Banc of California Inc.

11/06/2026 | Press release | Distributed by Public on 11/06/2026 15:13

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of the major factors that influenced our results of operations and financial condition as of and for the nine months ended September 30, 2026. This analysis should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2025 and with the unaudited consolidated financial statements and notes thereto set forth in this Quarterly Report on Form 10-Q.
Forward-Looking Information
This Quarterly Report on Form 10-Q contains certain 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, profitability, liquidity and capital; anticipated benefits of our securities repositioning and other strategic balance sheet actions including, among others, a strengthened credit risk profile, increased capital efficiency, and an enhanced earnings profile; 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 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 tariffs and retaliatory tariffs, 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 or renewed 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 and private 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) our ability to achieve or maintain the anticipated benefits of our securities repositioning and other strategic balance sheet actions due to one or more of the other factors described herein or otherwise; (ix) our ability to successfully implement new business initiatives, such as our private banking service, and to realize their anticipated benefits; (x) our ability to raise capital or incur debt on reasonable terms; (xi) the costs and effects of litigation; (xii) 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; (xiii) the competitive and other impacts on our business of emerging technologies, including stablecoins and other digital currencies, tokenized deposits, blockchain, artificial intelligence, quantum computing, and related innovations affecting both the Company and the banking industry; (xiv) 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; (xv) 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; (xvi) the risk that our enterprise risk management framework may not be effective in mitigating risk and reducing the potential for losses; (xvii) errors in estimates of the fair values of certain of our assets and liabilities, as well as the value of collateral supporting our loans, which may result in significant changes in valuation or recoveries; (xviii) cybersecurity threats and failures or security breaches with respect to the network, applications, vendors and computer systems on which we depend; (xix) our ability to attract and retain key members of our senior management team; (xx) the effects of climate change, severe weather events, natural disasters such as earthquakes and wildfires, pandemics, epidemics and other public health crises, military activity (including the ongoing Iran war) or acts of terrorism, and other external events on our business; (xxi) 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; (xxii) the possibility that our recorded goodwill could become impaired, which may have an adverse impact on our earnings and capital; (xxiii) 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; (xxiv) changes in market conditions or strategic balance sheet actions, which may result in realized losses on investment securities or other assets; (xxv) the effects of any damage to our reputation resulting from developments related to any of the items identified above; and (xxvi) other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services and the other risks described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 and from time to time in other documents that we file with or furnish to the SEC.
All forward-looking statements included in this Quarterly Report on Form 10-Q are based on information available at the time the statement is made. We are under no obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements, whether as a result of new information, future events or otherwise except as required by law.
Overview
Banc of California, Inc., a Maryland corporation, was incorporated in March 2002 and serves as the holding company for its wholly owned subsidiary, Banc of California (the "Bank"), a California state-chartered bank and a member of the FRB. When we refer to the "parent" or the "holding company," we are referring to Banc of California, Inc., the parent company, on a stand-alone basis. When we refer to "we," "us," "our," or the "Company," we are referring to Banc of California, Inc. and its consolidated subsidiaries including the Bank, collectively. The Bank 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. Through its Private Banking division, the Bank also serves individuals and families with personalized banking solutions, dedicated relationship management, and exceptional service. The Bank offers a broad range of loan and deposit products and services through 76 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-service payment processing solutions to its clients 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.
Recent Events
Strategic Balance Sheet Actions
During the second quarter of 2026, the Company executed several strategic balance sheet actions, including (i) the repositioning of $2.3 billion of lower-yielding HTM securities, (ii) the transfer of $827.0 million of selected commercial real estate and multi-family construction loans from HFI to HFS as part of a targeted loan sale process, and (iii) the redemption of $385.0 million of subordinated debt.
As part of the securities repositioning, the Company transferred $2.3 billion of HTM securities to AFS, subsequently sold substantially all of the transferred securities, and redeployed the proceeds into higher-yielding, shorter-duration AFS securities. In connection with the targeted loan sale process, the Company transferred $827.0 million of loans to HFS during the second quarter of 2026. The majority of the targeted loan sales closed during the third quarter of 2026, and the Company completed the remaining targeted loan sales on October 21, 2026. In addition, the Company redeemed $385.0 million of subordinated debt prior to a higher interest rate reset during the second quarter of 2026.
Stock Repurchase Program
On March 23, 2026, we announced the extension of the Company's existing $300 million stock repurchase program, which had been scheduled to expire in March 2026, through March 16, 2027. During the nine months ended September 30, 2026, the Company repurchased a total of approximately 1.7 million shares of common and common equivalent stock for $31.9 million, at a weighted-average price of $18.68 per share. As of September 30, 2026, the Company had $82.6 million remaining under the stock repurchase authorization. For further information on the stock repurchase program, see "Note 14. Stockholders' Equity" in Item 1 of this Form 10-Q.
Critical Accounting Policies and Estimates
The following discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements and related notes, which have been prepared in accordance with U.S. GAAP. The preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts and disclosure. We evaluate these estimates and assumptions on an ongoing basis based on historical experience and other relevant factors and circumstances; however, actual results may differ significantly from these estimates and assumptions, which could have a material adverse effect on our financial condition and results of operations.
Our accounting policies and estimates are fundamental to understanding the following discussion and analysis of financial condition and results of operations. We identify critical accounting estimates as those that involve the most significant judgments, uncertainties, and subjective decisions, and that could result in materially different outcomes under different assumptions or conditions. Our critical accounting policies and estimates include those related to the ACL on loans and leases HFI and the realization of deferred tax assets and liabilities. Our critical accounting policies and estimates are described in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Form 10-K.
Non-GAAP Financial Measures
We use certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company's operational performance and to enhance investors' overall understanding of such financial performance. This disclosure should not be viewed as a substitute for results determined in accordance with GAAP. The methodology for determining these non-GAAP measures may differ among companies and may not be comparable. Accordingly, we refer to the following non-GAAP measures in this Quarterly Report on Form 10-Q.
Return on average tangible common equity, tangible common equity, tangible book value per common share, efficiency ratio, and pre-tax pre-provision income are presented because the use of these measures is prevalent among banking regulators, investors, and analysts. These measures are disclosed in addition to the related GAAP measures of return on average equity, book value per common share, and noninterest expense to total revenue, respectively. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are presented in the following tables for and as of the periods presented.
Three Months Ended Nine Months Ended
Return on Average Tangible September 30, June 30, September 30,
Common Equity ("ROATCE") 2026 2026 2026 2025
(Dollars in thousands)
Net earnings (loss) $ 83,057 $ (241,347) $ (86,338) $ 151,582
Adjustments:
Intangible asset amortization 6,188 6,349 18,885 21,479
Tax impact of adjustment above (1)
(1,431) (1,778) (6,481) (5,872)
Adjustment to net earnings (loss) 4,757 4,571 12,404 15,607
Adjusted net earnings (loss) for ROATCE 87,814 (236,776) (73,934) 167,189
Less: Preferred stock dividends 9,947 9,947 29,841 29,841
Adjusted net earnings (loss) available to common and
equivalent stockholders for ROATCE $ 77,867 $ (246,723) $ (103,775) $ 137,348
Average stockholders' equity $ 3,392,012 $ 3,545,141 $ 3,494,710 $ 3,463,568
Less: Average goodwill and intangible assets 304,652 311,068 310,932 337,361
Less: Average preferred stock 498,516 498,516 498,516 498,516
Average tangible common equity $ 2,588,844 $ 2,735,557 $ 2,685,262 $ 2,627,691
Return on average equity (2)
9.71 % (27.31) % (3.30) % 5.85 %
ROATCE (3)
11.93 % (36.18) % (5.17) % 6.99 %
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(1) Annual effective tax rates of 23.12% and 28.00% used for the three months ended September 30, 2026 and June 30, 2026. Annual effective tax rates of 34.32% and 27.34% used for the nine months ended September 30, 2026 and 2025.
(2) Annualized net earnings (loss) divided by average stockholders' equity.
(3) Annualized adjusted net earnings (loss) available to common and equivalent stockholders for ROATCE divided by average tangible common equity.
Tangible Common Equity and
Tangible Book Value Per Common Share September 30, 2026 December 31, 2025
(Dollars in thousands, except per share data)
Stockholders' equity $ 3,348,829 $ 3,541,277
Less: Preferred stock 498,516 498,516
Total common equity 2,850,313 3,042,761
Less: Goodwill and intangible assets 301,042 319,808
Tangible common equity $ 2,549,271 $ 2,722,953
Book value per common share (1)
$ 17.99 $ 19.56
Tangible book value per common share (2)
$ 16.09 $ 17.51
Common and equivalent shares outstanding (3)
158,459,635 155,533,403
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(1) Total common equity divided by common and equivalent shares outstanding.
(2) Tangible common equity divided by common and equivalent shares outstanding.
(3) Common and equivalent shares outstanding include NVCE that are participating securities. There was no NVCE outstanding as of September 30, 2026.
Three Months Ended Nine Months Ended
September 30, June 30, September 30,
Efficiency Ratio 2026 2026 2026 2025
(Dollars in thousands)
Noninterest expense (1)
$ 185,370 $ 189,867 $ 556,628 $ 555,206
Less: Intangible asset amortization (6,188) (6,349) (18,885) (21,479)
Noninterest expense used for efficiency ratio $ 179,182 $ 183,518 $ 537,743 $ 533,727
Net interest income $ 272,442 $ 250,501 $ 774,560 $ 726,024
Noninterest income (loss) 31,356 (234,096) (167,412) 100,568
Total revenue 303,798 16,405 607,148 826,592
Add: (Gain) loss on securities AFS (728) 256,749 256,021 -
Total revenue used for efficiency ratio $ 303,070 $ 273,154 $ 863,169 $ 826,592
Noninterest expense to total revenue 61.02 % 1157.37 % 91.68 % 67.17 %
Efficiency ratio (2)
59.12 % 67.18 % 62.30 % 64.57 %
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(1) Includes customer related expense of $24.8 million and $24.1 million for the three months ended September 30, 2026 and June 30, 2026, and $72.7 million and $80.6 million for nine months ended September 30, 2026 and 2025.
(2) Noninterest expense used for efficiency ratio divided by total revenue used for efficiency ratio.
Three Months Ended Nine Months Ended
September 30, June 30, September 30,
Pre-Tax Pre-Provision Income (Loss) 2026 2026 2026 2025
(Dollars in thousands)
Net interest income (GAAP) $ 272,442 $ 250,501 $ 774,560 $ 726,024
Add: Noninterest income (loss) (GAAP) 31,356 (234,096) (167,412) 100,568
Total revenues (GAAP) 303,798 16,405 607,148 826,592
Less: Noninterest expense (GAAP) 185,370 189,867 556,628 555,206
Pre-tax pre-provision income (loss) (Non-GAAP) $ 118,428 $ (173,462) $ 50,520 $ 271,386
Results of Operations
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.
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 for the third quarter of 2025.
•Total revenue of $303.8 million, up 6% from the third quarter of 2025, and pre-tax pre-provision income(1) of $118.4 million, up 16% from the third quarter of 2025, while noninterest expense of $185.4 million remained flat from the third quarter of 2025.
•NII increased $21.9 million, or 9%, from the second quarter of 2026, 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 HFI 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 HFI declined by 12 basis points and 35 basis points, respectively.
•Capital ratios increased from the second quarter of 2026 and exceeded the regulatory thresholds for "well capitalized" banks, including a 12.10% Tier 1 capital ratio, up 43 basis points, and 9.70% CET1 capital ratio, up 45 basis points, reflecting capital generation following the balance sheet repositioning.
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(1) See "Non-GAAP Financial Measures."
Earnings Performance
The following table presents financial results and performance ratios for the periods indicated:
Three Months Ended Nine Months Ended
September 30, June 30, September 30,
2026 2026 2026 2025
(Dollars in thousands, except per share data)
Earnings Summary:
Interest income $ 442,736 $ 414,596 $ 1,264,774 $ 1,259,705
Interest expense (170,294) (164,095) (490,214) (533,681)
Net interest income 272,442 250,501 774,560 726,024
Provision for credit losses (10,400) (161,780) (181,980) (58,100)
Noninterest income (loss) 31,356 (234,096) (167,412) 100,568
Noninterest expense (185,370) (189,867) (556,628) (555,206)
Earnings (loss) before income taxes 108,028 (335,242) (131,460) 213,286
Income tax (expense) benefit (24,971) 93,895 45,122 (61,704)
Net earnings (loss) 83,057 (241,347) (86,338) 151,582
Preferred stock dividends (9,947) (9,947) (29,841) (29,841)
Net earnings (loss) available to common and equivalent stockholders $ 73,110 $ (251,294) $ (116,179) $ 121,741
Per Common Share Data:
Diluted earnings (loss) per share (1)
$ 0.46 $ (1.61) $ (0.74) $ 0.75
Performance Ratios:
Return on average assets (3)
0.94 % (2.79) % (0.33) % 0.60 %
Return on average equity (3)
9.71 % (27.31) % (3.30) % 5.85 %
Return on average tangible common equity (2)(3)
11.93 % (36.18) % (5.17) % 6.99 %
Net interest margin (3)
3.34 % 3.13 % 3.24 % 3.13 %
Yield on average loans and leases (3)
5.69 % 5.63 % 5.69 % 5.96 %
Cost of average total deposits (3)
1.83 % 1.80 % 1.81 % 2.11 %
Noninterest expense to total revenue (4)
61.02 % 1157.37 % 91.68 % 67.17 %
Efficiency ratio (2)(5)
59.12 % 67.18 % 62.30 % 64.57 %
Capital Ratios (consolidated):
Common equity tier 1 capital ratio 9.70 % 9.25 %
Tier 1 capital ratio 12.10 % 11.67 %
Total capital ratio 14.71 % 14.31 %
Tier 1 leverage capital ratio 9.14 % 8.89 %
Risk-weighted assets $ 26,221,857 $ 26,061,398
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(1) Common shares include NVCE that are participating securities. There was no NVCE outstanding as of September 30, 2026 and June 30, 2026.
(2) See "Non-GAAP Financial Measures" in Item 2 of this Form 10-Q.
(3) Annualized.
(4) Total revenue equals the sum of NII and noninterest income.
(5) Ratio calculated by dividing noninterest expense (less intangible asset amortization and acquisition, integration and reorganization costs) by total revenue (less gain/loss on securities). See "Non-GAAP Financial Measures" in Item 2 of this Form 10-Q. Noninterest expense includes customer related expense of $24.8 million and $24.1 million for the three months ended September 30, 2026 and June 30, 2026, and $72.7 million and $80.6 million for nine months ended September 30, 2026 and 2025.
Net Interest Income and Net Interest Margin
The following tables summarize the distribution of average assets, liabilities, and stockholders' equity, as well as interest income and yields earned on average interest-earning assets and interest expense and rates paid on average interest-bearing liabilities, presented on a tax equivalent basis, for the periods indicated:
Three Months Ended
September 30, 2026 June 30, 2026
Average Average
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
(Dollars in thousands)
ASSETS:
Loans and leases (1)
$ 25,274,927 $ 362,549 5.69 % $ 25,266,712 $ 354,832 5.63 %
Investment securities 4,912,701 60,125 4.86 % 4,938,232 42,407 3.44 %
Deposits in financial institutions 2,166,626 20,062 3.67 % 1,912,585 17,357 3.64 %
Total interest-earning assets 32,354,254 442,736 5.43 % 32,117,529 414,596 5.18 %
Other assets 2,666,216 2,527,401
Total assets $ 35,020,470 $ 34,644,930
LIABILITIES AND
STOCKHOLDERS' EQUITY:
Interest checking $ 8,878,491 $ 53,397 2.39 % $ 8,313,161 $ 47,694 2.30 %
Money market 5,252,893 28,127 2.12 % 4,736,107 23,429 1.98 %
Savings 1,865,962 10,024 2.13 % 1,883,240 9,575 2.04 %
Time 4,301,532 38,700 3.57 % 4,820,101 43,572 3.63 %
Total interest-bearing deposits 20,298,878 130,248 2.55 % 19,752,609 124,270 2.52 %
Borrowings 2,461,168 27,623 4.45 % 2,399,546 26,568 4.44 %
Subordinated debt 574,612 12,423 8.58 % 699,159 13,257 7.61 %
Total interest-bearing liabilities 23,334,658 170,294 2.90 % 22,851,314 164,095 2.88 %
Noninterest-bearing demand deposits 7,885,157 7,866,139
Other liabilities 408,643 382,336
Total liabilities 31,628,458 31,099,789
Stockholders' equity 3,392,012 3,545,141
Total liabilities and stockholders' equity $ 35,020,470 $ 34,644,930
Net interest income $ 272,442 $ 250,501
Net interest rate spread 2.53 % 2.30 %
Net interest margin 3.34 % 3.13 %
Total deposits (2)
$ 28,184,035 $ 130,248 1.83 % $ 27,618,748 $ 124,270 1.80 %
Total funds (3)
$ 31,219,815 $ 170,294 2.16 % $ 30,717,453 $ 164,095 2.14 %
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(1) Total loans are net of deferred fees, related direct costs, and premiums and discounts, but exclude the allowance for loan losses. Includes net loan discount accretion of $8.7 million and $11.2 million for the three months ended September 30, 2026 and June 30, 2026.
(2) Total deposits is the sum of interest-bearing deposits and noninterest-bearing demand deposits. The cost of total deposits is calculated as annualized interest expense on total deposits divided by average total deposits.
(3) Total funds is the sum of total interest-bearing liabilities and noninterest-bearing demand deposits. The cost of total funds is calculated as annualized total interest expense divided by average total funds.
Nine Months Ended
September 30, 2026 September 30, 2025
Average Average
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
(Dollars in thousands)
ASSETS:
Loans and leases (1)
$ 25,086,150 $ 1,067,324 5.69 % $ 24,252,860 $ 1,081,129 5.96 %
Investment securities 4,955,926 144,405 3.90 % 4,745,530 113,769 3.21 %
Deposits in financial institutions 1,942,176 53,045 3.65 % 1,972,486 64,807 4.39 %
Total interest-earning assets 31,984,252 1,264,774 5.29 % 30,970,876 1,259,705 5.44 %
Other assets 2,575,510 2,665,623
Total assets $ 34,559,762 $ 33,636,499
LIABILITIES AND
STOCKHOLDERS' EQUITY:
Interest checking $ 8,458,185 $ 147,973 2.34 % $ 7,661,200 $ 154,751 2.70 %
Money market 4,926,608 74,382 2.02 % 5,326,554 97,079 2.44 %
Savings 1,902,008 29,371 2.06 % 1,958,289 38,323 2.62 %
Time 4,543,252 123,025 3.62 % 4,567,443 138,391 4.05 %
Total interest-bearing deposits 19,830,053 374,751 2.53 % 19,513,486 428,544 2.94 %
Borrowings 2,211,339 74,368 4.50 % 1,578,462 58,903 4.99 %
Subordinated debt 741,114 41,095 7.41 % 946,441 46,234 6.53 %
Total interest-bearing liabilities 22,782,506 490,214 2.88 % 22,038,389 533,681 3.24 %
Noninterest-bearing demand deposits 7,880,575 7,660,504
Other liabilities 401,971 474,038
Total liabilities 31,065,052 30,172,931
Stockholders' equity 3,494,710 3,463,568
Total liabilities and stockholders' equity $ 34,559,762 $ 33,636,499
Net interest income $ 774,560 $ 726,024
Net interest rate spread 2.41 % 2.20 %
Net interest margin 3.24 % 3.13 %
Total deposits (2)
$ 27,710,628 $ 374,751 1.81 % $ 27,173,990 $ 428,544 2.11 %
Total funds (3)
$ 30,663,081 $ 490,214 2.14 % $ 29,698,893 $ 533,681 2.40 %
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(1) Total loans are net of deferred fees, related direct costs, and premiums and discounts, but exclude the allowance for loan losses. Includes net loan discount accretion of $32.2 million and $51.5 million for the nine months ended September 30, 2026 and 2025.
(2) Total deposits is the sum of total interest-bearing deposits and noninterest-bearing demand deposits. The cost of total deposits is calculated as annualized interest expense on total deposits divided by average total deposits.
(3) Total funds is the sum of total interest-bearing liabilities and noninterest-bearing demand deposits. The cost of total funds is calculated as annualized total interest expense divided by average total funds.
Third Quarter of 2026 Compared to Second Quarter of 2026
NII 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 second quarter of 2026 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.
Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025
NII 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 strategic 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 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
The following table sets forth the details of the provision for credit losses on loans and leases HFI and securities and information regarding credit quality metrics for the periods indicated:
Three Months Ended Nine Months Ended
September 30, June 30, September 30,
2026 2026 2026 2025
(Dollars in thousands)
Provision for Credit Losses:
Addition to allowance for loan and lease losses $ 8,400 $ 162,000 $ 180,200 $ 56,980
Addition to (Reduction in) reserve for unfunded loan commitments 2,000 (2,000) - 1,150
Total loan-related provision 10,400 160,000 180,200 58,130
(Reduction in) addition to allowance for HTM securities - (695) (695) (805)
Addition to allowance for AFS securities - 2,475 2,475 775
Total securities-related provision - 1,780 1,780 (30)
Total provision for credit losses $ 10,400 $ 161,780 $ 181,980 $ 58,100
Credit Quality Metrics:
Net charge-offs on loans and leases HFI (1)
$ 17,291 $ 160,281 $ 191,384 $ 55,839
Annualized net charge-offs to average loans and leases 0.27 % 2.54 % 1.02 % 0.31 %
At quarter-end:
Allowance for credit losses $ 269,349 $ 276,240
Allowance for credit losses to loans and leases HFI 1.10 % 1.14 %
Allowance for credit losses to nonaccrual loans and leases HFI 151.97 % 135.60 %
Nonaccrual loans and leases HFI $ 177,233 $ 203,712
Nonaccrual loans and leases HFI to loans and leases HFI 0.72 % 0.84 %
______________________
(1) See "Balance Sheet Analysis - Allowance for Credit Losses on Loans and Leases Held for Investment" in Item 2 of this Form 10-Q for detail of charge-offs and recoveries by loan portfolio segment, class, and subclass for the periods presented.
Provisions for credit losses are charged to earnings for both on and off-balance sheet credit exposures. The provisions for credit losses on our loans and leases HFI, AFS debt securities, and HTM debt securities are based on our allowance methodologies and are expenses that, in our judgment, are required to maintain an appropriate ACL for these assets.
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 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 CRE and multi-family construction loans, offset partially by improved risk ratings in our HFI portfolio.
Nine Months Ended September 30, 2026 Compared to Nine Months Ended 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 HFS during the second quarter of 2025 and recorded at the LOCOM. 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.
Certain circumstances may lead to increased provisions for credit losses on loans and leases in the future. Examples of such circumstances include an increased amount of classified and/or nonaccrual loans and leases, net loan and lease and unfunded commitment growth, and changes in economic conditions and forecasts. Changes in economic conditions and forecasts include the rate of economic growth, the unemployment rate, the rate of inflation, changes in the general level of interest rates, changes in real estate values, and adverse conditions in borrowers' businesses.
For information regarding the ACL on loans and leases HFI and HTM securities, see "Balance Sheet Analysis - Allowance for Credit Losses on Loans and Leases" and "Critical Accounting Policies and Estimates" in Item 2 Management's Discussion and Analysis, and "Note 4. Loans and Leases" in Item 1 of this Form 10-Q.
Noninterest Income (Loss)
The following table summarizes noninterest income by category for the periods indicated:
Three Months Ended Nine Months Ended
September 30, June 30, September 30,
Noninterest Income (Loss) 2026 2026 2026 2025
(In thousands)
Leased equipment income $ 9,812 $ 7,820 $ 26,162 $ 31,336
Commissions and fees 9,307 9,034 29,321 29,113
Service charges on deposit accounts 4,881 4,763 14,622 14,108
Loss on loans and leases HFS (4,199) (12,544) (16,733) (142)
Gain (loss) on securities AFS 728 (256,749) (256,021) -
Dividends and gains on equity investments 2,675 3,326 8,003 4,500
Warrant income 221 896 2,055 1,365
Other 7,931 9,358 25,179 20,288
Total noninterest income (loss) $ 31,356 $ (234,096) $ (167,412) $ 100,568
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 notes.
Nine Months Ended September 30, 2026 Compared to Nine Months Ended 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 LOCOM adjustments recorded during the second quarter in connection with the strategic balance sheet repositioning actions.
Noninterest Expense
The following table summarizes noninterest expense by category for the periods indicated:
Three Months Ended Nine Months Ended
September 30, June 30, September 30,
Noninterest Expense 2026 2026 2026 2025
(In thousands)
Compensation $ 87,318 $ 85,120 $ 263,538 $ 263,644
Customer related expense 24,834 24,114 72,685 80,555
Occupancy 14,733 14,714 44,339 45,898
Information technology and data processing 13,133 13,769 41,241 41,707
Insurance and assessments 12,211 14,500 33,475 25,680
Intangible asset amortization 6,188 6,349 18,885 21,479
Leased equipment depreciation 6,078 5,168 16,550 20,191
Other professional services 5,914 5,599 15,749 16,313
Loan expense 4,709 5,170 14,171 11,927
Other 10,252 15,364 35,995 27,812
Total noninterest expense $ 185,370 $ 189,867 $ 556,628 $ 555,206
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.
Nine Months Ended September 30, 2026 Compared to Nine Months Ended 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 is 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 tax provision using a 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 tax benefits from LIHTC investments resulting from return-to-provision adjustments.
Nine Months Ended September 30, 2026 Compared to Nine Months Ended 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 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 Analysis
The following table provides a summary of our balance sheet highlights as of the dates indicated:
Balance Sheet Highlights September 30, 2026 December 31, 2025 Increase (Decrease)
(In thousands)
Cash and cash equivalents $ 2,168,707 $ 2,307,965 $ (139,258)
Securities AFS 5,065,839 2,454,058 2,611,781
Securities HTM - 2,308,636 (2,308,636)
Loans HFS 498,759 182,936 315,823
Loans and leases HFI 24,590,523 25,032,679 (442,156)
Total loans and leases 25,089,282 25,215,615 (126,333)
Total assets 34,965,495 34,797,442 168,053
Noninterest-bearing deposits 7,690,767 7,822,787 (132,020)
Total deposits 28,260,309 27,843,357 416,952
Borrowings 2,408,626 2,063,819 344,807
Subordinated debt 575,024 952,740 (377,716)
Total liabilities 31,616,666 31,256,165 360,501
Total stockholders' equity 3,348,829 3,541,277 (192,448)
The Company's September 30, 2026 balance sheet reflects the effects of several strategic balance sheet actions that occurred in the second quarter of 2026, including the repositioning of $2.3 billion of lower-yielding HTM securities, the transfer of $827.0 million of loans from HFI to HFS as part of the targeted loan sale process, and the retirement of $385.0 million of subordinated debt.
Securities Available-for-Sale
The following table presents the composition and durations of our AFS securities as of the dates indicated:
September 30, 2026 December 31, 2025
Fair
% of
Duration Fair
% of
Duration
Security Type Value
Total
(in years) Value
Total
(in years)
(Dollars in thousands)
Agency residential CMOs $ 3,067,819 61 % 3.5 $ 871,624 36 % 2.3
Agency residential MBS 718,355 14 % 7.2 834,085 34 % 7.6
Private label residential CMOs 393,765 8 % 4.7 228,975 9 % 4.4
Collateralized loan obligations 107,928 2 % - 200,822 8 % -
Corporate debt securities 193,846 4 % 0.9 241,596 10 % 1.0
Agency commercial MBS 343,613 7 % 3.1 50,966 2 % 3.2
Asset-backed securities 11,633 - % - 13,249 1 % 0.1
Private label commercial MBS 6,822 - % 2.7 9,279 - % 3.1
SBA securities 2,549 - % 3.9 3,462 - % 3.0
U.S. Treasury securities 219,509 4 % 2.3 - - % -
Total securities AFS $ 5,065,839 100 % 3.9 $ 2,454,058 100 % 4.0
AFS securities increased by $2.6 billion to $5.1 billion at September 30, 2026 compared to $2.5 billion at December 31, 2025, due primarily to the transfer of HTM securities to AFS of $2.3 billion in the second quarter of 2026 and purchases of $3.3 billion, offset partially by the sale of $2.3 billion, as part of the securities repositioning, $446.7 million of principal paydowns, $54.3 million of maturities, $177.6 million decrease in the fair value of AFS securities, and $3.5 million of net amortization. As of September 30, 2026, AFS securities had aggregate unrealized net after-tax losses in AOCI of $261.4 million, up from $136.6 million at December 31, 2025, driven by higher interest rates.
Securities Held-to-Maturity
The Company did not hold any securities classified as HTM as of September 30, 2026. The following table presents the composition and duration of our HTM securities as of December 31, 2025.
December 31, 2025
Amortized
% of
Duration
Security Type Cost
Total
(in years)
(Dollars in thousands)
Municipal securities $ 1,237,792 54 % 7.5
Agency commercial MBS 447,283 19 % 5.1
Private label commercial MBS 360,382 16 % 4.8
U.S. Treasury securities 193,022 8 % 5.0
Corporate debt securities 70,852 3 % 4.0
Total securities HTM $ 2,309,331 100 % 6.3
Loans Held for Sale
As part of our management of the loans held in our portfolio, on occasion we will transfer loans from HFI to HFS. Total loans and leases HFS increased by $315.8 million to $498.8 million at September 30, 2026 compared to $182.9 million at December 31, 2025. The increase was primarily driven by the transfer of $827.0 million of CRE and multi-family construction loans from HFI to HFS in the second quarter of 2026 as part of the Company's targeted loan sale process, offset partially by $615.2 million of loan sales during the nine months ended September 30, 2026, including a majority of the targeted loan sales that closed during the period. The remaining targeted loan sales closed on October 21, 2026.
Loans and Leases Held for Investment
The following table presents the composition of our loans and leases HFI by loan portfolio segment, class, and subclass as of the dates indicated:
September 30, 2026 December 31, 2025
% of % of
Balance Total Balance
Total
(Dollars in thousands)
Real Estate Mortgage:
Commercial real estate $ 3,086,685 12 % $ 3,259,164 13 %
SBA program 625,161 3 % 666,424 3 %
Hotel 286,837 1 % 389,049 1 %
Total commercial real estate mortgage 3,998,683 16 % 4,314,637 17 %
Multi-family 5,376,885 22 % 6,089,417 24 %
Residential mortgage 4,081,067 17 % 3,307,427 14 %
Investor-owned residential 14,943 - % 32,567 - %
Residential renovation 4,706 - % 6,739 - %
Total other residential real estate 4,100,716 17 % 3,346,733 14 %
Total real estate mortgage 13,476,284 55 % 13,750,787 55 %
Real Estate Construction and Land:
Commercial 358,696 1 % 379,387 2 %
Residential 1,116,075 5 % 1,568,240 6 %
Total real estate construction and land (1)
1,474,771 6 % 1,947,627 8 %
Commercial:
Lender finance 2,189,659 9 % 1,623,474 6 %
Equipment finance 622,418 3 % 674,714 3 %
Premium finance 277,704 1 % 447,939 2 %
Other asset-based 303,219 1 % 204,883 1 %
Total asset-based 3,393,000 14 % 2,951,010 12 %
Equity fund loans 1,375,284 6 % 1,320,297 5 %
Venture lending 994,267 4 % 901,800 4 %
Total venture capital 2,369,551 10 % 2,222,097 9 %
Warehouse lending 1,814,318 7 % 2,100,075 8 %
Secured business loans 610,778 2 % 806,597 3 %
Other lending 1,116,414 5 % 897,427 4 %
Total other commercial 3,541,510 14 % 3,804,099 15 %
Total commercial 9,304,061 38 % 8,977,206 36 %
Consumer 335,407 1 % 357,059 1 %
Total loans and leases HFI $ 24,590,523 100 % $ 25,032,679 100 %
Total unfunded loan commitments $ 5,565,774 $ 5,433,357
________________________________
(1) Includes land and acquisition and development loans of $182.4 million at September 30, 2026 and $214.5 million at December 31, 2025.
Our NDFI lending for loans HFI totaled $5.4 billion or 22.1% of total loans HFI, as of September 30, 2026, compared to $5.1 billion, or 20.5% of total loans HFI as of December 31, 2025, and is diversified across multiple asset classes, including warehouse lending, equity fund loans, and lender finance. The NDFI portfolio has a history of strong asset quality performance with no delinquencies, nonperforming loans, or classified loans for these respective periods.
The following table presents a roll forward of loans and leases HFI for the period indicated:
Roll Forward of Loans and Leases Held for Investment Nine Months Ended September 30, 2026
(In thousands)
Balance, beginning of period $ 25,032,679
Additions:
Production 3,272,697
Disbursements 4,285,259
Total production and disbursements 7,557,956
Reductions:
Payoffs (2,521,464)
Paydowns (4,322,464)
Total payoffs and paydowns (6,843,928)
Sales (85,011)
Transfers to foreclosed assets (7,429)
Charge-offs (196,868)
Transfers to loans HFS (866,876)
Total reductions (8,000,112)
Net decrease (442,156)
Balance, end of period $ 24,590,523
Loan Concentrations
We mitigate loan concentration risk through disciplined underwriting and approval processes that consider borrower, industry, and collateral characteristics. All loan originations and renewals are individually reviewed, with larger exposures subject to credit committee oversight. Credit risk is actively managed through ongoing borrower monitoring, covenant compliance, independent credit review, and portfolio reviews designed to identify emerging credit risks.
Total real estate loans HFI were $15.0 billion, or 61%, of our loan portfolio at September 30, 2026 and consisted of $13.5 billion of real estate mortgage loans and $1.5 billion of real estate construction and land loans, compared to $15.7 billion, or 63%, of our total loan portfolio at December 31, 2025 and consisted of $13.8 billion of real estate mortgage loans and $1.9 billion of real estate construction and land loans. At September 30, 2026 and December 31, 2025, 70% and 71% of our real estate loans were collateralized by property in California, reflecting the concentration of our community banking operations within the state.
Allowance for Credit Losses on Loans and Leases Held for Investment
The ACL represents our estimate of CECL for loans and leases HFI and unfunded loan commitments as of the reporting date. The ACL is estimated under the CECL methodology, which incorporates historical credit loss experience, current conditions, and reasonable and supportable forecasts.
In estimating the ACL, we consider multiple forward-looking economic scenarios, with scenario selection and weighting reflecting current economic conditions and downside risk over the reasonable and supportable forecast period. Expected losses revert to a through-the-cycle basis thereafter, and assumptions are reassessed quarterly based on portfolio composition, credit quality trends, and macroeconomic factors. Quantitative model outputs are supplemented by qualitative adjustments for risks not fully captured in the models, primarily related to CRE exposure, portfolio concentrations, and levels of adversely classified loans. As part of our ACL governance framework, we perform sensitivity analyses to assess the reasonableness of the allowance; however, due to the interrelated nature of key assumptions, the impact of changes in individual inputs cannot be isolated.
We believe the ACL appropriately reflects expected credit losses inherent in the portfolio as of the reporting date. Actual results may differ due to changes in economic conditions, portfolio mix, or borrower performance. For additional information regarding our ACL methodology and accounting policies, see "Note 1 - Nature of Operations and Summary of Significant Accounting Policies" in Item 8 of the Form 10-K.
The following table presents information regarding the ACL on loans and leases HFI as of the dates indicated:
Allowance for Credit Losses Data September 30, 2026 December 31, 2025
(Dollars in thousands)
Allowance for loan and lease losses $ 234,428 $ 245,612
Reserve for unfunded loan commitments 34,921 34,921
Total ACL $ 269,349 $ 280,533
ACL to loans and leases HFI 1.10 % 1.12 %
ACL to nonaccrual loans and leases HFI 151.97 % 176.30 %
The following table presents the changes in our ACL on loans and leases HFI for the periods indicated:
Three Months Ended Nine Months Ended
Roll Forward of Allowance for Credit Losses September 30, June 30, September 30,
on Loans and Leases Held for Investment 2026 2026 2026 2025
(Dollars in thousands)
Balance, beginning of period $ 276,240 $ 276,521 $ 280,533 $ 268,431
Provision for credit losses:
Addition to allowance for loan and lease losses 8,400 162,000 180,200 56,980
Addition to reserve for unfunded loan commitments 2,000 (2,000) - 1,150
Total provision for credit losses 10,400 160,000 180,200 58,130
Loans and leases charged off:
Real estate mortgage (13,145) (77,833) (96,352) (24,324)
Real estate construction and land - (67,531) (75,608) (21,536)
Commercial (5,254) (15,104) (22,095) (21,227)
Consumer (755) (1,149) (2,813) (2,877)
Total loans and leases charged off (19,154) (161,617) (196,868) (69,964)
Recoveries on loans and leases charged off:
Real estate mortgage 1,088 90 1,980 2,212
Real estate construction and land - - - 1,370
Commercial 722 921 2,950 10,224
Consumer 53 325 554 319
Total recoveries on loans and leases charged off 1,863 1,336 5,484 14,125
Net charge-offs (17,291) (160,281) (191,384) (55,839)
Balance, end of period $ 269,349 $ 276,240 $ 269,349 $ 270,722
Annualized net charge-offs to average loans and leases 0.27 % 2.54 % 1.02 % 0.31 %
The following table presents charge-offs by loan portfolio segment, class, and subclass for the periods indicated:
Three Months Ended Nine Months Ended
September 30, June 30, September 30,
Allowance for Credit Losses Charge-offs
2026 2026 2026 2025
(In thousands)
Real Estate Mortgage:
Commercial real estate $ 11,055 $ 2,542 $ 13,597 $ 17,411
SBA program 65 5 70 634
Hotel - 6,404 11,504 -
Total commercial real estate mortgage 11,120 8,951 25,171 18,045
Multi-family 1,752 68,249 70,001 3,275
Residential mortgage - - 71 849
Investor-owned residential 14 619 647 1,698
Residential renovation 259 14 462 457
Total other residential real estate 273 633 1,180 3,004
Total real estate mortgage 13,145 77,833 96,352 24,324
Real Estate Construction and Land:
Commercial - - 8,077 21,536
Residential - 67,531 67,531 -
Total real estate construction and land - 67,531 75,608 21,536
Commercial:
Venture lending - 14,400 14,400 5,257
Total venture capital - 14,400 14,400 5,257
Secured business loans 4,041 - 5,467 4,265
Other lending 1,213 704 2,228 11,705
Total other commercial 5,254 704 7,695 15,970
Total commercial 5,254 15,104 22,095 21,227
Consumer 755 1,149 2,813 2,877
Total charge-offs $ 19,154 $ 161,617 $ 196,868 $ 69,964
The following table presents recoveries by portfolio segment, class, and subclass for the periods indicated:
Three Months Ended Nine Months Ended
September 30, June 30, September 30,
Allowance for Credit Losses Recoveries 2026 2026 2026 2025
(In thousands)
Real Estate Mortgage:
Commercial real estate $ 14 $ 14 $ 500 $ 1,843
SBA program 336 62 488 252
Total commercial real estate mortgage 350 76 988 2,095
Multi-family 692 - 692 -
Residential mortgage 8 7 176 22
Investor-owned residential 36 7 92 9
Residential renovation 2 - 32 86
Total other residential real estate 46 14 300 117
Total real estate mortgage 1,088 90 1,980 2,212
Real Estate Construction and Land:
Commercial - - - 1,370
Total real estate construction and land - - - 1,370
Commercial:
Premium finance - - 2 15
Other asset-based 50 100 708 1,488
Total asset-based 50 100 710 1,503
Venture lending 14 23 50 283
Total venture capital 14 23 50 283
Secured business loans 191 458 892 2,711
Other lending 467 340 1,298 5,727
Total other commercial 658 798 2,190 8,438
Total commercial 722 921 2,950 10,224
Consumer 53 325 554 319
Total recoveries $ 1,863 $ 1,336 $ 5,484 $ 14,125
Credit Quality
Nonperforming Assets, Classified Loans and Leases, and Special Mention Loans and Leases
The following table presents information on our nonperforming assets, classified loans and leases, and special mention loans and leases as of the dates indicated:
September 30, 2026 December 31, 2025
(Dollars in thousands)
Nonaccrual loans and leases HFI $ 177,233 $ 159,168
Accruing loans contractually past due 90 days or more - -
Total nonperforming loans and leases 177,233 159,168
Foreclosed assets, net 21,460 17,115
Total nonperforming assets $ 198,693 $ 176,283
Classified loans and leases HFI $ 507,368 $ 800,330
Special mention loans and leases HFI 352,144 458,683
Criticized loans and leases HFI $ 859,512 $ 1,259,013
Nonaccrual loans and leases HFI to loans and leases HFI 0.72 % 0.64 %
Nonperforming assets to loans and leases HFI and foreclosed assets, net 0.81 % 0.70 %
ACL to nonaccrual loans and leases HFI 151.97 % 176.25 %
Classified loans and leases HFI to loans and leases HFI 2.06 % 3.20 %
Special mention loans and leases HFI to loans and leases HFI 1.43 % 1.83 %
Nonaccrual Loans and Leases Held for Investment
The following table presents our nonaccrual loans and leases HFI and accruing loans and leases past due between 30 and 89 days by loan portfolio segment and class as of the dates indicated:
September 30, 2026 December 31, 2025 Increase (Decrease)
Accruing Accruing Accruing
and 30-89 and 30-89 and 30-89
Nonaccrual Days Past Due Nonaccrual Days Past Due Nonaccrual Days Past Due
(In thousands)
Real estate mortgage:
Commercial $ 88,083 $ - $ 93,334 $ 1,124 $ (5,251) $ (1,124)
Multi-family 6,755 - 3,358 32,887 3,397 (32,887)
Other residential 62,613 22,948 57,984 28,614 4,629 (5,666)
Total real estate mortgage 157,451 22,948 154,676 62,625 2,775 (39,677)
Real estate construction and land:
Residential 2,385 - - 26,540 2,385 (26,540)
Total real estate construction and land 2,385 - - 26,540 2,385 (26,540)
Commercial:
Asset-based - 54 - 1,142 - (1,088)
Venture capital 14,398 - 625 - 13,773 -
Other commercial 1,961 1,233 2,510 788 (549) 445
Total commercial 16,359 1,287 3,135 1,930 13,224 (643)
Consumer 1,038 2,212 1,357 1,933 (319) 279
Total HFI $ 177,233 $ 26,447 $ 159,168 $ 93,028 $ 18,065 $ (66,581)
Nonperforming loans and leases HFI increased by $18.1 million to $177.2 million at September 30, 2026 compared to $159.2 million at December 31, 2025, due mainly to additions of $515.5 million, offset partially by transfers to loans HFS of $303.0 million, charge-offs of $114.9 million, principal and other reductions of $64.2 million, and transfers to accrual status of $15.3 million. As of September 30, 2026, three of our largest loan relationships on nonaccrual status had an aggregate carrying value of $54.8 million and represented 31% of total nonaccrual loans and leases.
Loans and leases accruing and 30-89 days past due decreased by $66.6 million to $26.4 million as of September 30, 2026 compared to $93.0 million at December 31, 2025, due mainly to decreases of $32.9 million in multi-family real estate mortgage delinquent loans and $26.5 million in residential real estate construction and land delinquent loans.
Foreclosed Assets, Net
The following table presents foreclosed assets (primarily OREO), net of the valuation allowance, by property type as of the dates indicated:
Property Type September 30, 2026 December 31, 2025
(In thousands)
Commercial real estate $ 2,231 $ -
Single-family residential 19,209 17,095
Total OREO, net 21,440 17,095
Other foreclosed assets 20 20
Total foreclosed assets, net $ 21,460 $ 17,115
Foreclosed assets increased by $4.3 million to $21.5 million at September 30, 2026 compared to $17.1 million at December 31, 2025, due mainly to transfers from loans of $7.6 million, offset partially by sales of $3.1 million and a provision for losses on OREO of $0.1 million.
Classified and Special Mention Loans and Leases Held for Investment
The following table presents the credit risk ratings of our loans and leases HFI as of the dates indicated:
Loan and Lease Credit Risk Ratings
September 30, 2026 December 31, 2025
(In thousands)
Pass $ 23,731,011 $ 23,773,666
Special mention 352,144 458,683
Classified 507,368 800,330
Total loans and leases HFI $ 24,590,523 $ 25,032,679
Special mention and classified loans and leases were impacted by the transfer of $827.0 million of loans from HFI to HFS in the second quarter of 2026 as part of the Company's targeted loan sale process.
The following table presents the classified and special mention credit risk rating categories for loans and leases HFI by loan portfolio segment and class and the related net changes as of the dates indicated:
September 30, 2026 December 31, 2025 Increase (Decrease)
Special Special Special
Classified Mention Classified Mention Classified Mention
(In thousands)
Real estate mortgage:
Commercial $ 202,087 $ 101,960 $ 297,606 $ 126,998 $ (95,519) $ (25,038)
Multi-family 148,748 83,573 166,385 216,286 (17,637) (132,713)
Other residential 62,613 - 58,202 - 4,411 -
Total real estate mortgage 413,448 185,533 522,193 343,284 (108,745) (157,751)
Real estate construction and land:
Commercial - - 52,828 - (52,828) -
Residential 2,385 48,565 2,982 10,714 (597) 37,851
Total real estate construction and land 2,385 48,565 55,810 10,714 (53,425) 37,851
Commercial:
Asset-based 5,155 7,227 36,732 7,180 (31,577) 47
Venture capital 75,950 85,196 171,847 64,577 (95,897) 20,619
Other commercial 9,392 22,008 12,143 27,689 (2,751) (5,681)
Total commercial 90,497 114,431 220,722 99,446 (130,225) 14,985
Consumer 1,038 3,615 1,605 5,239 (567) (1,624)
Total $ 507,368 $ 352,144 $ 800,330 $ 458,683 $ (292,962) $ (106,539)
Classified loans and leases decreased by $293.0 million to $507.4 million at September 30, 2026 compared to $800.3 million at December 31, 2025, primarily reflecting the transfer of certain loans to HFS in the second quarter of 2026 as part of the Company's targeted loan sale process. The decline was concentrated in venture capital loans, CRE mortgage loans, CRE construction and land loans, and asset-based loans, which decreased by $95.9 million, $95.5 million, $52.8 million, and $31.6 million, respectively.
Special mention loans and leases decreased by $106.5 million to $352.1 million at September 30, 2026 compared to $458.7 million at December 31, 2025, primarily reflecting the targeted loan sale transfer in the second quarter of 2026. The largest decreases occurred in multi-family real estate mortgage loans, which declined by $132.7 million.
Deposits
The following table presents the composition of our deposits portfolio by account type as of the dates indicated:
September 30, 2026 December 31, 2025
Deposit Type Balance
% of Total
Balance
% of Total
Increase (Decrease)
(Dollars in thousands)
Noninterest-bearing checking $ 7,690,767 27 % $ 7,822,787 28 % $ (132,020)
Interest-bearing:
Checking 9,024,086 32 % 8,509,587 30 % 514,499
Money market 5,718,773 20 % 4,917,857 18 % 800,916
Savings 1,862,512 7 % 1,905,863 7 % (43,351)
Time:
Non-brokered 2,006,617 7 % 2,254,293 8 % (247,676)
Brokered 1,957,554 7 % 2,432,970 9 % (475,416)
Total time deposits 3,964,171 14 % 4,687,263 17 % (723,092)
Total interest-bearing 20,569,542 73 % 20,020,570 72 % 548,972
Total deposits $ 28,260,309 100 % $ 27,843,357 100 % $ 416,952
Total deposits increased by $417.0 million to $28.3 billion at September 30, 2026 compared to $27.8 billion at December 31, 2025. The increase in total deposits was due primarily to higher balances in money market accounts of $800.9 million and higher checking accounts of $514.5 million, offset partially by lower brokered and non-brokered time deposits of $723.1 million, lower noninterest-bearing checking accounts of $132.0 million, and lower savings accounts of $43.4 million. At September 30, 2026, noninterest-bearing deposits totaled $7.7 billion, or 27%, of total deposits, and interest-bearing deposits totaled $20.6 billion, or 73%, of total deposits, compared to noninterest-bearing deposits of $7.8 billion, or 28% of total deposits, and interest-bearing deposits of $20.0 billion, or 72% of total deposits, at December 31, 2025.
The following table presents time deposits based on the $250,000 FDIC insured limit as of the dates indicated:
September 30, 2026 December 31, 2025
% of Total % of Total
Time Deposits Balance Deposits Balance Deposits
(Dollars in thousands)
Time deposits $250,000 and under $ 3,078,694 11 % $ 3,669,523 13 %
Time deposits over $250,000 885,477 3 % 1,017,740 4 %
Total time deposits $ 3,964,171 14 % $ 4,687,263 17 %
As of September 30, 2026, FDIC-insured deposits represented approximately 72% of total deposits, up from 71% as of December 31, 2025.
The following table summarizes the maturities of time deposits as of the date indicated:
Time Deposits
September 30, 2026
$250,000 and Under
Over $250,000
Total
(In thousands)
Maturities:
Due in three months or less $ 1,483,081 $ 295,421 $ 1,778,502
Due in over three months through six months 838,402 254,498 1,092,900
Due in over six months through 12 months 677,190 270,917 948,107
Total due within 12 months 2,998,673 820,836 3,819,509
Due in over 12 months through 24 months 75,057 60,756 135,813
Due in over 24 months 4,964 3,885 8,849
Total due over 12 months 80,021 64,641 144,662
Total $ 3,078,694 $ 885,477 $ 3,964,171
Client Investment Funds
In addition to deposit products, we also offer alternative, non-depository corporate treasury solutions for clients to invest excess liquidity. These off-balance sheet client funds totaled $1.0 billion at September 30, 2026 and $1.2 billion at December 31, 2025.
Borrowings
The following table summarizes our borrowings as of the dates indicated:
September 30, 2026 December 31, 2025
Weighted Average Weighted Average
Balance Rate Balance Rate
(Dollars in thousands)
FHLB secured advances $ 2,300,000 4.21 % $ 1,710,185 3.90 %
Other short-term borrowings - - % 240,000 3.69 %
Credit-linked notes 108,626 14.47 % 113,634 14.63 %
Total borrowings, net $ 2,408,626 4.67 % $ 2,063,819 4.47 %
Borrowings increased by $344.8 million to $2.4 billion at September 30, 2026 compared to $2.1 billion at December 31, 2025, due to higher FHLB secured advances. We utilized these borrowings to manage liquidity needs, including, but not limited to, funding asset growth, accommodating liability maturities and deposit withdrawals, and supporting business operations.
Subordinated Debt
Subordinated debt decreased to $575.0 million at September 30, 2026 compared to $952.7 million at December 31, 2025, driven primarily by the redemption of the $385 million subordinated debt in the second quarter of 2026. At September 30, 2026, $131.0 million of subordinated debt was included in the Company's Tier 1 capital and $413.8 million was included in Tier 2 capital.
Regulatory Matters
Capital
Bank regulatory agencies measure capital adequacy through standardized risk-based capital guidelines that compare different levels of capital (as defined by such guidelines) to risk-weighted assets and off-balance sheet obligations.
Regulatory capital requirements limit the amount of DTAs that may be included when determining the amount of regulatory capital. DTA amounts in excess of the calculated limit are disallowed from regulatory capital. At September 30, 2026, such disallowed amounts were $293.9 million for the Company and $264.3 million for the Bank. No assurance can be given that the regulatory capital DTA limitation will not increase in the future or that the Company and the Bank will not have increased DTAs that are disallowed.
Basel III currently requires all banking organizations to maintain a 2.50% capital conservation buffer above the minimum risk-based capital requirements to avoid certain limitations on capital distributions, stock repurchases and discretionary bonus payments to executive officers. The capital conservation buffer is exclusively comprised of CET1 capital, and it applies to each of the three risk-based capital ratios but not to the leverage ratio. Effective January 1, 2019, the CET1, Tier 1, and Total capital ratio minimums inclusive of the capital conservation buffer were 7.00%, 8.50%, and 10.50%. At September 30, 2026, the Company and the Bank were in compliance with the capital conservation buffer requirements.
The following tables present a comparison of our actual capital ratios to the minimum required ratios and well capitalized ratios as of the dates indicated:
Minimum Required
For Capital Adequacy For Capital Conservation For Well Capitalized
September 30, 2026 December 31, 2025 Purposes Buffer Classification
Banc of California, Inc.:
Tier 1 leverage capital ratio 9.14% 9.99% 4.00% N/A N/A
CET1 capital ratio 9.70% 10.01% 4.50% 7.00% N/A
Tier 1 capital ratio 12.10% 12.34% 6.00% 8.50% 6.00%
Total capital ratio 14.71% 16.31% 8.00% 10.50% 10.00%
Banc of California:
Tier 1 leverage capital ratio 9.77% 10.65% 4.00% N/A 5.00%
CET1 capital ratio 12.94% 13.15% 4.50% 7.00% 6.50%
Tier 1 capital ratio 12.94% 13.15% 6.00% 8.50% 8.00%
Total capital ratio 13.97% 15.61% 8.00% 10.50% 10.00%
The Company's consolidated risk-based capital ratios and Tier 1 leverage ratio decreased during the nine months ended September 30, 2026 due mainly to the effect of the strategic balance sheet actions taken during the second quarter of 2026.
Dividends on Common Stock and Interest on Subordinated Debt
As a bank holding company, Banc of California, Inc. is required to notify and receive approval from the FRB prior to declaring and paying a dividend to common stockholders during any period in which quarterly and/or cumulative twelve-month net earnings are insufficient to fund the dividend amount, among other requirements. Interest payments made on subordinated debt are considered dividend payments under FRB regulations. We may not pay a dividend if the FRB objects or until such time as we receive approval from the FRB or we no longer need to provide notice under applicable regulations. The Company currently is required to receive FRB approval to declare or pay a dividend to stockholders. Further, if the Company defaults or elects to defer the interest payments on its subordinated debt, it is restricted from paying dividends on its Series F preferred and common stock.
Dividends on Preferred Stock
The Company's ability to pay dividends on the Series F preferred stock depends on the ability of the Bank to pay dividends to the holding company. The ability of the Company and the Bank to pay dividends in the future is subject to bank regulatory requirements, including capital regulations and policies established by the FRB and the DFPI, as applicable. Dividends on the Series F preferred stock will not be declared, paid, or set aside for payment to the extent such act would cause us to fail to comply with applicable laws and regulations, including applicable FRB capital adequacy regulations and policies.
Dividends on the Series F preferred stock are not cumulative or mandatory. If the Company's Board of Directors does not declare a dividend on the Series F preferred stock in respect of a dividend period, then no dividend shall be deemed to be payable for such dividend period or be cumulative, and the Company will have no obligation to pay any dividend for that dividend period, whether or not the Board of Directors declares a dividend on the Series F preferred stock or any other class or series of its capital stock for any future dividend period. However, if dividends on the Series F preferred stock have not been declared or paid for the equivalent of six dividend payments, whether or not for consecutive dividend periods, holders of the outstanding shares of Series F preferred stock, together with holders of any other series of the Company's preferred stock ranking equal with the Series F preferred stock with similar voting rights, will generally be entitled to vote for the election of two additional directors. Additionally, so long as any share of Series F preferred stock remains outstanding, unless dividends on all outstanding shares of Series F preferred stock for the most recently completed dividend period have been paid in full or declared and a sum sufficient for the payment thereof has been set aside for payment, no dividend shall be declared or paid or set aside for payment and no distribution shall be declared or made or set aside for payment on the Company's common stock.
Liquidity
Liquidity Management
Liquidity is the ongoing ability to accommodate liability maturities and deposit withdrawals, fund asset growth and business operations, and meet contractual obligations through unconstrained access to funding at reasonable market rates. Liquidity management involves forecasting funding requirements and maintaining sufficient capacity to meet the needs and accommodate fluctuations in asset and liability levels due to changes in the Company's business operations or unanticipated events.
We have a Management Finance Committee ("MFC") that is comprised of members of senior management and is responsible for managing commitments to meet the needs of customers while achieving our financial objectives. MFC meets regularly to review funding capacities, current and forecasted loan demand, and investment opportunities.
We manage our liquidity by maintaining pools of liquid assets on-balance sheet, consisting of cash and receivables due from banks, interest-earning deposits in other financial institutions, and unpledged AFS securities, which we refer to as our primary liquidity. We also maintain available borrowing capacity under secured credit lines with the FHLB and the FRBSF, which we refer to as our secondary liquidity.
As a member of the FHLB, the Bank had secured borrowing capacity with the FHLB of $6.8 billion at September 30, 2026, offset partially by $658.5 million pledged for letters of credit and a balance outstanding of $2.3 billion as of that date. The FHLB secured credit line was collateralized by a blanket lien on $9.8 billion of certain qualifying loans. The Bank also had secured borrowing capacity with the FRBSF under the Discount Window program totaling $4.9 billion at September 30, 2026, all of which was unused and available. The FRBSF Discount Window secured credit line was collateralized by liens on $6.1 billion of qualifying loans and $290.4 million of pledged securities.
In addition to its secured lines of credit with the FHLB and FRBSF, the Bank also had credit limits of $190.0 million in the aggregate with several commercial banks, as well as borrowing arrangements with unaffiliated financial institutions that provide for the purchase of overnight funds or other short-term borrowings. The availability of these unsecured borrowings fluctuates regularly and is subject to the discretion of the counterparties. As of September 30, 2026, the Bank had no balance outstanding under these arrangements. Additionally, the holding company has a $100.0 million unsecured revolving line of credit. As of September 30, 2026, there was no balance outstanding.
The following tables provide a summary of the Company's primary and secondary liquidity levels at the dates indicated:
Primary Liquidity - On-Balance Sheet September 30, 2026 December 31, 2025
(Dollars in thousands)
Cash and due from banks $ 293,680 $ 181,103
Interest-earning deposits in financial institutions 1,875,027 2,126,862
Total cash, cash equivalents, and restricted cash 2,168,707 2,307,965
Less: Restricted cash (175,293) (170,229)
Add: Securities AFS, at fair value 5,065,839 2,454,058
Less: Pledged securities AFS, at fair value (943,055) (3,463)
Less: Haircut on securities AFS (210,503) (183,265)
Total primary liquidity $ 5,905,695 $ 4,405,066
Ratio of primary liquidity to total assets 16.9 % 12.7 %
Secondary Liquidity - Off-Balance Sheet
Available Secured Borrowing Capacity September 30, 2026 December 31, 2025
(In thousands)
Total secured borrowing capacity with the FHLB $ 6,773,723 $ 6,949,898
Less: Letters of credit (658,492) (514,091)
Less: Secured advances outstanding (2,300,000) (1,710,185)
Available secured borrowing capacity with the FHLB 3,815,231 4,725,622
Available secured borrowing capacity with the FRBSF 4,870,871 5,044,040
Total secondary liquidity $ 8,686,102 $ 9,769,662
The Company's primary liquidity increased by $1.5 billion to $5.9 billion at September 30, 2026 compared to $4.4 billion at December 31, 2025, due mainly to an increase of $2.6 billion in AFS securities, offset partially by a decrease of $139.3 million in total cash and cash equivalents. Prior to the strategic balance sheet actions that occurred in the second quarter of 2026, we also included certain unencumbered HTM securities in our internal liquidity stress test buffer which are not included in our primary liquidity. The Company's secondary liquidity decreased by $1.1 billion to $8.7 billion at September 30, 2026 compared to $9.8 billion at December 31, 2025, due to a decrease in the available secured borrowing capacity with the FRB of $173.2 million and a decrease in available borrowing capacity at the FHLB of $910.4 million. At September 30, 2026, total available liquidity was $14.6 billion, which exceeded uninsured and uncollateralized deposits of $7.3 billion.
Obtaining new customer deposits or having existing customers increase their deposit balances with us, are primary sources of funding for our operations and is one of the highest priorities of the Company. See "Balance Sheet Analysis - Deposits" for additional information and detail of our deposits. Additionally, we fund our operations with cash flows from our loan and securities portfolios.
Our deposit balances may decrease if customers withdraw funds from the Bank. In order to address the Bank's liquidity risk from fluctuating deposit balances, the Bank maintains adequate levels of available liquidity on and off the balance sheet.
We use brokered deposits, the availability of which is uncertain and subject to competitive market forces and regulations, for liquidity management purposes. At September 30, 2026, brokered deposits totaled $2.4 billion, consisting of $2.0 billion of brokered time deposits and $485.2 million of non-maturity brokered accounts. At December 31, 2025, brokered deposits totaled $2.9 billion, consisting of $2.4 billion of brokered time deposits and $480.0 million of non-maturity brokered accounts.
Our Liquidity Management Policy establishes guidelines aligned with the Company's Risk Appetite Framework and includes a range of liquidity and funding concentration metrics designed to monitor balance sheet strength, funding stability, and available liquidity resources. These measures incorporate assessments of on-balance sheet liquidity, contingent funding capacity, and the composition of funding sources. As of September 30, 2026, the Bank maintained liquidity resources designed to support its ongoing funding needs and balance sheet objectives.
Holding Company Liquidity
Banc of California, Inc. acts as a source of financial strength for the Bank which can also include being a source of liquidity. The primary sources of liquidity for the holding company include dividends from the Bank, intercompany tax payments from the Bank, and Banc of California, Inc.'s ability to raise capital, issue subordinated and senior debt, and secure outside borrowings. Banc of California, Inc.'s ability to obtain funds for the payment of dividends to our stockholders, the repurchase of shares of common stock and preferred stock, and other cash requirements is largely dependent upon the Bank's earnings. The Bank is subject to restrictions under certain federal and state laws and regulations that limit its ability to transfer funds to the holding company through intercompany loans, advances, or cash dividends. Banc of California, Inc.'s ability to pay dividends is also subject to the restrictions set forth by the FRB, and by certain covenants contained in our subordinated debt. See "Regulatory Matters - Dividends on Preferred Stock" for information regarding the payment of dividends on the Series F preferred stock.
On December 23, 2024, Banc of California, Inc. entered into an unsecured revolving line of credit agreement as a borrower for $50.0 million. On March 17, 2025, the Company executed an amendment to the credit agreement that increased the Company's unsecured revolving line of credit to $100.0 million. As of September 30, 2026 and December 31, 2025, there was no balance outstanding.
On March 23, 2026, we announced the extension of the Company's existing $300 million stock repurchase program, which had been scheduled to expire in March 2026, through March 16, 2027. During the first quarter of 2026, the Company repurchased a total of approximately 1.7 million shares of common and common equivalent stock for $31.9 million, at a weighted-average price of $18.68 per share. There were no additional repurchases during the second or third quarters of 2026. As of September 30, 2026, the Company had $82.6 million remaining under the stock repurchase authorization. For further information on the stock repurchase program, see "Note 14. Stockholders' Equity", in Item 1 of this Form 10-Q.
At September 30, 2026, Banc of California, Inc. had $164.4 million in cash and cash equivalents, of which a substantial amount was on deposit at the Bank. We believe this amount of cash, along with anticipated future dividends from the Bank, will be sufficient to fund the holding company's cash flow needs over the next 12 months.
Commitments and Contingencies
Our obligations also include off-balance sheet arrangements consisting of loan commitments, of which only a portion is expected to be funded, and standby letters of credit. At September 30, 2026, our loan commitments and standby letters of credit were $5.6 billion and $259.8 million. The loan commitments, a portion of which will eventually result in funded loans, increase our profitability through NII when drawn and unused commitment fees prior to being drawn. We manage our overall liquidity taking into consideration funded and unfunded commitments as a percentage of our liquidity sources. Our liquidity sources, as described in "Liquidity - Liquidity Management," have been and are expected to be sufficient to meet the cash requirements of our lending activities. For further information on loan commitments, see "Note 10. Commitments and Contingencies", in Item 1 of this Form 10-Q.
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