Banc of California BANC Form 10-Q filing Q3 FY2025

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets (Unaudited) 5

Condensed Consolidated Statements of Earnings (Unaudited) 6

Condensed Consolidated Statements of Comprehensive Income (Unaudited) 8

Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) 9

Condensed Consolidated Statements of Cash Flows (Unaudited) 15

Notes to Condensed Consolidated Financial Statements (Unaudited) 17

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 75

Item 3. Quantitative and Qualitative Disclosures About Market Risk 113

Item 4. Controls and Procedures 117

PART II. OTHER INFORMATION

Item 1. Legal Proceedings 117

Item 1A. Risk Factors 117

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 118

Item 3. Defaults Upon Senior Securities 118

Item 4. Mine Safety Disclosures 118

Item 5. Other Information 118

Item 6. Exhibits 119

Signatures 120

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PART I. FINANCIAL INFORMATION

Glossary of Acronyms, Abbreviations, and Terms

The acronyms, abbreviations, and terms listed below are used in various sections of this Quarterly Report on Form 10-Q, including "Item 1. Financial Statements" and "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations."

ACL Allowance for Credit Losses FRBSF Federal Reserve Bank of San Francisco

AFS Available-for-Sale HFS Held for Sale

AFX American Financial Exchange HLBV Hypothetical Liquidation at Book Value

ALLL Allowance for Loan and Lease Losses HOA Homeowners Association

ALM Asset Liability Management HTM Held-to-Maturity

ASC Accounting Standards Codification ICS IntraFi Cash Service

ASU Accounting Standards Update IRR Interest Rate Risk

Basel III A comprehensive capital framework and rules for U.S. banking organizations approved by the FRB and the FDIC in 2013 LIHTC Low Income Housing Tax Credit

BOLI Bank Owned Life Insurance LOCOM Lower of Cost or Market

CDI Core Deposit Intangible Assets MBS Mortgage-Backed Securities

CECL Current Expected Credit Loss NAV Net Asset Value

CET1 Common Equity Tier 1 NII Net Interest Income

Civic Civic Financial Services, LLC (a company acquired on February 1, 2021) NVCE Non-Voting Common Stock Equivalents

CMBS Commercial Mortgage-Backed Securities OREO Other Real Estate Owned

CMOs Collateralized Mortgage Obligations PCD Purchased Credit Deteriorated

CODM Chief Operating Decision Maker PSUs Performance Stock Units

COVID-19 Coronavirus Disease ROU Right-of-use

CRA Community Reinvestment Act RSUs Restricted Stock Units

CRI Customer Relationship Intangible Assets S&P Standard & Poor's

DFPI California Department of Financial Protection and Innovation SBA Small Business Administration

DTAs Deferred Tax Assets SBIC Small Business Investment Company

ECR Earnings Credit Rate SEC Securities and Exchange Commission

EVE Economic Value of Equity SOFR Secured Overnight Financing Rate

FDIC Federal Deposit Insurance Corporation TRSAs Time-Based Restricted Stock Awards

FHLB Federal Home Loan Bank of San Francisco U.S. GAAP U.S. Generally Accepted Accounting Principles

FRB Board of Governors of the Federal Reserve System

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ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

See Notes to Condensed Consolidated Financial Statements.

5

BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)

See Notes to Condensed Consolidated Financial Statements.

6

BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)

See Notes to Condensed Consolidated Financial Statements.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(1) Entire amount recognized in "Loss on sale of securities" on the Condensed Consolidated Statements of Earnings (Loss).

See Notes to Condensed Consolidated Financial Statements.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

• (Unaudited)
• (In thousands, except per share amount)_

See Notes to Condensed Consolidated Financial Statements.

9

BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

• (Unaudited)
• (In thousands, except per share amount)_

See Notes to Condensed Consolidated Financial Statements.

10

BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

• (Unaudited)
• (In ones)_

See Notes to Condensed Consolidated Financial Statements.

11

BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

• (Unaudited)
• (In thousands, except per share amount)_

See Notes to Condensed Consolidated Financial Statements.

12

BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

• (Unaudited)
• (In thousands, except per share amount)_

See Notes to Condensed Consolidated Financial Statements.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

• (Unaudited)
• (In ones)_

See Notes to Condensed Consolidated Financial Statements.

14

BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

See Notes to Condensed Consolidated Financial Statements.

15

BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

See Notes to Condensed Consolidated Financial Statements.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Banc of California, Inc., a Maryland corporation, was incorporated in March 2002 and serves as the holding company for its wholly owned subsidiary, Banc of California (the “Bank”), a California state-chartered bank and member of the FRB. When we refer to the “holding company," we are referring to Banc of California, Inc., the parent company, on a stand-alone basis. When we refer to “we,” “us,” “our,” or the “Company,” we are referring to Banc of California, Inc. and its consolidated subsidiaries including the Bank, collectively. As a bank holding company, Banc of California, Inc. is subject to ongoing and comprehensive supervision, regulation, examination, and enforcement by the FRB. As a California state-chartered bank and a member of the FRB, the Bank is subject to ongoing and comprehensive supervision, regulation, examination, and enforcement by the DFPI and the FRB. The Bank is also a member of the FHLB system, and its deposit accounts are insured by the Deposit Insurance Fund (the "DIF") of the FDIC.

Banc of California is one of the nation's premier relationship-based business banks, providing banking and treasury management services to small-, middle-market, and venture-backed businesses. The Bank offers a broad range of loan and deposit products and services through full-service branches throughout California and in Denver, Colorado, and Durham, North Carolina, as well as through regional offices nationwide. The Bank also provides full-service payment processing solutions to its clients and serves the Community Association Management industry nationwide with its technology-forward platform, SmartStreet™. The Bank is committed to its local communities through the Banc of California Charitable Foundation, and by supporting organizations that provide financial literacy and job training, small business support, affordable housing, and more.

We generate our revenue primarily from interest received on loans and leases and, to a lesser extent, from interest received on investment securities, and fees received in connection with deposit services, extending credit, and other services offered, including treasury management services. Our major operating expenses are interest paid by the Bank on deposits and borrowings, compensation expense, customer related expense, occupancy expense, information technology and data processing expense, and general operating expenses.

Significant Accounting Policies

Our accounting policies are described in Note 1. Nature of Operations and Summary of Significant Accounting Policies, of our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC ("Form 10-K").

Recently Issued Accounting Standards Not Yet Adopted

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures." The standard, among other changes, improves annual income tax disclosures by requiring disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. The enhanced income tax disclosure requirements apply on a prospective basis to annual financial statements for periods beginning after December 15, 2024. However, retrospective application in all prior periods presented is permitted. The Company expects to adopt the standard on a prospective basis and will provide the required enhanced income tax disclosures in its Annual Report on Form 10-K for the year ending December 31, 2025.

In November 2024, the FASB issued ASU 2024-03, "Disaggregation of Income Statement Expenses." The standard, among other changes, requires additional disclosure of the nature of expenses included in the income statement in response to longstanding requests from investors for more information about an entity’s expenses. The new standard requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. The prescribed categories include, among other things, employee compensation, depreciation, and intangible asset amortization. In addition, companies will need to provide qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. In January 2025, the FASB also issued ASU 2025-01, "Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures-Clarifying the Effective Date," which amends the effective date of ASU 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. The enhanced income statement expense disclosure requirements apply on a prospective basis. However, retrospective application in all prior periods presented is permitted. The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

In May 2025, the FASB issued ASU 2025-03, "Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity." The new standard amends the guidance for identifying the accounting acquirer of a variable-interest entity ("VIE") in ASC 805, Business Combinations. Prior to the amendments, the guidance in ASC 805 stipulated that the primary beneficiary of a VIE acquired in a business combination would always be the accounting acquirer. The amendments revise this guidance to require entities to consider the factors in ASC 805-10-55-12 through 55-15 when determining the accounting acquirer in a business combinations that meets both of the following conditions: (1) the transaction is effected primarily by exchanging equity interests; and (2) the legal acquiree is a VIE that meets the definition of a business. This guidance is effective for fiscal years beginning after December 15, 2026 with early adoption permitted. The amendments are required to be applied prospectively to any acquisition transaction that occurs after the initial application date. The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06, "Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software." The new standard clarifies and modernizes the accounting for costs related to internal-use software under ASC 350-40. Specifically, the amendments address the accounting for software developed using iterative and agile development methods, clarify the threshold for when capitalization of software costs should begin, and require that the disclosure requirements under ASC 360-10 apply to capitalized internal-use software costs. This guidance is effective for fiscal years beginning after December 15, 2027, with early adoption permitted. Entities may apply the guidance using one of three transition methods: prospective, modified retrospective (based on the project’s status and whether costs were previously capitalized), or full retrospective application. The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.

Basis of Presentation

The accounting and reporting policies of the Company are in accordance with U.S. generally accepted accounting principles, which we may refer to as U.S. GAAP. In the opinion of management, all significant intercompany accounts and transactions have been eliminated and adjustments, consisting solely of normal recurring accruals and considered necessary for the fair presentation of financial statements, have been included.

The interim condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Form 10-K.

Use of Estimates

The Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period to prepare these consolidated financial statements in conformity with U.S. GAAP. Actual results could differ from those estimates. Material estimates subject to change in the near term include, among other items, the allowance for credit losses (the combination of the ALLL and the reserve for unfunded loan commitments), the carrying value of goodwill and other intangible assets, and the realization of deferred tax assets. These estimates may be adjusted as more current information becomes available, and any adjustment may be significant.

NOTE 2. RESTRICTED CASH

The Company is required to maintain reserve balances with the FRBSF. Such reserve requirements are based on a percentage of deposit liabilities and may be satisfied by cash on hand. There were no average reserves required to be held at the FRBSF for the nine months ended September 30, 2025 and 2024. The following restricted cash balances are included in "Interest-earning deposits in financial institutions" on the condensed consolidated balance sheets. As of September 30, 2025 and December 31, 2024, we pledged cash collateral for our derivative contracts of $14.6 million and $5.3 million. In connection with the issuance of the credit-linked notes on September 29, 2022, we established a correspondent bank account at a third party financial institution as the collateral account for the credit-linked notes. The repayment of principal on the credit-linked notes is secured by this collateral account, which had a balance of $116.6 million at September 30, 2025 and $119.6 million at December 31, 2024. Starting in the second quarter of 2023, we began to pledge cash to secure the standby letters of credit that we have issued on behalf of our customers. As of September 30, 2025 and December 31, 2024, the balance of such restricted cash totaled $39.8 million and $59.3 million.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 3. INVESTMENT SECURITIES

Securities Available-for-Sale

The following tables present amortized cost, gross unrealized gains and losses, and fair values of AFS securities as of the dates indicated:

(1) Excludes accrued interest receivable of $12.2 million at September 30, 2025 which is recorded in "Other assets" on the condensed consolidated balance sheets.

(1) Excludes accrued interest receivable of $12.6 million at December 31, 2024 which is recorded in "Other assets" on the condensed consolidated balance sheets.

As of September 30, 2025, AFS securities with a fair value of $3.4 million were pledged as collateral solely for public deposits.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Realized Gains and Losses on Securities Available-for-Sale

The following table presents the amortized cost of AFS securities sold with related gross realized gains, gross realized losses, and net realized (losses) gains for the periods indicated:

Unrealized Losses on Securities Available-for-Sale

The following tables present the gross unrealized losses and fair values of AFS securities that were in unrealized loss positions as of the dates indicated:

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The securities that were in an unrealized loss position at September 30, 2025, were considered impaired and required further review to determine if the unrealized losses were credit-related. As of September 30, 2025, the Company had recorded an allowance for credit losses on AFS securities of $0.8 million on one corporate debt security. Except for the one corporate debt security noted, we concluded the unrealized losses were a result of the level of market interest rates relative to the types of securities and pricing changes caused by shifting supply and demand dynamics and not a result of downgraded credit ratings or other indicators of deterioration of the underlying issuers' ability to repay. We also considered the seniority of the tranches and U.S. government agency guarantees, if any, to assess whether an unrealized loss was credit-related. Further, we do not currently intend to sell any of the securities in an unrealized loss position and it is not more likely than not the Company will be required to sell these securities before their anticipated recovery. As such, we recognized the unrealized losses in "Accumulated other comprehensive loss, net" of "Stockholders' equity" on the condensed consolidated balance sheets.

Contractual Maturities of Securities Available-for-Sale

The following tables present the contractual maturities of our AFS securities portfolio based on amortized cost and fair value as of the dates indicated:

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

CMBS, CMOs, and MBS have contractual maturity dates, but require periodic payments based upon scheduled amortization terms. Actual principal collections on these securities usually occur more rapidly than the scheduled amortization terms because of prepayments made by obligors of the underlying loan collateral.

Securities Held-to-Maturity

The following tables present amortized cost, allowance for credit losses, gross unrealized gains and losses, and fair values of HTM securities as of the dates indicated:

(1) Excludes accrued interest receivable of $11.2 million at September 30, 2025 which is recorded in "Other assets" on the condensed consolidated balance sheets.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(1) Excludes accrued interest receivable of $13.4 million at December 31, 2024 which is recorded in "Other assets" on the condensed consolidated balance sheets.

As of September 30, 2025, HTM securities with an amortized cost of $2.3 billion and a fair value of $2.2 billion were pledged as collateral primarily for the FRB secured line of credit and public deposits.

Allowance for Credit Losses on Securities Held-to-Maturity

Credit losses on HTM securities are recorded at the time of purchase, acquisition, or when the Company designates securities as held-to-maturity. Credit losses on HTM securities are representative of current expected credit losses that may be incurred over the life of the investment. Accrued interest receivable on HTM securities, which is included in "Other assets" on the condensed consolidated balance sheets, is excluded from the estimate of expected credit losses. HTM U.S. treasury securities and agency-backed MBS securities are considered to have no risk of loss as they are either explicitly or implicitly guaranteed by the U.S. government. The change in fair value in the HTM private label CMBS portfolio is solely driven by changes in interest rates. The Company has no knowledge of any underlying credit issues and the cash flows underlying the debt securities have not changed and are not expected to be impacted by changes in interest rates and, thus, there is no related ACL for this portfolio. The underlying bonds in the Company’s HTM municipal securities and HTM corporate debt securities portfolios are evaluated for credit losses in conjunction with management’s estimate of the ACL based primarily on credit ratings, and as of September 30, 2025, the Company had recorded an allowance for credit losses on securities held-to-maturity of $0.7 million.

Securities Held-to-Maturity by Credit Quality Indicator

The Company uses S&P, Moody's, Fitch, Kroll, and Egan Jones ratings as the credit quality indicators for its HTM securities. The following tables present our HTM securities portfolio at amortized cost by the lowest available credit rating as of the dates indicated:

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Contractual Maturities of Securities Held-to-Maturity

The following tables present the contractual maturities of our HTM securities portfolio based on amortized cost and fair value as of the date indicated:

CMBS have contractual maturity dates, but require periodic payments based upon scheduled amortization terms. Actual principal collections on these securities usually occur more rapidly than the scheduled amortization terms because of prepayments made by obligors of the underlying loan collateral.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Interest Income on Investment Securities

The following table presents the composition of our interest income on investment securities for the periods indicated:

NOTE 4. LOANS AND LEASES HELD FOR INVESTMENT

Our loans and leases held for investment are carried at the principal amount outstanding, net of deferred fees and costs, and in the case of acquired and purchased loans, net of purchase discounts and premiums. Deferred fees and costs and purchase discounts and premiums on acquired loans are recognized as an adjustment to interest income over the contractual life of the loans primarily using the effective interest method or taken into income when the related loans are paid off or included in the carrying amount of loans that are sold.

The following table summarizes the composition of our loans and leases held for investment as of the dates indicated:

(1) Includes land and acquisition and development loans of $217.7 million and $223.9 million at September 30, 2025 and December 31, 2024.

(2) Represents net acquisition discounts of $175.0 million and purchase premiums of $66.6 million at September 30, 2025, and net acquisition discounts of $235.2 million and purchase premiums of $59.5 million at December 31, 2024.

(3) Excludes accrued interest receivable of $99.1 million and $96.8 million at September 30, 2025 and December 31, 2024, respectively, which is recorded in "Other assets" on the condensed consolidated balance sheets.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following tables present an aging analysis of our loans and leases held for investment by loan portfolio segment and class as of the dates indicated:

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

It is our policy to discontinue accruing interest when principal or interest payments are past due 90 days or more (unless the loan is both well secured and in the process of collection) or when, in the opinion of management, there is a reasonable doubt as to the collectability of a loan or lease in the normal course of business. Interest income on nonaccrual loans is recognized only to the extent cash is received and the principal balance of the loan is deemed collectable.

The following table presents our nonaccrual and performing loans and leases held for investment by loan portfolio segment and class as of the dates indicated:

At September 30, 2025, nonaccrual loans and leases included $105.0 million of loans and leases 90 or more days past due, $11.0 million of loans and leases 30 to 89 days past due, and $58.6 million of loans and leases current with respect to contractual payments that were placed on nonaccrual status based on management’s judgment regarding their collectability. At December 31, 2024, nonaccrual loans and leases included $88.8 million of loans and leases 90 or more days past due, $40.6 million of loans and leases 30 to 89 days past due, and $60.2 million of current loans and leases that were placed on nonaccrual status based on management’s judgment regarding their collectability.

As of September 30, 2025, our three largest loan relationships on nonaccrual status had an aggregate carrying value of $47.0 million and represented 27% of total nonaccrual loans and leases.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following tables present the credit risk rating categories for loans and leases held for investment by loan portfolio segment and class as of the dates indicated. Classified loans and leases are those with a credit risk rating of either substandard or doubtful.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents our nonaccrual loans and leases by loan portfolio segment and class and by with and without an allowance recorded as of the date indicated and interest income recognized on nonaccrual loans and leases for the periods indicated:

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following tables present our loans held for investment by loan portfolio segment and class, by credit quality indicator (internal risk ratings), and by year of origination (vintage year) as of the dates indicated:

(1) Amounts with negative balances are loans with zero principal balances and deferred loan origination fees.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(1) Amounts with negative balances are loans with zero principal balances and deferred loan origination fees.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(1) Amounts with negative balances are loans with zero principal balances and deferred loan origination fees.

32

BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(1) Amounts with negative balances are loans with zero principal balances and deferred loan origination fees.

33

BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(1) Amounts with negative balances are loans with zero principal balances and deferred loan origination fees.

34

BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(1) Amounts with negative balances are loans with zero principal balances and deferred loan origination fees.

35

BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Loan Modifications

The following tables present our loan modifications made to borrowers experiencing financial difficulty by type of modification for the periods indicated with related amortized cost balances as of the dates indicated:

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

• September 30, 2025
• (Dollars in thousands)_

• September 30, 2025
• (Dollars in thousands)_

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

• September 30, 2024
• (Dollars in thousands)_

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following tables present the financial effect of our loan modifications made to borrowers experiencing financial difficulty by type of modification for the periods indicated:

• Three Months Ended September 30, 2025
• Term Extension - Financial Effect
• Real estate mortgage:
• Commercial Extended maturity by a weighted average 16 months.
• Multi-family Extended maturity by a weighted average 12 months.
• Other residential Extended maturity by a weighted average 9 months.
• Real estate construction and land:
• Residential Extended maturity by a weighted average 9 months.
• Commercial:
• Asset-based Extended maturity by a weighted average 6 months.
• Venture capital Extended maturity by a weighted average 7 months.
• Other commercial Extended maturity by a weighted average 60 months.
• Three Months Ended September 30, 2025
• Payment Delay - Financial Effect
• Commercial:
• Venture capital Granted payment deferrals for a weighted average of 3 months.
• Three Months Ended September 30, 2025
• Interest Rate Reduction - Financial Effect
• Real estate mortgage:
• Commercial Reduced interest rates by a weighted average 3.15% for a weighted average period of 20 months.
• Nine Months Ended September 30, 2025
• Term Extension - Financial Effect
• Real estate mortgage:
• Commercial Extended maturity by a weighted average 16 months.
• Multi-family Extended maturity by a weighted average 12 months.
• Other residential Extended maturity by a weighted average 9 months.
• Real estate construction and land:
• Residential Extended maturity by a weighted average 9 months.
• Commercial:
• Asset-based Extended maturity by a weighted average 22 months.
• Venture capital Extended maturity by a weighted average 8 months.
• Other commercial Extended maturity by a weighted average 18 months.
• Consumer Extended maturity by a weighted average 24 months.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

• Nine Months Ended September 30, 2025
• Payment Delay - Financial Effect
• Real estate mortgage:
• Commercial Granted payment deferrals for a weighted average of 4 months.
• Other residential Granted payment deferrals for a weighted average of 3 months.
• Commercial:
• Venture capital Granted payment deferrals for a weighted average of 3 months.
• Nine Months Ended September 30, 2025
• Interest Rate Reduction - Financial Effect
• Real estate mortgage:
• Commercial Reduced interest rates by a weighted average 3.21% for a weighted average period of 17 months.
• Nine Months Ended September 30, 2025
• Combination - Term Extension and Rate Reduction - Financial Effect
• Commercial:
• Other commercial Extended maturity by a weighted average 4.6 years and reduced interest rates by a weighted average 1.93%.
• Nine Months Ended September 30, 2025
• Term Extension, Rate Reduction and Payment Delay - Financial Effect
• Commercial:
• Other commercial Extended maturity by a weighted average 5.1 years, reduced interest rates by a weighted average 5.75%, and granted payment deferrals for a weighted average of 3 months.
• Nine Months Ended September 30, 2025
• Combination - Term Extension and Principal Forgiveness - Financial Effect
• Commercial:
• Other commercial Extended maturity by a weighted average 2.9 years and forgave principal balances totaling $64,000.
• Three Months Ended September 30, 2024
• Term Extension - Financial Effect
• Real estate mortgage:
• Commercial Extended maturity by a weighted average 15 months.
• Other residential Extended maturity by a weighted average 8 months.
• Commercial:
• Asset-based Extended maturity by a weighted average 4 months.
• Other commercial Extended maturity by a weighted average 14 months.
• Three Months Ended September 30, 2024
• Payment Delay - Financial Effect
• Real estate mortgage:
• Commercial Deferred partial payments by a weighted average 24 months.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

• Three Months Ended September 30, 2024
• Combination - Term Extension and Payment Delay - Financial Effect
• Commercial:
• Venture capital Extended maturity by a weighted average 3 months and granted 3 months of payment deferrals.
• Nine Months Ended September 30, 2024
• Term Extension - Financial Effect
• Real estate mortgage:
• Commercial Extended maturity by a weighted average 15 months.
• Other residential Extended maturity by a weighted average 10 months.
• Commercial:
• Asset-based Extended maturity by a weighted average 4 months.
• Other commercial Extended maturity by a weighted average 15 months.
• Consumer Extended maturity by a weighted average 12 months.
• Nine Months Ended September 30, 2024
• Payment Delay - Financial Effect
• Real estate mortgage:
• Commercial Deferred partial payments by a weighted average 20 months.
• Nine Months Ended September 30, 2024
• Combination - Term Extension and Principal Forgiveness - Financial Effect
• Real estate mortgage:
• Commercial Extended maturity by a weighted average 3 years and granted principal forgiveness totaling $4.0 million.
• Nine Months Ended September 30, 2024
• Combination - Term Extension and Payment Delay - Financial Effect
• Commercial:
• Venture capital Extended maturity by a weighted average 3 months and granted 3 months of payment deferrals.
• Other commercial Extended maturity by a weighted average 10 years and granted 4 months of payment deferrals.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following tables present the payment status of loans that were modified during the preceding 12-month period, with related amortized cost balances, as of the dates indicated:

The following tables present information on loans that defaulted during the periods indicated, which had been modified during the preceding 12-month period, with related amortized cost balances as of the dates indicated:

• September 30, 2025
• (In thousands)_

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

43

BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Leases Receivable

We provide equipment financing to our customers primarily with operating and direct financing leases. For direct financing leases, lease receivables are recorded on the balance sheet, but the leased equipment is not, although we generally retain legal title to the leased equipment until the end of each lease. Direct financing leases are stated at the net amount of minimum lease payments receivable, plus any unguaranteed residual value, less the amount of unearned income and net acquisition discount at the reporting date. Direct lease origination costs are amortized using the effective interest method over the life of the leases. Direct financing leases are subject to our accounting for ALLL. See Note 7. Leases for information regarding operating leases where we are the lessor.

The following table provides the components of leases receivable income for the periods indicated:

The following table presents the components of leases receivable as of the dates indicated:

The following table presents maturities of leases receivable as of the date indicated:

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Allowance for Loan and Lease Losses

The following tables present a summary of the activity in the ALLL on loans and leases held for investment by loan portfolio segment for the periods indicated:

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The allowance for loan and lease losses increased by $11.2 million in the third quarter of 2025 to $240.5 million compared to the second quarter due primarily to a $8.7 million provision and net recoveries of $2.5 million.

For additional information regarding the calculation of the ALLL using the CECL methodology, including discussion of forecasts used to estimate the allowance, please see Note 1(j). Nature of Operations and Summary of Significant Accounting Policies - Allowance for Credit Losses on Loans and Leases Held for Investment of the Notes to Consolidated Financial Statements contained in "Item 8. Financial Statements and Supplementary Data" of the Form 10-K.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

A loan is considered collateral-dependent, and is individually evaluated for reserve purposes, when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. The following table summarizes collateral-dependent loans held for investment by collateral type as of the following dates:

Allowance for Credit Losses

The ACL is the combination of the ALLL and the reserve for unfunded loan commitments. The reserve for unfunded loan commitments is included within "Accrued interest payable and other liabilities" on the condensed consolidated balance sheets.

The following tables present a summary of the activity in the ALLL and reserve for unfunded loan commitments for the periods indicated:

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 5. GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Goodwill and other intangible assets arise from the acquisition method of accounting for business combinations. Goodwill and other intangible assets generated from business combinations and deemed to have indefinite lives are not subject to amortization and instead are tested for impairment annually at the reporting unit level unless a triggering event occurs thereby requiring an updated assessment. Our regular annual impairment assessment occurs in the fourth quarter.

Goodwill represents the excess of the purchase price over the fair value of the net assets and other identifiable intangible assets acquired. Impairment exists when the carrying value of the goodwill exceeds the fair value of the reporting unit. An impairment loss would be recognized in an amount equal to that excess as a charge to "Noninterest expense" in the condensed consolidated statements of earnings.

The following table presents the carrying amount of goodwill as of the dates indicated:

Our other intangible assets with definite lives are CDI and CRI. CDI and CRI are amortized on an accelerated basis over their respective estimated useful lives and reviewed for impairment at least quarterly. The amortization expense represents the estimated decline in the value of the underlying deposits or customer relationships acquired.

The following table presents the carrying amounts of CDI and CRI and the related accumulated amortization for the periods indicated:

The following table presents the estimated aggregate future amortization expense for our current CDI and CRI as of the date indicated:

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 6. OTHER ASSETS

The following table presents the detail of our other assets as of the dates indicated:

(1) See Note 7. Leases for further details regarding the operating lease ROU assets.

NOTE 7. LEASES

Operating Leases as a Lessee

Our lease expense is a component of "Occupancy expense" on our condensed consolidated statements of earnings. The following table presents the components of lease expense for the periods indicated:

The following table presents supplemental cash flow information related to leases for the periods indicated:

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents supplemental balance sheet and other information related to operating leases as of the dates indicated:

The following table presents the maturities of operating lease liabilities as of the date indicated:

Operating Leases as a Lessor

 We provide equipment financing to our customers through operating leases where we facilitate the purchase of equipment leased to our customers. The equipment is shown on the condensed consolidated balance sheets as "Equipment leased to others under operating leases" and is depreciated to its estimated residual value at the end of the lease term, shown as "Leased equipment depreciation" in the condensed consolidated statements of earnings, according to our fixed asset accounting policy. We receive periodic rental income payments under the leases, which are recorded as "Leased equipment income" in the condensed consolidated statements of earnings. The equipment is tested periodically for impairment. No impairment was recorded on "Equipment leased to others under operating leases" during the nine months ended September 30, 2025 and 2024.

  The following table presents the rental payments to be received on operating leases as of the date indicated:

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 8. BORROWINGS AND SUBORDINATED DEBT

Borrowings

The following table summarizes our borrowings as of the dates indicated:

(1) All borrowings were held at the Bank level with the exception of the Senior Notes. The Senior Notes were repaid in full in April 2025.

The Bank has established secured and unsecured lines of credit under which it may borrow funds from time to time on a term or overnight basis from the FHLB, the FRBSF, and other financial institutions.

FHLB Secured Line of Credit. The Bank had secured financing capacity with the FHLB as of September 30, 2025 of $7.1 billion, collateralized by a blanket lien on $10.6 billion of qualifying loans and $20.1 million of securities. As of September 30, 2025, there were $577.4 million in letters of credit pledged and $1.7 billion outstanding. As of December 31, 2024, there were $527.9 million in letters of credit pledged and a $1.1 billion balance outstanding.

The following table presents the interest rates and maturity dates of FHLB secured advances as of the date indicated:

(1) Represents FHLB term advances that include a put feature.which allows the FHLB to terminate the advance before its scheduled maturity date.

FRBSF Secured Line of Credit. The Bank has a secured line of credit with the FRBSF. As of September 30, 2025, the Bank had secured borrowing capacity of $5.5 billion collateralized by liens covering $5.0 billion of qualifying loans and $1.6 billion of securities. As of September 30, 2025 and December 31, 2024, there was no balance outstanding.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Holding Company Line of Credit Arrangement. On December 23, 2024, Banc of California, Inc. entered into an unsecured revolving line of credit agreement as a borrower for $50.0 million. On March 17, 2025, the Company executed an amendment to the credit agreement which increased the Company's unsecured revolving line of credit to $100.0 million. The rate is based on 1-month SOFR plus a spread of 225 basis points. As of September 30, 2025 and December 31, 2024, there was no balance outstanding.

Senior Notes. The Senior Notes were unsecured debt obligations and ranked equally with our other unsecured unsubordinated obligations. We made interest payments on the Senior Notes semi-annually in arrears. On April 4, 2025, the Company repaid the Senior Notes in full that were scheduled to mature on April 15, 2025.

Credit-Linked Notes. On September 29, 2022, legacy Pacific Western Bank completed a credit-linked notes transaction. The notes were issued in five classes, each with an interest rate of SOFR plus a spread that ranges from 8.00% to 13.25%, with a weighted average spread of 10.75% at September 30, 2025. The notes are linked to the credit risk of an approximately $2.2 billion reference pool of previously purchased single-family residential mortgage loans at September 30, 2025. The notes are due June 27, 2052. Principal payments on the notes are based only on principal that is actually collected on these loans. The notes are reported at fair value of $115.0 million at September 30, 2025. See Note 2. Restricted Cash for information regarding the collateral for the notes and Note 11. Fair Value Option for additional information.

Other Short-Term Borrowing Arrangements. The Bank had credit limits of $215.0 million in the aggregate with several commercial banks, as well as borrowing arrangements with unaffiliated financial institutions that provide for the purchase of overnight funds and other short-term borrowings. The availability of these unsecured borrowings fluctuates regularly and is subject to the discretion of the counterparties. As of September 30, 2025, $190.0 million was outstanding under these arrangements, compared to no borrowings outstanding as of December 31, 2024.

53

BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Subordinated Debt

The following table summarizes the terms of each issuance of subordinated debt outstanding as of the dates indicated:

(1) Rates do not include the effects of discounts and issuance costs.

(2) Net of unamortized issuance costs of $3.4 million at September 30, 2025 and $3.8 million at December 31, 2024.

(3) Interest rate is fixed until May 1, 2026, when it changes to a floating rate and resets quarterly equal to 3-month Term SOFR, plus a spread of 252 basis points.

(4) Subordinated notes, net, issued at the Bank level rather than the holding company level.

(5) Interest rate was fixed until October 30, 2025, when it changed to a floating rate equal to 3-month Term SOFR, plus a spread of 419.5 basis points.

(6) Denomination is in Euros with a value of €25.8 million.

(7) Amount represents the fair value adjustment on subordinated debt assumed in acquisitions.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 9. DERIVATIVES

We use derivative instruments and other risk management techniques to reduce our exposure to adverse fluctuations in interest rates and foreign currency exchange rates in accordance with our risk management policies and for certain loan clients to allow them to hedge the risk of rising interest rates and on their variable rate loans.

Our derivatives are carried at fair value and recorded in "Other assets" or "Accrued interest payable and other liabilities," as appropriate, in the condensed consolidated balance sheets. On the date we enter into a derivative contract, the derivative is designated as a fair value hedge, cash flow hedge, or a hedge designation is not made as it is a customer-related transaction. When a derivative is designated as a fair value hedge or cash flow hedge, the Company performs an assessment at inception, and at least quarterly thereafter, to determine the effectiveness of the derivative in offsetting changes in the fair value or cash flows of the hedged items.

The following table presents the U.S. dollar notional amounts and fair values of our derivative instruments included in the condensed consolidated balance sheets as of the dates indicated:

Cash Flow Hedges

Cash flow hedges included pay-fixed, receive-floating interest rate swap contracts with notional amounts aggregating $300.0 million, five-year terms, and varying maturity dates throughout 2028. These swap contracts were entered into with institutional counterparties to hedge against variability in cash flow attributable to interest rate risk on a portion of the Company's borrowings. Cash flow hedges also included 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 Hedge

The 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 SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Other Interest Rate Swaps, Foreign Exchange Contracts, and Equity Warrant Assets Not Designated for Hedge Accounting

The 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% with ultimate principal exchanged at maturity. For the quarter ended September 30, 2025, changes in fair value and fees recorded to "Noninterest income" in the condensed consolidated statements of earnings were immaterial.

See Note 12. Fair Value Measurements for additional information regarding equity warrant assets.

NOTE 10. COMMITMENTS AND CONTINGENCIES

The following table presents a summary of commitments described below as of the dates indicated:

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the condensed consolidated balance sheets. The contract or notional amounts of those instruments reflect the extent of involvement that the Company has in particular classes of financial instruments.

Commitments to extend credit are contractual agreements to lend to our customers when customers are in compliance with their contractual credit agreements and when customers have contractual availability to borrow under such agreements. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The estimated exposure to loss from these commitments is included in the reserve for unfunded loan commitments, which amounted to $30.2 million at September 30, 2025 and $29.1 million at December 31, 2024.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. We provide standby letters of credit in conjunction with several of our lending arrangements and property lease obligations. Most guarantees expire within one year from the date of issuance. If a borrower defaults on its commitments subject to any letter of credit issued under these arrangements, we would be required to meet the borrower's financial obligation but would seek repayment of that financial obligation from the borrower. In some cases, borrowers have pledged cash and investment securities as collateral under these arrangements.

In addition, we invest in SBICs that call for capital contributions up to an amount specified in the partnership agreements, and in CRA-related loan pools. As of September 30, 2025 and December 31, 2024, we had commitments to contribute capital to these entities totaling $107.4 million and $79.7 million.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents the years in which commitments are expected to be paid for our commitments to contribute capital to SBICs and CRA-related loan pools as of the date indicated:

Legal Matters

In the ordinary course of our business, the Company is party to various legal actions, which we believe are incidental to the operation of our business. The outcome of such legal actions and the timing of ultimate resolution are inherently difficult to predict. In the opinion of management, based upon currently available information, any resulting liability, in addition to amounts already accrued, and taking into consideration insurance which may be applicable, would not have a material adverse effect on the Company’s financial statements or operations. The range of any reasonably possible liabilities is also not significant.

57

BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 11. FAIR VALUE OPTION

The Company may elect to report financial instruments and certain other items at fair value on an instrument-by-instrument basis with changes in fair value reported in earnings. The election is made upon the initial recognition of an eligible financial asset, financial liability, or firm commitment or when certain specified reconsideration events occur. The fair value election may not otherwise be revoked once an election is made. The changes in fair value are recorded in "Noninterest income" on the condensed consolidated statements of earnings. However, movements in debt valuation adjustments are reported as a component of "Accumulated other comprehensive loss, net" on the condensed consolidated balance sheets. Debt valuation adjustments represent the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk.

Fair Value Option for Certain Debt Liabilities

The Company has elected the fair value option for the credit-linked notes issued in September 2022. The Company elected the fair value option because these exposures are considered to be structured notes, which are financial instruments that contain embedded derivatives. The notes are linked to the credit risk of an approximately $2.2 billion reference pool of previously purchased single-family residential mortgage loans. The principal balance of the credit-linked notes was $116.2 million at September 30, 2025. The carrying value of the credit-linked notes at September 30, 2025 was the estimated fair value of $115.0 million. For the three and nine months ended September 30, 2025, the interest expense on the credit-linked notes totaled $4.5 million and $13.5 million and totaled $5.0 million and $15.0 million for the three and nine months ended September 30, 2024, and was recorded in "Interest expense - borrowings" on the condensed consolidated statements of earnings.

The following table presents the changes in fair value of the credit-linked notes for which the fair value option has been elected for the periods indicated:

The following table provides information about the credit-linked notes carried at fair value as of the dates indicated:

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 12. FAIR VALUE MEASUREMENTS

The Company uses fair value to measure certain assets and liabilities on a recurring basis, primarily AFS securities, derivatives, and certain debt liabilities. For assets measured at the lower of cost or fair value, the fair value measurement criteria may or may not be met during a reporting period and such measurements are therefore considered “nonrecurring” for purposes of disclosing our fair value measurements. Fair value is used on a nonrecurring basis to adjust carrying values for individually evaluated loans and leases and other real estate owned and also to record impairment on certain assets, such as goodwill, CDI, and other long-lived assets.

For information regarding the valuation methodologies used to measure our assets recorded at fair value (under ASC Topic 820), and for estimating fair value for financial instruments not recorded at fair value (under ASC Topic 825, as amended by ASU 2016-01 and ASU 2018-03), see Note 1. Nature of Operations and Summary of Significant Accounting Policies and Note 15. Fair Value Measurements to the Consolidated Financial Statements of the Company's Form 10-K.

The Company also holds SBIC investments measured at fair value using the NAV per share practical expedient that are not required to be classified in the fair value hierarchy. At September 30, 2025, the fair value of these investments was $116.9 million.

The following tables present information on the assets and liabilities measured and recorded at fair value on a recurring basis as of the dates indicated:

(1) For information regarding derivative instruments, see Note 9. Derivatives.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(1) For information regarding derivative instruments, see Note 9. Derivatives.

During the nine months ended September 30, 2025, there was a $2,000 transfer from Level 3 equity warrants to Level 1 equity investments with readily determinable fair values measured on a recurring basis. There was no transfer of AFS corporate debt securities from Level 3 to Level 2 during the nine months ended September 30, 2025 and no transfer of AFS corporate debt securities from Level 2 to Level 3 during the same period.

The following table presents information about quantitative inputs and assumptions used to determine the fair values provided by our third-party pricing service for our Level 3 corporate debt securities available-for-sale measured at fair value on a recurring basis as of the date indicated:

(1) Unobservable inputs for corporate debt securities were weighted by the relative fair values of the instruments.

60

BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents information about quantitative inputs and assumptions used in the modified Black-Scholes option pricing model to determine the fair value for our Level 3 equity warrants measured at fair value on a recurring basis as of the date indicated:

(1) The high-end volatility input relates to an out-of-the-money warrant with an immaterial fair value and near-term expiration.

(2) Unobservable inputs for equity warrants were weighted by the relative fair values of the instruments.

The following table summarizes activity for our Level 3 corporate debt securities available-for-sale, equity warrants, and credit-linked notes measured at fair value on a recurring basis for the period indicated:

The following tables present assets measured at fair value on a non-recurring basis as of the dates indicated:

61

BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

In addition to individually evaluated loans and leases and OREO, loans held for sale are carried at the lower of cost or market and may be measured at fair value on a nonrecurring basis when fair value is less than cost. Fair value is based on active bids and other observable market inputs, such as appraised value of the underlying collaterals, adjusted for specific attributes of that loan or other available market data for similar loans. Loans held for sale are classified as Level 2 in the fair value hierarchy.

The following table presents losses recognized on assets measured on a nonrecurring basis for the periods indicated:

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a nonrecurring basis as of the date indicated:

62

BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following tables present carrying amounts and estimated fair values of certain financial instruments as of the dates indicated:

63

BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Limitations

Fair value estimates are made at a specific point in time and are based on relevant market information and information about the financial instrument. These estimates do not reflect income taxes or any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a portion of the Company’s financial instruments, fair value estimates are based on what management believes to be reasonable judgments regarding expected future cash flows, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimated fair values are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Since the fair values have been estimated as of September 30, 2025, the amounts that will actually be realized or paid at settlement or maturity of the instruments could be significantly different.

NOTE 13. EARNINGS PER SHARE

The following tables present the computations of basic and diluted net earnings per share by class of common stock for the periods indicated:

(1) Represents cash dividends paid to holders of unvested restricted stock, net of forfeitures, plus undistributed earnings amounts available to holders of unvested restricted stock, if any.

64

BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(1) Represents cash dividends paid to holders of unvested restricted stock, net of forfeitures, plus undistributed earnings amounts available to holders of unvested restricted stock, if any.

65

BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(1) Represents cash dividends paid to holders of unvested restricted stock, net of forfeitures, plus undistributed earnings amounts available to holders of unvested restricted stock, if any.

66

BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(1) Represents cash dividends paid to holders of unvested restricted stock, net of forfeitures, plus undistributed earnings amounts available to holders of unvested restricted stock, if any.

The terms of each class of the Company’s capital stock are described in Note 15. Stockholders’ Equity to the accompanying condensed consolidated financial statements.

The following table presents the weighted average outstanding restricted shares and warrants that were not included in the computation of diluted earnings per share because their effect would be anti-dilutive for the periods indicated:

67

BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 14. REVENUE FROM CONTRACTS WITH CUSTOMERS

Disaggregation of Revenue

The following table presents interest income and noninterest income, the components of total revenue, as disclosed in the condensed consolidated statements of earnings and the related amounts which are from contracts with customers within the scope of ASC Topic 606, "Revenue from Contracts with Customers," for the periods indicated. As illustrated here, substantially all of our revenue is specifically excluded from the scope of ASC Topic 606.

The following table presents revenue from contracts with customers based on the timing of revenue recognition for the periods indicated:

68

BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents revenue from contracts with customers based on the timing of revenue recognition for the periods indicated:

Contract Balances

The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers as of the dates indicated:

Contract liabilities relate to advance consideration received from customers for which revenue is recognized over the life of the contract. The change in contract liabilities for the nine months ended September 30, 2025 due to revenue recognized that was included in the contract liability balance at the beginning of the period was $52,000.

69

BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 15. STOCKHOLDERS' EQUITY

Stock-Based Compensation

At the special meeting of stockholders held on November 22, 2023, the Company's stockholders approved the Amended and Restated Banc of California, Inc. 2018 Stock Incentive Plan (the “Amended and Restated 2018 Plan”). The Company’s Amended and Restated 2018 Plan permits stock-based compensation awards to officers, directors, employees, and consultants and will remain in effect until November 30, 2033. The Amended and Restated 2018 Plan authorizes grants of stock-based compensation instruments to purchase or issue up to 10,717,882 shares. As of September 30, 2025, there were 3,392,919 shares available for grant under the Amended and Restated 2018 Plan. In addition to the Amended and Restated 2018 Plan, in connection with the November 30, 2023 merger of PacWest Bancorp with and into Banc of California, Inc. (the “Merger”), the Company assumed the Amended and Restated PacWest Bancorp 2017 Stock Incentive Plan (the "PacWest 2017 Plan") with respect to PacWest's outstanding stock-based awards.

Restricted Stock (RSUs, TRSAs, and PSUs)

Restricted stock amortization totaled $5.9 million and $5.2 million for the three months ended September 30, 2025 and 2024 and $17.3 million and $13.3 million for the nine months ended September 30, 2025 and 2024. Such amounts are included in "Compensation expense" on the condensed consolidated statements of earnings. The amount of unrecognized compensation expense related to all unvested RSUs, TRSAs, and PSUs as of September 30, 2025 totaled $49.8 million.

Restricted Stock Units and Time-Based Restricted Stock Awards

At September 30, 2025, there were 2,611,113 shares of unvested RSUs outstanding pursuant to the Amended and Restated 2018 Plan. At September 30, 2025, there were 78,656 shares of unvested TRSAs outstanding pursuant to the PacWest 2017 Plan. The RSUs and TRSAs generally vest over a service period of three or four years from the date of the grant or immediately upon death of an employee. Compensation expense related to RSUs and TRSAs is based on the fair value of the underlying stock on the award date and is recognized over the vesting period using the straight‑line method. TRSAs were assumed by the Company in connection with the Merger and continue to vest in accordance with the original vesting schedule of the awards.

Performance Stock Units

At September 30, 2025, there were 2,426,262 units of unvested PSUs outstanding. Compensation expense related to the PSUs is based on the fair value of the underlying stock on the award date and is amortized over the vesting period using the straight-line method unless it is determined that: (1) attainment of the financial metrics is less than probable, in which case a portion of the amortization is suspended, or (2) attainment of the financial metrics is improbable, in which case a portion of the previously recognized amortization is reversed and also suspended. Annual PSU expense may vary during the performance period based upon changes in management's estimate of the number of shares that may ultimately vest. In the case where the performance target for the PSUs is based on a market condition (such as total shareholder return), the amortization is neither reversed nor suspended if it is subsequently determined that the attainment of the performance target is less than probable or improbable and the employee continues to meet the service requirement of the award.

Classes of Stock and Equity Instruments

Preferred Stock

Depositary shares each representing 1/40th of a share of 7.75% Fixed Rate Reset Non-Cumulative Perpetual Preferred Stock, Series F (“Series F Preferred Stock”) are listed on the NYSE under the symbol “BANC/PF.” The Series F Preferred Stock ranks senior to our common stock and common stock equivalents both as to dividends and liquidation preference but generally have no voting rights. There are 50,000,000 total preferred shares authorized, of which 27,000,000 were authorized for the non-voting common stock equivalents (“NVCE”) and 513,250 were authorized and outstanding for the Series F Preferred stock at September 30, 2025 and December 31, 2024.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Common Stock

Our voting common stock is listed on the NYSE under the symbol “BANC” and there were 446,863,844 shares authorized at September 30, 2025 and December 31, 2024 and 150,826,212 shares outstanding at September 30, 2025 and 158,346,529 shares outstanding at December 31, 2024.

Class B Non-Voting Common Stock

Our Class B non-voting, non-convertible common stock is not listed or traded on any national securities exchange or automated quotation system, and there currently is no established trading market for such stock. The Class B non-voting common stock ranks equally with, and has identical rights, preferences, and privileges as the voting common stock with respect to dividends and liquidation preference but generally have no voting rights. There were 3,136,156 shares authorized at September 30, 2025 and December 31, 2024 and 477,321 shares outstanding at September 30, 2025 and at December 31, 2024.

Non-Voting Common Stock Equivalents

In conjunction with the Merger, the Company issued a new class of NVCE from authorized preferred stock, which were issued under the Investment Agreements (as defined below). Our NVCE stock is not listed or traded on any national securities exchange or automated quotation system, and there currently is no established trading market for such stock. The NVCE stock does not have voting rights and ranks equally with, and has identical rights, preferences, and privileges as, the voting common stock with respect to dividends or distributions (including regular quarterly dividends) declared by the Board and rights upon any liquidation, dissolution, winding up or similar proceeding of the Company. The NVCE stock is convertible into shares of voting common stock on a one-for-one basis, generally upon transfer to an eligible holder or the occurrence of other specified events in accordance with the terms of the Warburg Investment Agreements with affiliates of funds managed by Warburg Pincus LLC (the "Warburg Investors"). There were 27,000,000 shares of NVCE stock authorized at September 30, 2025 and December 31, 2024 and 4,140,600 shares of NVCE stock outstanding at September 30, 2025 and 9,790,600 at December 31, 2024.

During the third quarter of 2025, certain affiliates of Warburg Pincus LLC sold 4,500,000 shares of the Company’s NVCE in a negotiated block trade with a third party at a price per share of $16.38. The transaction was executed at a market-based price reflecting a customary block trade discount, and the NVCE shares automatically converted to common shares upon sale. The Company also repurchased 1,150,000 shares of its NVCE stock from the Warburg Investors at that same price per share under the Company's authorized share repurchase program. The repurchased shares were retired upon settlement and recorded as a reduction to stockholders’ equity.

Warrants

In conjunction with the Merger and per the terms of the investment agreements, each dated July 25, 2023, entered into by Banc of California, Inc. with the Warburg Investors (such agreement, the "Warburg Investment Agreement") and the Centerbridge Investor (together with the Warburg Investment Agreement, the "Investment Agreements"), respectively, the Warburg Investors received warrants to purchase 15,853,659 shares of NVCE stock (the "Warburg Warrants"), and the Centerbridge Investor received warrants to purchase 3,048,780 shares of voting common stock (the “Centerbridge Warrants”), each with an initial exercise price of $15.375 per share, subject to customary anti-dilution adjustments provided for under the warrant agreements. The warrants carry a term of seven years but are subject to mandatory exercise when the market price of the voting common stock reaches or exceeds $24.60 for 20 or more trading days during any 30-consecutive trading day period. These warrants are being accounted for as equity. The exercise price of the Centerbridge Warrants will be adjusted downward, per the terms of their warrant agreement, and the exercise price of the Warburg Warrants will also be adjusted, per the terms of their warrant agreement and the NVCE Articles Supplementary, for cash distributions to stockholders of the Company’s voting common stock, including the Company’s quarterly cash dividend.

In addition to their holdings of NVCE and warrants, the Warburg Investors beneficially owned approximately 10.34% of the Company’s outstanding voting common stock as of September 30, 2025. See Note 17. Related Party Transactions for additional information regarding these holdings.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Stock Repurchase Program

On March 17, 2025, we announced that our Board of Directors authorized the repurchase of up to $150.0 million of our common stock. On April 23, 2025, we announced an upsize of the stock repurchase program from $150.0 million to $300.0 million and expanded the program to cover both the Company's common stock and depositary shares representing its preferred stock. The repurchase authorization expires in March 2026.

During the first quarter of 2025, common stock repurchased under the program totaled 2,684,823 shares at a weighted average price per share of $14.36, or $38.5 million in the aggregate. During the second quarter of 2025, common stock repurchased under the program totaled 8,809,814 shares at a weighted average price per share of $12.65, or $111.5 million in the aggregate. During the third quarter of 2025, common and common equivalent stock repurchased under the program totaled 2,153,792 shares at a weighted average price per share of $16.48, or $35.5 million in aggregate. The third quarter of 2025 repurchases include 1,150,000 shares of our NVCE stock from the Warburg Investors at a price per share of $16.38. During the nine months ended September 30, 2025, common and common equivalent stock repurchased under the program totaled 13,648,429 shares at a weighted average price per share of $13.59, or $185.5 million in the aggregate. As of September 30, 2025, the Company had $114.5 million remaining under the stock repurchase authorization.

Purchases may be made in open-market transactions, in block transactions on or off an exchange, in privately negotiated transactions or by other means as determined by our management and in accordance with the regulations of the SEC. The timing of purchases and the number of shares repurchased under the program will depend on a variety of factors including price, trading volume, corporate and regulatory requirements, and market conditions. The program may be changed, suspended, or discontinued at any time.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 16. SEGMENT REPORTING

The Company provides banking and treasury management services to small-, middle-market, and venture-backed businesses. The principal business activities of the Company are gathering deposits, originating and servicing loans and leases, and investing in investment securities. The Company's CODM is the Chief Executive Officer.

The Company operates as one reportable segment, Commercial Banking, based on how the CODM manages the business activities. The CODM uses net earnings to evaluate income generated from segment assets, assess performance, decide how to allocate resources, determine dividend availability, establish management's compensation, and guide other strategic decisions. The accounting policies of the Commercial Banking segment are the same as those described in Note 1. Nature of Operations and Summary of Significant Accounting Policies, of our audited consolidated financial statements included in our Form 10-K. Additionally, the Company does not have intra-entity sales or transfers.

The following presents our operating segment income statement, including significant expense categories, regularly reviewed by the CODM, and the reconciliation of segment net earnings to consolidated net earnings for the periods indicated:

(1) Includes business development expense, communications expense, stationery and supplies, employee related expenses, operating and other losses, OREO expenses, and other corporate overhead and operating expenses.

(2) Segment earnings is the same as net earnings reported on the condensed consolidated statements of earnings.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following presents our operating segment balance sheet information and the reconciliation of segment assets to consolidated total assets as of the dates indicated:

(1) Segment total assets is the same as total assets reported on the condensed consolidated balance sheets.

NOTE 17. RELATED PARTY TRANSACTIONS

Certain of our executive officers and directors, and their related interests, are customers of, or have had transactions with, the Bank in the ordinary course of business, including deposits, loans, and other financial services-related transactions. From time to time, the Bank may make loans to executive officers and directors, and their related interests, in the ordinary course of business and on substantially the same terms and conditions, including interest rates and collateral, as those of comparable transactions with non-insiders prevailing at the time, in accordance with the Bank's underwriting guidelines, and do not involve more than the normal risk of collectability or present other unfavorable features. As of September 30, 2025, no related party loans were categorized as nonaccrual, past due, restructured, or potential problem loans.

Transactions with Related Parties

The Company and the Bank have engaged in the transaction described below with the Company's current directors, executive officers, and beneficial owners of more than five percent of the outstanding shares of the Company's voting common stock and certain persons related to them.

The Company is a party to a services agreement with IntraFi Network LLC (“IntraFi”) whereby IntraFi provides the Bank with certain insured cash sweep services from time to time. Affiliates of funds managed by Warburg Pincus LLC hold a material investment interest in IntraFi. Additionally, one of Warburg Pincus LLC’s principals, Todd Schell, who currently serves as a member of the Board, is a member of the board of directors of IntraFi. Affiliates of funds managed by Warburg Pincus LLC beneficially owned approximately 10.34% of the Company’s outstanding voting common stock as of September 30, 2025, based on information reported on a Schedule 13D filed with the SEC on August 1, 2024. For the three and nine months ended September 30, 2025, the amounts paid to IntraFi for certain insured cash sweep services were $1.9 million and $5.6 million, and were $1.8 million and $6.0 million for the three and nine months ended September 30, 2024.

During the third quarter of 2025, the Company also repurchased 1,150,000 shares of our NVCE stock from the Warburg Investors. See Note 15. Stockholders’ Equity for additional information regarding this transaction.

NOTE 18. SUBSEQUENT EVENTS

Common Stock Dividend

On November 6, 2025, the Company announced that the Board of Directors had declared a quarterly cash dividend of $0.10 per common share. The cash dividend is payable on January 2, 2026, to stockholders of record at the close of business on December 15, 2025.

Preferred Stock Dividend

On November 6, 2025, the Company announced that the Board of Directors had declared a quarterly cash dividend of $0.4845 per Depositary Share. The cash dividend is payable on December 1, 2025 to stockholders of record at the close of business on November 20, 2025.

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