Banc of California's 2024 Earnings: A Mixed Bag of Beats and Misses

Banc of California, Inc. (NYSE: BANC) reported its full-year 2024 earnings results on January 23, 2025, and the market had a mixed reaction. While the company's earnings per share (EPS) beat analyst expectations, revenues fell short. Let's dive into the details and explore what these results mean for the bank and its investors.



EPS Beats Expectations

Banc of California reported diluted EPS of $0.28 for Q4 2024, surpassing the estimated EPS of $0.23. This strong performance was driven by a 11 basis point expansion in net interest margin to 3.04% and a 7.6% decrease in noninterest expenses from Q3 2024 to $181.4 million. The company's strategic focus on cost reduction and balance sheet optimization has clearly paid off, as these improvements reflect effective management practices and a commitment to driving long-term growth.

Jared Wolff, President & CEO of Banc of California, commented on the company's strong fourth quarter results, stating, "During the quarter, we achieved additional cost savings as well as a significant decline in our funding costs driven by our targeted reduction in deposit costs and the balance sheet repositioning actions that we completed earlier in the year." This strategic focus has enabled the company to maintain competitiveness in the banking sector and position itself well for future growth.



Revenue Misses the Mark

While EPS was impressive, Banc of California's revenue missed analyst estimates by 3.9%. The company reported net interest income of $235.29 million, slightly below the estimated revenue of $246.81 million. This miss can be attributed to a slight decrease in average yield on interest-earning assets and a reduction in the average total cost of funds to 2.55%. Although the company's net interest margin expanded by 11 basis points to 3.04%, the slight decrease in revenue highlights the challenges Banc of California faces in maintaining growth in a potentially lower rate environment.

Looking ahead, revenue is forecast to grow 13% p.a. on average during the next 2 years, compared to a 7.2% growth forecast for the Banks industry in the US. This indicates that Banc of California is well-positioned to bounce back from this revenue miss and continue its growth trajectory.



Wildfire Impact and Future Outlook

The recent wildfires in Southern California have had a significant impact on Banc of California's community and operations. While the company has not suffered material damage to its facilities or loan portfolio, it has launched the Banc of California Wildfire Relief and Recovery Fund to support relief efforts and rebuilding. As the company continues to monitor and assess the situation, it remains committed to supporting its community and ensuring the safety and well-being of its team members and clients.

In conclusion, Banc of California's 2024 earnings results were a mixed bag, with EPS beating expectations and revenue falling short. The company's strategic focus on cost reduction and balance sheet optimization has driven strong financial performance, but challenges remain in maintaining revenue growth in a potentially lower rate environment. As Banc of California continues to navigate the impact of the Southern California wildfires, it remains committed to supporting its community and driving long-term growth. Investors should keep a close eye on the company's progress as it works to overcome these challenges and capitalize on its strategic advantages.