Company: BANC-PF
Filing Date: 2025-11-10
Form Type: 10-Q
Source: 0001628280-25-050892
Chunk: 17

Company: BANC OF CALIFORNIA, INC.
Filing Date: 2025-11-10
Form: 10-Q
Item: Item 2
Chunk 17
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 Quarter of 2025 Compared to Second Quarter of 2025

Net interest income increased by $13.2 million to $253.4 million for the third quarter from $240.2 million for the second quarter, attributable primarily to the following:

•An increase of $10.4 million in interest income from loans due primarily to higher average yield driven mainly by higher rate on new loan production, a higher day count, and higher income from loan payoffs, including the payoff of a large commercial real estate loan.

•A decrease of $1.9 million in interest expense on deposits due primarily to lower average balances largely driven by lower brokered deposits and lower interest rates, partially offset by a higher day count.

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•An increase of $0.9 million in interest income from deposits in financial institutions driven mainly by higher average balances and a higher day count, partially offset by lower interest rates.

The net interest margin was 3.22% for the third quarter, up 12 basis points from 3.10% for the second quarter, primarily driven by a higher average yield on interest-earning assets. The average yield on interest-earning assets increased to 5.50% from 5.42%, reflecting a 12 basis point increase in the average yield on loans and leases to 6.05%, largely due to the higher income related to loan payoffs discussed above.

The average total cost of funds was 2.37% for the third quarter, down 5 basis points from 2.42% for the second quarter, driven primarily by lower deposit and borrowing costs and a favorable shift in the funding mix. Brokered deposits decreased as strong customer deposit inflows in the third quarter were used to reduce higher-cost funding sources. As a result, the average total cost of deposits decreased by 5 basis points to 2.08% from 2.13% in the second quarter, while the average cost of borrowings declined by 17 basis points to 4.76%.

Average total deposits decreased by $12.9 million, with a $112.1 million decrease in average interest-bearing deposits partially offset by a $99.2 million increase in average noninterest-bearing deposits. Average noninterest-bearing deposits represented 28.2% of average total deposits in the third quarter, up from 27.8% in the second quarter.

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

Net interest income increased by $35.