Banc of California BANC Form 10-Q filing Q2 FY2026

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements (Unaudited)

Consolidated Balance Sheets 4

Consolidated Statements of Earnings 5

Consolidated Statements of Comprehensive Income 6

Consolidated Statements of Changes in Stockholders' Equity 7

Consolidated Statements of Cash Flows 11

Notes to Unaudited Consolidated Financial Statements 13

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 59

Item 3. Quantitative and Qualitative Disclosures About Market Risk 88

Item 4. Controls and Procedures 91

PART II. OTHER INFORMATION

Item 1. Legal Proceedings 91

Item 1A. Risk Factors 91

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 91

Item 3. Defaults Upon Senior Securities 92

Item 4. Mine Safety Disclosures 92

Item 5. Other Information 92

Item 6. Exhibits 93

Signatures 94

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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 FRB Board of Governors of the Federal Reserve System

AFS Available-for-Sale FRBSF Federal Reserve Bank of San Francisco

ALLL Allowance for Loan and Lease Losses HFI Held for Investment

AOCI Accumulated Other Comprehensive Income (Loss) HFS Held for Sale

ASC Accounting Standards Codification HLBV Hypothetical Liquidation at Book Value

ASU Accounting Standards Update HTM Held-to-Maturity

Basel III A comprehensive capital framework and rules for U.S. banking organizations approved by the FRB and the FDIC in 2013 IRR Interest Rate Risk

BOLI Bank Owned Life Insurance LIHTC Low Income Housing Tax Credit

CDI Core Deposit Intangible Assets LOCOM Lower of Cost or Market

CECL Current Expected Credit Loss MBS Mortgage-Backed Securities

CET1 Common Equity Tier 1 NII Net Interest Income

CMBS Commercial Mortgage-Backed Securities NVCE Non-Voting Common Stock Equivalents

CMOs Collateralized Mortgage Obligations OREO Other Real Estate Owned

CODM Chief Operating Decision Maker PSUs Performance Stock Units

CRE Commercial Real Estate ROU Right-of-use

CRA Community Reinvestment Act RSUs Restricted Stock Units

CRI Customer Relationship Intangible Assets SBA Small Business Administration

DFPI California Department of Financial Protection and Innovation SBIC Small Business Investment Company

DTAs Deferred Tax Assets SEC Securities and Exchange Commission

ECR Earnings Credit Rate SFR Single-Family Residential

EVE Economic Value of Equity SOFR Secured Overnight Financing Rate

FASB Financial Accounting Standards Board TRSAs Time-Based Restricted Stock Awards

FDIC Federal Deposit Insurance Corporation U.S. GAAP U.S. Generally Accepted Accounting Principles

FHLB Federal Home Loan Bank of San Francisco

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ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

See Notes to Unaudited Consolidated Financial Statements.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

See Notes to Unaudited Consolidated Financial Statements.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(1) As part of a strategic balance sheet actions completed during the three and six months ended June 30, 2026, the Company transferred all HTM securities, including those originally reclassified into the HTM portfolio, to the AFS portfolio at fair value. The previously combined net unrealized losses in AOCI attributable to these securities were recognized as part of the transfer and subsequent sale of the securities. See "Note 3. Investment Securities" for further detail on the securities portfolio.

See Notes to Unaudited Consolidated Financial Statements.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

See Notes to Unaudited Consolidated Financial Statements.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

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See Notes to Unaudited Consolidated Financial Statements.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

See Notes to Unaudited Consolidated Financial Statements.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

See Notes to Unaudited Consolidated Financial Statements.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

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 a 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 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 located 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 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 and investment management services. Our major operating expenses are interest paid by the Bank on deposits and borrowings, compensation expense, customer related expense, occupancy expense, insurance and assessments 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, 2025 as filed with the SEC ("Form 10-K").

Recently Issued Accounting Standards Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, "Disaggregation of Income Statement Expenses," requiring additional disclosure of income statement expenses, including categories like employee compensation, depreciation, and intangible asset amortization, as well as selling expenses. Companies must also qualitatively describe any remaining amounts not separately disclosed. In January 2025, the FASB also issued ASU 2025-01, "Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures-Clarifying the Effective Date," which clarified that all public business entities must 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 disclosures apply prospectively, but retrospective application is allowed. 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 the disclosure requirements of ASC 360-10. 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.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

In November 2025, the FASB issued ASU 2025-08, “Financial Instruments—Credit Losses (Topic 326): Purchased Loans,” which updates the accounting for acquired loans under the CECL model. The amendments address application challenges under previous guidance, including the perceived double-counting of credit losses at acquisition, by expanding the gross-up approach and introducing the concept of purchased seasoned loans. Under the new standard, an ACL is recorded at acquisition with a corresponding adjustment to the loan’s amortized cost basis, eliminating the requirement for a day-one provision for certain acquired loans. Loans acquired in a business combination (excluding credit cards) are automatically considered purchased seasoned loans, while other loans qualify if acquired more than 90 days after origination and the acquirer was not involved in origination. The guidance is effective for fiscal years beginning after December 15, 2026, with early adoption permitted, and is to be applied prospectively. The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025‑11, “Interim Reporting (Topic 270): Narrow‑Scope Improvements,” which clarifies and consolidates interim reporting guidance under ASC 270 for entities issuing interim financial statements. In addition, the update establishes a disclosure principle requiring entities to disclose material events or changes since the end of the most recent annual reporting period. The amendment does not introduce new recognition, measurement, or disclosure requirements and is not intended to change the fundamental nature of interim reporting, but rather to enhance clarity and consistency in interim financial reporting. The guidance is effective for interim reporting periods within fiscal years beginning after December 15, 2027, with early adoption permitted. Entities may apply the guidance using either prospective or 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 accompanying unaudited Consolidated Financial Statements as of June 30, 2026 and six months ended June 30, 2026 and 2025 have been prepared in accordance with U.S. GAAP for interim information and Article 10 of Regulation S-X and, therefore, do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Accordingly, these statements 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 ACL (the combination of the ALLL and the reserve for unfunded loan commitments) and the realization of deferred tax assets and liabilities. 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 six months ended June 30, 2026 and 2025. The following restricted cash balances are included in "Interest-earning deposits in financial institutions" on the consolidated balance sheets. As of June 30, 2026 and December 31, 2025, we pledged cash collateral for our derivative contracts of $16.3 million and $15.1 million, respectively. In connection with the issuance of the credit-linked notes on September 29, 2022, the Company maintains a correspondent bank account at a third-party financial institution that serves as the collateral account. The repayment of principal on the credit-linked notes is secured by this collateral account, which had a balance of $113.4 million at June 30, 2026 and $115.3 million at December 31, 2025. We pledged cash to secure standby letters of credit that we have issued on behalf of our customers. As of June 30, 2026 and December 31, 2025, the balance of such restricted cash totaled $39.8 million and $39.8 million, respectively.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

NOTE 3. INVESTMENT SECURITIES

During the second quarter, the Company transferred its entire HTM securities portfolio, with an aggregate amortized cost basis of $2.3 billion, to AFS securities as part of the strategic balance sheet actions. Most of the transferred securities were subsequently sold during the quarter, resulting in a pre-tax loss of $251.3 million. As of June 30, 2026, the Company had reinvested $1.7 billion of the sale proceeds into higher-yielding, lower-duration AFS 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 $19.4 million at June 30, 2026 which is recorded in "Other assets" on the consolidated balance sheets.

(1) Excludes accrued interest receivable of $11.4 million at December 31, 2025 which is recorded in "Other assets" on the consolidated balance sheets.

See "Note 11. Fair Value Measurements and Fair Value of Financial Instruments" for information on fair value measurements and methodology.

As of June 30, 2026, AFS securities with a fair value of $694.9 million were pledged as collateral for deposits, letters of credit, and secured borrowing facilities.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

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:

At June 30, 2026, the Company evaluated all securities in an unrealized loss position to determine whether any portion of the unrealized losses were attributable to credit related factors. As a result of this assessment, an ACL of $3.3 million was recorded on one corporate debt security classified as AFS.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

As of June 30, 2026, two securities that were transferred to AFS as part of the securities repositioning remained unsold. Given the Company's intent to sell these securities, unrealized losses of $5.4 million were recorded in loss on securities AFS.

For all other securities in unrealized loss positions, the loss was attributable to changes in market interest rates and other market conditions, rather than credit deterioration of the underlying issuers. In making this determination, we considered several factors, including credit ratings and financial condition of the issuers, the seniority of the tranches, and any U.S. government agency guarantees. For these remaining securities in an unrealized loss position, the Company does not intend to sell them, and it is not more likely than not that the Company will be required to sell them before recovery of their amortized cost basis. Except for the credit losses and two positions recognized at fair value, the remaining unrealized losses continue to be recorded in accumulated other comprehensive loss within stockholders' equity.

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:

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.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

Securities Held-to-Maturity

As a result of the securities repositioning, the Company did not hold any securities classified as HTM as of June 30, 2026. The amortized cost, ACL, gross unrealized gains and losses, and fair values of HTM securities as of December 31, 2025 are as follows:

(1) Excludes accrued interest receivable of $13.4 million at December 31, 2025 which is recorded in "Other assets" on the consolidated balance sheets.

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 HTM. The ACL on HTM securities represents CECL that may be incurred over the life of the investment. Accrued interest receivable on HTM securities, which is included in "Other assets" on the 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. As of December 31, 2025, the company recorded an ACL on HTM securities of $0.7 million.

Securities Held-to-Maturity by Credit Quality Indicator

The Company uses Standard & Poor's, 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 by the lowest available credit rating as of December 31, 2025:

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

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 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.

Loans and Leases Held for Investment

The following table summarizes the composition of our loans and leases HFI as of the dates indicated:

(1) Includes land and acquisition and development loans of $186.0 million and $214.5 million at June 30, 2026 and December 31, 2025.

(2) Represents net acquisition discounts of $127.4 million and net purchase premiums of $80.6 million at June 30, 2026, and net acquisition discounts of $158.5 million and net purchase premiums of $72.4 million at December 31, 2025.

(3) Excludes accrued interest receivable of $101.1 million and $104.3 million at June 30, 2026 and December 31, 2025, respectively, which is recorded in "Other assets" on the consolidated balance sheets.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

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

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

Our policy is 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 collectability is otherwise in doubt in the normal course of business. Interest income on nonaccrual loans is recognized only as cash is received and when the loan's principal balance is deemed collectible.

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

At June 30, 2026, nonaccrual loans and leases included $82.5 million of loans and leases 90 or more days past due, $18.4 million of loans 30 to 89 days past due, and $102.8 million of current loans that were placed on nonaccrual status based on management’s judgment regarding their collectability. At December 31, 2025, nonaccrual loans and leases included $92.7 million of loans and leases 90 or more days past due, $15.3 million of loans 30 to 89 days past due, and $51.2 million of current loans that were placed on nonaccrual status based on management’s judgment regarding their collectability. As of June 30, 2026, three of our largest loan relationships on nonaccrual status had an aggregate carrying value of $69.8 million and represented 34% of total nonaccrual loans and leases.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

The following tables present the credit risk rating categories for loans and leases HFI 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 Unaudited Consolidated Financial Statements

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 Unaudited Consolidated Financial Statements

The following tables present our loans HFI 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:

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

(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 Unaudited Consolidated Financial Statements

(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 Unaudited Consolidated Financial Statements

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

(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 Unaudited Consolidated Financial Statements

(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 Unaudited Consolidated Financial Statements

Loan Modifications

The following table presents our loan modifications to our HFI loans and leases granted to borrowers experiencing financial difficulty by type of modification for the year indicated with balances as of the dates indicated:

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

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:

• (in months)
• (in months)
• (in % points)
• (in months)
• (in % points)_

• (in months)
• (in months)
• (in % points)
• (in months)
• (in % points)
• (in months)
• (in % points)_

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

• (in months)
• (in % points)
• (in months)
• (in % points)_

• (in months)
• (in % points)
• (in months)
• (in % points)_

The following outlines the weighted average financial effects of our combination loan modifications for borrowers experiencing financial difficulties.

Combination - term extension, interest rate reduction, and principal forgiveness. Regarding the combination of term extensions, interest rate reductions, and principal forgiveness, the weighted average financial effect for the three months ended June 30, 2026 for venture capital loans included a 68 month maturity extension, a reduced rate of 1.00%, and principal forgiveness of $5.0 million.

Combination - term extension, interest rate reduction, and principal forgiveness. Regarding the combination of term extensions, interest rate reductions, and principal forgiveness, the weighted average financial effect for the six months ended June 30, 2026 for CRE loans included a 64 month maturity extension, a reduced rate of 1.65%, and principal forgiveness of $8.1 million and venture capital loans included a 68 month maturity extension, a reduced rate of 1.00%, and principal forgiveness of $5.0 million.

Combination - term extension, payment delay, and interest rate reduction. For the six months ended June 30, 2025, other commercial loans included a 61 month maturity extension, a reduced rate of 5.75%, and payment deferrals of 3 months.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

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:

No loans modified within the previous 12 months subsequently defaulted during the three or six month periods ended June 30, 2026. During the three and six month periods ended June 30, 2025, the Company had one modified residential real estate loan during the preceding 12-month period, with an amortized cost basis of $2.5 million, that subsequently defaulted.

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 ACL. See "Note 7. Leases" for information regarding operating leases where we are the lessor.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

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:

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 consolidated balance sheets.

The following tables present a summary of the activity in the ACL loans and leases HFI by loan portfolio segment for the periods indicated:

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

The ALLL increased by $1.7 million in the second quarter of 2026 to $243.3 million compared to the first quarter, due primarily to a $162.0 million provision and net charge-offs of $160.3 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. 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 Unaudited Consolidated Financial Statements

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 HFI by collateral type as of the following dates:

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

NOTE 5. GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Goodwill represents the excess of purchase consideration over the fair value of identifiable net assets acquired in a business combination. Goodwill and other intangible assets with indefinite useful lives are not amortized but are assessed for impairment at least annually. The carrying amount of goodwill was $214.5 million as of June 30, 2026 and December 31, 2025. For additional information regarding the calculation of goodwill and other intangibles see "Note 1. Nature of Operations and Summary of Significant Accounting Policies - Goodwill and Other Intangible Assets" in Item 8 of the Form 10-K.

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 as of the date indicated:

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

NOTE 6. OTHER ASSETS

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

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

(2) See "Note 11. Fair Value Measurements and Fair Value of Financial Instruments" for information regarding equity warrants.

Other receivables/assets increased by $45.8 million to $89.9 million at June 30, 2026, from $44.1 million at December 31, 2025. The increase was primarily driven by a loan servicing receivable, offset partially by a decrease in servicing assets resulting from the mortgage servicing rights portfolio sale.

NOTE 7. LEASES

Operating Leases as a Lessee

Our lease expense is a component of "Occupancy expense" on our 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 Unaudited Consolidated Financial Statements

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 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 consolidated statements of earnings. Periodic lease payments received under the leases are recorded as "Leased equipment income" in the consolidated statements of earnings. The valuation of equipment is tested periodically for impairment. No impairment was recorded on "Equipment leased to others under operating leases" during the six months ended June 30, 2026 and 2025.

The following table presents the contractual 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 Unaudited Consolidated Financial Statements

NOTE 8. BORROWINGS AND SUBORDINATED DEBT

Borrowings

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

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 of $7.1 billion as of June 30, 2026, collateralized by a blanket lien on $10.3 billion of qualifying loans. As of June 30, 2026, there were $611.2 million in letters of credit pledged and a $2.4 billion balance outstanding. As of December 31, 2025, there were $514.1 million in letters of credit pledged and a $1.7 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 June 30, 2026, the Bank had secured borrowing capacity of $3.8 billion collateralized by liens covering $4.7 billion of qualifying loans and $0.1 billion of securities. As of June 30, 2026 and December 31, 2025, there were no balances outstanding.

Holding Company Line of Credit Arrangement. As of June 30, 2026, we have a $100.0 million unsecured revolving line of credit available. The rate is based on 1-month SOFR plus a spread of 2.25%. As of June 30, 2026 and December 31, 2025, there was no balance outstanding.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

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 10.76% at June 30, 2026. The notes are linked to the credit risk of an approximately $2.1 billion reference pool of previously purchased SFR mortgage loans at June 30, 2026. 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 $110.4 million at June 30, 2026. See "Note 2. Restricted Cash" for information regarding the collateral for the notes and "Note 11. Fair Value Measurements and Fair Value of Financial Instruments" for additional information.

Other Short-Term Borrowing Arrangements. As of June 30, 2026, the Bank had credit limits of $190.0 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. These lines are renewable annually and have no unused commitment fees. As of June 30, 2026 there was no balance outstanding under these arrangements compared to $240.0 million outstanding as of December 31, 2025.

Subordinated Debt

On May 1, 2026, the Company redeemed all $385 million outstanding aggregate principal amount of its 3.25% Fixed-to-Floating Rate Subordinated Notes due 2031 originally issued by Pacific Western Bank. The remaining unamortized discount and debt issuance costs were recorded as a loss on redemption of debt in noninterest income.

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 $3.3 million at December 31, 2025.

(3) The subordinated notes, which were issued at the Bank level rather than the holding company level, carried a fixed interest rate until May 1, 2026. On that date, the Company redeemed the outstanding principal amount of $385 million. The balance reflected in the table above differs from the redemption amount due to the carrying value of the subordinated notes, which includes the impact of unamortized debt issuance discount at the reporting date.

(4) Interest rate was fixed at 4.375% 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.

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

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

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

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 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 consolidated balance sheets as of the dates indicated:

Cash Flow Hedges

Cash flow hedges include interest rate swap contracts with an aggregate notional amount of $680.0 million, consisting of $300.0 million of pay-fixed, receive-floating and $380.0 million of forward-starting receive-fixed, pay-floating swaps. These contracts have terms of up to five years and mature at various dates through 2032. The Company entered into these swaps with institutional counterparties to hedge against variability in cash flows attributable to IRR on a portion of the Company’s borrowings and forecasted interest income on cash balances indexed to the interest on reserve balances rate. 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 IRR on a portion of the Company's floating rate deposits. Additionally, cash flow hedges also included forward-starting purchased interest rate caps, which are option contracts designed to limit the Company's exposure to increases in short term interest rates. The interest rate caps have notional amounts aggregating to $380.0 million, with five year terms, and maturing in March 2032. These caps were entered into with institutional counterparties to hedge against variability in cash flows attributable to IRR on a portion of the Company's floating rate deposits.

The cash flow hedges were deemed highly effective at inception and as of June 30, 2026. 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 consolidated balance sheets until the related cash flows from the hedged items are recognized in earnings. As of June 30, 2026, the fair value of the cash flow hedges represented a net asset of $1.6 million, related to which a loss of $3.2 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 $1.4 million.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

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 $135.6 million at June 30, 2026.

The Company has also hedged the IRR 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 June 30, 2026, changes in fair value and fees recorded to "Noninterest income" in the consolidated statements of earnings were immaterial.

See "Note 11. Fair Value Measurements and Fair Value of Financial Instruments" 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 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 $32.9 million at June 30, 2026 and $34.9 million at December 31, 2025.

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.

Additionally, we have commitments to invest in SBICs that call for capital contributions up to an amount specified in the partnership agreements, affordable housing investments, and in CRA-related loan pools. As of June 30, 2026 and December 31, 2025, such commitments totaled $116.5 million and $122.1 million.

Legal Matters

In the ordinary course of our business, we are 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 information currently available to us, 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.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

NOTE 11. FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS

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 consolidated statements of earnings. However, movements in debt valuation adjustments are reported as a component of "Accumulated other comprehensive loss, net" on the 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 $2.1 billion reference pool of previously purchased SFR mortgage loans. The principal balance of the credit-linked notes was $111.6 million at June 30, 2026. The carrying value of the credit-linked notes at June 30, 2026 was the estimated fair value of $110.4 million. Interest expense on the credit-linked notes totaled $4.1 million and $8.2 million for the three and six months ended June 30, 2026, and $4.5 million and $9.0 million for the three and six months ended June 30, 2025, respectively, and was recorded in "Interest expense - borrowings" on the 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:

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 OREO 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 Form 10-K.

The Company also holds SBIC investments measured at fair value using the net asset value per share practical expedient that are not required to be classified in the fair value hierarchy. At June 30, 2026, the fair value of these investments was $128.9 million.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

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 Unaudited Consolidated Financial Statements

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

During the six months ended June 30, 2026, there were $1.6 million transfers 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 six months ended June 30, 2026 and $4.5 million 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 AFS 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.

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

47

BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

The following table summarizes activity for our Level 3 corporate debt securities AFS, 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:

In addition to individually evaluated loans and leases and OREO, loans HFS are carried at the LOCOM 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 HFS 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:

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

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:

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

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

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 June 30, 2026, the amounts that will actually be realized or paid at settlement or maturity of the instruments could be significantly different.

50

BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

NOTE 12. (LOSS) EARNINGS PER SHARE

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

(1) Basic and diluted loss per share are calculated using the two-class method.

(2) 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.

(1) Basic and diluted loss per share are using the two-class method.

(2) 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.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

(1) Basic earnings per share is using the two-class method.

(2) 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.

(3) Diluted earnings per share is using the treasury method.

(1) Basic earnings per share is using the two-class method.

(2) 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.

(3) Diluted earnings per share is using the treasury method.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

The terms of each class of the Company’s capital stock are described in "Note 14. Stockholders’ Equity" to the accompanying 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:

NOTE 13. 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 consolidated statements of earnings and the related amounts which are from contracts with customers within the scope of ASC Topic 606. 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:

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

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 six months ended June 30, 2026 due to revenue recognized that was included in the contract liability balance at the beginning of the period was $35,000.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

NOTE 14. STOCKHOLDERS' EQUITY

Stock-Based Compensation

At the Annual meeting of stockholders held on May 6, 2026, the Company's stockholders approved the Second Amended and Restated Banc of California, Inc. 2018 Stock Incentive Plan (the “Second Amended and Restated 2018 Plan”). The Company’s Second 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 Second Amended and Restated 2018 Plan authorizes grants of stock-based compensation instruments covering up to 12,917,882 shares. As of June 30, 2026, there were 4,567,203 shares available for grant under the Second Amended and Restated 2018 Plan. In addition to the Second Amended and Restated 2018 Plan, in connection with 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 $4.0 million and $6.2 million for the three months ended June 30, 2026 and 2025, and $9.9 million and $11.4 million for the six months ended June 30, 2026 and 2025. Such amounts are included in "Compensation expense" on the consolidated statements of earnings. The amount of unrecognized compensation expense related to all unvested RSUs, TRSAs, and PSUs as of June 30, 2026 totaled $54.9 million.

Restricted Stock Units and Time-Based Restricted Stock Awards

At June 30, 2026, there were 2,853,214 shares of unvested RSUs outstanding pursuant to the Second Amended and Restated 2018 Plan. At June 30, 2026, there were 4,670 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 June 30, 2026, there were 2,364,356 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 NVCE and 513,250 were authorized and outstanding for the Series F Preferred stock at June 30, 2026 and December 31, 2025.

Common Stock

Our voting common stock is listed on the NYSE under the symbol “BANC” and there were 446,863,844 shares authorized at June 30, 2026 and December 31, 2025, and 157,950,529 shares outstanding at June 30, 2026 and 149,963,520 shares outstanding at December 31, 2025.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

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 June 30, 2026 and December 31, 2025 and 477,321 shares outstanding at June 30, 2026 and at December 31, 2025.

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 Agreement (as defined below) with affiliates of funds managed by Warburg Pincus LLC (the "Warburg Investors"). There were 27,000,000 shares of NVCE stock authorized at June 30, 2026 and December 31, 2025 and there were no shares of NVCE stock outstanding at June 30, 2026 and 5,017,064 at December 31, 2025.

During the six months ended June 30, 2026, the Company repurchased 1,000,000 shares of its NVCE stock from the Warburg Investors at $20.00 per share, which represented a slight discount to the market price at the time of sale. 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.

During the six months ended June 30, 2026, holders exercised 14,634,146 Warburg Warrants and 620,631 Centerbridge Warrants. As of June 30, 2026, 3,647,661 warrants remained outstanding.

Stock Repurchase Program

On March 23, 2026, we announced that our Board of Directors approved an extension of the Company's existing stock repurchase program, which was originally announced on March 17, 2025 and subsequently upsized from $150.0 million to $300.0 million on April 23, 2025. The stock repurchase program, which was previously scheduled to expire in March 2026, has been extended through March 16, 2027.

During the six months ended June 30, 2026, common and common equivalent stock repurchased under the program totaled 1,709,935 shares at a weighted average price per share of $18.68, or $31.9 million in the aggregate. As of June 30, 2026, the Company had $82.6 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 Unaudited Consolidated Financial Statements

NOTE 15. 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" in our Form 10-K. Additionally, the Company does not have intra-entity sales or transfers.

Since the Company operates as a single reportable segment and is managed on a consolidated basis, the consolidated statements of earnings reflect the segment results. Therefore, a separate segment income statement is not presented. The Company has reviewed the information provided to the CODM and determined that no further disaggregated expense disclosures are necessary beyond those in the consolidated statements of earnings.

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 consolidated balance sheets.

NOTE 16. 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 June 30, 2026, 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 certain of the Company's 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, which was a principal shareholder of the Company during the first quarter of 2026, hold a material investment interest in IntraFi. Additionally, Todd Schell, a principal of Warburg Pincus LLC, who served as a member of the Company's Board of Directors until his retirement during the second quarter of 2026, is a member of the board of directors of IntraFi. Accordingly, transactions with IntraFi constituted related-party transactions during the first quarter of 2026. For the six months ended June 30, 2026 and 2025, the amounts paid to IntraFi constituting related party transactions for certain insured cash sweep services were $1.8 million and $3.7 million.

During the six months ended June 30, 2026, the Company repurchased 1,000,000 shares of its NVCE stock from the Warburg Investors. See "Note 14. Stockholders’ Equity" for additional information regarding this transaction.

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BANC OF CALIFORNIA, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

NOTE 17. SUBSEQUENT EVENTS

Common Stock Dividend

On August 7, 2026, the Company announced that the Board of Directors had declared a quarterly cash dividend of $0.12 per common share. The cash dividend is payable on October 1, 2026, to stockholders of record at the close of business on September 15, 2026.

Preferred Stock Dividend

On August 7, 2026, 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 September 1, 2026 to stockholders of record at the close of business on August 20, 2026.

Loan Sale Transactions

In July 2026, the Company entered into agreements to sell the $827.0 million of CRE and multi-family construction loans transferred from HFI to HFS during the quarter as part of the targeted loan sale process.

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