Key Highlights

  • Diluted EPS was $0.46 versus $0.38 a year earlier and a loss of $1.61 in the second quarter.
  • Net earnings were $83.1 million, with total revenue of $303.8 million, up 6% year over year.
  • Net interest margin widened to 3.34% from 3.13% in the second quarter.
  • Nonperforming assets fell to $198.7 million, or 0.57% of assets, from $220.0 million.
  • Common equity tier 1 capital rose to 9.70% from 9.25% in the second quarter.

Banc of California Earnings: Did the Third Quarter Mark a Clean Recovery?

Banc of California (NYSE:BANC) reported third-quarter 2026 results on Tuesday, October 27, with diluted EPS of $0.46, up 21% from $0.38 a year earlier. The screen estimate was $0.45. The result follows a second-quarter diluted loss of $1.61, driven by a securities repositioning, loan sales and a subordinated note redemption.

Net earnings were $83.1 million, or $73.1 million available to common shareholders after preferred dividends. The company reported no adjusted EPS, and it gave no numeric guidance. The earnings call is scheduled for Wednesday, October 28.

Banc of California is a bank holding company serving businesses and individuals, with $28.26 billion in deposits at quarter end.

Banc of California Margin and Revenue: How Much Did the Repositioning Help?

Total revenue was $303.8 million, up 6% from $287.7 million. Net interest income rose to $272.4 million from $250.5 million in the second quarter and $253.4 million a year earlier. Net interest margin reached 3.34%, versus 3.13% and 3.22%.

Asset yield rose to 5.43% from 5.18%, with the investment securities yield at 4.86% versus 3.44% a year earlier. Cost of total deposits edged up to 1.83% from 1.80%. Noninterest income was $31.4 million, compared with a loss of $234.1 million in the second quarter.

Noninterest expense was $185.4 million, nearly flat from $185.7 million a year earlier. The efficiency ratio improved to 59.12% from 62.05%, and pre-tax pre-provision income rose 16% to $118.4 million. Return on average tangible common equity was 11.93% on a non-GAAP basis.

Banc of California Credit Quality: Are Reserves and Losses Stabilizing?

Provision for credit losses was $10.4 million versus $161.8 million in the second quarter. Annualized net charge-offs fell to 0.27% of loans, or $17.3 million, from 2.54%. Nonperforming loans were 0.72% of loans, down from 0.84%.

The allowance for credit losses was 1.10% of loans, with coverage of nonperforming loans at 151.97%. Classified loans fell to 2.06% of loans from 3.17% a year earlier. The company also cited $109.9 million of loss coverage from credit-linked notes.

Loans held for investment were $24.59 billion, up $379.7 million, or 6% annualized, on $2.6 billion of production at a 6.58% weighted average rate. Total deposits were $28.26 billion, with noninterest-bearing balances at $7.69 billion, or 27%.

Banc of California Capital and Outlook: What Comes After the Loan Sales?

Common equity tier 1 capital was 9.70%, up 45 basis points from the second quarter but below 10.14% a year ago. Tangible book value per share was $16.09, down from $16.44 last quarter, as unrealized losses on available-for-sale securities rose to $261.4 million after tax. Nine-month buybacks totaled $31.9 million, and $82.6 million remains under the authorization through March 2027.

The chief executive expects further profit improvement in the fourth quarter from a full quarter of securities reinvestment earnings and the completed loan sales. Of the remaining construction loans, $235 million were sold on October 21, and the rest of the held-for-sale book is expected to be sold over the next several quarters. Next to watch are the October 28 call, fourth-quarter margin, and capital build. No share reaction is cited here.