Company: BANC-PF
Filing Date: 2025-11-10
Form Type: 10-Q
Source: 0001628280-25-050892
Chunk: 118

Company: BANC OF CALIFORNIA, INC.
Filing Date: 2025-11-10
Form: 10-Q
Item: Item 8
Chunk 118
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 interest rate collars, which are option contracts designed to limit the Company's exposure to increases in short term interest rates while foregoing some of the upside if short term interest rates decrease significantly. The interest rate collars have notional amounts aggregating to $1.0 billion, with eighteen month terms, and maturing on October 31, 2026. These collars were entered into with institutional counterparties to hedge against variability in cash flows attributable to interest rate risk on a portion of the Company's floating rate deposits. The cash flow hedges were deemed highly effective at inception and as of September 30, 2025. For derivatives designated as cash flow hedges, the portion of changes in fair value considered to be highly effective is reported as a component of AOCI on the condensed consolidated balance sheets until the related cash flows from the hedged items are recognized in earnings. As of September 30, 2025, the fair value of the cash flow hedges represented a net liability of $4.4 million, related to which a loss of $3.9 million (net of tax) was included in AOCI. The estimated amount to be reclassified in the next 12 months out of AOCI into earnings is $1.1 million.Terminated Cash Flow HedgeThe Company terminated all of the pay-fixed, receive floating interest rate swap contracts classified as cash flow hedges with notional amounts of $355.0 million entered into during 2024, and all remaining deferred amounts in AOCI have been amortized into interest expense as of the end of the third quarter of 2025.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements (Unaudited)

Other Interest Rate Swaps, Foreign Exchange Contracts, and Equity Warrant Assets Not Designated for Hedge AccountingThe Company offers borrowers interest rate swaps under a "back-to-back" loan hedging program and offsets these "pay floating/receive fixed" contracts with borrowers with "receive floating/pay fixed" swaps with counterparty banks. The total notional balance of these offsetting hedging contracts was $152.5 million at September 30, 2025. The Company has also hedged the interest rate risk and foreign currency risk on €25.8 million of subordinated debt utilizing a cross-currency swap. Under the current terms of the swap, the Company receives three-month Euribor plus 205 basis points and pays a fixed rate of 5.92%