Banc of California Restores Profit After Repositioning

The Tip Desk · November 8, 2026 · 3 min read

Third-quarter diluted earnings were $0.46 a share as net interest income rose 9% to $272.4 million and the margin widened 21 bps to 3.34%.

Banc of California, Inc. (BANC), the parent of the Los Angeles commercial bank, reported net earnings available to common and equivalent stockholders of $73.1 million, or $0.46 a diluted share, for the third quarter ended September 30, 2026, compared with $59.7 million, or $0.38 a share, a year earlier.

The result reversed a second-quarter net loss of $251.3 million, or $1.61 a share, that reflected the previously announced strategic balance-sheet repositioning. Chairman and Chief Executive Officer Jared Wolff said the third-quarter results demonstrated a stronger earnings foundation created through that second-quarter repositioning and continued execution.

Net interest income increased $21.9 million, or 9%, from the prior quarter to $272.4 million, and the net interest margin expanded 21 basis points to 3.34% from 3.13%. The company said the increase was driven primarily by a $17.7 million rise in interest income on investment securities after the second-quarter repositioning and reinvestment into higher-yielding assets, including a $2.8 million special dividend on FHLB stock. The average yield on investment securities rose 142 basis points to 4.86%, lifting the yield on average interest-earning assets to 5.43% from 5.18%.

Interest income on loans rose $7.7 million, which the company attributed primarily to lower interest reversals on nonaccrual loans and one additional day in the quarter. Those gains were offset in part by a $6.0 million increase in deposit interest expense from higher market rates, the extra day, and higher average balances. The average total cost of funds was 2.16%, up from 2.14%, as the average cost of deposits rose 3 basis points to 1.83%. Average noninterest-bearing deposits were 28.0% of average total deposits, down from 28.5%.

Total revenue was $303.8 million, up 6% from a year earlier. Pre-tax pre-provision income was $118.4 million, up 16% year over year. Noninterest expense was $185.4 million, down $4.5 million from the second quarter, primarily because of a $5.1 million decrease in other expense after a non-recurring software obsolescence charge in the second quarter and a $2.3 million decrease in insurance and assessments from a lower FDIC rate. Noninterest income was $31.4 million, compared with a $234.1 million loss in the second quarter, as the company recorded a $257.5 million smaller loss on securities and an $8.3 million smaller loss on loans held for sale.

The provision for credit losses was $10.4 million, versus $161.8 million in the second quarter, when the provision included the targeted loan-sale process. The third-quarter provision included $8.4 million for loan losses and $2.0 million for unfunded commitments. Credit quality improved: nonperforming loans fell 12 basis points and classified loans 35 basis points as a share of loans held for investment. Total delinquent loans were $114.8 million at September 30, down from $173.7 million at June 30.

Loans and leases held for investment increased $379.7 million, or 6% on an annualized basis, to $24.6 billion, on $2.6 billion of production at a weighted average rate of 6.58%. Average deposits increased $565.3 million, or 8% annualized. Held-for-sale loans declined $416.4 million to $498.8 million after about $525 million of the $827 million targeted commercial real estate and construction sale closed in the quarter; $235 million of remaining construction loans were sold on October 21, 2026. The company said it anticipates selling the remaining held-for-sale portfolio over the next several quarters.

Preliminary capital ratios exceeded “well capitalized” thresholds, including an estimated 12.10% Tier 1 ratio, up 43 basis points, and a 9.70% CET1 ratio, up 45 basis points. Wolff said the company expects further improvement in profitability in the fourth quarter as it realizes a full quarter of earnings from securities reinvestment and additional benefits from completed loan sales.