Stock of the Day

September 11, 2019

Banc of California (BANC)

$17.24
+$0.26 (+1.5%)
Market Cap: $2.69B

About Banc of California

Banc of California, Inc. operates as the bank holding company for Banc of California that provides various banking products and services in California. The company offers deposit products, such as checking, savings, money market, demand, and time deposits; certificates of deposit; retirement accounts; and safe deposit boxes. It also provides real estate loans to professional developers and real estate investors for the acquisition, construction, refinancing, renovation, and on-going operation of commercial real estate properties; commercial real estate mortgage, residential real estate mortgage, and real estate construction and land loans; commercial loans and leases, such as equipment finance, other asset-based, venture capital, secured business, warehouse, and other lending services; small business administration loans; and consumer loans comprising personal, auto, and other loans, as well as home equity and revolving lines of credit. In addition, the company offers international banking, multi-state deposit, and asset and investment management services, as well as cash and treasury management services; and online, mobile, remote deposit, and telephone banking services. It serves small and middle-market businesses, venture capital firms, non-profit organizations, business owners, entrepreneurs, professionals, and high-net worth individuals. Banc of California, Inc. was founded in 1941 and is headquartered in Los Angeles, California.

Today's Trend

Banc of California, Inc. (NYSE: BANC) shares declined after the bank reported a much larger-than-expected second-quarter loss and announced a major balance-sheet restructuring. The stock opened well below its prior close and continued to trade below its 50-day and 200-day moving averages, while trading volume was elevated.

  • The bank expects the strategic repositioning to improve future earnings, targeting a 3.30%–3.40% net interest margin and $125 million–$130 million of fourth-quarter pretax, pre-provision income. Banc of California targets NIM and fourth-quarter pretax pre-provision income
  • Despite the loss, deposits increased by $799 million, or 2.9%, and average loans rose by $556 million, or 2.3%, during the quarter. Estimated Tier 1 and CET1 capital ratios were 11.67% and 9.25%, respectively. Banc of California second-quarter financial results
  • Banc of California repositioned $2.3 billion of securities, began a targeted sale of $827 million in loans and retired $385 million of subordinated debt. Management views these moves as a way to improve the long-term earnings profile, but they create significant near-term financial costs.
  • The bank reported a $251.3 million net loss available to common shareholders, or $1.61 per diluted share, versus analysts’ expectation of approximately $0.40 in earnings. Revenue of about $164 million also fell far short of the roughly $295 million consensus estimate and declined sharply year over year. Banc of California sees surprise $251.3 million loss
  • The securities repositioning produced a $256.7 million pretax loss, making the restructuring the immediate catalyst for the earnings miss and share-price decline. Brean Capital subsequently downgraded BANC from “buy” to “neutral,” adding further pressure on investor sentiment.
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