Banc of California (FPB) Q3 2026 Earnings Report

The call was strongly positive. Management reported substantial improvements in earnings, profitability, net interest margin, operating leverage, deposits, credit metrics, and capital, while providing a clear fourth-quarter earnings outlook and identifying multiple future growth drivers. The main challenges were non-recurring losses, net charge-offs, a decline in tangible book value from securities losses, higher funding-related costs, and economic sensitivity to further rate hikes, but these issues were presented as manageable within the company's broader balance-sheet repositioning.

For the fourth quarter, Banc of California expects pre-tax, pre-provision income of $125 million-$130 million, net interest margin of 3.35%-3.40%, and a tax rate to normalize to around 26%; it expects additional benefits from the securities repositioning and loan sales, including somewhere between 15 basis points or so expansion of yield, somewhere in that range, maybe like 12 to 15 basis point expansion of yield on the AFS securities book. The company expects a year-end CET1 ratio of between 9.80% and 9.90%, anticipates retiring its preferred stock when it is redeemable in September of 2027, and said backfilling the 7.75% preferred with FHLB could provide at least 50% of the benefit, or about $20 million of after-tax income to the common, which is $0.11 or $0.12 or something like that. Average earning assets could increase by several hundred million, the loan-to-deposit ratio is expected to run 85%-92% and probably float up to around 90%, cumulative beta remains around 60%, and payments is expected to contribute to fee income in a way that shows up next year, with $10 million-$12 million of fee income a month currently, $30 million-$36 million a quarter, and a goal of 5% of fee income or even more next year, although no formal target has been set yet.