BANC - Banc of California: 0.75x Book Value Soaring NII 3.1% Dividend (Rating Upgrade)
2024-06-21 12:05:30 ET
Summary
- Banc of California shares are undervalued, trading below book value, with potential for upside due to balance sheet restructuring and growth in the net interest margin.
- The lender's net interest margin increased to 2.66% in Q1'24, driven by a reduction in high cost wholesale funding.
- Despite risks to interest rates, Banc of California is a bargain and offers investors significant revaluation potential.
- I see a fair value, based on earnings and book value, of ~$17.
Shares of Banc of California, Inc. ( BANC ) are undeservedly languishing and trading way below book value, a sign that investors are mispricing the regional bank, in my opinion. The bank previously acquired PacWest and has made significant progress in repaying high-cost wholesale funding sources which is set to improve Banc of California's financial performance going forward. A significant decline in borrowings has led to an upsurge in the bank's net interest margin in the first quarter and the outlook remains positive as well. The single biggest asset, in my opinion, is that the bank's shares sell for a large 25% discount to book value which reflects a risk profile that is heavily skewed to the upside!...
Banc of California: 0.75x Book Value, Soaring NII, 3.1% Dividend (Rating Upgrade)