Company: BANC-PF
Filing Date: 2025-11-10
Form Type: 10-Q
Source: 0001628280-25-050892
Chunk: 21

Company: BANC OF CALIFORNIA, INC.
Filing Date: 2025-11-10
Form: 10-Q
Item: Item 2
Chunk 21
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 secured by office properties compared to the second quarter. 

The second quarter provision included a $38.6 million provision for loan losses and a $0.9 million provision for credit losses related to investment securities, offset by a $0.4 million reversal of the provision for unfunded loan commitments. 

The second quarter provision for loan losses included $26.3 million related to loans transferred to held for sale ("HFS") for the pending strategic loan sales.  The remaining $12.3 million increase in provision for loan losses was primarily driven by net charge-off activity experienced during the quarter, and an increase in the reserve driven by the updated economic forecast. 

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

The provision for credit losses was $58.1 million for the nine months ended September 30, 2025  compared to $30.0 million for the nine months ended September 30, 2024. The provision for the 2025 period primarily included a provision for loan losses of $57.0 million and a provision for unfunded loan commitments of $1.2 million.

The provision for the 2025 period included $26.3 million related to loans transferred to HFS, as described above. The remaining increase in the provision for loan losses and unfunded loan commitments was primarily driven by net charge-off activity, 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.

The provision for loans losses and unfunded loan commitments for the 2024 period included a $32.0 million provision for loan losses and a $2.0 million reversal of the provision for unfunded loan commitments. The provision for the 2024 period was generally due to higher net charge-offs and higher qualitative reserves, offset partially by the reserves released for the Civic loans transferred to HFS in the second quarter of 2024 and sold in the third quarter of 2024.

Certain circumstances may lead to increased provisions for credit losses on loans and leases in the future. Examples of such circumstances include deterioration in economic conditions and forecasts, an increased amount of classified and/or criticized loans and leases, and net loan and lease and unfunded commitment growth. Deterioration in economic conditions and forecasts may include the rate of economic growth, the unemployment rate, the rate of inflation, changes in the general level of interest rates, changes in