A Fresh Look at Banc of California’s (BANC) Valuation After Powell’s Rate Comments Spark Bank Rally

When Fed Chair Jerome Powell hinted at a softer stance on interest rates during his Jackson Hole remarks, it was as if someone flipped a switch for regional banks. Banc of California (BANC) reacted quickly to the rally, with its shares climbing nearly 5% in a single day. For investors, Powell’s comments provided a welcome break from anxiety over high funding costs that have been weighing on the sector for much of the year.

This policy shift comes at an intriguing moment for Banc of California. After a choppy start to the year, the stock has now posted a 16% gain over the past three months and is up 15% year-to-date. With annual revenue up 13% and net income surging 40%, there is growing evidence that underlying business momentum may be outpacing investor expectations that had been muted by rate hike fears.

With this latest burst higher, some investors may be asking whether Banc of California is undervalued or if the market is already factoring future growth into the stock price.

Most Popular Narrative: 8.3% Undervalued

According to the community narrative, Banc of California is currently trading at a discount to its estimated fair value. Analysts see upside potential based on future earnings growth and strategic initiatives.

"The successful merger integration with Pacific Western Bank is unlocking cost synergies, revenue cross-sell opportunities, and scale benefits, which are already contributing to tangible book value expansion and margin improvement. These factors are likely to further boost future profitability."

Curious how this merger and a wave of digital transformation could be fueling hidden value? Behind the scenes, ambitious growth forecasts and a much lower anticipated future profit multiple could shift the narrative and the share price. Want to see the key numbers the experts are betting on? Find out what’s driving this bullish valuation.

Result: Fair Value of $17.77 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, heavy reliance on Southern California real estate, along with rising deposit costs, could quickly challenge the optimistic outlook if market conditions shift.

Find out about the key risks to this Banc of California narrative.

Another View: Market Comparison Raises Doubts

Looking at a market-based approach, the company’s share price appears expensive compared to the average in its industry. This method presents a counterpoint to the optimistic outlook offered by other valuation models. Could the answer be found somewhere between these perspectives?

See what the numbers say about this price — find out in our valuation breakdown.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Banc of California for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Banc of California Narrative

If you see the story differently or want to dig into the numbers on your own, you can shape a personalized analysis in just a few minutes. do it your way.

A great starting point for your Banc of California research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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