Banc of California trades at $21.01 per share and has stayed right on track with the overall market, gaining 6.6% over the last six months. At the same time, the S&P 500 has returned 6.2%.
Is now the time to buy Banc of California, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free.
Why Do We Think Banc of California Will Underperform?
We don’t have much confidence in Banc of California. Here are three reasons we avoid BANC, plus one stock we’d rather own.
1. Net Interest Income Points to Soft Demand
Markets consistently prioritize net interest income over non-recurring fees, recognizing its superior quality compared to the more unpredictable revenue streams.
Banc of California’s net interest income has grown at a 2.5% annualized rate over the last five years, much worse than the broader banking industry.
3. Substandard TBVPS Growth Indicates Limited Asset Expansion
Tangible book value per share (TBVPS) serves as a key indicator of a bank’s financial strength, representing the hard assets available to shareholders after removing intangible assets that could evaporate during financial distress.
Disappointingly for investors, Banc of California’s TBVPS grew at a mediocre 8.5% annual clip over the last two years.
Final Judgment
Banc of California doesn’t pass our quality test. That said, the stock currently trades at 1× forward P/B (or $21.01 per share). This multiple tells us a lot of good news is priced in - we think there are better opportunities elsewhere. Let us point you toward a safe-and-steady industrials business benefiting from an upgrade cycle.
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