Company: BANC-PF
Filing Date: 2025-05-09
Form Type: 10-Q
Source: 0001169770-25-000024
Chunk: 146

Company: BANC OF CALIFORNIA, INC.
Filing Date: 2025-05-09
Form: 10-Q
Item: Item 8
Chunk 146
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 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 and an improved funding mix. The average cost of deposits decreased by 54 basis points to 2.12% in the first quarter of 2025 from 2.66% for the first quarter of 2024 mainly driven by the federal funds rate cuts. The improved funding mix is reflected in the increase in average noninterest-bearing deposits, which represent 29% of average total deposits for the first quarter of 2025 compared to 26% of average total deposits for the first quarter of 2024. The shift reflects the success of our relationship-based strategy to grow our deposit base. Additionally, average brokered deposits represented 10% of average total deposits for the first quarter of 2025 compared to