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Banc of California Inc. (BANC)
NYSE:BANC
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Banc of California
(NYSE:BANC)
55Neutral
Positive Factors
Loan Growth
Loan growth should benefit from more certainty around rates and politics, with management reiterating mid-to-high single-digit growth.
NIM Expansion
Management was optimistic about margin expansion, expecting NIM to stabilize at approximately 3.25%.
Negative Factors
Profitability Concerns
The 4Q25 return on average tangible common equity estimate is below the company's target, reflecting below peer profitability.
Banc of California (BANC) vs. S&P 500 (SPY)
Market Cap
$2.24B
Dividend Yield2.92%
Average Volume (3M)2.04M
Price to Earnings (P/E)25.0
Beta (1Y)1.61
Revenue Growth345.02%
EPS GrowthN/A
CountryUS
Employees2,304
SectorFinancial
Sector Strength77
IndustryBanking
Share Statistics
EPS (TTM)0.52
Shares Outstanding158,354,600
10 Day Avg. Volume2,684,676
30 Day Avg. Volume2,040,118
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)2.20
Price to Cash Flow (P/CF)6.60
P/FCF Ratio2.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$19.11Price Target Upside39.49% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering9
Banc of California Business Overview & Revenue Model
Company DescriptionBanc of California, Inc. is a financial holding company, which engages in the provision of commercial banking services. It offers personal banking, business and commercial banking, real estate banking, and private banking. The company was founded in March 2002 and is headquartered in Santa Ana, CA.
How the Company Makes MoneyBanc of California makes money primarily through the interest income generated from its lending activities. This includes interest from loans such as commercial real estate loans, residential mortgages, and small business loans. The bank also earns non-interest income from fees and service charges related to deposit accounts, loan servicing, and other banking services. Additionally, Banc of California may generate revenue from investment securities and other financial instruments. The company's earnings can be influenced by factors such as interest rate fluctuations, economic conditions, and competition in the banking sector. Strategic partnerships and a focus on expanding its customer base in the Southern California region also play a role in its revenue generation.
Banc of California Financial Statement Overview
Summary
Banc of California shows positive revenue growth and improved profitability in 2024, but past volatility in income and negative cash flow trends affect stability. A strong balance sheet with no debt in 2024 enhances financial health, but cash flow management needs improvement.Income Statement
The company shows a substantial improvement in total revenue and net income from 2023 to 2024, indicating positive revenue growth. However, previous years showed significant volatility, especially with negative EBIT and net income in 2023, which affects overall stability. The gross profit margin is consistently high due to the nature of banking revenues, but profitability has been inconsistent.60
Neutral
Balance Sheet
The balance sheet demonstrates strong equity with a substantial stockholder's equity and no total debt in 2024, indicating stability and low financial risk. The equity ratio is healthy, and the return on equity has improved significantly in 2024, showcasing good leverage management. However, cash and short-term investments have fluctuated, suggesting potential liquidity considerations.75
Positive
Cash Flow
Cash flow from operations has been inconsistent, with a significant drop in operating cash flow in 2024 compared to 2023. Although free cash flow is positive, the growth rate is negative due to a decrease from the previous year, indicating potential challenges in cash management. The operating cash flow to net income ratio remains favorable, but the volatility in financing cash flow suggests external funding reliance.55
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.81B | 278.38M | 331.71M | 272.71M | 243.11M | Gross Profit |
| 1.81B | 278.38M | 331.71M | 272.71M | 243.11M | EBIT |
| 1.47B | -251.60M | 242.64M | 82.62M | 14.36M | EBITDA |
| 0.00 | 0.00 | 664.97M | 177.96M | 0.00 | Net Income Common Stockholders |
| 126.89M | -1.90B | 120.94M | 62.35M | 12.57M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 4.89B | 5.38B | 1.10B | 1.54B | 1.45B | Total Assets |
| 33.54B | 38.53B | 9.20B | 9.39B | 7.88B | Total Debt |
| 2.33B | 3.85B | 1.00B | 816.12M | 816.76M | Net Debt |
| -168.47M | -1.53B | 773.36M | 588.00M | 595.94M | Total Liabilities |
| 30.04B | 35.14B | 8.24B | 8.33B | 816.76M | Stockholders Equity |
| 3.50B | 3.39B | 959.62M | 1.07B | 897.21M |
| Cash Flow | Free Cash Flow | |||
| 16.98M | 120.55M | 109.28M | 102.93M | 69.77M | Operating Cash Flow |
| 16.98M | 135.77M | 136.12M | 105.74M | 74.86M | Investing Cash Flow |
| 1.89B | 12.61B | 149.53M | -5.67M | -266.92M | Financing Cash Flow |
| -110.49M | -9.61B | 1.05B | -92.77M | 39.40M |
Banc of California Technical Analysis
Negative
13.70
Price Trends
15.40
Negative
15.74
Negative
14.63
Negative
Market Momentum
-0.63
Positive
35.67
Neutral
20.93
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BANC, the sentiment is Negative. The current price of 13.7 is below the 20-day moving average (MA) of 14.69, below the 50-day MA of 15.40, and below the 200-day MA of 14.63, indicating a bearish trend. The MACD of -0.63 indicates Positive momentum. The RSI at 35.67 is Neutral, neither overbought nor oversold. The STOCH value of 20.93 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for BANC.
Banc of California Risk Analysis
Banc of California disclosed 49 risk factors in its most recent earnings report. Banc of California reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Banc of California Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $1.52B | 9.80 | 10.44% | ― | -3.61% | -29.58% | |
64 Neutral | $7.48B | 11.38 | 10.72% | 4.99% | -6.54% | -21.90% | |
64 Neutral | $13.79B | 10.52 | 9.20% | 4.24% | 17.25% | -7.60% | |
61 Neutral | $9.49B | 13.05 | 8.70% | 3.39% | 4.56% | -13.90% | |
60 Neutral | $8.13B | 10.39 | 12.32% | 2.04% | 13.60% | 8.85% | |
55 Neutral | $2.24B | 25.04 | 3.68% | 2.92% | 345.02% | ― |
* Financial Sector Average
Performance Comparison
BANC
Banc of California
13.70
-0.20
-1.44%
CMA
Comerica
57.06
9.63
20.30%
FRCB
First Republic Bank
0.01
-0.03
-75.00%
FHN
First Horizon
18.73
4.45
31.16%
WAL
Western Alliance
75.80
19.83
35.43%
CUBI
Customers Bancorp
49.09
0.34
0.70%
Banc of California Earnings Call Summary
Earnings Call Date: Jan 23, 2025 | % Change Since: -14.75% | Next Earnings Date: Apr 17, 2025
Earnings Call Sentiment Positive
The call emphasized strong core profitability growth, expansion in net interest margin, and significant cost synergies post-merger. There were challenges due to an increase in nonaccrual loans and charge-offs in specific segments, but these were largely isolated incidents. The bank demonstrated resilience in the face of external challenges like the wildfires, with no significant impact on their financials.Highlights
Strong Core Profitability Growth
EPS increased to $0.28, with a significant improvement in core profitability and higher profitability metrics across the board.
Net Interest Margin Expansion
Net interest margin (NIM) expanded by 135 basis points year-over-year, with a current NIM of 3.04%, expected to grow to 3.20%-3.30% in 2025 assuming no further Fed rate cuts.
Reduction in Wholesale Funding and Cost Synergies
Wholesale funding was reduced from nearly 17% in Q4 2023 to 10.3% of assets. Noninterest operating expenses decreased by 36% from a normalized Q4 2023.
Loan Growth and Portfolio Diversification
C&I loans grew to 30.1% of the core loan portfolio from 25.6% a year ago. New loan production rates were above 7%.
Improved Deposit Mix
NIB grew to 29.1% of total average deposits, up nearly 7% from a year ago, and cost of deposits declined 28 basis points to 2.26%.
Lowlights
Challenges with Nonaccrual Loans
An increase in nonaccrual loans was driven by a single borrower relationship, although no losses are expected given collateral coverage.
Charge-offs in Specific Loan Segments
Decided to charge off two NPL loans, one in Life Sciences and the other in the Civic portfolio, amounting to $14 million and an undisclosed amount, respectively.
Impact of Wildfires in Los Angeles
The devastating wildfires affected clients and colleagues, although no material impact on loan portfolio or collateral damage was reported.
Company Guidance
In the fourth quarter 2024 earnings call for Banc of California, the executives provided several key metrics and guidance for the upcoming year. They reported a net income of $47 million, with earnings per share (EPS) rising to $0.28. The net interest margin (NIM) expanded by 135 basis points year-over-year, reaching 3.04%, driven by a 27 basis point decline in the cost of funds. The bank achieved a significant reduction in noninterest operating expenses, which decreased by 36% from the fourth quarter of 2023. They also reported growth in noninterest-bearing deposits, which constituted 29.1% of total average deposits, up nearly 7% from the previous year. Credit metrics showed a reserve level at 1.13% of total loans, with a 142% coverage of nonperforming loans. The bank expects mid- to upper single-digit loan growth in 2025, primarily in warehouse, fund finance, and lender finance portfolios, with a continued focus on reducing the cost of deposits and expanding client relationships. Additionally, they are targeting a net interest margin range of 3.20% to 3.30% for the entire year, assuming no further Fed rate cuts.Banc of California Corporate Events
Executive/Board Changes
Banc of California Appoints New Chief Accounting Officer
Neutral
Mar 4, 2025
On March 4, 2025, Banc of California announced the appointment of Karen Hon as Chief Accounting Officer. Hon, with over 20 years of experience in finance and accounting, previously held the same position at SVB and has extensive expertise in accounting, system integrations, and process improvements. Her appointment is expected to drive operational excellence and enhance processes, systems, and technology across the bank. She replaces Jeff Krumpoch, who is retiring after 23 years of service.
Business Operations and StrategyFinancial Disclosures
Banc of California Reports Strong 2024 Financial Results
Positive
Jan 23, 2025
Banc of California reported its financial results for the fourth quarter and the full year of 2024, showing a strong performance with net earnings of $47.0 million and diluted earnings per share of $0.28 for the fourth quarter. The company experienced significant year-over-year net interest margin expansion and reduced noninterest expenses, indicating improved operational efficiency. The bank also launched a $1 million wildfire relief fund in response to the Southern California wildfires, demonstrating its commitment to community support. Despite the wildfires, the bank did not observe any material impact on its loan portfolio or facilities, and it remains optimistic about continued growth in 2025, driven by strategic cost reductions and balance sheet improvements.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.