BANC: Lower Funding Costs And 2025 Expansion Will Support Balanced Outlook

Analysts have raised their price target on Banc of California to about $20.95 from roughly $20.41 per share, citing expectations for lower funding costs with only modest pressure on asset yields, as well as potential upside to 2025 loan and deposit growth.

Analyst Commentary

Recent commentary from JPMorgan and other bullish analysts highlights a constructive shift in sentiment toward Banc of California, driven by expectations for improved funding dynamics and a more supportive growth outlook into 2025.

Bullish Takeaways

• Bullish analysts view the bank's ability to lower funding costs as a key driver of near term margin support. This underpins the higher price target and Overweight rating from JPMorgan.
• Expectations for only modest pressure on earning asset yields suggest that net interest income could hold up better than previously forecast, supporting upside to earnings estimates.
• Analysts see room for stronger than expected 2025 loan and deposit growth. If executed well, this would validate current valuation premiums and justify further re rating of the shares.
• Placement on a Positive Catalyst Watch signals confidence that upcoming quarters could provide visible proof points on integration, cost of funds, and growth execution. This could potentially act as a near term share price catalyst.

Bearish Takeaways

• Bearish analysts caution that the margin benefit from lower funding costs could be partially offset if competitive pressures force more aggressive pricing on new loans, which would limit earnings leverage.
• There is concern that ambitious 2025 loan and deposit growth expectations may be difficult to achieve in a slower macro environment, creating execution risk relative to heightened market hopes.
• Some remain wary that integration and balance sheet optimization efforts could take longer than anticipated, delaying the full realization of cost and funding synergies embedded in current valuation assumptions.
• Uncertainty around the broader rate path and deposit betas may introduce volatility in quarterly results, which could pressure the stock if near term performance falls short of upgraded expectations.

What's in the News

• Completed share repurchase of 13,648,429 shares, or about 8.26% of outstanding shares, totaling $185.49 million under the March 17, 2025 buyback authorization (company disclosure)
• Between July 1 and September 30, 2025, repurchased 2,153,792 shares, or roughly 1.37% of shares, for $35.49 million as the final tranche of the buyback program (company disclosure)
• Ongoing capital return via buybacks reflects management’s view of the bank’s valuation and earnings trajectory following recent integration and optimization efforts (analysis based on company disclosure)

Valuation Changes

• Fair Value Estimate has risen slightly to about $20.95 from roughly $20.41 per share, reflecting a modestly more optimistic outlook.
• Discount Rate has edged down marginally to approximately 7.76% from about 7.79%, indicating a slightly lower perceived risk profile.
• Revenue Growth Forecast has increased very slightly to around 11.78% from roughly 11.77%, suggesting a largely unchanged growth trajectory.
• Net Profit Margin has improved modestly to about 26.12% from approximately 25.97%, signaling incremental efficiency gains in projected profitability.
• Future P/E Multiple has ticked up slightly to roughly 8.81x from about 8.64x, implying a small expansion in the valuation investors may be willing to assign to forward earnings.