Tim Sedabres - IR Steven Sugarman - CEO Ronald Nicolas - CFO Hugh Boyle - Chief Credit Officer, Chief Risk Officer.

Gary Tenner - D.A. Davidson Andrew Liesch - Sandler O'Neill Don Worthington - Raymond James Jacque Chimera - Keefe, Bruyette & Woods.

Good morning and welcome to the Banc of California second-quarter 2015 earnings conference call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Tim Sedabres. Please go ahead, sir..

Thank you, Frank. Good morning, everyone, and thank you for joining us today for today's second-quarter earnings conference call. With me on today for 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 that today's conference call is being recorded, and a copy of the recording will be made available later on the Company's investor relations website.

We have also furnished a presentation that management will reference on today's call, and that presentation is also available on our website under the investor relations section.

Before I turn it over to Steve, I want to remind everyone that, as always, certain elements of this presentation are forward-looking and are based on our best view of the world and businesses as we see them today. Those elements can change as the world changes. Please interpret them in that light.

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 our President and CEO, Steven Sugarman..

Thank you, Tim. And welcome to everyone for our second-quarter earnings call. At our investor day just over a year ago, we outlined our financial target metrics for our Company. These targets for the consolidated entity included a 1% return on assets, 15% return on common stock, and an efficiency ratio of between 70% and 75%.

Management provided guidance that the Company would target achievement of these metrics as of year-end 2015 on a run-rate basis. We are making great progress towards these targets.

I'm pleased to report that our second-quarter 2015 earnings have resulted in a return on assets of approximately 1%, a return on tangible common equity of 14.5%, and an efficiency ratio of 73%.

While these results are consistent with our long-term target levels, we continue to focus on improving the quality of earnings through our low-cost core deposit strategies, a focus on continuing to shift the mix of earnings towards our commercial banking segment, which now represents 66% of our business segment profit contribution and more fully deploying the capital we raised during the second quarter.

Management believes we remain in the early innings of demonstrating the long-term earning power of our franchise. This progress towards our financial targets is a testament to the strong team we have built at Banc of California and the power and soundness of our business model.

Second-quarter returns were achieved notwithstanding that the Company raised approximately $290 million of debt and preferred securities during the quarter, which resulted in increased interest and dividend expense at the holding Company.

As of the end of the second quarter, the capital remained largely undeployed, which was consistent with our strategy of pre-funding our anticipated growth.

Management expects several financial metrics to further strengthen and solidify by the end of the year as the capital is deployed, including return on tangible common equity and our efficiency ratio. Turning to Slide 2 of the presentation, we highlight a few key accomplishments from the quarter.

The Company earned $0.32 per share on a fully diluted basis for the second quarter, with $13.1 million of net income to common shareholders. This sets another record mark for the Company's quarterly net income.

Excluding non-core items for the quarter, such as our building sale and the impact of our transfer of legacy loans not originated during the quarter to help for investment, our earnings per share was $0.28. Year-over-year we have seen terrific progress across our franchise. Revenues have grown by 70% from a year ago.

The consolidated efficiency ratio improved to 73% from 85% a year ago. Assets are up 47% from a year ago, while non-interest-bearing deposits increased by 116% over the past year, including 18% during the last quarter alone.

Turning to capital, our capital ratios remained strong at the end of the quarter, with our tangible equity to tangible assets ratio increasing to 9.1% and common equity Tier 1 ratio of 9%. Importantly, at our subsidiary bank, our Tier 1 total leverage ratio grew to approximately 10.3%.

We believe this quarter's results are a clear demonstration of management's commitment to delivering strong and increasing returns for shareholders.

This marks the fourth quarter in a row in which we have delivered consistent net income over $10 million per quarter, a return on average assets north of 75 basis points, and a return on tangible common equity of over 11%.

This is my fifth quarter as CEO of our Bank, and I couldn't be prouder of the financial progress we have made over this time period.

Much credit is due to our finance team that has now implemented our profit center accounting and funds transfer pricing model across the Company, and our risk analytics team that has built robust stress-testing models that are consistent with DFAST methodology.

These improved analytics are enabling business unit leaders to manage their businesses with greater financial accountability, risk controls, and discipline.

Additionally, the strength of our shared services team has enabled the Bank to safely and profitably integrate our most recent acquisitions, including the acquisition of Popular Community Bank and CS Financial.

These acquisitions have now proven themselves to be highly profitable and attractive transactions for our Company, both strategically and financially.

As an example, our acquisition of Popular Community Bank continues to generate returns in excess of our initial public guidance, and the quality of the deposit and lending relationships as well as the personnel continues to exceed management's expectations.

As we look towards the second half of the year, our team is focused on continuing to drive strong financial returns. And equally importantly, we are focused on consistency, sustainability, and quality of our revenue growth and profitability.

We believe that with the proceeds from the April capital offering, we are well funded to be able to grow the Company through increased earning assets and higher net interest income to support consistent and sustainable earnings. There remains work to be done to deploy the capital and continue to grow the Company prudently and profitably.

While we see the accelerating loan origination volumes across our business, we continue to measure our overall asset growth by the pace with which we originate quality deposits. We are seeing significant progress in our deposit-gathering activities across our franchise.

Each deposit group, including our private Bank, commercial Bank, retail Bank and financial institutions Bank, saw positive deposit-gathering results in the second quarter, which I am pleased to say have continued into the third quarter.

While higher loan growth, which we expect during the second half of the year, may initially result in earnings headwinds from increased ALLL provisioning, we continue to originate loans that are expected to generate IRRs in line with our key financial metrics over their life.

During the second quarter our deposit costs fell to 50 basis points, with our average yield on newly originated deposits coming in at approximately 40 basis points. Meanwhile, our average yield on newly originated loans was north of 4.3%.

Continuing to originate at these spreads will enable the Bank to reduce drag on earnings that currently exist due to interest expense on undeployed capital. Management believes that the progress made during the second quarter continues to put the Company on pace to meet or exceed its year-end 2015 run-rate financial targets.

And with that I will turn it over to our CFO, Ronald Nicolas..

Thanks, Steve, and good morning, everyone. I will be directing my comments to the supplemental presentation that accompanied our release, starting with the highlights for the first quarter on Slide 4.

Today, as Steve noted, we reported net income available to common shareholders of $13.1 million after accounting for our preferred dividends, or $0.32 per diluted share, with a return on average tangible common equity of 14.5%. Total revenues were $120.8 million, a 23% increase over the prior quarter.

Higher net interest income was driven primarily by higher earning assets. Non-interest income increased by $20.7 million or 45% from the first quarter, due to higher mortgage banking revenues, higher net gain on sale of non-agency loans, and the gross gain on the sale of the Costa Mesa building.

Noninterest expense increased to $87.9 million, attributable to higher volume-related expense related to mortgage banking operations, expenses tied to the building sale, and higher compensation expenses.

Provision expense for the second quarter totaled $5.5 million, with $4.5 million of that total as a result of the transfer of $475 million of loan balances that were previously held for sale to held-for-investment during the quarter.

Lastly, our preferred dividends reflect the additional interest associated with the capital raise completed earlier in the quarter. On Slide 5 we outline the pretax contributions by business segment.

The banking segment, which includes the commercial and retail banking activities, produced a pretax contribution margin of $23.7 million for the second quarter, which represents a 66% overall business segment contribution.

This includes both the benefit of the building sale as well as the incremental loss provision associated with the jumbo loan transfer.

The mortgage banking segment, which includes our traditional agency and conforming mortgage banking activities, produced a pretax income of $10.3 million for the second quarter and represented 29% overall business segment contribution. Increases in both originations and sales exceeded 20%.

The financial advisory and asset management segment represents The Palisades Group. Pretax income for the second quarter of $1.9 million increased from the second quarter as a result of the performance recognition fee.

Finally, the corporate and other segment primarily represents both the operating expense as well as the interest expense of the Holding Company. Our key profitability measures, which Steve alluded to earlier in his comments, are highlighted on Slide 6.

Net interest income grew to $54.1 million during the second quarter from $52 million in the first quarter, due largely to a higher earning asset base. Loan yields remained relatively stable compared to the prior three quarters at 4.63% and are above our targeted range of 4.25% to 4.5%.

Cost of deposits declined by 4 basis points to 50 basis points on a consolidated basis and are down 24 basis points from a year ago. As previously mentioned, our stated goal was to bring the Company's cost of deposits down to 50 basis points by year-end.

And as we stand today, we have achieved that goal and continue to be focused on lowering the overall funding costs of the Company. Turning to non-interest income, Slide 7, for the quarter we recognized $66.7 million, an increase of $20.7 million compared to the prior quarter.

The primary drivers of the increase included the $9.9 million gross gain on the sale of the building, stronger mortgage banking income resulting from higher originations and sales, a higher net gain on the sale of loans that included $214 million of multifamily loan balances sold during the quarter.

TPG-related advisory fees increased to $4.4 million for the second quarter as a result of higher performance-based fees of $3.2 million. For the prior quarter, advisory fees were $1.2 million and included no transactional or performance-based fees.

Gain on sale of loans, excluding mortgage banking, for the second quarter increased by $3.4 million to $7.8 million, again, primarily as a result of the $214 million multifamily loan sale during the quarter.

All other noninterest income increased by $2.7 million to $5.1 million for the quarter, driven principally by a higher MSR value as well as increased loan servicing income, as we added $14 million of new servicing during the quarter and did not sell any MSRs. Slide 8 details our loan originations and sales for the quarter.

In total, our lending teams originated $1.9 billion of loans during the second quarter, up from $1.5 million in the prior quarter. We continue to target originations of over $7 billion for the full year. The second-quarter commercial loan originations totaled $297 million, up from $202 million in the prior quarter.

CRE and multifamily saw the largest increases quarter to quarter, accounting for $25 million and $29 million, respectively as well as our warehouse lending business, which also increased $29 million in commitments during the quarter.

Mortgage banking originations for the second quarter totaled $1.25 billion, up from $1 billion in the prior quarter and we sold $1.2 billion compared to $922 million in the first quarter.

Roughly 52% of our second quarter mortgage banking originations were purchase related, up from 43% in the first quarter, with June coming in at 60% purchase as refi volumes were relatively flat quarter to quarter, and purchase increased over 50%.

Second quarter production of jumbo mortgage originations totaled $290 million compared to $240 million in the prior quarter, with sales of $167 million compared to the first-quarter $188 million in sales. 66% of the jumbo originations were purchase related, relatively flat from the prior quarter.

Slide 9 summarizes our noninterest expense and productivity gains. The second quarter noninterest expense totaled $87.9 million, up $12 million from the first quarter.

The increased expenses during the quarter were driven primarily by higher loan volume-related expenses, which increased by $3 million as a result of higher mortgage banking originations; and $2.6 million of one-time expenses, which included $2.3 million of building sale-related costs as well as a $300,000 impairment charge related to announced sale of two branch locations.

The increase in base expenses of $6.4 million included $2.8 million in higher compensation expense related to higher revenue and profitability. Turning to the right side of Slide 9, we see the benefits of scale that we are achieving.

On the top right, we highlight the historical trend of assets per FTE and the improving economics, as we have seen the FTE increase -- the assets increase by 57% over the past two years. Also highlighted on the lower right chart are similar trends for revenue per FTE, which has also continued to increase with scale.

Turning to the balance sheet on Slide 10, the Company finished the quarter at $6.4 billion in total assets, up $341 million from the first quarter. Loans held for investment increased by $539 million from the first quarter, as we transferred $475 million of loans held for sale into the held-for-investment portfolio.

Organic held-for-investment net loan growth totaled $64 million during the quarter, including the negating effects of the sale of $214 million of multifamily loans during the order.

Loans held for sale decreased by $494 million and, currently, mortgage banking held-for-sale balances total approximately $400 million for our agency loans held for sale and $300 million for our jumbo loans held for sale.

The securities portfolio increased by approximately $150 million, and cash increased by $194 million during the quarter as deposit growth as well as the proceeds from our April capital offerings were deployed.

Deposits increased by $243 million during the quarter, as we were able to lower our FHLB advances, and brokered CDs, and other borrowings by approximately $355 million as a result of this robust deposit growth. Lastly, the notes payable increased as a result of the $175 million of new debt raised earlier in the quarter.

Taking a closer look at deposits on Slide 11, as mentioned, deposits increased by $243 million to $5.1 billion as of June 30. We saw continued growth in non-interest-bearing deposits across all of our deposit-gathering business lines during the quarter, which grew by $132 million -- as did our money market balances, which increased by $257 million.

Savings and interest-bearing checking balances declined by a combined $85 million during the quarter. Slide 12 highlights our current loan portfolio mix. Our current portfolio of $5.2 billion continues to be comprised of nearly 50% of commercial loans. During the quarter, as previously noted, we sold $214 million of multifamily real estate loans.

These loans were generally lower-yielding assets compared to our overall yield targets. This sale allows us flexibility to continue to originate and grow our overall CRE and multifamily businesses without taking on undue concentration risk. The associated net gain for these assets totaled $4.5 million.

As always, we continue to examine opportunities to optimize our returns on capital and may opportunistically sell additional assets with lower risk-adjusted returns in the future.

In the loans-held-for-sale investment portfolio, residential mortgages increased by $672 million, which of course included the $475 million of loans transferred from held-for-sale.

Business loans, including C&I, SBA, and leasing, increased by $321 million, in part due to the reclassification of the owner-occupied CRE balances from CRE to C&I to better reflect borrower and underwriting profile associated with our Banco Popular acquisition.

Excluding the transfer to HFI and the multifamily loan sale, our held-for-investment loan balances would have increased by $278 million or 7% compared to the first quarter. Slide 13 highlights our capital position. Tangible book value increased to $10.93 per share.

And when adjusting for the TEU conversion, tangible book value per share increased $0.15 to $10.11 per share. Our tangible equity to tangible asset ratio increased to 9.1% as a result of the April preferred stock offering. At the bank, as Steve mentioned, our total Tier 1 leverage ratio now exceeds 10.3%.

Both the Bank and the Company remained well capitalized at the end of the quarter for each of the key risk-based and leverage ratios. We have ample capital ready to deploy through continued loan growth to lever and grow the earnings power of the franchise. With that, I will now turn it over to Hugh Boyle to highlight credit quality..

Thank you, Ron. Asset quality continued to remain strong and stable at Banc of California during the second quarter. Please see Slide 14 in our investor presentation, which highlights our key asset quality metrics.

Total loans, HFI and HFS, remained flat for the quarter at roughly $5.2 billion, with HFI loans growing from $3.9 billion in the first quarter to just under $4.5 billion in Q2. The HFI book benefited from a transfer of single-family residential loans from HFS to HFI.

Total delinquencies rose on an absolute dollar basis by $11.1 million quarter over quarter but remained flat on a percentage basis, at just over 2% relative to total HFI loans.

The modest dollar growth in delinquencies was attributable to our residential mortgage portfolios, which saw a rise of $17.1 million during the quarter, with the increase spread across our portfolio loans, seasoned loans, and our HFS loan pool transfer.

Notably, delinquencies fell on a net basis in our commercial lines of business by $6 million, resulting in the $11.1 million net increase for the quarter. Both the absolute dollar level of nonperforming loans and nonperforming assets as well as the percentage of nonperforming loans to loans and NPAs to total assets fell quarter over quarter.

Nonperforming assets declined slightly to end the quarter at $42.7 million and represent just 66 basis points of total assets. Net charge-offs remained negligible in the second quarter.

The provision for loan losses for the second quarter was $5.5 million, and the key driver of provisions in this quarter was the $4.5 million provision related to the transfer of loans to held-for-investment status and, hence, the resulting establishment of an initial allowance for these assets.

Banc of California's ALLL, or allowance for loans and lease losses, increased to $34.8 million at June 30, 2015. The ALLL coverage ratio fell slightly during the quarter, with the ALLL to originated loans ratio declining from 1.35% in Q1 to 1.27% in Q2.

This slight decline in our coverage ratio is primarily the result of our continued very low charge-off experience and the portfolio mix shift during the quarter to lower-loss residential mortgages. With that, I will turn back over to our CEO, Steven Sugarman..

Thank you, Hugh. Thank you, Ron. Operator, we are ready for questions..

We will now begin the question and answer session, [Operator Instructions]. First question comes from Gary Tenner from D.A. Davidson, please go ahead sir..

I did have a few questions. Ron, first off, on the expense side, you've talked about the base expenses going up $2.8 million because of increased -- what sounds like bonus accruals, essentially.

Is there any first-quarter catch-up in there? Or do we think of elevated bonus accruals for the remainder of the year? And then maybe you could talk about what else may have been increasing the base expenses sequentially..

Yes. Gary, specifically to your question, there was no catch-up with the first quarter. Obviously, we have business lines, and overall many of the executives and staff are bonuses based upon the Company's growth in revenues and profitability. And as that continues to grow, we will accrue more.

And accordingly, if it flattens out or decreases in terms of growth, the bonus accruals and that will be adjusted commensurate with that..

Okay. And of the sequential delta on base expenses, you mentioned that $2.8 million. But what's the rest of it? There's like another $3.5 million.

Anything meaningful or something worth pointing out for that reminder?.

Yes. So in that $6.4 million, of course, we've got some increased staffing expenses. I think roughly about $1.5 million was associated with just overall staff, which increased, I believe, about 46 people during the quarter -- split evenly between the bank and the mortgage company.

There's some additional business marketing initiatives that are included in that, some additional occupancy costs. So it's really a potpourri, if you will, of operating expenses across the board..

Okay, thanks. And then I had a question on the gain-on-sale in that multifamily portfolio.

Did you say $4.5 million was -- the gain on the $214 million sale?.

Yes, that is correct. It is correct..

Okay.

So then, ex that, the gain-on-sale of the jumbo portfolio was sequentially -- was it lower? What were the margins or the spreads on the gain-on-sale this quarter?.

On the jumbo portfolio we sold, I believe, about $180 million. And we achieved roughly about 1.5% on a gain-on-sale, net gain-on-sale with respect to that -- which is about the norm; sometimes a little higher, sometimes a little lower. But that's what we achieved in the quarter..

Okay.

And then what were they on the conforming sales?.

The conforming sales -- the margin -- the gain-on-sale margin squeezed during the quarter a little bit as we saw higher interest rates as the quarter progressed. Roughly, we are just under about 3% on a net gain-on-sale for the quarter. I think in the prior quarter we were closer to about 3.5%..

Next question comes from Andrew Liesch, Sandler O'Neill, please go ahead..

So basically, just your comments around the expenses -- it sounds like this $64.7 million to $65 million -- that's a good core run rate to build off? It doesn't seem like there was anything that might go away there? Right?.

Yes. I would say there were a couple of smaller, what I would call nonrecurring -- I don't know that I'd call them or term them non-core, but nonrecurring expenses. But for the most part, yes, I think that's a fairly sound bet..

Okay. And then your decision to move some mortgages to the portfolio -- just curious what drove that decision.

And then what did that do to the overall duration of the loan portfolio?.

It's Steve. With our capital raise that occurred in the second quarter, we modeled the most profitable path for our loan portfolio. We had been selling in HFS certain loans which would be more profitable to hold and was part of the reason to raise the additional capital.

And so for those loans, we move them to HFI, because we now believe that for the foreseeable future we are going to hold them in our portfolio. As far as your prior question and the question that Gary also asked around the expenses, there was elevated bonus expense that comes from profitability above targets.

So the level of expenses is a run rate if profitability continues to be above our targets on a run rate. And those targets include things like non-core items that lead to profitability. So excluding excess profits, then the bonus pool and the incentive compensation would be much lower..

Okay.

And then just the rise in the non-interest-bearing deposits -- are there any temporary funds parked there? Or is that just all good organic growth?.

This was probably the highlight of our quarter -- and really, over the last year, where it has grown by more than double. The non-interest-bearing deposits has been a focus of our business as we have transitioned the platform to the commercial Bank. We saw it from a broad swath of deposits.

Primarily I think it's driven by our focus on specialty deposit products to niche businesses. A good example of that would be our financial institutions Bank.

But it also showed strong deposit growth in our private banking, retail, and commercial banking segments -- and, in fact, we believe is a byproduct of some reorganizations we did a few quarters ago to refocus some of our acquired teams and businesses to the deposit side.

Because our organic lending platform continues to be robust, where we can really take our relationship managers and focus them and incentivize them by deposits..

Okay, great.

I just realized -- the duration of the loan book -- do you have that handy?.

I don't have it offhand. But we can look into that for you..

Next question comes from Don Worthington from Raymond James, please go ahead sir..

Did you receive a special dividend from the Home Loan Bank in the quarter?.

Yes, we did..

How much was that?.

That was $1.1 million. That was included in our net interest income..

All right. And then I notice you've got about $50 million in deposits held for sale.

Is that due to the branch sale?.

Yes, that is correct. We have reclassified roughly $50 million of deposits and $40 million in loans. The loans you can't see as clearly, because it's embedded in the agency and the jumbo loans held for sale. But that's both for the announced branch sale transaction, yes..

Okay..

And, Don, I'd just add that there was a couple hundred thousand dollar impairment associated with that reclassification for certain assets that are being sold along with that contemplated branch sale..

Okay, great. Thanks. And I guess lastly, when you had purchased the property in Costa Mesa that has been sold in the quarter, the thought was consolidating; and then, I guess, reducing other lease expenses.

Any update on the thought process there in terms of ultimately consolidating operations into fewer buildings?.

Yes. The decision to sell the building was something that resulted from an unsolicited offer, which was -- reflected the price that we believed was in the best interest of the shareholders. That will also offset some expenses in future quarters that were associated with the holding of that building and maintenance of it.

That said, our current lease continues to run for another couple years. We do believe, long-term, that there are benefits to consolidation. We continue to look for the right opportunity to do so.

But we have time, and we thought that the sale of this building at the price we achieved was very attractive for shareholders, and the reduction in ongoing operating expenses that we will see in future quarters will also be a positive in the meantime..

[Operator Instructions], next question comes from Jacque Chimera from KBW, please go ahead..

Just trying to iron out the organic loan growth in the quarter to the moving pieces. So if I look at that roughly around $2 billion in originated loans that you had last quarter, and then that increased to $2.5 billion in the quarter, I'm assuming that the entirety of the $475 million in jumbo loans flowed into that bucket.

Is that correct?.

Well, the $475 million, Jacque, -- yes, Jacque, this is Ron. The $475 million were loans that were previously originated in prior quarters. So that is an accumulation of, if you will, the last six, seven quarters of origination. So that doesn't count towards our current quarter's worth of originations..

Yes, and Jacque, I would just highlight -- when we think about our core earnings during this quarter, given that those loans were originated in different quarters and it's a management decision on holding it, we don't look at that as a sign of the current-quarter earnings power from core earnings.

So the 475 are not part of the $1.9 billion of originations; they are on top of that. And the ALLL associated with them is ALLL associated with loans originated during prior periods and not reflective of current-period loan originations..

Okay. No, definitely understood on those points. So what I'm trying to do is just iron out between the two originated numbers -- what flowed into that that wasn't part of the origination? So I know it was the $475 million, because that was in prior quarters.

For the $214 million that were sold in multifamily during the quarter, was some of that in the acquired loan bucket, because it came over from Popular?.

No, these were all loans that are multifamily team originated organically. And we thought it was a very positive sign that we were able to demonstrate the value of the lending.

I think on prior calls we have had questions about whether our multifamily lending business had attractive margins and was creating value, because folks had seen trends of compressing margins in that space.

These were recently, or over the last year or so, originated in multifamily that we originated organically and demonstrated a pretty attractive gain-on-sale margin on sale..

Okay. So if I take that originated loan bucket, then, and I subtract out the $475 million -- because that's what came in that was already there -- and then I add back the $214 million just from other quarters, then essentially what you achieved in your originated bucket was double-digit loan growth in the quarter.

Is that a good way to look at it?.

I think that Ron -- we tried to do that math for you, and I think that in Ron's comments he put the net originations, which also include offsets, paydowns, and everything else, at about 7% organic loan growth, net of these one-time transactions. But your number is probably correct if you are not including paydowns and payoffs and refis.

And the 7% includes kind of a comprehensive view of organic loan growth, the best that we can provide to you..

Okay, thank you. Sorry I missed that; they were collecting my information on the conference call. So that's really helpful. Thank you.

And then, do you happen to have the dollar amount of what was transferred from CRE into C&I during the quarter?.

Jacque, with the Banco Popular acquisition, Hugh and his team are still working through a lot of the classifications and the appropriate assimilation, if you will -- that portfolio with the way we look at the variety of portfolios that we have on our books. So there was a number of movements to tweak that and sort that out.

Ostensibly, we think we are done with the major part of that. We will probably have some fine-tuning of those portfolio classifications. But the numbers, obviously, that you see today we feel pretty good about as far as the right finishing point for June 30 and the right starting point here for the third quarter.

Now, on average, roughly about $200 million of the B Pop loans moved around. And then there were a few legacy loans that moved around a little bit, to the tune of about $60 million to $70 million..

Okay.

So absent that transfer, then, you still had growth in the CRE portfolio, the formerly classified CRE portfolio?.

Yes, that is correct. Right, in my comments I had mentioned that the CRE and multifamily on a combined basis grew almost $55 million in new originations during the quarter..

And it's important to note that that portfolio segment with new originations -- the originations were coming in north of 4.5% as an average yield..

Okay. Great. Thank you both very much. That's really helpful..

This concludes the question-and-answer session. I'd now like to turn the conference back over to Steven Sugarman for any closing remarks, sir..

Well, thank you. And thanks to everyone for joining our second-quarter call. We are very proud of the progress we made during the second quarter and look forward to talking with you about the third quarter in a few months..

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect the line..