operating system that provides the services to clients. We're a Fiserv bank. They're an FIS bank. We both have contracts that come up pretty similar time frames. Their contract actually ends in April 2024, with notice in October 2023. Opportunity there, as I mentioned, in terms of, you know, termination fees and things like that. We're gonna have a talented, you know, transition leadership team that will be made up of leadership from both organizations to kind of define the organization going forward and look at those key decisions and give direction to our integration teams, which will be doing it on the ground. Look, it's a big opportunity, but beyond the core, you know, and staying there for a second, when you're looking at core, you're also looking at how you're integrating APIs, because most of us today are relying on outside services from, not just from Fiserv or FIS, to deploy really good solutions to your clients. You're not just looking at. You're no longer taking that as the package and delivering that out alone. You've bolted on other things that deliver things to your clients. We have, you know, our payments hub through Volante. There are things that we're doing through Deepstack, and there are things that we've partnered with. You know, I give Fiserv a lot of credit because they've opened up to APIs, perhaps faster than most, realizing they can't be a one-stop shop, and it's better to partner than to push away. We'll be looking at that really closely and try to figure out what the best solution is going forward. On the IT architecture side, I mean, we're both trying to be cloud-first and make sure that we have the right infrastructure and that can support us in a, in, you know, the changing environment that we're in, which is highly mobile. I think they've done a great job of thinking about how to be tech forward in terms of providing solutions to their clients. We've been I think we punch well above our weight class in terms of the technology delivery to our clients. There are specific systems that they have that we're gonna have to keep. The HOA system is unique, and we're gonna have to make sure that we build on that and make sure we support it for the growth that's there. There's tons of deposit growth, I think, that we see through HOA as well. Those technology solution decisions are gonna be very, very important. We've obviously made some initial attempts at assessing that, and we have some initial ideas, but we're gonna. You know, obviously, starting now, as they say, is when the real work begins. Got it. The last one from me. You know, fee revenues haven't been a big part of either institution. I'm just curious how you think about fees going forward. Obviously, Deepstack can play into that to some regard, but I'm just curious to think about how you think about the fee revenue generation, especially as you become, you know, a much larger institution. Yeah, I mean, we're both, not heavy on the fee side, right? PacWest did a better job than we did in terms of making up for it, because you know, they were earning a lot more than we were, so it made up for it. I think Deepstack is gonna be key. They are an issuer of cards, and they generate, some fees there. We are going to be an issuer of cards beginning in the fourth quarter, I think that's gonna be a good opportunity for fee generation. I think the payments business and the ecosystem that we're building around payments through Deepstack, through issuing, and through partner programs, through Baas, is gonna be a, probably the initial place where we're gonna see fee income grow faster than other parts of the company. Yep, that's helpful. I appreciate it. Thanks, everybody. Thank you, David. This concludes our question and answer session. The call has now concluded. Thank you for attending today's presentation. You may now disconnect.