Banc of California (BANC) investor relations material

Executive summary

• Strategic balance sheet repositioning included selling $2.3 billion of lower-yielding securities, initiating sale of $825–$827 million in selected loans, and retiring $385 million of subordinated debt to enhance long-term earnings and flexibility.

• These actions resulted in significant one-time charges, leading to a net loss of $251.3 million ($1.61 per share) for Q2 2026.

• Management expects these moves to improve net interest margin, recurring earnings, and capital generation going forward.

• Core franchise momentum continued, with strong annualized loan growth of 9% and deposit growth of 12% in Q2, and $2.8 billion in new loan production.

• Noteworthy one-time items, including losses from securities repositioning and loan sales, significantly impacted GAAP results for Q2 2026.

Financial highlights

• Net loss available to common shareholders was $251.3 million, or $(1.61) per share, driven by strategic repositioning charges.

• Net interest income was $250.5 million, with net interest margin at 3.13% (down 11 bps sequentially), expected to rise to 3.30%+ post-loan sale.

• Noninterest income loss of $234.1 million, primarily due to $256.7 million securities loss and $12.5 million loan adjustment.

• Noninterest expense rose to $189.9 million, mainly due to elevated FDIC assessments and a non-recurring software charge.

• Book value per share was $18.38 and tangible book value per share was $16.44 at quarter-end.

Outlook and guidance

• Net interest margin expected to rise to 3.30–3.40% by year-end 2026; CET1 capital ratio projected to increase to 9.45–9.60% by Q3 end and above 10% in early 2027.

• ROAA targeted at 0.95–1.00% and ROTCE at 11.5–12.5% by year-end.

• PTPP income targeted at $125–$130 million for Q4 2026.

• Provisioning expected to normalize to $9–12 million per quarter; tax rate to decline by 1–2% in coming quarters.

• Remaining proceeds from securities sales to be invested in Q3 2026, further supporting earnings.