DA Davidson Defends Banc of California With An Upgrade, Says Buy The Weakness

Banc of California Inc BANC reported its Q3 EPS significantly ahead of expectations. The steep sell-off in the company’s shares in recent weeks offers “an attractive opportunity,” DA Davidson’s Gary P. Tenner said in a report. He upgraded the rating on the company from Neutral to Buy, while maintaining a price target of $20.

Beating Expectations

Banc of California reported its Q3 EPS at $0.59, $0.14 ahead of DA Davidson’s estimate and $0.17 higher than the Street’s expectation. The earnings upside was driven by higher fee income, analyst Tenner noted.

GAAP fee income came in at $74.6 million, versus $65.6 million in the prior quarter. Analyst Tenner mentioned that fee income was driven by “higher mortgage banking income, gain on sale of loans, and a reversion to positive loan servicing fees for the quarter.”

Company Refutes Seeking Alpha Claims

A Seeking Alpha post published on October 18 suggested that Jason Galanis had some control over Banc of California through his affiliation or control of COR Capital. “Yesterday evening BANC issued a press release with excerpts from a DOJ complaint against Mr. Galanis stating that any claims that he is affiliated with COR Capital were fraudulent,” Tenner wrote.

Following the sharp downturn in Banc of California’s shares in recent weeks, and Tuesday’s 29 percent decline, the company's stock “represents an attractive opportunity,” the analyst added.

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