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Tag: Banc of California Inc

  • Banc of California is expected to keep leading regional banks higher as PacWest deal ignites sector

    Banc of California is expected to keep leading regional banks higher as PacWest deal ignites sector

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    Banc of California Inc.’s proposed agreement to acquire PacWest Bancorp. helped send regional-bank stocks considerably higher on Wednesday. But even after a two-day increase of 12% for its shares, the acquiring bank remains the favorite name among analysts covering regional players in the U.S.

    The merger agreement was announced after the market close on Tuesday, but the rumor mill had already sent Banc of California’s
    BANC,
    +0.62%
    stock up by 11% that day. Then on Wednesday, shares of PacWest Bancorp
    PACW,
    +26.92%
    shot up 27% to $9.76, which was above the estimated takeout value of $9.60 a share when the deal was announced. The merger deal, if approved by both banks’ shareholders, will also include a $400 million investment from Warburg Pincus LLC and Centerbridge Partners L.P.

    A screen of regional banks by rating and stock-price target is below.

    Deal coverage:

    With PacWest closing above the initial per-share deal valuation, it is fair to wonder whether or not its shareholders will vote to approve the agreement. In a note to clients on Wednesday, Wedbush analyst David Chiaverini called Banc of California’s offer “fair, but not overwhelmingly attractive,” and wrote that PacWest was “a likely seller before the mini banking crisis occurred in March.”

    While Chiaverini went on to predict the deal’s approval by PacWest’s shareholders, he added that he “wouldn’t be surprised if there were some dissent among a minority of shareholders [which could] possibly open the door to the potential emergence of a third-party bid.”

    More broadly, Odeon Capital analyst Dick Bove wrote to clients on Wednesday that the merger deal, along with increasing involvement of private-equity firms in lending businesses, the expected enhancement of regulatory capital requirements for banks and other factors could lead to more consolidation among smaller banks.

    He went on to write that we might be entering a period for the banking industry similar to the 1990s, “when rules were being changed and acquisitions were rampant,” which “created new investment opportunities.”

    The SPDR S&P Regional Banking exchange-traded fund
    KRE,
    +4.74%
    rose 5% on Wednesday but was still down 17% for 2023, while the SPDR S&P 500 ETF Trust
    SPY,
    +0.02%
    was up 19%, both excluding dividends.

    KRE holds 139 stocks, with 98 covered by at least five analysts working for brokerage firms polled by FactSet. Out of those 98 banks, 45 have majority “buy” ratings among the analysts. Among those 45, here are the 10 with the most upside potential over the next 12 months, implied by consensus price targets:

    Bank

    		 Ticker

    		 City

    		 Total assets ($mil)

    		 July 26 price change

    		 Share buy ratings

    		 July 26 closing price

    		 Consensus price target

    		 Implied 12-month upside potential
    Banc of California Inc.

    		 BANC,
    +0.62%         		Santa Ana, Calif.

    		 $9,370

    		 1%

    		 71%

    		 $14.71

    		 $18.58

    		 26%
    Enterprise Financial Services Corp.

    		 EFSC,
    +1.83%         		Clayton, Mo.

    		 $13,871

    		 2%

    		 80%

    		 $41.75

    		 $49.25

    		 18%
    First Merchants Corp.

    		 FRME,
    +3.52%         		Muncie, Ind.

    		 $17,968

    		 4%

    		 100%

    		 $32.38

    		 $37.33

    		 15%
    Amerant Bancorp Inc. Class A

    		 AMTB,
    +3.47%         		Coral Gables, Fla.

    		 $9,520

    		 3%

    		 60%

    		 $20.26

    		 $23.30

    		 15%
    Old Second Bancorp Inc.

    		 OSBC,
    +3.39%         		Aurora, Ill.

    		 $5,884

    		 3%

    		 100%

    		 $16.15

    		 $18.50

    		 15%
    F.N.B. Corp.

    		 FNB,
    +2.87%         		Pittsburgh

    		 $44,778

    		 3%

    		 75%

    		 $12.91

    		 $14.50

    		 12%
    Columbia Banking System Inc.

    		 COLB,
    +3.95%         		Tacoma, Wash.

    		 $53,592

    		 4%

    		 55%

    		 $22.63

    		 $25.32

    		 12%
    Wintrust Financial Corp.

    		 WTFC,
    +3.43%         		Rosemont, Ill.

    		 $54,286

    		 3%

    		 92%

    		 $86.05

    		 $95.33

    		 11%
    Synovus Financial Corp.

    		 SNV,
    +6.01%         		Columbus, Ga.

    		 $60,656

    		 6%

    		 75%

    		 $34.06

    		 $37.73

    		 11%
    Home BancShares Inc.

    		 HOMB,
    +4.56%         		Conway, Ark.

    		 $22,126

    		 5%

    		 57%

    		 $24.09

    		 $26.67

    		 11%
    Source: FactSet

    Click on the tickers for more about each bank.

    Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

    Any stock screen can only be a starting point when considering whether or not to invest. If you see any stocks of interest here, you should do your own research to form your own opinion.

    Don’t miss: How you can profit in the stock market from an incredible financial-services trend over the next 20 years

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  • Stocks making the biggest midday moves: Microsoft, Alphabet, Boeing and more

    Stocks making the biggest midday moves: Microsoft, Alphabet, Boeing and more

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    A GE AC4400CW diesel-electric locomotive in Union Pacific livery is seen near Union Station in Los Angeles, California, September 15, 2022.

    Bing Guan | Reuters

    Here are the stocks making headlines on Wednesday, July 26.

    Microsoft — The Xbox owner saw its shares slide 4% after issuing quarterly revenue guidance that fell short of analysts’ expectations. The soft revenue outlook was partly due to weakness in the segment that contains Windows software. Microsoft did report earnings and revenue that beat Street estimates for the calendar second quarter, however.

    Alphabet — Shares of the Google parent rose more than 6% after Alphabet beat analysts’ revenue and profit in the second quarter. The parent company of YouTube reported $1.44 in earnings per share on $74.6 billion of revenue. Analysts surveyed by Refinitiv were expecting $1.34 per share on $72.82 billion of revenue.

    Boeing — The aerospace company’s shares jumped almost 6% and hit a new 52-week high after its second-quarter earnings announcement. Boeing’s revenue of $19.75 billion topped analysts’ estimates of $18.45 billion, according to Refinitiv. The company also reported an 82-cent-loss per share, while Refinitiv analysts had estimated a loss of 88 cents per share.

    WW International — Shares of the weight loss company soared more than 18% after an upgrade to overweight from Morgan Stanley. The bank highlighted WW International’s recent acquisition of Sequence, which analyst Lauren Schenk said will aid growth by providing exposure to weight loss drugs.

    Texas Instruments — Shares dropped 5% as investors focused on the company’s guidance for the current quarter. Texas Instruments said to expect between $1.68 and $1.92 in earnings per share in the current quarter, meaning much of the range was below the $1.91 estimate of analysts polled by FactSet. Meanwhile, the company guided revenue to between $4.36 billion and $4.74 billion against a FactSet consensus estimate of $4.59 billion. However, the company’s second quarter results exceeded analysts’ expectations.

    Visa — The credit card stock slipped more than 1% despite Visa beating estimates for its fiscal third quarter. The company reported $2.16 in adjusted earnings per share on $8.12 billion of revenue. Analysts surveyed by Refinitiv were looking for $2.12 in earnings per share on $8.06 billion of revenue. The company did report that payments volume growth was slowing slightly.

    Chubb — Shares of the insurance company jumped more than 5% after a stronger-than-expected second-quarter report. The company posted $4.92 in adjusted earnings per share, above the $4.41 expected by analysts, according to Refinitiv. The net premiums written for property and casualty lines came in at $10.68 billion, above estimates of $10.64 billion.

    Spotify — The music streaming company’s shares gained 3.2% Wednesday. Shares closed 14% lower Tuesday after Spotify’s second-quarter results missed analysts’ expectations. Deutsche Bank wrote in a Wednesday note that the post-earnings selloff created an attractive entry point for investors.

    PacWest – Shares of the community bank surged more than 27% afterit agreed to be acquired by Banc of California in all-stock deal, which includes $400 million in equity from Warburg Pincus and Centerbridge. The combined holding company will operate under the Banc of California name. Shares of Banc of California rose less than 1%.

    Union Pacific – The railroad operator saw its shares jump 10% after it named Jim Vena its new CEO. The announcement overshadowed its second-quarter results, which missed estimates. The Omaha-based company reported $2.54 in adjusted earnings per share on $5.96 billion of revenue. Analysts surveyed by Refinitiv had penciled in $2.75 per share and $6.12 billion. Union Pacific blamed softening consumer markets, inflation, a one-time labor expense and increased workforce levels but said resource levels were more aligned with demand to finish the quarter.

    Robert Half — Shares of the staffing consulting firm tumbled more than 5% after Robert Half reported disappointing second-quarter results. The firm reported $1.00 in earnings per share on $1.64 billion of revenue. Analysts surveyed by Refinitiv were expecting $1.14 per share and $1.69 billion of revenue.

    General Dynamics — The defense contractor climbed 3% after General Dynamics reported better-than-expected second-quarter results. The company logged $2.70 in earnings per share on $10.15 billion of revenue. Analysts surveyed by Refinitiv had estimated $2.56 in earnings per share on $9.46 billion of revenue.

    CoStar Group — Shares of the commercial real estate company slid 7.4% after reporting lighter-than-expected revenue for the second quarter, and softer guidance for the third quarter. CoStar said it generated $605.9 million in revenue during the second quarter and expected between $622 and $627 million in the third. Analysts estimated $607.3 million and $623.4 million for those respective periods, according to FactSet’s StreetAccount.

    KeyCorp — Shares of the Cleveland-based regional bank jumped more than 7%. Regional bank stocks moved broadly higher after the deal between Banc of California and PacWest.

    — CNBC’s Hakyung Kim, Brian Evans, Yun Li, Tanaya Macheel, Alex Harring and Samantha Subin contributed reporting.

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  • PacWest stock rockets nearly 40% after Banc of California confirms plan to buy troubled bank

    PacWest stock rockets nearly 40% after Banc of California confirms plan to buy troubled bank

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    PacWest Bancorp’s stock jumped more than 38% in after-hours trading Tuesday after the company said it had agreed to be acquired by Banc of California Inc. in an all-stock merger backed by two private-equity firms. The merger comes as PacWest looks to put a rocky period behind it.

    Under the terms of the merger agreement, PacWest
    PACW,
    -27.04%
    stockholders will receive 0.6569 of a share of Banc of California common stock for each share of PacWest common stock. Based on closing prices on Tuesday, the deal values PacWest at $9.60 a share, a premium over its closing price of $7.67 a share on Tuesday.

    Warburg Pincus and Centerbridge will provide $400 million in equity.

    PacWest stockholders will own 47% of the outstanding shares of the combined company, while the private-equity investors will own 19% and Banc of California shareholders will have 34%.

    PacWest said that it is the company being acquired and that it will change its name to Banc of California. PacWest said it will be the “accounting acquirer,” with fair-value accounting applied to Banc of California’s balance sheet at closing.

    Banc of California CEO Jared Wolff will retain the same role at the combined company.

    The combined company will repay about $13 billion in wholesale borrowings to be funded by the sale of assets, “which are fully marked as a result of the transaction, and excess cash,” the companies said.

    The merged company is currently projecting about $36.1 billion in assets, $25.3 billion in total loans, $30.5 billion in total deposits and more than 70 branches in California.

    John Eggemeyer, the independent lead director at PacWest, will be chair of the board of the combined company following the merger.

    The board of directors of the combined company will consist of 12 directors: eight from the existing Banc of California board, three from the existing PacWest board and one from the pair of private-equity firms led by Warburg Pincus.

    Citing sources close to the deal, the Wall Street Journal had reported earlier that a tie-up was imminent.

    In regular trading Tuesday, PacWest’s stock ended 27% down; trading was halted for volatility following the report of the deal.

    Banc of California’s stock rose 11% but was later halted for news pending as well. The stock rose more than 9% in after-hours trading on Tuesday.

    At last check, PacWest’s market capitalization was about $1.2 billion, while Banc of California’s was about $764 million. Combined, the business would be worth about $2 billion.

    PacWest’s big share-price move on Tuesday marks the latest in a volatile few months for the Beverly Hills, Calif., bank, which was founded in 1999.

    Investors had speculated that the bank could be the next to fail after Silicon Valley Bank and Signature Bank failed in March and First Republic Bank was taken over by JPMorgan.

    Also on Tuesday, PacWest said it lost $207.4 million, or $1.75 a share, in its second quarter, as it got a hit from items related to loan sales and restructuring of its lending unit Civic. The loss contrasts with earnings of $122 million, or $1.02 a share, in the year-ago period.

    Analysts polled by FactSet expected the bank to report a loss of 58 cents a share in the quarter.

    PacWest disclosed in recent months that it was exploring strategic alternatives while it sold off parts of its business to raise cash to strengthen its balance sheet. It sold a loan portfolio to Ares Management Corp.
    ARES,
    +0.92%
    in a move to generate $2 billion.

    Also read: PacWest sells loan portfolio to Ares Management in deal that generates $2 billion ‘to improve liquidity’

    It also sold a portfolio of loans to Kennedy-Wilson Holdings Inc.
    KW,
    -1.70%    ,
    which then sold part of the portfolio to Canada’s Fairfax Financial Holdings Ltd.
    FFH,
    +1.07%    .

    Also read: PacWest sparks regional-bank rally after unveiling plan to sell loans worth $2.6 billion

    In May, PacWest sold its real-estate lending portfolio to Roc360.

    Also in May, PacWest’s stock dropped more than 20% after it said it had lost 9.5% of its deposits amid market volatility.

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  • Banc of California and PacWest to merge into new firm called Pacific Western

    Banc of California and PacWest to merge into new firm called Pacific Western

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    Closing Bell: Overtime

    CNBC’s Leslie Picker joins ‘Closing Bell Overtime’ with breaking news on the Banc of California, PacWest merger.

    01:53

    Tue, Jul 25 20234:31 PM EDT

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  • Wells Fargo loves these three regional banks and thinks one will rally 50%

    Wells Fargo loves these three regional banks and thinks one will rally 50%

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