Banc of California, Inc. Reports Third Quarter Diluted Earnings per Share of $0.46, Up 21% Year Over Year

Strategic Repositioning and Core Business Performance Drive Higher Earnings and Positive Operating Leverage

LOS ANGELES--(BUSINESS WIRE)--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, 2026. The Company reported net earnings available to common and equivalent stockholders of $73.1 million, or $0.46 per diluted common share, for the third quarter of 2026, compared to $59.7 million, or $0.38 per diluted common share for the third quarter of 2025. For the second quarter of 2026, the Company reported a net loss available to common and equivalent stockholders of $251.3 million, or $(1.61) per diluted common share, reflecting the previously announced strategic balance sheet repositioning.

Jared Wolff, Chairman & CEO of Banc of California, commented, “Our third quarter results demonstrate the stronger earnings foundation we have created through our second quarter strategic balance sheet repositioning and continued execution across our business. Compared to the first quarter, before the repositioning, diluted earnings per share increased 18%, total revenue increased 6% and pre-tax pre-provision income increased 12%. We also grew deposits, reduced our reliance on brokered funding and increased our CET1 ratio by 45 basis points from the second quarter.”

Mr. Wolff added, “We expect further improvement in profitability in the fourth quarter as we realize a full quarter of earnings from our securities reinvestment and additional benefits from the completed loan sales. We are focused on building on this progress through deeper client relationships, disciplined loan growth, growth in relationship deposits and continued capital generation to deliver sustainable earnings growth and long-term shareholder value.”

Third Quarter 2026 Financial Highlights:

• The second quarter strategic balance sheet repositioning contributed to increased third quarter earnings, with diluted earnings per share of $0.46, up 21% from $0.38 year-over-year.

• Total revenue of $303.8 million, up 6% year-over-year, and pre-tax pre-provision income⁽¹⁾ of $118.4 million, up 16% year-over-year, while noninterest expense of $185.4 million remained flat year-over-year.

• Net interest income increased $21.9 million, or 9%, from prior quarter to $272.4 million, and net interest margin expanded 21 basis points to 3.34%, reflecting higher yields on investment securities following the Company's second quarter strategic balance sheet repositioning activities and continued execution across the business.

• Loans and leases held for investment increased $379.7 million, or 6% on an annualized basis, driven by $2.6 billion of loan production and disbursements with a weighted average interest rate on production of 6.58%.

• Average deposits increased $565.3 million, or 8% on an annualized basis, supporting reduced wholesale funding.

• Credit quality trends were favorable, as nonperforming and classified loans and leases as a percentage of total loans and leases held for investment declined by 12 basis points and 35 basis points, respectively.

• Capital ratios⁽²⁾ increased from prior quarter and exceeded the regulatory thresholds for "well capitalized" banks, including an estimated 12.10% Tier 1 capital ratio, up 43 basis points from prior quarter, and 9.70% common equity tier 1 ("CET1") capital ratio, up 45 basis points from the prior quarter, reflecting capital generation following the balance sheet repositioning.

During the second quarter of 2026, the Company entered into targeted loan sales relating to $827 million of commercial real estate and construction loans. Of these loans, approximately $525 million were sold during the third quarter. Of the remaining approximately $300 million of construction loans, $235 million were sold on October 21, 2026, and $65 million were removed prior to sale as construction on the project was completed and the loan converted into permanent financing. We anticipate selling our remaining held for sale loan portfolio over the next several quarters.

INCOME STATEMENT HIGHLIGHTS

Net Interest Income and Margin

Third Quarter of 2026 Compared to Second Quarter of 2026

Net interest income increased by $21.9 million to $272.4 million for the third quarter, from $250.5 million in the second quarter. This increase was primarily driven by the $17.7 million increase in interest income on investment securities resulting from the strategic balance sheet repositioning during the second quarter and reinvestment into higher-yielding assets, including a $2.8 million special dividend received on FHLB stock. In addition, interest income on loans increased by $7.7 million primarily driven by lower interest reversals associated with nonaccrual loans compared to the prior quarter and one additional day in the quarter. These increases were offset partially by a $6.0 million increase in interest expense on deposits primarily due to increased market interest rates, one additional day in the quarter, as well as higher average balances.

Net interest margin was 3.34% for the third quarter, up 21 basis points from 3.13% for the second quarter. The increase was primarily driven by the higher yield on average interest earning assets, which increased to 5.43% from 5.18%, reflecting a 142 basis point increase in the average yield on investment securities to 4.86%. The increase in investment securities yield reflects earnings from the strategic balance sheet repositioning and reinvestment activities.

The average total cost of funds increased to 2.16% from 2.14%, primarily due to a 3 basis point increase in the average total cost of deposits to 1.83%. Average total deposits increased by $565.3 million, with a $546.3 million increase in average interest-bearing deposits. The increase in average yield on total interest-bearing deposits reflects the impact of the federal funds rate increases during the quarter. Average noninterest-bearing deposits represented 28.0% of average total deposits in the third quarter, down from 28.5% in the second quarter.

YTD September 30, 2026 vs YTD September 30, 2025

Net interest income increased $48.5 million to $774.6 million for the nine months ended September 30, 2026, from $726.0 million for the nine months ended September 30, 2025. The increase was primarily driven by a $53.8 million decrease in interest expense on deposits due to lower interest rates following federal funds rate cuts in the second half of 2025, and a $30.6 million increase in interest income from investment securities reflecting the benefits of prior balance sheet repositioning and reinvestment activities, including $4.1 million of special dividends received on FHLB stock. These benefits were offset partially by a $15.5 million increase in borrowing costs associated with funding loan growth and the subordinated debt redemption prior to higher repricing in the second quarter of 2026, a $13.8 million decrease in loan interest income primarily attributable to a reversal of previously accrued interest on loans placed on nonaccrual status offset partially by the benefit of higher average loan balances, and an $11.8 million decrease in interest income from deposits in financial institutions due to lower balances and lower market interest rates.

The net interest margin was 3.24% for the nine months ended September 30, 2026, up 11 basis points from 3.13% for the nine months ended September 30, 2025. The year-over-year improvement was primarily driven by a 26 basis point decrease in the average total cost of funds due mainly to lower market interest rates and a 69 basis point increase in the average yield on investment securities.

The average total cost of funds decreased by 26 basis points to 2.14%, driven primarily by the decline in average cost of deposits of 30 basis points to 1.81%, reflecting the impact of lower market interest rates. Average total deposits increased by $536.6 million year-over-year, as a result of a $316.6 million increase in average interest-bearing deposits and a $220.1 million increase in average noninterest-bearing deposits. Average noninterest-bearing deposits represented 28.4% of average total deposits for the nine months ended September 30, 2026, up from 28.2% for the comparable period in 2025. The average cost of borrowings also decreased by 49 basis points to 4.50%, reflecting the paydown of higher-cost borrowings in the prior year and their replacement with lower-cost short-term Federal Home Loan Bank ("FHLB") advances.

The average yield on interest-earning assets declined by 15 basis points to 5.29%. The decrease was primarily driven by a 27 basis point decline in average yield on loans and leases to 5.69% and a 74 basis point decline in average yield on deposits in financial institutions, primarily consisting of reserves held at the Federal Reserve Bank, to 3.65%, reflecting lower market rates. These decreases were offset partially by a 69 basis point increase in the average yield on investment securities to 3.90%, reflecting a benefit from the strategic balance sheet repositioning and reinvestment activities.

Provision For Credit Losses

Third Quarter of 2026 Compared to Second Quarter of 2026

The provision for credit losses was $10.4 million for the third quarter compared to $161.8 million for the second quarter.

The third quarter provision included an $8.4 million provision for loan losses and a $2.0 million provision for unfunded commitments. The provision was primarily driven by net charge-off activity experienced in the quarter and growth in the held for investment ("HFI") loan portfolio, offset partially by lower specific reserves and changes in the economic factors used in the provision estimate.

The second quarter provision was elevated by the strategic balance sheet repositioning activities related to the targeted loan sale process, the impact of loan growth and higher loss given default rates on commercial real estate and multi-family construction loans, offset partially by improved risk ratings in our HFI portfolio.

YTD September 30, 2026 vs YTD September 30, 2025

The provision for credit losses was $182.0 million for the nine months ended September 30, 2026, compared to $58.1 million for the nine months ended September 30, 2025. The provision for the 2026 period included a provision for loan losses of $180.2 million, reflecting the impact of the targeted loan sale process and the impact of loan growth, offset partially by improved risk ratings for our HFI portfolio.

The provision for the nine months ended September 30, 2025 included the impact of $506.7 million of loans transferred to held for sale ("HFS") and recorded at the lower of cost or market value. The remaining increase in the provision for credit losses was primarily driven by net charge-off activity experienced in the first half of the year, with additional impacts from changes in loan risk ratings. These were offset partially by lower specific reserves and a favorable shift in the portfolio mix due to growth in loan segments with lower expected credit losses.

Noninterest Income

Third Quarter of 2026 Compared to Second Quarter of 2026

Noninterest income increased by $265.5 million to $31.4 million for the third quarter, compared to a loss of $234.1 million for the second quarter. The increase was primarily driven by a $257.5 million decrease in loss on securities and an $8.3 million decrease in loss on loans and leases HFS, both of which were a result of the strategic balance sheet repositioning actions taken in the second quarter. Also included in noninterest income was a $2.0 million increase in operating lease income, primarily due to new lease fundings and higher lease renewal income, offset partially by a $1.4 million decrease in other income. The decrease in other income was primarily due to the second quarter gain recognized on the sale of the Company's single-family mortgage servicing rights portfolio, offset partially by the second quarter loss on the redemption of the $385 million subordinated note.

YTD September 30, 2026 vs YTD September 30, 2025

Noninterest income decreased by $268.0 million to a loss of $167.4 million for the nine months ended September 30, 2026, compared to income of $100.6 million for the same period in 2025. The decrease was primarily attributable to the $256.0 million pre-tax loss recognized as part of the securities repositioning and a $16.6 million increase in the loss on loans and leases HFS resulting primarily from lower of cost or market adjustments recorded during the second quarter in connection with the strategic balance sheet repositioning actions.

Noninterest Expense

Third Quarter of 2026 Compared to Second Quarter of 2026

Noninterest expense decreased by $4.5 million to $185.4 million for the third quarter from $189.9 million for the second quarter. The decrease was primarily due to a $5.1 million decrease in other expense due to a non-recurring software obsolescence charge taken during the second quarter and a $2.3 million decrease in insurance and assessments due to a lower FDIC assessment rate resulting from favorable mix. These decreases were offset partially by a $2.2 million increase in compensation expense primarily driven by one-time incentive plan adjustments in the second quarter and a $1.6 million increase in operating lease and customer related expenses.

YTD September 30, 2026 vs YTD September 30, 2025

Noninterest expense increased by $1.4 million to $556.6 million for the nine months ended September 30, 2026 from $555.2 million for the nine months ended September 30, 2025. The increase was primarily due to an $8.2 million increase in other expense related mainly to software obsolescence charges, a $7.8 million increase in insurance and assessments due to the higher assessment rate resulting from the balance sheet repositioning and its effect on assessment related metrics, and a $2.2 million increase in loan expense related to legal fees. These increases were offset partially by a $7.9 million decrease in customer related expenses primarily due to federal funds rate cuts in the fourth quarter of 2025 and a $3.6 million decrease in leased equipment depreciation.

Income Taxes

Third Quarter of 2026 Compared to Second Quarter of 2026

Income tax expense of $25.0 million was recorded for the third quarter, resulting in an effective tax rate of 23.1%, compared to an income tax benefit of $93.9 million and an effective tax rate of 28.0% for the second quarter. The second quarter tax rate reflects the effects of the Company's balance sheet repositioning actions. Due to the significant impact of these actions on projected annual earnings, in the second quarter, the Company began calculating its income tax provision using the year-to-date effective tax rate approach rather than the estimated annual effective tax rate method. The decrease in the effective tax rate from the second quarter is due primarily to the recognition of increased income tax benefits in the third quarter.

YTD September 30, 2026 vs YTD September 30, 2025

Income tax benefit of $45.1 million was recorded for the nine months ended September 30, 2026, resulting in an effective tax rate of 34.3%, compared to income tax expense of $61.7 million and an effective tax rate of 28.9% for the same period in 2025. The increase in the effective tax rate from 2025 to 2026 is due primarily to the effects of the Company’s balance sheet repositioning actions taken in the second quarter of 2026.

BALANCE SHEET HIGHLIGHTS

Securities

Available-for-sale ("AFS") securities increased by $0.6 billion during the third quarter to $5.1 billion at September 30, 2026 compared to $4.5 billion at June 30, 2026, due primarily to the remaining reinvestment activities following the securities repositioning in the second quarter. During the third quarter AFS securities were impacted by $997.2 million of purchases offset partially by $209.9 million of principal paydowns, $160.2 million decrease in the fair value of AFS securities, $26.8 million of maturities, and $18.3 million of sales. As of September 30, 2026, AFS securities had aggregate unrealized net after-tax losses in AOCI of $261.4 million, up from $145.3 million at June 30, 2026, driven by higher interest rates.

Loans and Leases

The following table sets forth the composition, by loan category, of our loan and lease portfolio HFI as of the dates indicated:

Investor Relations Inquiries:
Banc of California, Inc.
(855) 361-2262
Jared Wolff, (310) 424-1230
Joe Kauder, (310) 844-5224
Meghan O'Leary, (310) 236-8236

Media Contact:
Debora Vrana, Banc of California
(213) 533-3122
Deb.Vrana@bancofcal.com