2024-07-09 16:30:48 ET
Summary
- Banc of California has been busy since closing the PacWest deal, including billions of dollars of balance sheet restructuring in Q1 that meaningfully reduces funding costs.
- I expect above-average growth in 2025 driven by balance sheet restructuring, NIM improvement, and cost synergies from the PacWest deal.
- Long-term core earnings growth should grow at 5-6%, driving a fair value above $15, and the shares also appear undervalued on ROTCE-driven P/TBV, with a potential fair value of $18.50-$20.
There’s a lot of work ahead for the management of Banc of California (BANC). In addition to the normal integration work that would be required to bring PacWest into the fold after the 2023 merger, management is still restructuring the balance sheet to improve its funding situation, refining the loan book, monitoring a challenging office CRE market, and working to convince the Street on the merits of the PacWest deal....
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Banc of California: Opportunity Amidst The Noise