Banc of California’s third quarter results were marked by solid year-on-year growth and a negative market reaction, despite outpacing Wall Street’s revenue and profit expectations. Management attributed the quarter’s performance to strong loan production, disciplined cost control, and robust growth in core noninterest-bearing deposits. CEO Jared Wolff highlighted the bank’s “positive operating leverage and consistency of our results,” emphasizing margin expansion from higher-yielding loan categories and ongoing progress in deposit gathering. The team also called out proactive management of credit quality and a dynamic approach to optimizing the balance sheet.
Is now the time to buy BANC? Find out in our full research report (it’s free for active Edge members).
Banc of California (BANC) Q3 CY2025 Highlights:
- Revenue: $287.7 million vs analyst estimates of $282.7 million (32.8% year-on-year growth, 1.8% beat)
- EPS (GAAP): $0.38 vs analyst estimates of $0.33 (14.4% beat)
- Adjusted Operating Income: $92.35 million vs analyst estimates of $94.67 million (32.1% margin, 2.5% miss)
- Market Capitalization: $2.67 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Banc of California’s Q3 Earnings Call
- Jared David Shaw (Barclays): Asked for clarity on exposure to non-depository financial institution (NDFI) lending and collateral risk. CEO Jared Wolff explained that the bank’s exposure was limited to secured real estate loans with strong collateral protection, not NDFI loans, and detailed anti-fraud measures and risk controls.
- Timur Braziler (Wells Fargo): Queried about margin sensitivity to interest rate cuts. CFO Joseph Kauder and Wolff clarified that, excluding earnings credit rate (ECR) deposits, the bank remains largely neutral to rate changes, with margin expansion primarily driven by loan production.
- Matthew Clark (Piper Sandler): Probed for details on loan and deposit growth targets and the difficulty in meeting mid-single-digit deposit growth. Wolff acknowledged the challenge but emphasized confidence in hitting loan growth targets and dynamic management of deposit levels to match lending.
- Chris McGratty (KBW): Asked about capital management and CET1 targets amid buybacks and regulatory considerations. Wolff stated a target CET1 range of 10–11%, with ongoing buybacks balanced against capital requirements and growth.
- Tim Coffey (Janney): Inquired about expense control strategies and future cost guidance. Wolff and Kauder described efficiency gains from technology and process improvements, stating that expense growth will remain modest and tied to revenue expansion.
Catalysts in Upcoming Quarters
In upcoming quarters, our team will closely monitor (1) sustained core deposit growth and the ability to further reduce expensive brokered funding, (2) continued net interest margin expansion as the loan portfolio is repriced and new production comes online, and (3) disciplined credit management, especially within sectors exposed to macroeconomic and regulatory risk. Execution on technology-driven efficiency initiatives and capital deployment decisions, including share repurchases, will also be key indicators of management’s ability to deliver consistent earnings growth.
Banc of California currently trades at $16.81, in line with $16.88 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free for active Edge members).
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