Company: BANC-PF
Filing Date: 2025-05-09
Form Type: 10-Q
Source: 0001169770-25-000024
Chunk: 15

Company: BANC OF CALIFORNIA, INC.
Filing Date: 2025-05-09
Form: 10-Q
Item: Item 2
Chunk 15
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72

First Quarter of 2025 Compared to First Quarter of 2024

Net interest income increased by $3.3 million to $232.4 million for the first quarter of 2025 from $229.1 million for the first quarter of 2024 attributable primarily to the following:

•A decrease of $54.3 million in interest expense paid on deposits, including a $26.3 million reduction in interest expense paid on interest-bearing non-brokered deposits, driven by lower average balances and lower market interest rates following the federal funds rate cuts of 100 basis points during 2024. In addition, interest expense paid on brokered deposits decreased by $28.0 million as higher-cost wholesale funding were paid down during 2024 as we executed our strategy to reduce overall funding costs.

•A decrease of $21.0 million in interest expense paid on our borrowings and subordinated debt, primarily due to a lower balance resulting from the payoff of higher-cost Bank Term Funding Program borrowings, which were partially replaced with lower-cost long-term FHLB advances.

•An increase of $3.6 million in interest income from investment securities reflecting the benefit from the balance sheet repositioning actions taken in 2024 and the purchase of and reinvestment into higher-yielding securities.

This was partially offset by: 

•A decrease of $39.4 million in interest income from loans due primarily to lower loan balances mainly resulting from the $1.95 billion sale of the Civic loan portfolio in the third quarter of 2024, lower market interest rates, and a lower day count relative to the first quarter of 2024, which included an additional day due to the leap year.

•A decrease of $36.2 million in interest income from deposits in financial institutions driven by lower balances, as we right-sized our balance sheet and reduced our cash target level after the merger as well as lower market interest rates.

The net interest margin was 3.08% for the first quarter of 2025 compared to 2.66% for the first quarter of 2024. Our net interest margin increased by 42 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 60 basis points to 2.42% for the first quarter of 2025 compared to 3.02% for the first quarter of 2024 due mainly to lower market interest rates