Company: BANC-PF
Filing Date: 2025-05-09
Form Type: 10-Q
Source: 0001169770-25-000024
Chunk: 144

Company: BANC OF CALIFORNIA, INC.
Filing Date: 2025-05-09
Form: 10-Q
Item: Item 8
Chunk 144
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. 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.

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First Quarter of 2025 Compared to Fourth Quarter of 2024

Net interest income decreased by $2.9 million to $232.4 million for the first quarter of 2025 from $235.3 million for the fourth quarter of 2024 attributable primarily to the following:

•A decrease of $11.2 million in interest income from loans due primarily to lower day count, lower loan prepayments, and lower market interest rates reflective of a full quarter impact of the cumulative 50 basis points federal funds rate cuts in the fourth quarter.

•A decrease of $6.8 million in interest income from deposits in financial institutions driven by lower balances, as we maintained a lower cash target level in the first quarter of 2025, and lower market interest rates.

This was partially offset by:

•A decrease of $13.6 million in interest expense due primarily to lower interest paid on interest-bearing deposits as a result of deposit rate repricing driven by the federal funds rate cuts in the fourth quarter and lower day count.

•A decrease of $1.4 million in interest expense paid on our borrowings and subordinated debt driven by lower market interest rates.

The net interest margin was 3.08% for the first quarter of 2025 compared to 3.04% for the fourth quarter of 2024. Our net interest margin increased by 4 basis points primarily driven by a lower average total cost of funds, offset partially by a lower average yield on interest-earning assets as described below:

•The average total cost of funds decreased by 13 basis points to 2.42% for the first quarter of 2025 compared to 2.55% for the fourth quarter of 2024 due mainly to lower market interest rates and a lower balance of average total deposits. The average cost of deposits decreased by 14 basis points to 2.12% in the first quarter of 2025 from 2.26% for the fourth quarter of 2024 reflecting a full quarter impact of the federal funds rate cuts. Average total deposits decreased by $247.0 million, with average noninterest-bearing deposits decreasing by $190.9 million for the first quarter of