BANC OF CALIFORNIA, INC.

Previous wording

The following is management's discussion and analysis of the major factors that influenced our results of operations and financial condition as of and for the three months ended March 31, 2026. This analysis should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2025 and with the unaudited consolidated financial statements and notes thereto set forth in this Quarterly Report on Form 10-Q.

Current wording

The following is management's discussion and analysis of the major factors that influenced our results of operations and financial condition as of and for the six months ended June 30, 2026. This analysis should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2025 and with the unaudited consolidated financial statements and notes thereto set forth in this Quarterly Report on Form 10-Q.

Previous wording

Actual results could differ materially from those contained or implied by such forward-looking statements for a variety of factors, including without limitation: (i) changes in general economic conditions, either nationally or in our market areas, including the impact of tariffs, supply chain disruptions, and the risk of recession or an economic downturn; (ii) changes in the interest rate environment, including the recent and potential future changes in the FRB benchmark rate, which could adversely affect our revenue and expenses, the value of assets and obligations, the realization of DTAs, the availability and cost of capital and liquidity, and the impacts of continuing or renewed inflation; (iii) the credit risks of lending activities, which may be affected by deterioration in real estate markets and the financial condition of borrowers, and the operational risk of lending activities, including the effectiveness of our underwriting practices and the risk of fraud, any of which may lead to increased loan delinquencies, losses, and non-performing assets, and may result in our ACL not being adequate; (iv) fluctuations in the demand for loans, and fluctuations in commercial and residential real estate values in our market area; (v) the quality and composition of our securities portfolio; (vi) our ability to develop and maintain a strong core deposit base, including among our venture banking clients, or other low cost funding sources necessary to fund our activities particularly in a rising or high interest rate environment; (vii) the rapid withdrawal of a significant amount of demand deposits over a short period of time; (viii) the costs and effects of litigation; (ix) risks related to the Company's acquisitions, including disruption to current plans and operations; difficulties in customer and employee retention; fees, expenses and charges related to these transactions being significantly higher than anticipated; and our inability to achieve expected revenues, cost savings, synergies, and other benefits; (x) results of examinations by regulatory authorities of the Company and the possibility that any such regulatory authority may, among other things, limit our business activities, restrict our ability to invest in certain assets, refrain from issuing an approval or non-objection to certain capital or other actions, increase our ACL, result in write-downs of asset values, restrict our ability or that of our bank subsidiary to pay dividends, or impose fines, penalties or sanctions; (xi) legislative or regulatory changes that adversely affect our business, including changes in tax laws and policies, accounting policies and practices, privacy laws, and regulatory capital or other rules; (xii) the risk that our enterprise risk management framework may not be effective in mitigating risk and reducing the potential for losses; (xiii) errors in estimates of the fair values of certain of our assets and liabilities, as well as the value of collateral suppo…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Factors that could cause actual results to differ materially from the results anticipated or projected include, but are not limited to: (i) changes in general economic conditions, either nationally or in our market areas, including the impact of tariffs and retaliatory tariffs, supply chain disruptions, and the risk of recession or an economic downturn; (ii) changes in the interest rate environment, including the recent and potential future changes in the FRB benchmark rate, which could adversely affect our revenue and expenses, the value of assets and obligations, the realization of deferred tax assets, the availability and cost of capital and liquidity, and the impacts of continuing or renewed inflation; (iii) the credit risks of lending activities, which may be affected by deterioration in real estate markets and the financial condition of borrowers, and the operational risk of lending activities, including the effectiveness of our underwriting practices and the risk of fraud, any of which may lead to increased loan delinquencies, losses, and non-performing assets, and may result in our allowance for credit losses not being adequate; (iv) fluctuations in the demand for loans, and fluctuations in commercial and residential real estate values in our market area; (v) the quality and composition of our securities portfolio; (vi) our ability to develop and maintain a strong core deposit base, including among our venture banking clients, or other low cost funding sources necessary to fund our activities particularly in a rising or high interest rate environment; (vii) the rapid withdrawal of a significant amount of demand deposits over a short period of time; (viii) our ability to achieve or maintain the anticipated benefits of our securities repositioning and other strategic balance sheet actions due to one or more of the other factors described herein or otherwise, or the failure to complete our anticipated loan sales due to a condition to closing not being satisfied or otherwise; (ix) our ability to raise capital or incur debt on reasonable terms; (x) the costs and effects of litigation; (xi) risks related to the Company’s acquisitions, including disruption to current plans and operations; difficulties in customer and employee retention; fees, expenses and charges related to these transactions being significantly higher than anticipated; and our inability to achieve expected revenues, cost savings, synergies, and other benefits; (xii) the competitive and other impacts on our business of emerging technologies, including stablecoins and other digital currencies, tokenized deposits, blockchain, artificial intelligence, quantum computing, and related innovations affecting both the Company and the banking industry; (xiii) results of examinations by regulatory authorities of the Company and the possibility that any such regulatory authority may, among other things, limit our business activities, restrict our ability to invest in certain assets, refrain…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

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 "parent" or 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. The Bank 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 79 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.

Current wording

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 "parent" or 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. The Bank 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 77 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.

Previous wording

On March 23, 2026, we announced the extension of the Company’s existing $300 million stock repurchase program, which had been scheduled to expire in March 2026, through March 16, 2027. During the first quarter of 2026, the Company repurchased a total of approximately 1.7 million shares of common and common equivalent stock for $31.9 million, at a weighted-average price of $18.68 per share. As of March 31, 2026, the Company had $82.6 million remaining under the stock repurchase authorization. For further information on the stock repurchase program, see "Note 14. Stockholders' Equity", in Item 1 of this Form 10-Q.

Current wording

On March 23, 2026, we announced the extension of the Company’s existing $300 million stock repurchase program, which had been scheduled to expire in March 2026, through March 16, 2027. During six months ended June 30, 2026, the Company repurchased a total of approximately 1.7 million shares of common and common equivalent stock for $31.9 million, at a weighted-average price of $18.68 per share. As of June 30, 2026, the Company had $82.6 million remaining under the stock repurchase authorization. For further information on the stock repurchase program, see "Note 14. Stockholders' Equity", in Item 1 of this Form 10-Q.

Previous wording

The following discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements and related notes, which have been prepared in accordance with U.S. GAAP. The preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts and disclosure. We evaluate these estimates and assumptions on a ongoing basis based on historical experience and other relevant factors and circumstances; however, actual results may differ significantly from these estimates and assumptions, which could have a material adverse effect on our financial condition and results of operations.

Current wording

The following discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements and related notes, which have been prepared in accordance with U.S. GAAP. The preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts and disclosure. We evaluate these estimates and assumptions on an ongoing basis based on historical experience and other relevant factors and circumstances; however, actual results may differ significantly from these estimates and assumptions, which could have a material adverse effect on our financial condition and results of operations.

Previous wording

(1) Effective tax rates of 25.14%, 26.86% and 25.30% used for the three months ended March 31, 2026, December 31, 2025 and March 31, 2025.

Current wording

(1) Effective tax rates of 28.00%, 25.14% and 23.12% used for the three months ended June 30, 2026, March 31, 2026 and June 30, 2025. Effective tax rates of 29.30% and 23.12% used for the six months ended June 30, 2026 and 2025.

Previous wording

(2) Annualized net earnings divided by average stockholders' equity.

Current wording

(2) Annualized net (loss) earnings divided by average stockholders' equity.

Previous wording

(3) Annualized adjusted net earnings available to common and equivalent stockholders for ROATCE divided by average tangible common equity.

Current wording

(3) Annualized adjusted net (loss) earnings available to common and equivalent stockholders for ROATCE divided by average tangible common equity.

Previous wording

(3) Common and equivalent shares outstanding include NVCE that are participating securities. There were no NVCE outstanding as of March 31, 2026.

Current wording

(3) Common and equivalent shares outstanding include NVCE that are participating securities. There was no NVCE outstanding as of June 30, 2026.

Previous wording

(1) Includes customer related expense of $23.7 million, $24.9 million, and $27.8 million for the three months ended March 31, 2026, December 31, 2025, and March 31, 2025, respectively.

Current wording

(1) Includes customer related expense of $24.1 million, $23.7 million, and $26.6 million for the three months ended June 30, 2026, March 31, 2026, and June 30, 2025, and $47.9 million and $54.3 million for six months ended June 30, 2026 and 2025.

Previous wording

(2) Noninterest expense used for efficiency ratio divided by total revenue.

Current wording

(2) Noninterest expense used for efficiency ratio divided by total revenue used for efficiency ratio.

Previous wording

The Company reported net earnings available to common and equivalent stockholders of$62.0 million, or$0.39 per diluted common share, for the first quarter of 2026. This compares to net earnings available to common and equivalent stockholders of $67.4 million, or $0.42 per diluted common share, for the fourth quarter of 2025, and net earnings available to common and equivalent stockholders of$43.6 million, or$0.26 per diluted common share, for the first quarter of 2025.

Current wording

The Company reported net loss available to common and equivalent stockholders of$251.3 million, or$(1.61) per diluted common share, for the second quarter of 2026. This compares to net earnings available to common and equivalent stockholders of $62.0 million, or $0.39 per diluted common share, for the first quarter of 2026, and net earnings available to common and equivalent stockholders of$18.4 million, or$0.12 per diluted common share, for the second quarter of 2025. The net loss for the second quarter of 2026 was primarily attributable to the impact of strategic balance sheet actions undertaken during the quarter, including the securities repositioning, targeted loan sale process, and redemption of subordinated debt.

Previous wording

•Healthy capital ratios well above the regulatory thresholds for "well capitalized" banks, including a 12.54% Tier 1 capital ratio and a 10.18% CET 1 capital ratio.

Current wording

•Capital ratios exceeded the regulatory thresholds for "well capitalized" banks, including a 11.67% Tier 1 capital ratio and 9.25% CET 1 capital ratio.

Previous wording

(1) Common shares include NVCE that are participating securities. There were no NVCE outstanding as of March 31, 2026.

Current wording

(1) Common shares include NVCE that are participating securities. There was no NVCE outstanding as of June 30, 2026 and March 31, 2026.

Previous wording

(5) Ratio calculated by dividing noninterest expense (less intangible asset amortization and acquisition, integration and reorganization costs) by total revenue (less gain/loss on sale of securities). See "Non-GAAP Financial Measures" in Item 2 of this Form 10-Q. Noninterest expense includes customer related expense of $23.7 million, $24.9 million and $27.8 million for the three months ended March 31, 2026, December 31, 2025 and March 31, 2025.

Current wording

(5) Ratio calculated by dividing noninterest expense (less intangible asset amortization and acquisition, integration and reorganization costs) by total revenue (less gain/loss on securities). See "Non-GAAP Financial Measures" in Item 2 of this Form 10-Q. Noninterest expense includes customer related expense of $24.1 million and $23.7 million for the three months ended June 30, 2026 and March 31, 2026, and $47.9 million and $54.3 million for six months ended June 30, 2026 and 2025.

Previous wording

(1) Total loans are net of deferred fees, related direct costs, and premiums and discounts, but exclude the allowance for loan losses. Includes net loan discount accretion of $12.2 million, $12.7 million and $16.0 million for the three months ended March 31, 2026, December 31, 2025 and March 31, 2025.

Current wording

(1) Total loans are net of deferred fees, related direct costs, and premiums and discounts, but exclude the allowance for loan losses. Includes net loan discount accretion of $11.2 million, $12.2 million and $16.1 million for the three months ended June 30, 2026, March 31, 2026 and June 30, 2025.

Previous wording

Net interest margin was 3.24% for the first quarter, up 4 basis points from 3.20% for the fourth quarter, primarily driven by lower average total cost of funds, offset partially by lower average yield on interest-earning assets. The average total cost of funds decreased to 2.10% from 2.20%, as a result of an 11 basis point decrease in the average total cost of deposits to 1.78%, and an 11 basis points decrease in the average cost of borrowings to 4.63%. The average yield on interest-earning assets decreased to 5.25% from 5.31%, as a result of a 9 basis point decrease in the average yield on loans and leases to 5.74%. Declines in both funding costs and asset yield reflect the full quarter impact of rate cuts that occurred in the fourth quarter.

Current wording

Net interest margin was 3.13% for the second quarter, down 11 basis points from 3.24% for the first quarter. The decrease was primarily driven by nonaccrual interest impacts and an increase in short-term funding associated with strong loan growth and the redemption of subordinated debt, while core deposit growth strengthened toward quarter-end, improving the Company's funding profile entering the third quarter. The average total cost of funds increased to 2.14% from 2.10%, as a result of a 2 basis point increase in the average total cost of deposits to 1.80%, and a 19 basis point decrease in the average cost of borrowings to 4.44%. The average yield on interest-earning assets decreased to 5.18% from 5.25%, as a result of an 11 basis point decrease in the average yield on loans and leases to 5.63%.

Previous wording

Average total deposits increased by$103.4 million, with a$81.2 million increase in average noninterest-bearing deposits and$22.2 million increase in average interest-bearing deposits. Average noninterest-bearing deposits represented 28.9% of average total deposits in the first quarter, up from 28.7% in the fourth quarter.

Current wording

Average total deposits increased by$299.1 million, with a $323.5 million increase in average interest-bearing deposits, offset partially by a$24.4 million decrease in average noninterest-bearing deposits. Average noninterest-bearing deposits represented 28.5% of average total deposits in the second quarter, down from 28.9% in the first quarter.

Previous wording

Average total deposits increased by $398.7 million year over year, with a $223.0 million increase in average interest-bearing deposits and a $175.7 million increase in average noninterest-bearing deposits. Average noninterest-bearing deposits represented 28.9% of average total deposits for the three months ended March 31, 2026, up from 28.7% for the comparable period in 2025.

Current wording

The average total cost of funds decreased by 30 basis points to 2.12%, driven mainly by lower market interest rates. The average cost of deposits declined by 33 basis points to 1.79%, reflecting the impact of federal funds rate cuts in the second half of 2025. Average total deposits increased by $356.0 million year-over-year, as a result of a $229.2 million increase in average noninterest-bearing deposits and a $126.8 million increase in average interest-bearing deposits. Average noninterest-bearing deposits represented 28.7% of average total deposits for the six months ended June 30, 2026, up from 28.2% for the comparable period in 2025. The average cost of borrowings also decreased by 60 basis points to 4.52%, reflecting the paydown of higher-cost borrowings in the prior year and their replacement with lower-cost long-term FHLB advances.

Previous wording

The first quarter of 2026 provision for loan losses and unfunded commitments was primarily driven by net charge off activity and changes in loan risk ratings including specific reserves, offset by lower balances in the HFI portfolio and lower qualitative reserves.

Current wording

The first quarter provision for loan losses and unfunded loan commitments was primarily driven by net charge off activity and changes in loan risk ratings including specific reserves, offset partially by lower balances in the HFI portfolio and lower qualitative reserves.

Previous wording

For information regarding the ACL on loans and leases HFI and HTM securities, see “Balance Sheet Analysis - Allowance for Credit Losses on Loans and Leases” and “Critical Accounting Policies and Estimates” in Item 2 Management's Discussion and Analysis, and "Note 4. Loans and Leases" in Item 1 of this Form 10-Q.

Current wording

For information regarding the ACL on loans and leases HFI and HTM securities, see “Balance Sheet Analysis - Allowance for Credit Losses on Loans and Leases” and “Critical Accounting Policies and Estimates” in Item 2 Management's Discussion and Analysis, and "Note 4. Loans and Leases Held for Investment" in Item 1 of this Form 10-Q.

Previous wording

Income tax expense of $23.8 million was recorded for the first quarter of 2026 resulting in an effective tax rate of 24.9% compared to income tax expense of$19.5 million and an effective tax rate of 26.7% for the comparable period in 2025. The higher effective tax rate for the first quarter of 2025 was due primarily to a tax return to provision true-up adjustment recorded in the first quarter of 2025.

Current wording

Income tax benefit of $93.9 million was recorded for the second quarter, resulting in an effective tax rate of 28.0%, compared to income tax expense of $23.8 million and an effective tax rate of 24.9% for the first quarter. The second quarter tax rate reflects the effects of the Company's strategic balance sheet actions. Due to the significant impact of these actions on projected annual earnings, the Company calculated its second quarter income tax provision using a year to date effective tax rate approach rather than the estimated annual effective tax rate method.

Previous wording

AFS securities increased by $202.3 million during the first quarter to $2.7 billion at March 31, 2026 compared to$2.5 billion at December 31, 2025, due primarily to purchases of$343.4 million, offset partially by $119.8 million of principal paydowns, $10.8 million of maturities,$9.2 million decrease in the fair value of AFS securities, and $1.3 million of net amortization. As of March 31, 2026, AFS securities had aggregate unrealized net after-tax losses in AOCI of $143.3 million, up from $136.6 million at December 31, 2025, driven by higher interest rates.

Current wording

AFS securities increased by $1.8 billion to $4.5 billion at June 30, 2026 compared to $2.5 billion at December 31, 2025, due primarily to the transfer of HTM securities to AFS of $2.3 billion and purchases of $2.3 billion, offset partially by the sale of $2.3 billion, as part of the securities repositioning, $236.7 million of principal paydowns, $27.5 million of maturities, $17.4 million decrease in the fair value of AFS securities, and $3.4 million of net amortization. As of June 30, 2026, AFS securities had aggregate unrealized net after-tax losses in AOCI of $145.3 million, up from $136.6 million at December 31, 2025, driven by higher interest rates.

Previous wording

The following table presents the composition and duration of our HTM securities as of the dates indicated:

Current wording

As a result of the securities repositioning, the Company did not hold any securities classified as HTM as of June 30, 2026. The following table presents the composition and duration of our HTM securities as of December 31, 2025.

Previous wording

As part of our management of the loans held in our portfolio, on occasion we will transfer loans from HFI to HFS. Total loans and leases HFS increased by $76.1 million in the first quarter and totaled $259.0 million at March 31, 2026 compared to $182.9 million at December 31, 2025. The increase in loans HFS was primarily driven by a $72.1 million loan transfer during thefirst quarter. The loan was subsequently sold at par in April 2026.

Current wording

As part of our management of the loans held in our portfolio, on occasion we will transfer loans from HFI to HFS. Total loans and leases HFS increased by $732.2 million to $915.2 million at June 30, 2026 compared to $182.9 million at December 31, 2025. The increase was primarily driven by the transfer of $827.0 million of loans from HFI to HFS, which were recorded at the LOCOM, as part of the Company's targeted loan sale process and broader strategic balance sheet actions completed during the second quarter of 2026, offset partially by loan sales of $146.5 million .

Previous wording

(1) Includes land and acquisition and development loans of $217.8 million at March 31, 2026 and $214.5 million at December 31, 2025.

Current wording

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

Previous wording

Our non-deposit financial institutions ("NDFI") lending for HFI loans totaled $5.1 billion or 20.4%,as of March 31, 2026 compared to $5.1 billion, or 20.5% as of December 31, 2025, and is diversified across multiple asset classes, including warehouse lending, equity fund loans, and lender finance. The NDFI portfolio has a history of strong asset quality performance with no delinquencies, nonperforming loans, or classified loans for these respective periods.

Current wording

Our non-deposit financial institutions ("NDFI") lending for HFI loans totaled $5.2 billion or 21.6%, as of June 30, 2026 compared to $5.1 billion, or 20.5% as of December 31, 2025, and is diversified across multiple asset classes, including warehouse lending, equity fund loans, and lender finance. The NDFI portfolio has a history of strong asset quality performance with no delinquencies, nonperforming loans, or classified loans for these respective periods.

Previous wording

Total real estate loans HFI were $15.4 billion, or 63%, of our loan portfolio at March 31, 2026 and consisted of $13.5 billion of real estate mortgage loans and $1.9 billion of real estate construction and land loans, compared to $15.7 billion, or 63%, of our total loan portfolio at December 31, 2025 and consisted of $13.8 billion of real estate mortgage loans and $1.9 billion of real estate construction and loan loans. At March 31, 2026 and December 31, 2025, 70% and 71% of our real estate loans were collateralized by property in California, reflecting the concentration of our community banking operations within the state.

Current wording

Total real estate loans HFI were $14.8 billion, or 61%, of our loan portfolio at June 30, 2026 and consisted of $13.3 billion of real estate mortgage loans and $1.5 billion of real estate construction and land loans, compared to $15.7 billion, or 63%, of our total loan portfolio at December 31, 2025 and consisted of $13.8 billion of real estate mortgage loans and $1.9 billion of real estate construction and land loans. At June 30, 2026 and December 31, 2025, 70% and 71% of our real estate loans were collateralized by property in California, reflecting the concentration of our community banking operations within the state.

Previous wording

Nonperforming loans and leases HFI incr eased by $26.6 million to $185.7 million at March 31, 2026 compared to$159.2 million at December 31, 2025, due mainly to additions of $54.6 million, offset partially by principal and other reductions of $20.0 million, charge-offs of$5.2 million, and transfers to accrual status of $2.8 million. As of March 31, 2026, a few of our largest loan relationships on nonaccrual status had an aggregate carrying value of$62.9 million and represented 34% of total nonaccrual loans and leases.

Current wording

Nonperforming loans and leases HFI incr eased by $44.5 million to $203.7 million at June 30, 2026 compared to$159.2 million at December 31, 2025, due mainly to additions of $446.3 million, offset partially by transfers to loans HFS of $248.0 million, charge-offs of$97.1 million, principal and other reductions of $52.4 million, and transfers to accrual status of $4.4 million. 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.

Previous wording

Loans and leases accruing and 30-89 days past due increased by $142.1 million to $235.1 million as of March 31, 2026 compared to $93.0 million at December 31, 2025, due mainly to increases of$114.1 million in residential real estate construction and land delinquent loans,$32.9 million in commercial real estate construction and land delinquent loans, and $5.1 million in other residential real estate mortgage delinquent loans, offset partially by a decrease of $9.9 million in multi-family real estate mortgage delinquent loans.

Current wording

Loans and leases accruing and 30-89 days past due decreased by $20.3 million to $72.8 million as of June 30, 2026 compared to $93.0 million at December 31, 2025, due mainly to decreases of$32.9 million in multi-family real estate mortgage delinquent loans and $26.5 million in residential real estate construction and land delinquent loans, offset partially by increases of $24.8 million in other residential real estate mortgage delinquent loans.

Previous wording

Foreclosed assets increased by $0.9 million to $18.1 million at March 31, 2026 compared to$17.1 million at December 31, 2025, due mainly to transfers from loans of $1.7 million, offset partially bysales of$0.7 million.

Current wording

Foreclosed assets decreased by $0.8 million to $16.3 million at June 30, 2026 compared to$17.1 million at December 31, 2025, due mainly to sales of$2.9 million, offset partially by transfers from loans of $2.1 million.

Previous wording

Total deposits decreased by $521.2 million to $27.3 billion at March 31, 2026 compared to $27.8 billion at December 31, 2025. Interest-bearing deposits decreased due mainly to lower balances in checking accounts of $331.1 million and lower money market accounts of $274.5 million, offset partially by higher saving accounts of $85.1 million and higher brokered and non-brokered time deposits of $24.5 million. At March 31, 2026, noninterest-bearing deposits totaled $7.8 billion, or 29%, of total deposits, and interest-bearing deposits totaled $19.5 billion, or 71%, of total deposits, compared to noninterest-bearing deposits of $7.8 billion, or 28% of total deposits, and interest-bearing deposits of $20.0 billion, or 72% of total deposits, at December 31, 2025.

Current wording

Total deposits increased by $277.8 million to $28.1 billion at June 30, 2026 compared to $27.8 billion at December 31, 2025. The increase in total deposits was due primarily to higher balances in checking accounts of $229.8 million and higher money market accounts of $218.7 million, offset partially by lower savings accounts of $71.3 million, lower noninterest-bearing checking accounts of $64.7 million, and lower brokered and non-brokered time deposits of $34.6 million. At June 30, 2026, noninterest-bearing deposits totaled $7.8 billion, or 28%, of total deposits, and interest-bearing deposits totaled $20.4 billion, or 72%, of total deposits, compared to noninterest-bearing deposits of $7.8 billion, or 28% of total deposits, and interest-bearing deposits of $20.0 billion, or 72% of total deposits, at December 31, 2025.

Previous wording

As of March 31, 2026, FDIC-insured deposits represented approximately 70% of total deposits, down from 71% as of December 31, 2025.

Current wording

As of June 30, 2026, FDIC-insured deposits represented approximately 71%of total deposits, unchanged from 71% as of December 31, 2025.

Previous wording

In addition to deposit products, we also offer alternative, non-depository corporate treasury solutions for clients to invest excess liquidity. These off-balance sheet client funds totaled$1.2 billion at March 31, 2026 and$1.2 billion at December 31, 2025.

Current wording

In addition to deposit products, we also offer alternative, non-depository corporate treasury solutions for clients to invest excess liquidity. These off-balance sheet client funds totaled$1.0 billion at June 30, 2026 and$1.2 billion at December 31, 2025.

Previous wording

Borrowings increased by $487.4 million to $2.6 billion at March 31, 2026 compared to $2.1 billion at December 31, 2024, due to higher FHLB secured advances and other short-term borrowings. We utilized these borrowings to manage liquidity needs, including, but not limited to, funding asset growth, accommodating liability maturities and deposit withdrawals, and supporting business operations.

Current wording

Borrowings increased by $396.5 million to $2.5 billion at June 30, 2026 compared to $2.1 billion at December 31, 2025, due to higher FHLB secured advances. We utilized these borrowings to manage liquidity needs, including, but not limited to, funding asset growth, accommodating liability maturities and deposit withdrawals, and supporting business operations.

Previous wording

Subordinated debt increased by $1.3 million to $954.1 million at March 31, 2026 compared to $952.7 million at December 31, 2025, due primarily to the accretion of the acquisition discount on acquired subordinated debt, offset partially by the lower valuation of the Euribor-based subordinated debt. At March 31, 2026, $131.0 million of subordinated debt was included in the Company's Tier I capital and $792.9 million was included in Tier II capital.

Current wording

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. As a result of the redemption, subordinated debt decreased to $573.6 million at June 30, 2026 compared to $952.7 million at December 31, 2025. At June 30, 2026, $131.0 million of subordinated debt was included in the Company's Tier I capital and $412.3 million was included in Tier II capital.

Previous wording

Regulatory capital requirements limit the amount of DTAs that may be included when determining the amount of regulatory capital. DTA amounts in excess of the calculated limit are disallowed from regulatory capital. At March 31, 2026, such disallowed amounts were $315.7 million for the Company and $291.4 million for the Bank. No assurance can be given that the regulatory capital DTA limitation will not increase in the future or that the Company and the Bank will not have increased DTAs that are disallowed.

Current wording

Regulatory capital requirements limit the amount of DTAs that may be included when determining the amount of regulatory capital. DTA amounts in excess of the calculated limit are disallowed from regulatory capital. At June 30, 2026, such disallowed amounts were $362.4 million for the Company and $333.4 million for the Bank. No assurance can be given that the regulatory capital DTA limitation will not increase in the future or that the Company and the Bank will not have increased DTAs that are disallowed.

Previous wording

The Company's consolidated risk-based capital ratios increased during the three months ended March 31, 2026 due mainly to the effect of positive earnings for the period, offset partially by stock purchases, dividends and lower loan balances. The consolidated Tier 1 leverage ratio decreased during the three months ended March 31, 2026 due mainly to the impact of higher average assets, offset partially by earnings.

Current wording

The Company's consolidated risk-based capital ratios and Tier 1 leverage ratio decreased during the six months ended June 30, 2026 due mainly to the effect of the strategic balance sheet actions.

Previous wording

As a member of the FHLB, the Bank had secured borrowing capacity with the FHLB of $6.9 billion at March 31, 2026, offset partially by $476.0 million pledged for letters of credit and a balance outstanding of $2.0 billion as of that date. The FHLB secured credit line was collateralized by a blanket lien on $10.1 billion of certain qualifying loans and $19.8 million of securities. The Bank also had secured borrowing capacity with the FRBSF under the Discount Window program totaling $5.3 billion at March 31, 2026, of which $5.3 billion was available. The FRBSF Discount Window secured credit line was collateralized by liens on $5.0 billion of qualifying loans and $1.4 billion of pledged securities.

Current wording

As a member of the FHLB, the Bank had secured borrowing capacity with the FHLB of $7.1 billion at June 30, 2026, offset partially by $611.2 million pledged for letters of credit and a balance outstanding of $2.4 billion as of that date. The FHLB secured credit line was collateralized by a blanket lien on $10.3 billion of certain qualifying loans. The Bank also had secured borrowing capacity with the FRBSF under the Discount Window program totaling $3.8 billion at June 30, 2026, of which $3.8 billion was available. The FRBSF Discount Window secured credit line was collateralized by liens on $4.7 billion of qualifying loans and $56.4 million of pledged securities.

Previous wording

In addition to its secured lines of credit with the FHLB and FRBSF, the Bank also had credit limits of $215.0 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 or other short-term borrowings. The availability of these unsecured borrowings fluctuates regularly and is subject to the discretion of the counterparties. As of March 31, 2026, the Bank had $440.0 million outstanding under these arrangements. Additionally, the holding company has a $100.0 million unsecured revolving line of credit. As of March 31, 2026, there was no balance outstanding.

Current wording

In addition to its secured lines of credit with the FHLB and FRBSF, the Bank also 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 or other short-term borrowings. The availability of these unsecured borrowings fluctuates regularly and is subject to the discretion of the counterparties. As of June 30, 2026, the Bank had no balance outstanding under these arrangements. Additionally, the holding company has a $100.0 million unsecured revolving line of credit. As of June 30, 2026, there was no balance outstanding.