Banc of California(US:BANC)2026-02-27 22:25Credit Losses and Asset Quality - The total allowance for credit losses (ACL) on loans and leases held for investment (HFI) increased to $280.5 million in 2025 from $268.4 million in 2024, reflecting a rise of 4.1%[327] - The provision for credit losses for 2025 was $70.6 million, compared to $43.0 million in 2024, indicating a significant increase of 64.3%[327] - Net charge-offs decreased to $58.5 million in 2025 from $85.8 million in 2024, a reduction of 31.8%[328] - The ratio of net charge-offs to average loans for 2025 was 0.24%, down from 0.35% in 2024, showing an improvement in credit quality[327] - The allowance for credit losses to loans and leases HFI was 1.12% in 2025, slightly down from 1.13% in 2024[327] - Real estate mortgage net charge-offs decreased to $23.7 million in 2025 from $60.4 million in 2024, a decline of 60.7%[328] - The total loans and leases charged off in 2025 amounted to $75.5 million, down from $94.9 million in 2024, a decrease of 19.4%[331] - The total allowance for credit losses to nonaccrual loans and leases HFI was 176.3% in 2025, up from 141.6% in 2024, indicating a stronger coverage ratio[327] - Nonperforming assets decreased to $176.3 million in 2025 from $199.3 million in 2024, primarily due to a reduction in nonaccrual loans[338] - Classified loans and leases increased to $800.3 million in 2025 from $563.5 million in 2024, indicating a rise in credit risk[343] - Nonaccrual loans and leases decreased by $30.4 million to $159.2 million in 2025, with the largest three relationships representing 27% of total nonaccrual loans[339] - Loans and leases accruing and 30-89 days past due increased by $42.2 million to $93.0 million in 2025, mainly due to increases in residential real estate construction and multi-family real estate mortgage delinquent loans[340] Deposits and Borrowings - Total deposits increased by $651.4 million to $27.8 billion at December 31, 2025, compared to $27.2 billion at December 31, 2024[347] - FDIC-insured deposits represented approximately 71% of total deposits as of December 31, 2025, down from 72% as of December 31, 2024[348] - Total borrowings increased by $672.0 million to $2.1 billion at December 31, 2025, compared to $1.4 billion at December 31, 2024[352] - Brokered deposits totaled $2.9 billion at December 31, 2025, an increase from $2.7 billion at December 31, 2024, reflecting a shift in funding sources[371] Capital and Liquidity - At December 31, 2025, the Company maintained a Tier 1 leverage capital ratio of 9.99%, a CET1 capital ratio of 10.01%, and a total capital ratio of 16.31%, all exceeding the minimum required ratios for capital adequacy[358] - The Company's primary liquidity increased by $38.3 million to $4.4 billion at December 31, 2025, driven by a $218.7 million increase in unpledged AFS securities[367] - The Company's secondary liquidity decreased by $1.8 billion to $9.8 billion at December 31, 2025, due to decreases in available secured borrowing capacity with the FRB and FHLB[368] - The capital conservation buffer requirements were met, with the Company maintaining a CET1 capital ratio of 13.15% as of December 31, 2025, above the required 7.00%[357] - The company was in compliance with all applicable liquidity and funding concentration guidelines as of December 31, 2025, ensuring financial stability[372] Deferred Tax Assets - The net Deferred Tax Asset balance totaled $656.8 million as of December 31, 2025, down from $720.6 million as of December 31, 2024[346] - The company had a valuation allowance of $16.1 million against Deferred Tax Assets as of December 31, 2025[346] - Disallowed deferred tax assets amounted to $316.7 million for the Company and $294.1 million for the Bank as of December 31, 2025, impacting regulatory capital calculations[355] Stock Repurchase and Dividends - The company authorized a stock repurchase program of up to $300.0 million, with 13,648,429 shares repurchased at a weighted average price of $13.59, totaling $185.5 million during the year ended December 31, 2025[375] - The stock repurchase authorization is set to expire in March 2026, with $114.5 million remaining under the authorization as of December 31, 2025[375] - The ability to pay dividends is subject to restrictions from the Federal Reserve Board and certain covenants in subordinated debt[373] Off-Balance Sheet Arrangements - The company has off-balance sheet arrangements consisting of loan commitments of $5.4 billion and standby letters of credit totaling $244.9 million as of December 31, 2025[379] - The company expects to maintain adequate liquidity levels through profitability, loan and lease payoffs, and continued deposit gathering activities[378] - The company entered into an unsecured revolving line of credit agreement, increasing from $50.0 million to $100.0 million as of March 17, 2025, with no balance outstanding as of December 31, 2025[374] - The company's liability to contribute capital to LIHTC partnerships was $40.9 million, and commitments to SBICs and CRA-related loan pools totaled $122.1 million, with $87.8 million due within one year[377] Loan Portfolio Growth - Total loans and leases held for investment rose to $25.0 billion in 2025 from $23.8 billion in 2024, reflecting growth in the loan portfolio[343] - The average loan balance for real estate mortgage increased to $13.6 billion in 2025 from $14.5 billion in 2024[328] - The allowance for loan and lease losses for real estate mortgage loans was $137.4 million in 2025, down from $145.8 million in 2024, with a coverage ratio decrease from 1.09% to 1.00%[334] - The allowance for loan and lease losses for commercial loans rose to $86.1 million in 2025 from $67.8 million in 2024, with a coverage ratio decrease from 1.00% to 0.96%[336]