Company: BANC-PF
Filing Date: 2025-03-03
Form Type: 10-K
Source: 0001628280-25-009438
Chunk: 265

Company: BANC OF CALIFORNIA, INC.
Filing Date: 2025-03-03
Form: 10-K
Item: Item 1A
Chunk 265
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 future taxable income to realize our net deferred tax asset, we are required under GAAP to establish a full or partial valuation allowance. If we determine that a valuation allowance is necessary, we are required to incur a charge to operations. We regularly assess available positive and negative evidence to determine whether it is more likely than not that our net deferred tax asset will be realized. Realization of a deferred tax asset requires us to apply significant judgment and is inherently speculative because it requires estimates that cannot be made with certainty. As of December 31, 2024, we had a net DTA of $720.6 million. For additional information, see Note 16. Income Taxes of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.

We have suffered significant losses from the balance sheet repositioning and may suffer significant losses from future asset sales.

In connection with the Merger, legacy Banc of California, legacy Pacific Western Bank, and the combined company sold approximately $6.1 billion in assets as part of the balance sheet repositioning strategy, comprised of (i) $2.7 billion of Pacific Western Bank’s securities portfolio, which included agency commercial mortgage-backed securities, agency collateralized mortgage obligations (“CMO”), treasury bonds, municipal bonds, and corporate bonds, (ii) $1.3 billion of Banc of California’s securities portfolio, which included agency mortgage-backed securities, CMOs, and bonds, (iii) $1.5 billion book value of Banc of California’s single-family residential ("SFR") mortgage portfolio, and (iv) $673 million book value of Banc of California’s multi-family residential mortgage portfolio. Some of these assets were sold at significant losses. In 2024, we continued to reposition our balance sheet, including the sale of $742 million of our AFS securities portfolio, for which we suffered $60 million in pre-tax losses, and $1.95 billion of our Civic loans. We will continue to evaluate all available options as we seek to optimize our balance sheet. Depending on the existence of various potential buyers and competitive prices, we may sell additional assets at a significant loss, which could adversely affect our financial condition and results of operations.

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Our level of indebtedness could adversely affect our ability to raise capital and meet our debt obligations.

As of December 31, 2024, the Company had outstanding indebtedness in the amount of approximately $2.3 billion. Our existing indebtedness, together with any future incurrence