Banc of California upgraded to Buy at Citi as lower deposit costs seen boosting EPS growth

[Banc of California Building]
Edward Chaidez/iStock Editorial via Getty Images

Citi raised Banco of California (NYSE:BANC [https://seekingalpha.com/symbol/BANC]) to Buy from Neutral as analyst Benjamin Gerlinger sees a clear path to a $2.00 EPS run rate.

Lower deposit costs, driven by Fed rate cuts, asset repricing, and its strong full-relationship offering on the lending side should support an above-peer net interest income improvement trend.

"Operationally, we find BANC to be well positioned to be in the top-decile for Y/Y PPNR (pretax preprovision net revenue) improvement. Credit continues to improve and the 1.0x P/TBV likely sees above-peer valuation expansion as the ROTCE improvement takes shape," Gerlinger wrote in a note to clients.

Citi expects 2026 net interest margin guidance to be near 3.30%-3.40% in the company's January call if the Fed proceeds with October and December rate cuts. That would imply a "high 3.40s exit rate" for 2026.

In addition, though it's not Gerlinger's base case, Banc of California (NYSE:BANC [https://seekingalpha.com/symbol/BANC]) could be seen as an attractive acquisition target by a larger institution for its concentrated foot-hold in southern California.

The Buy rating contrasts with the SA Quant ratin [https://seekingalpha.com/symbol/BANC/ratings/quant-ratings]g of Hold and aligns with the average Wall Street rating [https://seekingalpha.com/symbol/BANC/ratings/sell-side-ratings]of Buy.

MORE ON BANC OF CALIFORNIA

* Banc of California, Inc. (BANC) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4832714-banc-of-california-inc-banc-q3-2025-earnings-call-transcript]
* Banc of California, Inc. 2025 Q3 - Results - Earnings Call Presentation [https://seekingalpha.com/article/4832668-banc-of-california-inc-2025-q3-results-earnings-call-presentation]
* Banc of California signals continued margin expansion and robust buybacks with CET1 above 10% [https://seekingalpha.com/news/4507938-banc-of-california-signals-continued-margin-expansion-and-robust-buybacks-with-cet1-above-10]