EU and US could reach trade deal this weekend - Reuters
On Monday, Raymond (NSE:RYMD) James reiterated its Outperform rating on Banc of California (NYSE:BANC) with a steady price target of $18.00. The firm’s analysts expressed satisfaction with the recent announcement from the bank, emphasizing its advantageous position for share repurchases. Currently trading at $14.32 with a market capitalization of $2.42 billion, the bank’s shares are at 89% of tangible book value (TBV), seen by analysts as the optimal use of excess capital at this time. They anticipate the bank will actively buy back shares. According to InvestingPro data, the stock trades at a price-to-book ratio of 0.78, supporting the analysts’ valuation assessment.
The analysts noted that the bank’s announcement does not preclude the possibility of a preferred redemption. They also mentioned that the management has put a hold on restructuring its held-to-maturity (HTM) assets. Raymond James highlights that their current model does not account for any share repurchase activities, suggesting that any such action would boost earnings per share (EPS) and return on average tangible common equity (ROATCE). Moreover, they pointed out that repurchasing shares below TBV would also increase the TBV itself. InvestingPro analysis shows the bank maintains a PEG ratio of 0.26, indicating attractive valuation relative to its growth prospects, though its overall Financial Health Score remains weak.
Raymond James sees additional opportunities for Banc of California to unlock more capital through risk-weighted assets (RWA) optimization, a strategy similar to that of its peers. This could particularly impact the bank’s mortgage warehouse segment, which holds approximately $1.5 billion in loans. The analysts believe these potential catalysts could drive a positive reaction in the bank’s shares, which were up 2.4% in pre-market trading.
In conclusion, the Raymond James analysts remain positive on the outlook for Banc of California, expecting the bank’s proactive measures to yield favorable results for its stock performance.
In other recent news, Banc of California reported its fourth-quarter 2024 financial results, where it exceeded earnings expectations with an earnings per share (EPS) of $0.28, beating the forecast of $0.23. However, the bank’s revenue fell short of projections, coming in at $264.27 million compared to the expected $272.7 million. This revenue shortfall has been a point of concern for investors, despite the positive EPS outcome. The bank’s strategic focus on reducing costs and enhancing digital capabilities is seen as a potential driver for future growth. Additionally, Banc of California completed an all-stock acquisition of PacWest Bancorp (NASDAQ:PACW) in November 2023, expanding its portfolio with various specialty businesses. Analysts from JPMorgan have rated Banc of California as Neutral, setting a price target of $18.00. They noted the bank’s projected loan and deposit growth, although the expected return on average tangible equity capital (ROATEC) for the fourth quarter of 2025 is forecasted at 10.2%, which is below the bank’s target and industry average. These developments reflect the bank’s ongoing efforts to strengthen its financial position and market presence.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.