On Oct 8, Zacks Investment Research upgraded Banc of California, Inc. (BANC) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Banc of California has been witnessing rising earnings estimates on the back of strong second-quarter 2013 results and the recent acquisition of Calif.-based The Palisades Group, LLC. Moreover, this well-known retail banking services provider recorded a year-to-date return of 11.6%. The long-term expected earnings growth rate for this stock is 15%.
Banc of California reported its second-quarter results on Aug 7 with earnings per share of 36 cents, beating the Zacks Consensus Estimate of 23 cents by 56.5% and the year-ago loss of 9 cents. Robust results for the reported quarter were primarily driven by organic growth, which reflected an elevated top line along with increased loans and deposits. Yet, these positives were partially offset by higher provisions for loan losses and augmented non-interest expenses.
Recently, Banc of California completed the sale of its eight legacy branches to Wash. -based AmericanWest Bank. This move will facilitate the bank in focusing on retail branch network in Los Angeles, Orange and San Diego counties.
Additionally, in September, Banc of California completed the acquisition of Palisades, which provides financial advisory and asset management services. As of Jun 30, 2013, Palisades had assets under management of about $1.7 billion.
Following second-quarter 2013 results and the recent restructuring, the Zacks Consensus Estimate for 2013 increased 17.9% to $1.58 per share, over the last 60 days. For 2014, the Zacks Consensus Estimate advanced 5.6% to $1.52 per share over the same time period.
Other Stocks to Consider
Besides Banc of California, other banks in the same sector that are worth considering include Cullen/Frost Bankers, Inc. (CFR) with a Zacks Rank #1, while Prosperity Bancshares Inc. (PB) and BofI Holding, Inc. (BOFI) carry a Zacks Rank #2 (Buy).