When two people are having sex but not admitting they are in a relationship.
Girl 1: Hey ho, what did you do this weekend?
Girl 2: Hung out with a guy friend.
Girl 1: I didn't know you had a new boyfriend?
Girl 2: Oh, no he's not my boyfriend, we are just hanging out.
Girl 1: Hahah I see, Are yall hanging out, or are yall banging out?
Girl 2: hahahah i guess we are banging out.
To have sexual intercourse
I was "Banging Out" this chick in the bathroom and then someone walked in.