third quarter 2026
Filed Oct 27, 2026Third Quarter Diluted Earnings per Share of $0.46, Up 21% Year Over Year; strategic repositioning and core business performance drove higher earnings and positive operating leverage.
Third-quarter GAAP earnings, revenue, net interest income, net interest margin and pre-tax pre-provision income improved, while credit-quality ratios and regulatory capital also strengthened. The period still reflects the aftermath of second-quarter repositioning losses, and AOCI losses increased.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenue, three months ended September 30, 2026GAAP | $303.8M | – | 6% |
| Net interest income, three months ended September 30, 2026GAAP | $272.4M | $21.9 million, or 9% | – |
| Total interest income, three months ended September 30, 2026GAAP | $442.7M | – | – |
| Total interest expense, three months ended September 30, 2026GAAP | $170.3M | – | – |
| Net interest margin, three months ended September 30, 2026GAAP | 3.34% | up 21 basis points | – |
| Total noninterest income, three months ended September 30, 2026GAAP | $31.36M | increased by $265.5 million | – |
| Total noninterest expense, three months ended September 30, 2026GAAP | $185.4M | decreased by $4.5 million | remained flat year-over-year |
| Pre-tax pre-provision income, three months ended September 30, 2026non-GAAP | $118.4M | – | up 16% |
| Provision for credit losses, three months ended September 30, 2026GAAP | $10.4M | – | – |
| Earnings before income taxes, three months ended September 30, 2026GAAP | $108.0M | – | – |
| Income tax expense, three months ended September 30, 2026GAAP | $24.97M | – | – |
| Effective tax rate, three months ended September 30, 2026GAAP | 23.1% | – | – |
| Net earnings, three months ended September 30, 2026GAAP | $83.06M | – | – |
| Net earnings available to common and equivalent stockholders, three months ended September 30, 2026GAAP | $73.11M | – | – |
| Diluted earnings per common share, three months ended September 30, 2026GAAP | $0.46 | – | up 21% |
| Basic earnings per common share, three months ended September 30, 2026GAAP | $0.46 | – | – |
| Efficiency ratio, three months ended September 30, 2026non-GAAP | 59.12% | – | – |
| Return on average assets, three months ended September 30, 2026GAAP | 0.94% | – | – |
| Return on average tangible common equity, three months ended September 30, 2026non-GAAP | 11.93% | – | – |
| Total revenue, nine months ended September 30, 2026GAAP | $607.1M | – | – |
| Net interest income, nine months ended September 30, 2026GAAP | $774.6M | – | increased $48.5 million |
| Net interest margin, nine months ended September 30, 2026GAAP | 3.24% | – | up 11 basis points |
| Provision for credit losses, nine months ended September 30, 2026GAAP | $182.0M | – | – |
| Total noninterest income, nine months ended September 30, 2026GAAP | −$167.4M | – | decreased by $268.0 million |
| Total noninterest expense, nine months ended September 30, 2026GAAP | $556.6M | – | increased by $1.4 million |
| Net earnings, nine months ended September 30, 2026GAAP | −$86.34M | – | – |
| Diluted earnings per common share, nine months ended September 30, 2026GAAP | $(0.74) | – | – |
| Loans and leases held for investment, September 30, 2026GAAP | $24.59B | increased $379.7 million, or 6% on an annualized basis | – |
| Total deposits, September 30, 2026GAAP | $28.26B | increased by $139.1 million | – |
| Cash and cash equivalents, September 30, 2026GAAP | $2.17B | $(649,348) (Dollars in thousands) | – |
| Total assets, September 30, 2026GAAP | $34.97B | $(65,458) (Dollars in thousands) | – |
| Borrowings, September 30, 2026GAAP | $2.41B | $(51,737) (Dollars in thousands) | – |
| Total stockholders' equity, September 30, 2026GAAP | $3.35B | decreased by $61.3 million | – |
| Tangible common equity, September 30, 2026non-GAAP | $2.55B | decreased by $55.1 million | – |
| Common equity tier 1 capital ratio, September 30, 2026other | 9.70% | up 45 basis points | – |
| Tier 1 risk-based capital ratio, September 30, 2026other | 12.10% | up 43 basis points | – |
| Total risk-based capital ratio, September 30, 2026other | 14.71% | – | – |
| Nonperforming loans and leases to loans and leases HFI, September 30, 2026GAAP | 0.72% | decreased 12 basis points | – |
| Classified loans and leases to loans and leases HFI, September 30, 2026GAAP | 2.06% | decreased 35 basis points | – |
| Allowance for credit losses to loans and leases HFI, September 30, 2026GAAP | 1.10% | – | – |
| Net charge-offs to average loans and leases, annualized, three months ended September 30, 2026GAAP | 0.27% | – | – |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
fourth quarter outlook
- NoteThe Company expects further improvement in profitability in the fourth quarter as it realizes a full quarter of earnings from securities reinvestment and additional benefits from completed loan sales.
- NoteThe Company anticipates selling its remaining held for sale loan portfolio over the next several quarters.
Capital returns
- For the nine-month period ended September 30, 2026, the Company repurchased 1,709,935 shares of common and common equivalent stock at a weighted average price per share of $18.68, or $31.9 million in the aggregate.
- As of September 30, 2026, $82.6 million remained available under the current stock repurchase authorization, which expires in March 2027.
- Common and preferred stock dividends were $29.3 million during the third quarter.
What drove it
- The second-quarter strategic balance sheet repositioning and reinvestment into higher-yielding assets increased investment-securities interest income by $17.7 million sequentially.
- Net interest margin expanded to 3.34% from 3.13% as the average yield on investment securities increased to 4.86% from 3.44%.
- Loan production and disbursements totaled $2.6 billion, with a weighted average interest rate on production of 6.58%.
- Average deposits increased by $565.3 million, with a $546.3 million increase in average interest-bearing deposits.
- Third-quarter noninterest income improved as loss on securities AFS declined by $257.5 million and loss on loans and leases HFS declined by $8.3 million from the second quarter.
- The third-quarter provision included an $8.4 million provision for loan losses and a $2.0 million provision for unfunded commitments.
Concerns
- The nine-month period recorded a $256.0 million pre-tax loss on securities repositioning and a $16.6 million increase in loss on loans and leases HFS.
- Aggregate unrealized net after-tax losses in AOCI for AFS securities increased by $116.1 million during the third quarter.
- Noninterest-bearing checking deposits were $7.7 billion, or 27% of total deposits, compared to $7.8 billion, or 28% of total deposits, at June 30, 2026.
- Average total cost of deposits increased to 1.83% from 1.80% sequentially.
- Special mention loans and leases to loans and leases HFI increased to 1.43% from 1.24% sequentially.
- The Company expects to sell its remaining held for sale loan portfolio over the next several quarters.
What to watch
- Fourth-quarter realization of a full quarter of earnings from securities reinvestment and benefits from completed loan sales.
- Execution of sales of the remaining held for sale loan portfolio over the next several quarters.
- Deposit mix, including the proportion of noninterest-bearing deposits, and the average cost of deposits.
- AOCI movement and the impact of interest rates on AFS securities valuations.
- Credit migration, including special mention loans, nonperforming loans and net charge-offs.
- Capital generation following the balance sheet repositioning.
Balance sheet and cash flow
- Cash and cash equivalents totaled $2.2 billion at September 30, 2026, down $649.3 million from June 30, 2026.
- Immediately available cash and cash equivalents, excluding restricted cash, were $2.0 billion.
- Total available liquidity was $14.6 billion at the end of the third quarter, including total available borrowing capacity of $8.7 billion and unpledged AFS securities of $3.9 billion.
- AFS securities increased by $0.6 billion during the third quarter to $5.1 billion at September 30, 2026.
- AFS securities had aggregate unrealized net after-tax losses in AOCI of $261.4 million at September 30, 2026, up from $145.3 million at June 30, 2026.
- Operating cash flow and free cash flow were not reported.
Analysis
Banc of California reported a materially improved third quarter following its second-quarter strategic balance sheet repositioning. GAAP net earnings available to common and equivalent stockholders were $73,110 (In thousands), or $0.46 per diluted common share, compared with $59,682 (In thousands), or $0.38 per diluted common share, in the third quarter of 2025. Total revenue was $303,798 (In thousands), up 6%, and noninterest expense was $185,370 (In thousands), described as flat year over year. Pre-tax pre-provision income reached $118,428 (In thousands), up 16%, and the efficiency ratio improved to 59.12% from 62.05%.
Net interest income was the central earnings driver. It rose to $272,442 (In thousands) from $250,501 (In thousands) in the second quarter, while net interest margin expanded to 3.34% from 3.13%. The Company attributed the improvement principally to a $17.7 million sequential increase in interest income on investment securities, including a $2.8 million special dividend on FHLB stock, and to higher loan interest income. The average investment-securities yield rose to 4.86% from 3.44%, although the average total cost of deposits increased to 1.83% from 1.80%.
Balance-sheet activity reflected loan growth and funding mix changes. Loans and leases HFI increased by $379.7 million during the quarter to $24.6 billion, supported by $2.6 billion of production and disbursements. Total deposits increased by $139.1 million to $28.3 billion, while brokered and non-brokered time deposits declined by $688.4 million, offset by growth in money market and checking balances. Average deposits increased by $565.3 million. Cash and cash equivalents declined by $649.3 million as the Company completed reinvestment of cash generated from the securities repositioning.
Credit indicators improved sequentially, although special mention loans increased as a percentage of HFI loans. Nonperforming loans and leases to HFI loans declined to 0.72% from 0.84%, classified loans and leases to HFI loans declined to 2.06% from 2.41%, and annualized net charge-offs fell to 0.27% from 2.54%. The provision for credit losses was $10,400 (In thousands), compared with $161,780 (In thousands) in the second quarter. The allowance for credit losses to loans and leases HFI decreased to 1.10% from 1.14%.
Capital ratios strengthened from the second quarter, with the preliminary CET1 ratio rising to 9.70% from 9.25% and the Tier 1 risk-based capital ratio increasing to 12.10% from 11.67%. However, total stockholders' equity fell to $3,348,829 (Dollars in thousands), primarily because aggregate unrealized net after-tax losses in AOCI for AFS securities increased. Management expects further profitability improvement in the fourth quarter from a full quarter of securities reinvestment earnings and completed loan sales, while the remaining held for sale loan portfolio is expected to be sold over the next several quarters.
Management, verbatim
Our third quarter results demonstrate the stronger earnings foundation we have created through our second quarter strategic balance sheet repositioning and continued execution across our business.
Jared Wolff, Chairman & CEO of Banc of California
We expect further improvement in profitability in the fourth quarter as we realize a full quarter of earnings from our securities reinvestment and additional benefits from the completed loan sales.
Jared Wolff, Chairman & CEO of Banc of California
Not in the filing
stated, not guessed- Prior outlook was not provided, so comparison with prior guidance is unavailable.
- No operating cash flow was reported.
- No free cash flow was reported.
- No gross margin was reported.
- No segment revenue reporting was provided.
- No formal quantitative fourth-quarter revenue, expense, tax-rate, EPS or margin guidance was provided.
- No dividend per common share was reported.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.