Company: BANC-PF
Filing Date: 2025-03-03
Form Type: 10-K
Source: 0001628280-25-009438
Chunk: 212

Company: BANC OF CALIFORNIA, INC.
Filing Date: 2025-03-03
Form: 10-K
Item: Item 1
Chunk 212
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 ratios, and minimum operating cash flow requirements;

•considering market rental and occupancy rates relative to our underwritten or projected rental and occupancy rates;

•considering the experience of our borrowers and our borrowers’ abilities to operate and manage the properties securing our loans;

•evaluating the supply of comparable real estate and new supply under construction in the collateral's market area;

•obtaining independent third-party appraisals that are reviewed by our appraisal department;

•obtaining environmental risk assessments; and

•obtaining seismic studies where appropriate.

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With respect to real estate construction loans, in addition to the points above, we attempt to mitigate project-specific risks by:

•considering the experience of our borrowers and our borrowers’ abilities to manage the properties during construction and into the stabilization periods;

•obtaining project completion guaranties from our borrowers;

•including covenants in our construction loan agreements that require the borrowers to fund costs that exceed the initial construction budgets; 

•implementing a controlled disbursement process for loan proceeds in accordance with an agreed upon schedule, which usually results in the borrowers' equity being invested before loan advances commence and which ensures the costs to complete the projects are in balance with our remaining unfunded loan commitments;

•conducting project site visits and using construction consultants who review the progress of the project; and

•monitoring the construction costs compared to the budgeted costs and the remaining costs to complete. 

SBA 7(a) and 504 program loans are subject to the risks outlined above and the risk that an SBA 7(a) guaranty may be invalid if specific SBA procedures are not followed. We mitigate this risk by adhering to SBA requirements.

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Commercial Loans and Leases 

 Our commercial loans and leases portfolio is diverse and includes various asset-secured loans, equipment-secured loans and leases, venture capital loans to support venture capital firms’ operations and the operations of entrepreneurial and venture-backed companies, warehouse loans, and business loans originated through our CCB group. Commercial loan and lease growth also assists in the growth of our deposits because many commercial loan borrowers establish deposit accounts and utilize treasury management services. Those deposit accounts help us to reduce the overall cost of funds, and those banking service relationships provide a source of noninterest fee income.

Our commercial loans and leases include the following specific lending products:

•Lender finance. These are loans to companies used to purchase finance receivables or extend finance receivables to the underlying obligors and are secured primarily by the