Banc of California slides after interest income miss, balance sheet rejig
BANC•Balance sheet repositioning and analyst reaction
** Los Angeles, California-based BANC dumped $2.3 billion of lower-yielding securities, initiated sale of $827 million of select commercial real estate and multi-family construction loans and retired $385 million of subordinated debt
** "We think shares could be under pressure today due to the large hit to capital and updated guidance not significantly above the Street despite the B/S overhaul," Barclays analyst Jared Shaw said
** "The quarter's real story is the ultimate impact of the announced strategic actions and repositioning. We expect investor focus to center on the longer-term NIM trajectory post-repositioning, deposit cost trends, and the other drivers underpinning the improvement in profitability implied by guidance," Jefferies analyst David Chiaverini said
** As of last close, BANC stock up 9.8% YTD
Shares slide after quarterly interest income miss
** Banc of California's BANC.N shares slide 9% to $19.28
** The regional lender swung to a loss in Q2 as it overhauled its balance sheet to refocus capital towards higher-return opportunities
** Meanwhile, Q2 net interest income fell short of estimates, while some analysts said updated net interest margin may be "disappointing"
