Company: BANC-PF
Filing Date: 2025-11-10
Form Type: 10-Q
Source: 0001628280-25-050892
Chunk: 160

Company: BANC OF CALIFORNIA, INC.
Filing Date: 2025-11-10
Form: 10-Q
Item: Item 8
Chunk 160
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 income from investment securities reflecting the benefits from 2024 balance sheet repositioning actions and reinvestment in higher-yield securities.

This was offset partially by:

•A decrease of $76.1 million in interest income from deposits in financial institutions driven by lower balances, as we maintained a lower cash target level and lower market interest rates.

•A decrease of $63.1 million in interest income from loans due primarily to lower market interest rates reflective of federal funds rate cuts, lower average balances attributable mainly to the sale in July 2024 of $1.95 billion of Civic loans, and by lower net loan discount accretion income. 

The net interest margin was 3.13% for the nine months ended September 30, 2025, up 34 basis points from 2.79% for the nine months ended September 30, 2024. The year-over-year improvement was primarily driven by a 53 basis point decrease in the average total cost of funds to 2.40%, offset partially by a 17 basis point decrease in the average yield on interest-earning assets to 5.44%.

The average total cost of funds decreased by 53 basis points to 2.40%, driven by lower market interest rates and a shift in mix. The average cost of deposits declined by 49 basis points to 2.11%, reflecting the impact of federal funds rate cuts in the second half of 2024. Average total deposits decreased by $1.7 billion year over year, including a $1.5 billion reduction in average interest-bearing deposits and a $144.0 million decrease in average noninterest-bearing deposits. Despite this decline, average noninterest-bearing deposits represented 28.2% of average total deposits for the nine months ended September 30, 2025, up from 27.0% for the comparable period in 2024. The average cost of borrowings also decreased by 75 basis points to 4.99%, reflecting the paydown of higher-cost borrowings in the prior year and their replacement with lower-cost long-term FHLB advances.

87

The average yield on interest-earning assets declined by 17 basis points to 5.44%, due primarily to a 102 basis point decrease in the average yield on deposits in financial institutions, and an 18 basis point decline in the average yield on loans and leases, offset partially by a 27 basis point increase in the average yield on investment securities. The average yield on deposits in financial institutions decreased