Banc of California, Inc. Reports Third Quarter 2024 Financial Results Which Include Balance Sheet Repositioning

Banc of California, Inc. (NYSE:BANC):

Banc of California, Inc. (NYSE:BANC) ("Banc of California" or the "Company"), the parent company of wholly-owned subsidiary Banc of California (the "Bank"), today reported financial results for the third quarter ended September 30, 2024. The Company reported a net loss available to common and equivalent stockholders of $1.2 million, or a loss of $0.01 per diluted common share, for the third quarter of 2024. On an adjusted basis, net earnings available to common and equivalent stockholders were $41.4 million, or $0.25 per diluted common share.⁽¹⁾ This compares to net earnings available to common and equivalent stockholders of $20.4 million, or $0.12 per diluted common share, for the second quarter of 2024. The third quarter of 2024 includes $60 million of pre-tax losses from repositioning a portion of the securities portfolio.

Third quarter highlights include:

• Closed the sale of $1.95 billion of Civic loans in July which generated net proceeds of $1.91 billion. This sale increased our capital ratios and liquidity and allowed us to reposition a portion of our securities portfolio in Q3 and pay down higher-cost brokered deposits and borrowings.
• Repositioned $742 million of available-for-sale securities resulting in a pre-tax loss of $60 million. Sold $742 million of securities with a weighted average yield of 2.94% and purchased $724 million of securities with a weighted average yield of 5.65%. Expected to increase interest income by approximately $4.8 million per quarter.
• Net interest margin of 2.93%, an increase of 13 basis points from 2.80% in the second quarter, driven mainly by lower funding costs.
• Average total cost of deposits and average total cost of funds decreased by 6 basis points and 13 basis points, respectively, to 2.54% and 2.82%. The declines in deposit and funding costs were driven mainly by the maturity of brokered time deposits (which decreased by $2.0 billion in the third quarter), while the $545 million payoff of Bank Term Funding Program borrowings also contributed to the decline in funding costs.
• Average noninterest-bearing deposits increased to 28% of average total deposits for the third quarter, up from 27% in the second quarter.
• Achieved Q4 2024 cost targets ahead of schedule with total noninterest expense of $196.2 million for the third quarter, down $7.4 million, or 4%, from the second quarter.
• Strong capital ratios well above the regulatory "well capitalized" thresholds at September 30, 2024, including an estimated 16.98% Total risk-based capital ratio, 12.87% Tier 1 capital ratio, 10.45% CET1 capital ratio, and 9.83% Tier 1 leverage ratio.
• Book value per share increased to $17.75 and tangible book value per share⁽¹⁾ increased to $15.63.

Jared Wolff, President & CEO of Banc of California, commented, "During the third quarter, we made significant progress growing our core earnings and we achieved our year-end targets for net interest margin, noninterest expenses, and balance sheet metrics a quarter early. We strengthened our franchise through several strategic balance sheet repositioning actions including completing the sale of $1.95 billion of Civic loans, which had a positive impact on our capital and liquidity. We leveraged the proceeds and capital to reposition a portion of our securities portfolio and significantly reduce higher cost funding, which resulted in strong net interest margin expansion and increased our tangible book value per share and capital position. Furthermore, we continued to make solid progress reducing noninterest expenses, completed our core system conversion successfully, and consolidated 12 branches during the quarter."

Mr. Wolff continued, "With these major balance sheet and operational initiatives behind us, Banc of California is now at an inflection point, shifting our focus from transforming our internal infrastructure to external growth. We are capitalizing on the strength of the franchise and balance sheet we have built and the exceptional customer experience we can offer to expand existing relationships and add attractive new client relationships. As economic conditions improve, we believe we are well positioned to increase our market share, expand our client roster, generate profitable growth and continue to enhance the long-term value of our franchise."

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Q3-2024 vs Q2-2024

Net interest income increased by $2.7 million to $232.2 million for the third quarter from $229.5 million for the second quarter due to lower interest expense on interest-bearing liabilities, offset partially by lower interest income on interest-earning assets.

Average interest-earning assets decreased by $1.4 billion to $31.6 billion for the third quarter due mainly to the sale in July 2024 of $1.95 billion of Civic loans which had been moved to held for sale during the second quarter of 2024. The proceeds of the sale were used primarily to pay down higher-cost brokered deposits and borrowings. The net interest margin increased by 13 basis points to 2.93% for the third quarter compared to 2.80% for the second quarter due to a 2 basis point decrease in the average yield on interest-earning assets being more than offset by a 13 basis point decrease in the average total cost of funds, which was positively impacted by a decrease in average borrowings.

The average yield on interest-earning assets decreased by 2 basis points to 5.63% for the third quarter from 5.65% in the second quarter due mainly to the average yield on deposits in financial institutions decreasing by 3 basis points and the average yield on loans and leases being flat.

The average yield on loans and leases was unchanged at 6.18% for the third quarter compared to the second quarter as a result of new originations being at rates higher than the existing portfolio, slightly higher loan discount accretion, and the change in the mix of loan product balances including the impact of the sale of the $1.95 billion Civic loan portfolio.

The average total cost of funds decreased by 13 basis points to 2.82% for the third quarter from 2.95% in the second quarter due mainly to lower market interest rates and reduced average borrowings. The average cost of interest-bearing liabilities decreased by 13 basis points to 3.80% for the third quarter from 3.93% in the second quarter. The average total cost of deposits decreased by 6 basis points to 2.54% for the third quarter compared to 2.60% in the second quarter. Average noninterest-bearing deposits decreased by $35.0 million for the third quarter compared to the second quarter, average total deposits decreased by $474.2 million, and average borrowings decreased by $950.1 million.

YTD September 30, 2024 vs YTD September 30, 2023

Net interest income increased by $94.7 million to $690.8 million for the nine months ended September 30, 2024 from $596.1 million for the nine months ended September 30, 2023 due to lower interest expense on interest-bearing liabilities, offset partially by lower interest income on interest-earning assets.

Average interest-earning assets decreased by $5.7 billion to $33.0 billion for the first nine months of 2024 due to lower average balances in loans and leases, investments securities, and deposits in financial institutions. Average loans and leases decreased by $1.0 billion primarily due to the sale in July 2024 of $1.95 billion of Civic loans which had been moved to held for sale during the second quarter of 2024 and the sales of non-core loan portfolios in the second quarter of 2023, offset partially by the acquisition of legacy Banc of California loans completed in the fourth quarter of 2023. Average investment securities decreased by $2.4 billion mostly due to securities sales completed in the fourth quarter of 2023. Average deposits in financial institutions decreased by $2.3 billion due to lower cash balances which were used to pay down higher-cost borrowings. The net interest margin increased by 72 basis points to 2.79% for the nine months ended September 30, 2024 compared to 2.07% for the same period in 2023 due to the average yield on interest-earning assets increasing by 41 basis points, while the average total cost of funds decreased by 31 basis points.

The average yield on interest-earning assets increased by 41 basis points to 5.61% for the first nine months of 2024 from 5.20% for the same period in 2023 due mainly to the change in the interest-earning asset mix. This was driven by the increase in the balance of average loans and leases as a percentage of average interest-earning assets to 75% for the nine months ended September 30, 2024 from 67% for the nine months ended September 30, 2023, the decrease in the balance of average investment securities as a percentage of average interest-earning assets to 14% for the first nine months of 2024 from 18% for the same period in 2023, and the decrease in the balance of average deposits in financial institutions as a percentage of average interest-earning assets to 10% for the nine months ended September 30, 2024 from 15% for the same period in 2023.

The average yield on loans and leases increased by 19 basis points to 6.14% for the first nine months of 2024 from 5.95% for the same period in 2023 as a result of changes in portfolio mix and higher net accretion of loan discounts.

The average total cost of funds decreased by 31 basis points to 2.93% for the nine months ended September 30, 2024 from 3.24% for the nine months ended September 30, 2023 due mainly to changes in the total funds mix. This was driven by the increase in the balance of lower-cost average total deposits as a percentage of average total funds to 91% for the first nine months of 2024 from 77% for the same period in 2023, and the decrease in the balance of higher cost average borrowings as a percentage of average total funds to 6% for the nine months ended September 30, 2024 from 21% for the same period in 2023. The average cost of interest-bearing liabilities decreased by 14 basis points to 3.89% for the first nine months of 2024 from 4.03% for the same period in 2023. The average total cost of deposits increased by 10 basis points to 2.60% for the nine months ended September 30, 2024 compared to 2.50% for the nine months ended September 30, 2023. Average noninterest-bearing deposits increased by $480.9 million for the first nine months of 2024 compared to the same period in 2023 and average total deposits decreased by $60.3 million.

Provision For Credit Losses

Q3-2024 vs Q2-2024

The provision for credit losses was $9.0 million for the third quarter compared to $11.0 million for the second quarter. The $9.0 million third quarter provision was driven primarily by increases in qualitative reserves, for loans secured by office properties and concentrations of credit, and specific reserves for nonperforming loan downgrades. The $11.0 million second quarter provision was driven by higher net charge-offs and higher qualitative reserves for office loans and other concentrations of credit, offset partially by the reserves released for the Civic loans transferred to held for sale.

YTD September 30, 2024 vs YTD September 30, 2023

The provision for credit losses increased by $25.0 million to $30.0 million for the nine months ended September 30, 2024 compared to $5.0 million for the nine months ended September 30, 2023. The higher provision in the 2024 period was generally due to higher net charge-offs and higher qualitative reserves, offset partially by the reserves released for the Civic loans transferred to held for sale in the second quarter of 2024 and sold in the third quarter of 2024.

Noninterest Income

Q3-2024 vs Q2-2024

Noninterest income decreased by $45.2 million to a loss of $15.5 million for the third quarter due mainly to a $60 million loss on the sale of $742 million of securities in the third quarter of 2024, offset partially by a $7.5 million increase in other income and a $5.7 million increase in leased equipment income. The increase in other income was due primarily to a $6.8 million increase in the positive fair value mark on the credit-linked notes. The increase in leased equipment income was due mostly to higher gains from early lease terminations and sale of leased assets.

YTD September 30, 2024 vs YTD September 30, 2023

Noninterest income increased by $96.0 million to $48.2 million for the nine months ended September 30, 2024 due mostly to a decrease in the loss on sale of loans and leases of $158.4 million, offset partially by a $60 million loss on the sale of $742 million of securities in the third quarter of 2024. The Company sold $2.5 billion of loans for a net gain of $0.6 million in the nine months ended September 30, 2024 and $6.1 billion of loans for a net loss of $157.8 million in the nine months ended September 30, 2023.

Noninterest Expense

Q3-2024 vs Q2-2024

Noninterest expense decreased by $7.4 million to $196.2 million for the third quarter due mainly to decreases of $13.7 million in insurance and assessments expense and $5.8 million in other expense, offset partially by a $12.1 million increase in acquisition, integration and reorganization costs. The decrease in insurance and assessments expense was due to lower assessment rates for both the regular FDIC assessment and the special assessment. The decrease in other expense was mostly due to a repurchase reserve recorded in the second quarter of 2024 for standard representations and warranties associated with the Civic loan sale. The increase in acquisition, integration and reorganization costs was due mainly to an adjustment of $12.7 million in the second quarter of 2024 due to actual amounts for certain expenses being lower than the estimated amounts accrued at merger close.

YTD September 30, 2024 vs YTD September 30, 2023

Noninterest expense decreased by $1.5 billion to $610.4 million for the nine-month period ended September 30, 2024 due mainly to a $1.4 billion goodwill impairment recorded in the same period in 2023.

Income Taxes

Q3-2024 vs Q2-2024

Income tax expense of $2.7 million was recorded for the third quarter resulting in an effective tax rate of 23.7% compared to income tax expense of $14.3 million for the second quarter and an effective tax rate of 32.0%. The lower third quarter effective tax rate was due primarily to a true-up to the full year tax rate, offset partially by an increase in disallowed executive compensation expense and loss of tax benefits with respect to restricted stock vested during the second quarter.

YTD September 30, 2024 vs YTD September 30, 2023

Income tax expense of $28.6 million was recorded for the nine-month period ended September 30, 2024 resulting in an effective tax rate of 29.0% compared to an income tax benefit of $135.2 million for the same period in 2023 and an effective tax rate of 8.7%. Excluding goodwill impairment, the effective tax rate for the nine-month period in 2023 was 21.7%. The lower effective tax rate in 2023 was due primarily to higher FDIC insurance premiums in relation to the reported net loss for 2023.

BALANCE SHEET HIGHLIGHTS

Securities

The balance of securities held-to-maturity ("HTM") remained consistent through the third quarter and totaled $2.3 billion at September 30, 2024. As of September 30, 2024, HTM securities had aggregate unrealized net after-tax losses in accumulated other comprehensive income (loss) ("AOCI") of $163.9 million remaining from the balance established at the time of transfer on June 1, 2022.

Securities available-for-sale ("AFS") increased by $56.3 million during the third quarter to $2.3 billion at September 30, 2024. AFS securities had aggregate unrealized net after-tax losses in AOCI of $161.7 million. These AFS unrealized net losses related primarily to changes in overall interest rates and spreads and the resulting impact on valuations.

Loans and Leases

The following table sets forth the composition, by loan category, of our loan and lease portfolio held for investment, net of deferred fees, as of the dates indicated:

Total loans and leases held for investment, net of deferred fees, increased by $298.9 million in the third quarter and totaled $23.5 billion at September 30, 2024. The increase in loans and leases held for investment was due primarily to increased balances in the lender finance, warehouse lending, and real estate construction portfolios. Loan fundings were $699.6 million in the third quarter at a weighted average interest rate of 8.29%.

Credit Quality

During the third quarter, we continued to remain conservative on risk rating of loans and leases. Increases to classified loans and leases that remained on accrual status resulted from downward migration for groups of loans and leases where performance deteriorated or increased borrower financial information was determined to be necessary. Nonaccrual loans and leases increased in the quarter primarily due to two commercial loans and one legacy Civic loan that migrated to nonperforming status. Delinquencies were also impacted by the aforementioned nonperforming loans. Our overall loan portfolio continues to benefit from strong underwriting, borrower strength and good credit metrics.

At September 30, 2024, total delinquent loans and leases were $125.0 million, compared to $83.8 million at June 30, 2024. The $41.2 million increase in total delinquent loans was due mainly to increases in the 30 to 89 days delinquent category of $17.1 million in commercial real estate mortgage loans and $9.1 million in other commercial loans. In the 90 or more days delinquent category, there was a $20.5 million increase in other residential real estate mortgage loans, offset partially by a $3.3 million decrease in other commercial loans. Total delinquent loans and leases as a percentage of total loans and leases increased to 0.53% at September 30, 2024, as compared to 0.36% at June 30, 2024.

At September 30, 2024, nonperforming assets were $177.0 million, or 0.53% of total assets, compared to $130.4 million, or 0.37% of total assets, as of June 30, 2024. At September 30, 2024, nonperforming assets included $8.7 million of foreclosed assets, consisting entirely of single-family residences.

At September 30, 2024, nonperforming loans were $168.3 million, compared to $117.1 million at June 30, 2024. During the third quarter, nonperforming loans increased by $51.3 million due to additions of $69.5 million, offset partially by borrowers that became current of $1.2 million, charge-offs of $1.1 million, and payoffs and paydowns of $15.9 million. The additions were driven primarily by two commercial loans and one Civic loan.

Nonperforming loans and leases as a percentage of loans and leases held for investment increased to 0.72% at September 30, 2024 compared to 0.50% at June 30, 2024.

Allowance for Credit Losses – Loans

The allowance for credit losses, which includes the reserve for unfunded loan commitments, totaled $281.9 million, or 1.20% of total loans and leases, at September 30, 2024, compared to $275.3 million, or 1.19% of total loans and leases, at June 30, 2024. The $6.6 million increase in the allowance was due to the $9.0 million provision, offset partially by net charge-offs of $2.4 million. The ACL coverage of nonperforming loans was 167% at September 30, 2024 compared to 235% at June 30, 2024.

Net charge-offs were 0.04% of average loans and leases (annualized) for the third quarter, compared to 0.89% for the second quarter. The decrease in net charge-offs in the third quarter was attributable primarily to the second quarter $28.7 million of Civic charge-offs as a result of the related $1.9 billion of Civic loans reclassified to held for sale and two large charge-offs of commercial real estate loans secured by office properties.

Deposits and Client Investment Funds

The following table sets forth the composition of our deposits at the dates indicated:

Total deposits decreased by $2.0 billion during the third quarter to $26.8 billion at September 30, 2024, due primarily to a decrease in brokered time deposits.

Noninterest-bearing checking totaled $7.81 billion and represented 29% of total deposits at September 30, 2024, compared to $7.83 billion, or 27% of total deposits, at June 30, 2024.

Uninsured and uncollateralized deposits of $6.7 billion represented 25% of total deposits at September 30, 2024 compared to uninsured and uncollateralized deposits of $6.8 billion or 24% of total deposits at June 30, 2024.

In addition to deposit products, we also offer alternative, non-depository corporate treasury solutions for select clients to invest excess liquidity. These alternative options include investments managed by BofCal Asset Management Inc. ("BAM"), our registered investment advisor subsidiary, and third-party sweep products. Total off-balance sheet client investment funds were $1.3 billion as of September 30, 2024, of which $0.6 billion was managed by BAM.

Borrowings

Borrowings increased by approximately $151 million to $1.6 billion at September 30, 2024 from $1.4 billion at June 30, 2024. Higher borrowings included the addition of a $500 million long-term Federal Home Loan Bank ("FHLB") advance (maturing in 10 years but callable by the FHLB after 2 years) offset partially by the $545 million payoff of the Bank Term Funding Program balance.

Equity

During the third quarter, total stockholders' equity increased by $88.4 million to $3.5 billion and tangible common equity⁽¹⁾ increased by $95.8 million to $2.6 billion at September 30, 2024. The increase in total stockholders' equity for the third quarter resulted primarily from a decrease in the unrealized after-tax net loss in AOCI for AFS securities of $103.0 million and net earnings of $8.8 million, partially offset by common and preferred stock dividends of $26.3 million.

At September 30, 2024, book value per common share increased to $17.75 compared to $17.23 at June 30, 2024, and tangible book value per common share⁽¹⁾ increased to $15.63 compared to $15.07 at June 30, 2024.

CAPITAL AND LIQUIDITY

Capital ratios remain strong with total risk-based capital at 16.98% and a tier 1 leverage ratio of 9.83% at September 30, 2024.

The following table sets forth our regulatory capital ratios as of the dates indicated:

At September 30, 2024, immediately available cash and cash equivalents were $2.4 billion, a decrease of $143.9 million from June 30, 2024. Combined with total available borrowing capacity of $11.7 billion and unpledged AFS securities of $2.1 billion, total available liquidity was $16.2 billion at the end of the third quarter.

Conference Call

The Company will host a conference call to discuss its third quarter 2024 financial results at 10:00 a.m. Pacific Time (PT) on Tuesday, October 22, 2024. Interested parties are welcome to attend the conference call by dialing (888) 317-6003 and referencing event code 6084667. A live audio webcast will also be available, and the webcast link will be posted on the Company's Investor Relations website at www.bancofcal.com/investor. The slide presentation for the call will also be available on the Company's Investor Relations website prior to the call. A replay of the call will be made available approximately one hour after the call has ended on the Company's Investor Relations website at www.bancofcal.com/investor or by dialing (877) 344-7529 and referencing event code 8866602.

About Banc of California, Inc.

Banc of California, Inc. (NYSE:BANC) is a bank holding company with over $33 billion in assets and the parent company of Banc of California. Banc of California is one of the nation's premier relationship-based business banks, providing banking and treasury management services to small-, middle-market, and venture-backed businesses. Banc of California is the third largest bank headquartered in California and offers a broad range of loan and deposit products and services through 80 full-service branches located throughout California and in Denver, Colorado, and Durham, North Carolina, as well as through regional offices nationwide. The bank also provides full-stack payment processing solutions through its subsidiary, Deepstack Technologies, and serves the Community Association Management industry nationwide with its technology-forward platform, SmartStreet™. The bank is committed to its local communities by supporting organizations that provide financial literacy and job training, small business support, affordable housing, and more. For more information, please visit us at www.bancofcal.com.

Forward-Looking Statements and Other Matters

This press release includes forward-looking statements within the meaning of the "Safe-Harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements related to our expectations regarding the performance of our business, liquidity and capital ratios and other non-historical statements. Words or phrases such as "believe," "will," "should," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," "plans," "strategy," or similar expressions are intended to identify these forward-looking statements. You are cautioned not to place undue reliance on any forward-looking statements. These statements are necessarily subject to risk and uncertainty and actual results could differ materially from those anticipated due to various factors, including those set forth from time to time in the documents filed or furnished by the Company with the Securities and Exchange Commission ("SEC"). The Company undertakes no obligation to revise or publicly release any revision or update to these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made, except as required by law.

Factors that could cause actual results to differ materially from the results anticipated or projected include, but are not limited to: (i) changes in general economic conditions, either nationally or in our market areas, including the impact of supply chain disruptions, and the risk of recession or an economic downturn; (ii) changes in the interest rate environment, including the recent and potential future changes in the FRB benchmark rate, which could adversely affect our revenue and expenses, the value of assets and obligations, the realization of deferred tax assets, the availability and cost of capital and liquidity, and the impacts of continuing inflation; (iii) the credit risks of lending activities, which may be affected by deterioration in real estate markets and the financial condition of borrowers, and the operational risk of lending activities, including the effectiveness of our underwriting practices and the risk of fraud, any of which may lead to increased loan delinquencies, losses, and non-performing assets, and may result in our allowance for credit losses not being adequate; (iv) fluctuations in the demand for loans, and fluctuations in commercial and residential real estate values in our market area; (v) the quality and composition of our securities portfolio; (vi) our ability to develop and maintain a strong core deposit base, including among our venture banking clients, or other low cost funding sources necessary to fund our activities particularly in a rising or high interest rate environment; (vii) the rapid withdrawal of a significant amount of demand deposits over a short period of time; (viii) the costs and effects of litigation; (ix) risks related to the Company's acquisitions, including disruption to current plans and operations; difficulties in customer and employee retention; fees, expenses and charges related to these transactions being significantly higher than anticipated; and our inability to achieve expected revenues, cost savings, synergies, and other benefits; and in the case of our recent acquisition of PacWest Bancorp ("PacWest"), reputational risk, regulatory risk and potential adverse reactions of the Company's or PacWest's customers, suppliers, vendors, employees or other business partners; (x) results of examinations by regulatory authorities of the Company and the possibility that any such regulatory authority may, among other things, limit our business activities, restrict our ability to invest in certain assets, refrain from issuing an approval or non-objection to certain capital or other actions, increase our allowance for credit losses, result in write-downs of asset values, restrict our ability or that of our bank subsidiary to pay dividends, or impose fines, penalties or sanctions; (xi) legislative or regulatory changes that adversely affect our business, including changes in tax laws and policies, accounting policies and practices, privacy laws, and regulatory capital or other rules; (xii) the risk that our enterprise risk management framework may not be effective in mitigating risk and reducing the potential for losses; (xiii) errors in estimates of the fair values of certain of our assets and liabilities, which may result in significant changes in valuation; (xiv) failures or security breaches with respect to the network, applications, vendors and computer systems on which we depend, including due to cybersecurity threats; (xv) our ability to attract and retain key members of our senior management team; (xvi) the effects of climate change, severe weather events, natural disasters, pandemics, epidemics and other public health crises, acts of war or terrorism, and other external events on our business; (xvii) the impact of bank failures or other adverse developments at other banks on general depositor and investor sentiment regarding the stability and liquidity of banks; (xviii) the possibility that our recorded goodwill could become impaired, which may have an adverse impact on our earnings and capital; (xix) our existing indebtedness, together with any future incurrence of additional indebtedness, could adversely affect our ability to raise additional capital and to meet our debt obligations; (xx) the risk that we may incur significant losses on future asset sales; and (xxi) other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services and the other risks described in this press release and from time to time in other documents that we file with or furnish to the SEC.

Non-GAAP Financial Measures

Included in this press release are certain non-GAAP financial measures, such as tangible assets, tangible equity to tangible assets, tangible book value per common share, adjusted net earnings (loss), return on average tangible common equity, and adjusted return on average tangible common equity, designed to complement the financial information presented in accordance with U.S. GAAP because management believes such measures are useful to investors. These non-GAAP financial measures should be considered only as supplemental to, and not superior to, financial measures provided in accordance with GAAP. Please refer to the "Non-GAAP Measures" section of this release for additional detail including reconciliations of the non-GAAP financial measures included in this press release to the most directly comparable financial measures prepared in accordance with GAAP.