Banc of California(BANC) - 2025 Q3 - Quarterly Results

Executive Summary Third Quarter 2025 Financial Highlights Banc of California reported strong financial results for Q3 2025, with significant growth in net earnings and pre-tax pre-provision income, driven by robust net interest income and margin expansion. The company also demonstrated stable credit quality, increased noninterest-bearing deposits, and maintained strong capital ratios | Metric | Q3 2025 Value | | :-------------------------------- | :------------ | | Diluted Earnings Per Share | $0.38 | | Book Value Per Share | $19.09 | | Tangible Book Value Per Share | $16.99 | | Total Revenue Growth (QoQ) | 5% | | Pre-Tax Pre-Provision Income Growth (QoQ) | 17% | | Noninterest-bearing Deposits Annualized Growth (QoQ) | 9% | - Net earnings available to common and equivalent stockholders increased to $59.7 million ($0.38 per diluted share) in Q3 2025, up from $18.4 million ($0.12 per diluted share) in Q2 2025. Adjusted net earnings for Q2 2025 were $48.4 million ($0.31 per diluted share), which included a $20.2 million provision expense (net of tax) for loans transferred to held for sale and a $9.8 million non-cash income tax expense[4] - Net interest margin (NIM) increased by 12 basis points from Q2 2025 to 3.22%, driven by a 12 basis point increase in average yield on loans and leases and a 5 basis point decrease in the cost of funds[6] - Noninterest-bearing deposits grew 9% annualized from Q2 2025, representing 28% of total deposits, up from 27%[6] - Credit quality remained stable with a 4% reduction in criticized loans from Q2 2025, and the allowance for credit losses ratio increased to 1.12% from 1.07%[6] - The company repurchased 2.2 million shares of common stock for $35.5 million in Q3 2025, and 13.6 million shares for $185.5 million year-to-date[6] - Capital ratios remained strong, with an estimated 12.56% Tier 1 capital ratio and 10.14% CET 1 capital ratio, both well above regulatory thresholds[6] CEO Commentary Chairman & CEO Jared Wolff highlighted the strength of the company's core earnings engine and disciplined execution, leading to double-digit adjusted earnings growth, expanded operating leverage, and improved profitability. He emphasized balance sheet strengthening through higher capital, strong loan production, relationship deposit growth, and proactive credit management, expressing confidence in continued profitable growth - Third quarter results reflect the strength of the core earnings engine and disciplined execution, delivering double-digit earnings growth on an adjusted basis, expanded operating leverage, and meaningfully improved profitability[7] - The balance sheet was further strengthened with higher capital levels, strong loan production, growth in relationship deposits, and proactive credit management[7] - Management expects further earnings growth as the balance sheet continues to remix and sees a good pipeline for the fourth quarter, positioning the company for profitable, long-term growth and shareholder value creation[7] Income Statement Highlights Summary Income Statement The summary income statement shows significant improvements in net earnings and diluted EPS for Q3 2025 compared to Q2 2025 and Q3 2024, driven by increased net interest income and total revenue, alongside a lower provision for credit losses | Summary Income Statement (In thousands) | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | YTD Sep 30, 2025 | YTD Sep 30, 2024 | | :-------------------------------------- | :----------- | :----------- | :----------- | :--------------- | :--------------- | | Total interest income | $432,541 | $420,509 | $446,893 | $1,259,705 | $1,388,186 | | Total interest expense | 179,097 | 180,293 | 214,718 | 533,681 | 697,421 | | Net interest income | 253,444 | 240,216 | 232,175 | 726,024 | 690,765 | | Provision for credit losses | 9,700 | 39,100 | 9,000 | 58,100 | 30,000 | | Total noninterest income | 34,285 | 32,633 | (15,452) | 100,568 | 48,156 | | Total revenue | 287,729 | 272,849 | 216,723 | 826,592 | 738,921 | | Total noninterest expense | 185,684 | 185,869 | 196,209 | 555,206 | 610,370 | | Earnings before income taxes | 92,345 | 47,880 | 11,514 | 213,286 | 98,551 | | Income tax expense | 22,716 | 19,495 | 2,730 | 61,704 | 28,582 | | Net earnings | 69,629 | 28,385 | 8,784 | 151,582 | 69,969 | | Preferred stock dividends | 9,947 | 9,947 | 9,947 | 29,841 | 29,841 | | Net earnings (loss) available to common and equivalent stockholders | $59,682 | $18,438 | $(1,163) | $121,741 | $40,128 | | Diluted earnings (loss) per share | $0.38 | $0.12 | $(0.01) | $0.75 | $0.24 | Net Interest Income and Margin Net interest income and margin saw positive trends both quarter-over-quarter and year-to-date, primarily driven by higher yields on interest-earning assets and a reduction in the cost of funds, despite a decrease in average total deposits Q3 2025 vs Q2 2025 Net interest income increased by $13.2 million to $253.4 million, and net interest margin expanded by 12 basis points to 3.22%, primarily due to a higher average yield on interest-earning assets and lower cost of funds | Metric | Q3 2025 (In millions) | Q2 2025 (In millions) | QoQ Change (In millions) | | :------------------------------------ | :-------------------- | :-------------------- | :----------------------- | | Net interest income | $253.4 | $240.2 | +$13.2 | | Net interest margin | 3.22% | 3.10% | +0.12% | | Average yield on interest-earning assets | 5.50% | 5.42% | +0.08% | | Average total cost of funds | 2.37% | 2.42% | -0.05% | | Average yield on loans and leases | 6.05% | 5.93% | +0.12% | | Average total cost of deposits | 2.08% | 2.13% | -0.05% | | Average cost of borrowings | 4.76% | 4.93% | -0.17% | | Average noninterest-bearing deposits as % of total deposits | 28.2% | 27.8% | +0.4% | - The increase in net interest income was driven by a $10.4 million increase in interest income from loans due to higher rates on new production, higher day count, and loan payoffs, and a $1.9 million decrease in interest expense on deposits due to lower average balances and interest rates[13] YTD September 30, 2025 vs YTD September 30, 2024 Year-to-date net interest income increased by $35.3 million to $726.0 million, and net interest margin improved by 34 basis points to 3.13%, primarily due to a significant decrease in the average total cost of funds, partially offset by a decrease in the average yield on interest-earning assets | Metric | YTD Sep 30, 2025 (In millions) | YTD Sep 30, 2024 (In millions) | YoY Change (In millions) | | :------------------------------------ | :----------------------------- | :----------------------------- | :----------------------- | | Net interest income | $726.0 | $690.8 | +$35.3 | | Net interest margin | 3.13% | 2.79% | +0.34% | | Average total cost of funds | 2.40% | 2.93% | -0.53% | | Average yield on interest-earning assets | 5.44% | 5.61% | -0.17% | | Average total deposits decrease | $1.7B | N/A | N/A | | Average noninterest-bearing deposits as % of total deposits | 28.2% | 27.0% | +1.2% | | Average cost of borrowings | 4.99% | 5.74% | -0.75% | - The improvement was driven by a $133.4 million decrease in interest expense on deposits due to lower rates from federal funds rate cuts and lower average balances from brokered deposit paydowns, and a $30.4 million decrease in interest expense on borrowings due to lower average balances and replacement of higher-cost borrowings[17] - Offsetting factors included a $76.1 million decrease in interest income from deposits in financial institutions due to lower balances and market rates, and a $63.1 million decrease in interest income from loans due to lower market rates, lower average balances (Civic loans sale), and lower net loan discount accretion[17] Provision For Credit Losses The provision for credit losses significantly decreased quarter-over-quarter but increased year-to-date, reflecting specific loan transfers to held for sale, changes in loan risk ratings, macroeconomic outlook, and net charge-off activity Q3 2025 vs Q2 2025 The provision for credit losses decreased substantially to $9.7 million in Q3 2025 from $39.1 million in Q2 2025, primarily due to the absence of large provisions related to loans transferred to held for sale that impacted Q2 | Metric | Q3 2025 (In millions) | Q2 2025 (In millions) | | :-------------------------- | :-------------------- | :-------------------- | | Provision for credit losses | $9.7 | $39.1 | | Provision for loan losses | $8.7 | $38.6 | | Provision for unfunded loan commitments | $1.0 | -$0.4 | | Provision for credit losses (investment securities) | N/A | $0.9 | - Q3 provision reflected changes in loan risk ratings, new originations, macroeconomic outlook, and higher unfunded commitments, partially offset by net recoveries and lower qualitative reserves for commercial real estate loans[24] - Q2 provision included $26.3 million related to loans transferred to held for sale and an additional $12.3 million driven by net charge-off activity and an updated economic forecast[26] YTD September 30, 2025 vs YTD September 30, 2024 The year-to-date provision for credit losses increased to $58.1 million in 2025 from $30.0 million in 2024, largely due to provisions for loans transferred to held for sale and net charge-off activity in the first half of 2025 | Metric | YTD Sep 30, 2025 (In millions) | YTD Sep 30, 2024 (In millions) | | :-------------------------- | :----------------------------- | :----------------------------- | | Provision for credit losses | $58.1 | $30.0 | | Provision for loan losses | $57.0 | $32.0 | | Provision for unfunded loan commitments | $1.2 | -$2.0 | - The 2025 YTD provision included $26.3 million for loans transferred to held for sale and was further driven by net charge-off activity and changes in loan risk ratings, partially offset by lower specific reserves and a favorable portfolio mix shift[28] - The 2024 YTD provision was mainly due to higher net charge-offs and qualitative reserves, partially offset by reserves released for Civic loans transferred to held for sale[29] Noninterest Income Noninterest income showed an increase both quarter-over-quarter and year-to-date, with Q3 2025 benefiting from fair value gains on equity investments and the YTD period reflecting the absence of a significant securities sale loss from the prior year Q3 2025 vs Q2 2025 Noninterest income increased by $1.7 million to $34.3 million in Q3 2025, primarily due to higher dividends and gains on equity investments, partially offset by a decrease in warrant income | Metric | Q3 2025 (In millions) | Q2 2025 (In millions) | | :------------------------------------ | :-------------------- | :-------------------- | | Noninterest income | $34.3 | $32.6 | | Dividends and gains on equity investments | $2.3 | -$0.1 | | Warrant income | $0.4 | $1.2 | - The increase in dividends and gains on equity investments was mainly related to fair value gains on Small Business Investment Company (SBIC) investments in Q3, contrasting with losses in Q2[30] YTD September 30, 2025 vs YTD September 30, 2024 Year-to-date noninterest income increased significantly by $52.4 million to $100.6 million, largely due to the absence of a $59.9 million loss on securities sales recorded in the prior year | Metric | YTD Sep 30, 2025 (In millions) | YTD Sep 30, 2024 (In millions) | | :----------------- | :----------------------------- | :----------------------------- | | Noninterest income | $100.6 | $48.2 | | Loss on sale of securities | $0 | $59.9 | | Leased equipment income | $31.3 | $40.4 | - The prior year period included a $59.9 million loss from a balance sheet repositioning initiative, which was partially offset by a $9.0 million decrease in leased equipment income in the current year[31] Noninterest Expense Noninterest expense remained relatively flat quarter-over-quarter but decreased significantly year-to-date, driven by reductions in insurance and assessments, customer-related expenses, and occupancy costs Q3 2025 vs Q2 2025 Noninterest expense remained stable at $185.7 million in Q3 2025, showing minimal change from Q2 2025 | Metric | Q3 2025 (In millions) | Q2 2025 (In millions) | | :----------------- | :-------------------- | :-------------------- | | Noninterest expense | $185.7 | $185.9 | YTD September 30, 2025 vs YTD September 30, 2024 Year-to-date noninterest expense decreased by $55.2 million to $555.2 million, primarily due to lower insurance and assessments, customer-related expenses, and occupancy costs, partially offset by acquisition, integration, and reorganization costs | Metric | YTD Sep 30, 2025 (In millions) | YTD Sep 30, 2024 (In millions) | | :------------------------------------ | :----------------------------- | :----------------------------- | | Noninterest expense | $555.2 | $610.4 | | Decrease in insurance and assessments | $33.9 | N/A | | Decrease in customer related expenses | $17.2 | N/A | | Decrease in occupancy expense | $6.4 | N/A | | Increase in acquisition, integration and reorganization costs | $13.2 | N/A | - The decrease in insurance and assessments was due to incremental FDIC special assessments recorded in 2024. Customer-related expenses decreased due to lower earnings credit rate expenses, and occupancy expense decreased from branch consolidations post-PacWest Bancorp merger[33] Income Taxes Income tax expense and effective tax rates varied quarter-over-quarter due to a one-time non-cash expense in Q2 2025, while year-to-date effective tax rates remained stable Q3 2025 vs Q2 2025 Income tax expense was $22.7 million in Q3 2025 with an effective tax rate of 24.6%, a decrease from Q2 2025's $19.5 million expense and 40.7% effective tax rate, which was impacted by a one-time adjustment | Metric | Q3 2025 (In millions) | Q2 2025 (In millions) | | :----------------- | :-------------------- | :-------------------- | | Income tax expense | $22.7 | $19.5 | | Effective tax rate | 24.6% | 40.7% | - The higher effective tax rate in Q2 2025 included a one-time non-cash income tax expense of $9.8 million, primarily due to the revaluation of deferred tax assets related to California state tax changes[35] YTD September 30, 2025 vs YTD September 30, 2024 Year-to-date income tax expense was $61.7 million with an effective tax rate of 28.9% for 2025, comparable to the 29.0% effective tax rate in 2024 | Metric | YTD Sep 30, 2025 (In millions) | YTD Sep 30, 2024 (In millions) | | :----------------- | :----------------------------- | :----------------------------- | | Income tax expense | $61.7 | $28.6 | | Effective tax rate | 28.9% | 29.0% | Balance Sheet Highlights Selected Balance Sheet Items The balance sheet at September 30, 2025, shows a slight decrease in total assets quarter-over-quarter but an increase year-over-year, with notable shifts in loan categories, a decrease in total deposits, and an increase in stockholders' equity | Selected Balance Sheet Items (In thousands) | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | QoQ Change | YoY Change | | :---------------------------------------- | :----------- | :----------- | :----------- | :--------- | :--------- | | Cash and cash equivalents | $2,398,265 | $2,353,552 | $2,554,227 | $44,713 | $(155,962) | | Securities available-for-sale | 2,426,734 | 2,246,174 | 2,300,284 | 180,560 | 126,450 | | Securities held-to-maturity | 2,303,657 | 2,316,725 | 2,301,263 | (13,068) | 2,394 | | Loans held for sale | 211,454 | 465,571 | 28,639 | (254,117) | 182,815 | | Loans and leases held for investment | 24,110,642 | 24,245,893 | 23,527,777 | (135,251) | 582,865 | | Total loans and leases | 24,322,096 | 24,711,464 | 23,556,416 | (389,368) | 765,680 | | Total assets | 34,012,965 | 34,250,453 | 33,432,613 | (237,488) | 580,352 | | Noninterest-bearing deposits | $7,603,748 | $7,441,116 | $7,811,796 | $162,632 | $(208,048) | | Total deposits | 27,184,765 | 27,528,433 | 26,828,269 | (343,668) | 356,496 | | Borrowings | 2,005,022 | 1,917,180 | 1,591,833 | 87,842 | 413,189 | | Total liabilities | 30,546,226 | 30,823,610 | 29,936,415 | (277,384) | 609,811 | | Total stockholders' equity | 3,466,739 | 3,426,843 | 3,496,198 | 39,896 | (29,459) | Securities The securities portfolio saw an increase in available-for-sale (AFS) securities, driven by purchases and fair value increases, while held-to-maturity (HTM) securities slightly decreased. Unrealized losses on AFS securities improved due to a slight decline in interest rates | Metric | Sep 30, 2025 (In billions) | Jun 30, 2025 (In billions) | QoQ Change (In millions) | | :------------------------------------ | :------------------------- | :------------------------- | :----------------------- | | Securities available-for-sale | $2.4 | $2.2 | +$180.6 | | AFS purchases | $277.6 | N/A | N/A | | AFS fair value increase | $25.8 | N/A | N/A | | AFS principal paydowns/maturities/amortization | $122.8 | N/A | N/A | | AFS aggregate unrealized net after-tax losses | $147.9 | $166.6 | -$18.7 | | Securities held-to-maturity | $2.3 | $2.3 | -$13.1 | | HTM aggregate unrealized net after-tax losses | $139.7 | N/A | N/A | - The decrease in AFS unrealized net losses was driven by a slight decline in interest rates, which positively impacted fair values[38] Loans and Leases Total loans and leases held for investment decreased slightly in Q3 2025, primarily due to reductions in residential real estate construction, multi-family, and venture capital loans, partially offset by growth in asset-based loans. Loans held for sale also decreased significantly due to sales and payoffs | Composition of Loans and Leases (In thousands) | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :--------------------------------------------- | :----------- | :----------- | :----------- | | Total real estate mortgage | $13,579,862 | $13,807,808 | $13,334,406 | | Total real estate construction and land | 2,154,826 | 2,302,091 | 3,459,409 | | Total commercial | 8,006,657 | 7,753,257 | 6,319,472 | | Consumer | 369,297 | 382,737 | 414,490 | | Total loans and leases held for investment | $24,110,642 | $24,245,893 | $23,527,777 | | Total unfunded loan commitments | $4,822,917 | $4,673,596 | $5,008,449 | | Total loans and leases held for sale | $211,454 | $465,571 | $28,639 | - Loans and leases held for investment decreased by $135.3 million to $24.1 billion, driven by decreases in residential real estate construction and land loans, multi-family loans, and venture capital loans, partially offset by an increase in asset-based loans[41] - Loan production and disbursements totaled $2.1 billion in Q3 2025, with a weighted average interest rate of 7.08%[41] - Loans held for sale decreased by $254.1 million, reflecting the sale of loans transferred in Q2 and loan payoffs[42] Credit Quality The overall credit quality of the loan portfolio remained strong, with a reduction in criticized loans, though delinquent and nonperforming loans saw slight increases. The increase in classified loans was primarily due to a risk rating framework update in the Venture Banking portfolio and a specific commercial real estate loan | Asset Quality Information and Ratios | Sep 30, 2025 (In thousands) | Jun 30, 2025 (In thousands) | Sep 30, 2024 (In thousands) | | :----------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total delinquent loans and leases | $161,368 | $149,466 | $124,964 | | Total delinquent loans and leases to loans and leases held for investment | 0.67% | 0.62% | 0.53% | | Nonaccrual loans and leases | $174,541 | $167,516 | $168,341 | | Total nonperforming loans and leases ("NPLs") | $174,541 | $167,516 | $168,341 | | Total nonperforming assets ("NPAs") | $179,331 | $175,322 | $177,002 | | Criticized loans and leases held for investment | $1,269,561 | $1,318,124 | $1,245,479 | | NPLs to loans and leases held for investment | 0.72% | 0.69% | 0.72% | | NPAs to total assets | 0.53% | 0.51% | 0.53% | - Criticized loans decreased by 4% from Q2 2025, driven by a 24% decrease in special mention loans, partially offset by an increase in classified loans due to a Venture Banking risk rating framework update and a $49.6 million commercial real estate loan becoming classified[44] - Total delinquent loans and leases increased by $11.9 million to $161.4 million, with increases in both 30-89 days and 90+ days delinquent categories, particularly in other residential and commercial real estate mortgage loans[45] - Nonperforming loans and leases increased by $7.0 million to $174.5 million, with additions of $40.0 million partially offset by payoffs, paydowns, transfers to accrual status, and charge-offs[46] Allowance for Credit Losses – Loans The allowance for credit losses (ACL) increased to $270.7 million, or 1.12% of total loans and leases, driven by a provision for credit losses and net recoveries. The economic coverage ratio, which includes additional loss coverage, also improved | Allowance for Credit Losses - Loans (In thousands) | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :------------------------------------------------- | :----------- | :----------- | :----------- | | Allowance for loan and lease losses ("ALLL") | $240,501 | $229,344 | $254,345 | | Reserve for unfunded loan commitments ("RUC") | $30,221 | $29,221 | $27,571 | | Allowance for credit losses ("ACL") - Loans | $270,722 | $258,565 | $281,916 | | ALLL to loans and leases held for investment | 1.00% | 0.95% | 1.08% | | ACL to loans and leases held for investment | 1.12% | 1.07% | 1.20% | | ACL to NPLs | 155.11% | 154.35% | 167.47% | | Economic coverage ratio | 1.65% | 1.61% | N/A | | Annualized net (recoveries) charge-offs to average loans and leases | (0.04)% | 0.72% | 0.04% | - The $12.2 million increase in ACL was driven by a $9.7 million provision for credit losses and $2.5 million in net recoveries, leading to a 5 basis point increase in the ACL coverage ratio[49] - Additional loss absorption capacity includes $110.5 million from credit-linked notes and $17.5 million in unearned credit marks, contributing to an economic coverage ratio of 1.65%[52] - Net recoveries were 0.04% of average loans and leases (annualized) for Q3, an improvement from net charge-offs of 0.72% in Q2, primarily due to net recoveries in commercial and real estate construction loans[53] Deposits and Client Investment Funds Total deposits decreased in Q3 2025, primarily due to a reduction in interest-bearing deposits, while noninterest-bearing deposits increased. Off-balance sheet client funds also saw a decrease | Composition of Deposits (In thousands) | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :------------------------------------- | :----------- | :----------- | :----------- | | Noninterest-bearing checking | $7,603,748 | $7,441,116 | $7,811,796 | | Total interest-bearing | 19,581,017 | 20,087,317 | 19,016,473 | | Total deposits | $27,184,765 | $27,528,433 | $26,828,269 | | Noninterest-bearing checking as % of Total Deposits | 28% | 27% | 29% | | Uninsured and uncollateralized deposits | $7.6B | $7.6B | N/A | | Off-balance sheet client funds | $1.1B | $1.5B | N/A | - Total deposits decreased by $343.7 million to $27.2 billion, driven by a $506.3 million decrease in interest-bearing deposits (mainly money market and time deposits), partially offset by a $162.6 million increase in noninterest-bearing deposits[54] - Noninterest-bearing checking deposits represented 28% of total deposits at September 30, 2025, up from 27% at June 30, 2025[55] - Off-balance sheet client funds decreased to $1.1 billion from $1.5 billion in the prior quarter[56] Borrowings Borrowings increased by $87.8 million in Q3 2025, primarily due to higher overnight and short-term borrowings | Metric | Sep 30, 2025 (In billions) | Jun 30, 2025 (In billions) | QoQ Change (In millions) | | :--------- | :------------------------- | :------------------------- | :----------------------- | | Borrowings | $2.0 | $1.9 | +$87.8 | Equity Total stockholders' equity and tangible common equity increased in Q3 2025, driven by net earnings and a decrease in unrealized losses on securities, despite share repurchases and dividend payments. Book value and tangible book value per share also improved | Metric | Sep 30, 2025 (In billions) | Jun 30, 2025 (In billions) | QoQ Change (In millions) | | :------------------------------------ | :------------------------- | :------------------------- | :----------------------- | | Total stockholders' equity | $3.5 | $3.4 | +$39.9 | | Tangible common equity | $2.6 | $2.6 | +$46.9 | | Book value per common share | $19.09 | $18.58 | +$0.51 | | Tangible book value per common share | $16.99 | $16.46 | +$0.53 | | Common and common equivalent stock repurchased (Q3) | 2.2 million shares | N/A | N/A | | Aggregate repurchase value (Q3) | $35.5 million | N/A | N/A | | Common and common equivalent stock repurchased (YTD) | 13.6 million shares | N/A | N/A | | Aggregate repurchase value (YTD) | $185.5 million | N/A | N/A | | Remaining repurchase authorization | $114.5 million | N/A | N/A | - The increase in total stockholders' equity was primarily due to net earnings of $69.6 million, a $25.0 million decrease in net after-tax loss in AOCI for AFS and HTM securities, and $6.1 million in share-based compensation, partially offset by $35.5 million in stock repurchases and $26.1 million in dividends[58] Capital and Liquidity Regulatory Capital Ratios Banc of California and its subsidiary bank maintained strong regulatory capital ratios at September 30, 2025, all well above the thresholds for 'well capitalized' banks, demonstrating robust financial health | Capital Ratios | Sep 30, 2025 (Preliminary) | Jun 30, 2025 | Sep 30, 2024 | | :-------------------------- | :------------------------- | :----------- | :----------- | | Banc of California, Inc. | | | | | Total risk-based capital ratio | 16.69% | 16.37% | 17.00% | | Tier 1 risk-based capital ratio | 12.56% | 12.34% | 12.88% | | Common equity tier 1 capital ratio | 10.14% | 9.95% | 10.46% | | Tier 1 leverage ratio | 9.77% | 9.74% | 9.83% | | Banc of California (Bank) | | | | | Total risk-based capital ratio | 15.94% | 15.65% | 16.61% | | Tier 1 risk-based capital ratio | 13.42% | 13.21% | 14.08% | | Common equity tier 1 capital ratio | 13.42% | 13.21% | 14.08% | | Tier 1 leverage ratio | 10.44% | 10.42% | 10.74% | Liquidity The company maintained a strong liquidity position at the end of Q3 2025, with significant immediately available cash and substantial borrowing capacity | Metric | Sep 30, 2025 (In billions) | | :------------------------------------ | :------------------------- | | Cash and cash equivalents | $2.4 | | Immediately available cash and cash equivalents (excluding restricted cash) | $2.2 | | Total available borrowing capacity | $10.3 | | Unpledged AFS securities | $2.2 | | Total available liquidity | $14.8 | Additional Information Conference Call Details Banc of California will host a conference call on October 23, 2025, to discuss its third quarter 2025 financial results, with details provided for participation and replay access - A conference call to discuss Q3 2025 financial results will be held on Thursday, October 23, 2025, at 10:00 a.m. Pacific Time (PT)[63] - Interested parties can join by dialing (888) 317-6003 (event code 5396883) or via a live audio webcast on www.bancofcal.com/investor, where the slide presentation will also be available[63] - A replay of the call will be accessible approximately one hour after its conclusion on the Investor Relations website or by dialing (877) 344-7529 (event code 2897660)[63] About Banc of California, Inc. Banc of California, Inc. is a bank holding company with over $34 billion in assets, operating as a premier relationship-based business bank primarily in California and Denver, Colorado. It offers a broad range of financial services and is committed to community support through its charitable foundation - Banc of California, Inc. (NYSE: BANC) is a bank holding company with over $34 billion in assets, serving as the parent company of Banc of California[64] - The bank is a relationship-based business bank, providing banking and treasury management services to small-, middle-market, and venture-backed businesses, and is the largest independent bank headquartered in Los Angeles and third largest in California[64] - It operates through 79 full-service branches across California, Denver, Colorado, and Durham, North Carolina, with regional offices nationwide, offering diverse loan and deposit products, payment processing, and community association management services (SmartStreet™)[64] - The company is dedicated to local communities through the Banc of California Charitable Foundation, supporting financial literacy, job training, small business, and affordable housing initiatives[64] Forward-Looking Statements This section serves as a cautionary statement regarding forward-looking information, highlighting that actual results may differ materially due to various risks and uncertainties, and the company undertakes no obligation to update these statements - The press release contains forward-looking statements subject to risks and uncertainties, and actual results could differ materially from those anticipated[65] - Readers are cautioned not to place undue reliance on these statements, and the company does not undertake to revise or publicly release updates unless required by law[65] - Factors that could cause differences include changes in economic conditions, interest rates, credit risks, loan demand, securities portfolio quality, deposit base, rapid deposit withdrawals, litigation, acquisition risks, regulatory actions, legislative changes, risk management effectiveness, fair value estimates, cybersecurity threats, key personnel retention, external events (climate change, pandemics, war), impact of bank failures, goodwill impairment, indebtedness, and asset sale losses[67] Non-GAAP Financial Measures The report includes several non-GAAP financial measures, such as tangible common equity and adjusted earnings, which management uses to analyze performance and believes are useful supplemental information for investors, with reconciliations provided - The press release includes non-GAAP financial measures like tangible common equity, tangible book value per common share, return on average tangible common equity (ROATCE), adjusted ROATCE, adjusted net earnings, adjusted return on average assets (ROAA), pre-tax pre-provision income, efficiency ratio, and economic coverage ratio[68][85] - Management uses these non-GAAP measures for performance analysis and believes they provide useful supplemental information for investors, but they should not be considered superior to GAAP measures[68][89] - Reconciliations of these non-GAAP measures to the most directly comparable GAAP financial measures are provided in the 'Non-GAAP Measures' section[68][90] Investor Relations / Media Contact Contact information is provided for investor relations and media inquiries for Banc of California, Inc - Investor Relations Inquiries can be directed to Banc of California, Inc. at (855) 361-2262, or specific contacts Jared Wolff (310) 424-1230, Joe Kauder (310) 844-5224, and Ann DeVries (646) 376-7011[70] - Media Contact is Debora Vrana at Banc of California, reachable at (213) 533-3122 or Deb.Vrana@bancofcal.com[70] Financial Statements (Unaudited) Consolidated Statements of Financial Condition The unaudited consolidated statements of financial condition provide a snapshot of the company's assets, liabilities, and stockholders' equity across multiple quarters, showing trends in key balance sheet items | ASSETS (Dollars in thousands) | Sep 30, 2025 | Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | | :------------------------------------ | :----------- | :----------- | :----------- | :----------- | :----------- | | Total cash and cash equivalents | $2,398,265 | $2,353,552 | $2,343,889 | $2,502,212 | $2,554,227 | | Total investment securities | 4,889,728 | 4,725,142 | 4,801,300 | 4,700,761 | 4,746,670 | | Loans held for sale | 211,454 | 465,571 | 25,797 | 26,331 | 28,639 | | Loans and leases held for investment, net | 23,870,141 | 24,016,549 | 23,891,541 | 23,542,303 | 23,273,432 | | Total assets | $34,012,965 | $34,250,453 | $33,779,918 | $33,542,864 | $33,432,613 | | LIABILITIES: | | | | | | | Total deposits | $27,184,765 | $27,528,433 | $27,193,191 | $27,191,909 | $26,828,269 | | Borrowings | 2,005,022 | 1,917,180 | 1,670,782 | 1,391,814 | 1,591,833 | | Subordinated debt | 950,888 | 949,213 | 944,908 | 941,923 | 942,151 | | Total liabilities | 30,546,226 | 30,823,610 | 30,258,262 | 30,042,915 | 29,936,415 | | STOCKHOLDERS' EQUITY: | | | | | | | Total stockholders' equity | 3,466,739 | 3,426,843 | 3,521,656 | 3,499,949 | 3,496,198 | Consolidated Statements of Earnings The unaudited consolidated statements of earnings detail the company's revenues, expenses, and net income for quarterly and year-to-date periods, illustrating the drivers of profitability and changes over time | (In thousands, except per share amounts) | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | YTD Sep 30, 2025 | YTD Sep 30, 2024 | | :--------------------------------------- | :----------- | :----------- | :----------- | :--------------- | :--------------- | | Total interest income | $432,541 | $420,509 | $446,893 | $1,259,705 | $1,388,186 | | Total interest expense | 179,097 | 180,293 | 214,718 | 533,681 | 697,421 | | Net interest income | 253,444 | 240,216 | 232,175 | 726,024 | 690,765 | | Provision for credit losses | 9,700 | 39,100 | 9,000 | 58,100 | 30,000 | | Total noninterest income | 34,285 | 32,633 | (15,452) | 100,568 | 48,156 | | Total noninterest expense | 185,684 | 185,869 | 196,209 | 555,206 | 610,370 | | Net earnings | 69,629 | 28,385 | 8,784 | 151,582 | 69,969 | | Diluted earnings (loss) per share | $0.38 | $0.12 | $(0.01) | $0.75 | $0.24 | Selected Financial Data This section presents key profitability and other financial ratios, offering a concise overview of the company's performance metrics and trends over various periods | Profitability and Other Ratios | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | YTD Sep 30, 2025 | YTD Sep 30, 2024 | | :--------------------------------------- | :----------- | :----------- | :----------- | :--------------- | :--------------- | | Return on average assets (1) | 0.82% | 0.34% | 0.10% | 0.60% | 0.26% | | Adjusted ROAA (1)(2) | 0.82% | 0.69% | 0.59% | 0.72% | 0.41% | | Return on average tangible common equity (1)(2) | 9.87% | 3.70% | 0.70% | 6.99% | 3.13% | | Net interest margin (1) | 3.22% | 3.10% | 2.93% | 3.13% | 2.79% | | Efficiency ratio (2)(5) | 62.05% | 65.50% | 68.04% | 64.57% | 74.88% | | Loans to deposits ratio | 89.47% | 89.77% | 87.80% | 89.47% | 87.80% | | Average total cost of funds (1) | 2.37% | 2.42% | 2.82% | 2.40% | 2.93% | Average Balance, Average Yield Earned, and Average Cost Paid (QoQ) This table provides a detailed breakdown of average balances, interest income/expense, and corresponding yields/costs for interest-earning assets and interest-bearing liabilities for the three months ended September 30, 2025, June 30, 2025, and September 30, 2024, highlighting quarter-over-quarter changes | (Dollars in thousands) | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :--------------------------------------- | :----------- | :----------- | :----------- | | Assets: | | | | | Loans and leases (1) (Average Balance) | $24,458,255 | $24,504,319 | $23,803,691 | | Loans and leases (Interest Income) | $372,723 | $362,303 | $369,913 | | Loans and leases (Average Yield) | 6.05% | 5.93% | 6.18% | | Total interest-earning assets (Average Balance) | $31,198,336 | $31,097,009 | $31,575,467 | | Total interest-earning assets (Interest Income) | $432,541 | $420,509 | $446,893 | | Total interest-earning assets (Average Yield) | 5.50% | 5.42% | 5.63% | | Liabilities and Stockholders' Equity: | | | | | Total interest-bearing deposits (Average Balance) | $19,608,906 | $19,721,040 | $20,474,188 | | Total interest-bearing deposits (Interest Expense) | $143,074 | $144,940 | $180,986 | | Total interest-bearing deposits (Average Cost) | 2.89% | 2.95% | 3.52% | | Total interest-bearing liabilities (Average Balance) | $22,264,293 | $22,296,364 | $22,478,209 | | Total interest-bearing liabilities (Interest Expense) | $179,097 | $180,293 | $214,718 | | Total interest-bearing liabilities (Average Cost) | 3.19% | 3.24% | 3.80% | | Net interest income (1) | $253,444 | $240,216 | $232,175 | | Net interest margin | 3.22% | 3.10% | 2.93% | Average Balance, Average Yield Earned, and Average Cost Paid (YTD) This table presents the average balances, interest income/expense, and corresponding yields/costs for interest-earning assets and interest-bearing liabilities for the nine months ended September 30, 2025, and September 30, 2024, illustrating year-over-year trends | (Dollars in thousands) | YTD Sep 30, 2025 | YTD Sep 30, 2024 | | :--------------------------------------- | :--------------- | :--------------- | | Assets: | | | | Loans and leases (1) (Average Balance) | $24,252,860 | $24,878,682 | | Loans and leases (Interest Income) | $1,081,129 | $1,144,231 | | Loans and leases (Average Yield) | 5.96% | 6.14% | | Total interest-earning assets (Average Balance) | $30,970,876 | $33,039,684 | | Total interest-earning assets (Interest Income) | $1,259,705 | $1,388,186 | | Total interest-earning assets (Average Yield) | 5.44% | 5.61% | | Liabilities and Stockholders' Equity: | | | | Total interest-bearing deposits (Average Balance) | $19,513,486 | $21,048,955 | | Total interest-bearing deposits (Interest Expense) | $428,544 | $561,899 | | Total interest-bearing deposits (Average Cost) | 2.94% | 3.57% | | Total interest-bearing liabilities (Average Balance) | $22,038,389 | $23,974,047 | | Total interest-bearing liabilities (Interest Expense) | $533,681 | $697,421 | | Total interest-bearing liabilities (Average Cost) | 3.24% | 3.89% | | Net interest income (1) | $726,024 | $690,765 | | Net interest margin | 3.13% | 2.79% | Non-GAAP Measures Reconciliations Tangible Common Equity and Tangible Book Value Per Share Reconciliation This section provides the reconciliation of GAAP stockholders' equity to tangible common equity and the calculation of tangible book value per common share, which are key non-GAAP metrics for assessing capital adequacy | Tangible Common Equity and Tangible Book Value Per Share (Dollars in thousands, except per share amounts) | Sep 30, 2025 | Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | | :------------------------------------------------------------------------------------------------------- | :----------- | :----------- | :----------- | :----------- | :----------- | | Stockholders' equity | $3,466,739 | $3,426,843 | $3,521,656 | $3,499,949 | $3,496,198 | | Less: Preferred stock | 498,516 | 498,516 | 498,516 | 498,516 | 498,516 | | Total common equity | 2,968,223 | 2,928,327 | 3,023,140 | 3,001,433 | 2,997,682 | | Less: Goodwill and intangible assets | 326,444 | 333,451 | 340,458 | 347,465 | 357,332 | | Tangible common equity | $2,641,779 | $2,594,876 | $2,682,682 | $2,653,968 | $2,640,350 | | Book value per common share (1) | $19.09 | $18.58 | $18.17 | $17.78 | $17.75 | | Tangible book value per common share (2) | $16.99 | $16.46 | $16.12 | $15.72 | $15.63 | | Common shares outstanding (3) | 155,522,693 | 157,647,137 | 166,403,086 | 168,825,656 | 168,879,566 | Return on Average Tangible Common Equity ("ROATCE") Reconciliation This section reconciles net earnings to adjusted net earnings for ROATCE, providing a non-GAAP measure of profitability relative to tangible common equity, which excludes goodwill and intangible assets | Return on Average Tangible Common Equity ("ROATCE") (Dollars in thousands) | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | YTD Sep 30, 2025 | YTD Sep 30, 2024 | | :------------------------------------------------------------------------ | :----------- | :----------- | :----------- | :--------------- | :--------------- | | Net earnings | $69,629 | $28,385 | $8,784 | $151,582 | $69,969 | | Intangible asset amortization | 7,160 | 7,159 | 8,485 | 21,479 | 25,373 | | Adjusted net earnings for ROATCE | 74,831 | 33,889 | 14,477 | 167,189 | 89,709 | | Adjusted net earnings available to common and equivalent stockholders for ROATCE | $64,884 | $23,942 | $4,530 | $137,348 | $59,868 | | Average tangible common equity | $2,608,542 | $2,594,275 | $2,592,743 | $2,627,691 | $2,556,127 | | ROATCE (3) | 9.87% | 3.70% | 0.70% | 6.99% | 3.13% | Adjusted Return on Average Tangible Common Equity ("ROATCE") Reconciliation This section provides a reconciliation of net earnings to adjusted net earnings for adjusted ROATCE, incorporating specific non-recurring items to present a normalized view of profitability relative to tangible common equity | Adjusted Return on Average Tangible Common Equity ("ROATCE") (Dollars in thousands) | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | YTD Sep 30, 2025 | YTD Sep 30, 2024 | | :-------------------------------------------------------------------------------- | :----------- | :----------- | :----------- | :--------------- | :--------------- | | Net earnings | $69,629 | $28,385 | $8,784 | $151,582 | $69,969 | | Intangible asset amortization | 7,160 | 7,159 | 8,485 | 21,479 | 25,373 | | Provision for credit losses related to transfer of loans to held for sale | — | 26,289 | — | 26,289 | — | | Income tax related adjustments | — | 9,792 | — | 9,792 | — | | Adjusted net earnings for adjusted ROATCE | 74,831 | 63,892 | 57,503 | 196,082 | 127,787 | | Adjusted net earnings available to common and equivalent stockholders for adjusted ROATCE | $64,884 | $53,945 | $47,556 | $166,241 | $97,946 | | Average tangible common equity | $2,608,542 | $2,594,275 | $2,592,743 | $2,627,691 | $2,556,127 | | Adjusted ROATCE (2) | 9.87% | 8.34% | 7.30% | 8.46% | 5.12% | Adjusted Net Earnings, Diluted EPS, and ROAA Reconciliation This section reconciles GAAP net earnings to adjusted net earnings, adjusted diluted EPS, and adjusted return on average assets (ROAA), providing a clearer view of core operating performance by excluding specific non-recurring or non-operational items | (Dollars in thousands) | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | YTD Sep 30, 2025 | YTD Sep 30, 2024 | | :--------------------------------------- | :----------- | :----------- | :----------- | :--------------- | :--------------- | | Net earnings | $69,629 | $28,385 | $8,784 | $151,582 | $69,969 | | FDIC special assessment | — | — | — | — | 5,816 | | Loss on sale of securities | — | — | 59,946 | — | 59,946 | | Acquisition, integration, and reorganization costs | — | — | (510) | — | (13,160) | | Provision for credit losses related to transfer of loans to held for sale | — | 26,289 | — | 26,289 | — | | Income tax related adjustments | — | 9,792 | — | 9,792 | — | | Adjusted net earnings | 69,629 | 58,388 | 51,361 | 180,476 | 109,420 | | Adjusted net earnings available to common and equivalent stockholders | $59,682 | $48,441 | $41,414 | $150,635 | $79,579 | | Diluted earnings (loss) per common share | $0.38 | $0.12 | $(0.01) | $0.75 | $0.24 | | Adjusted diluted earnings per common share (2) | $0.38 | $0.31 | $0.25 | $0.93 | $0.47 | | Return on average assets ("ROAA") (3) | 0.82% | 0.34% | 0.10% | 0.60% | 0.26% | | Adjusted ROAA (4) | 0.82% | 0.69% | 0.59% | 0.72% | 0.41% | Pre-Tax Pre-Provision Income Reconciliation This section calculates pre-tax pre-provision income (PTPPI), a non-GAAP measure that reflects the company's core earnings power before credit losses and income taxes, by summing net interest income and noninterest income and subtracting noninterest expense | Pre-Tax Pre-Provision Income (Dollars in thousands) | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | YTD Sep 30, 2025 | YTD Sep 30, 2024 | | :-------------------------------------------------- | :----------- | :----------- | :----------- | :--------------- | :--------------- | | Net interest income (GAAP) | $253,444 | $240,216 | $232,175 | $726,024 | $690,765 | | Add: Noninterest income (GAAP) | 34,285 | 32,633 | (15,452) | 100,568 | 48,156 | | Total revenues (GAAP) | 287,729 | 272,849 | 216,723 | 826,592 | 738,921 | | Less: Noninterest expense (GAAP) | 185,684 | 185,869 | 196,209 | 555,206 | 610,370 | | Pre-tax pre-provision income (Non-GAAP) | $102,045 | $86,980 | $20,514 | $271,386 | $128,551 | Efficiency Ratio Reconciliation This section provides the calculation of the efficiency ratio, a non-GAAP measure indicating how effectively the company manages its noninterest expenses relative to its revenue, adjusted for certain non-recurring or non-operational items | Efficiency Ratio (Dollars in thousands) | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | YTD Sep 30, 2025 | YTD Sep 30, 2024 | | :-------------------------------------- | :----------- | :----------- | :----------- | :--------------- | :--------------- | | Noninterest expense | $185,684 | $185,869 | $196,209 | $555,206 | $610,370 | | Less: Intangible asset amortization | (7,160) | (7,159) | (8,485) | (21,479) | (25,373) | | Less: Acquisition, integration, and reorganization costs | — | — | 510 | — | 13,160 | | Noninterest expense used for efficiency ratio | $178,524 | $178,710 | $188,234 | $533,727 | $598,157 | | Total revenue | $287,729 | $272,849 | $216,723 | $826,592 | $738,921 | | Add: Loss on sale of securities | — | — | 59,946 | — | 59,946 | | Total revenue used for efficiency ratio | $287,729 | $272,849 | $276,669 | $826,592 | $798,867 | | Efficiency ratio (1) | 62.05% | 65.50% | 68.04% | 64.57% | 74.88% | Economic Coverage Ratio Reconciliation This section details the calculation of the economic coverage ratio, a non-GAAP measure that adjusts the allowance for credit losses to include additional loss absorption capacity from unearned credit marks and credit-linked notes, providing a comprehensive view of credit loss coverage | Economic Coverage Ratio (Dollars in thousands) | Sep 30, 2025 | Jun 30, 2025 | | :--------------------------------------------- | :----------- | :----------- | | Allowance for credit losses ("ACL") | $270,722 | $258,565 | | Add: Unearned credit mark from purchase accounting (1) | 17,496 | 19,199 | | Add: Credit-linked notes (2) | 110,539 | 112,887 | | Adjusted allowance for credit losses | $398,757 | $390,651 | | Loans and leases held for investment | $24,110,642 | $24,245,893 | | ACL to loans and leases held for investment (3) | 1.12% | 1.07% | | Economic coverage ratio (4) | 1.65% | 1.61% | - The unearned credit mark from purchase accounting is estimated using the pro rata split between credit and yield marks for non-PCD loans[107] - Credit-linked notes loss coverage is equal to 5% of the unpaid principal balance of the pledged loans[108]