Banc of California (BANC) Q3 2026 Earnings Call Transcript

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DATE

Wednesday, Oct. 28, 2026

CALL PARTICIPANTS

• Chairman and Chief Executive Officer – Jared Wolff
• Chief Financial Officer – Joe Kauder
• Investor Relations – Meghan O’Leary

TAKEAWAYS

• Diluted EPS — $0.46, representing a 21% increase from $0.38 year over year.
• Net Interest Margin — 3.34%, expanding 21 basis points from the prior quarter following strategic balance sheet repositioning.
• Net Interest Income — $272.4 million, increasing 9% from the second quarter due to higher yields on interest-earning assets.
• Pretax Preprovision Income — $118.4 million, representing 16% growth year over year from $102.0 million.
• Total Revenue — $303.8 million, up 6% year over year driven by increased investment security yields.
• Loan Production — $2.6 billion for the quarter, with a weighted average interest rate on originations of 6.58%.
• Core Deposits — increased by approximately $515 million during the quarter, reflecting the bank’s relationship-driven growth strategy.
• Brokered Deposits — decreased by approximately $375 million, as management reduced its reliance on wholesale funding.
• Common Equity Tier 1 Ratio — 9.7%, an increase of 45 basis points from the previous quarter.
• Efficiency Ratio — 59.1%, improved from 67.2% in the second quarter as revenue grew while expenses remained flat.
• Q4 Pretax Preprovision Income Guidance — $125 million to $130 million, reflecting full-quarter benefits from securities reinvestment and completed loan sales.
• Q4 NIM Guidance — 3.35% to 3.40%, narrowing the range from previous communications.
• Subordinated Debt Redemption — $385 million, executed to avoid a significantly higher contractual interest rate reset.
• Return on Average Tangible Common Equity — 11.9%, increasing over 200 basis points since the first quarter.
• Available-for-Sale Securities Yield — 4.58%, up 23 basis points due to reinvestment into higher-yielding assets.
• Classified Loans — reached five-quarter lows as nonperforming assets declined during the period.
• Net Charge-Offs — $17.3 million, representing 0.27% of average loans and leases on an annualized basis.
• Tangible Book Value Per Share — $16.09, down from $16.44 at June 30 due to unrealized losses on available-for-sale securities.
• HOA Deposits — approximately $4 billion in balances, which management characterized as stable checking accounts with costs paid to property management firms.
• Targeted Loan Sales — $525 million of commercial real estate and construction loans sold during the quarter.
• Average Cost of Deposits — 1.83%, an increase of 3 basis points from the prior quarter.
• Total Available Liquidity — $14.6 billion, including cash, borrowing capacity, and unpledged securities.
• Multifamily Portfolio Credit Quality — $5 billion in total loans with a nonperforming ratio of 0.1%.
• Monthly Fee Income — $10 million to $12 million, supported by commissions, service charges, and leased equipment.
• Single-Family Residential Credit Coverage — $109.9 million from credit-linked notes on a $2.1 billion loan portfolio.

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RISKS

• Wolff stated, “Deposit pressure is real. I think all banks have been talking about it,” noting the competitive environment for funding.
• Wolff warned that interest rate hikes are probably going to stall the economy if the Federal Reserve implements further increases.

SUMMARY

Banc of California, Inc. (BANC +0.91%) reported improved earnings and positive operating leverage following the completion of its strategic balance sheet repositioning. Management indicated that the company is transitioning toward organic growth and asset remixing to drive sustainable returns across various economic cycles. The bank completed significant subordinated debt redemptions and securities reinvestments while reducing its credit concentrations in commercial real estate and construction lending.

• Wolff stated that the new private banking initiative provides high-touch tailored banking solutions to high-net-worth individuals and family offices.
• CFO Kauder stated, “We continue to expect fourth quarter pre-tax pre-provision income of $125 million to $130 million.”
• The company expects the multifamily portfolio to provide net interest income tailwinds as assets reprice to higher market rates during their scheduled maturity periods.
• Wolff indicated that the bank plans to retire its preferred stock in September 2027, which management expects will return approximately 20 million in after-tax income to common shareholders.
• Management expects the Common Equity Tier 1 ratio to reach 10% by the first quarter of 2027.
• Wolff noted that the company is partnering with a third-party firm to expand its payment processing workforce.

INDUSTRY GLOSSARY

• AOCI: Accumulated Other Comprehensive Income (Loss), which captures unrealized gains and losses on certain investments.
• CET1: Common Equity Tier 1, a key regulatory measure of a bank’s core equity capital.
• Efficiency Ratio: A financial metric used to calculate a bank’s overhead as a percentage of its revenue.
• FHLB: Federal Home Loan Bank, a provider of liquidity and funding to member financial institutions.
• HOA: Homeowners Association.
• LIHTC: Low-Income Housing Tax Credit.
• NIM: Net Interest Margin, the difference between the interest income generated and the interest paid to lenders.
• PTPP: Pre-tax, pre-provision income.
• ROTCE: Return on average tangible common equity, a measure of how much profit a bank makes on the equity held by common shareholders.

Full Conference Call Transcript

Operator: Good day, and welcome to the Banc of California third quarter 2026 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Meghan O’Leary, Investor Relations. Please go ahead.

Meghan O’Leary: Good morning, and thank you for joining Banc of California’s third quarter earnings call. Today’s call is being recorded, and a copy of the recording will be available later today on our investor relations website. Today’s presentation will also include non-GAAP measures. Reconciliations for these measures and additional required information are available in the earnings press release and earnings presentation, which are also available on our investor relations website. Before we be

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