Banc of California’s Preferred Dividend Offers Steady Returns Amid Strong Financials

Banc of California, Inc. (NYSE: BANC) has reaffirmed its commitment to shareholder returns with its latest dividend declaration for its 7.75% Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series F. The bank announced a quarterly dividend of $0.4845 per depositary share, payable on June 2, 2025, to shareholders of record as of May 19, 2025. This marks the latest installment in a consistent dividend payout strategy for the preferred stock, which trades under the ticker Banc/PF.

Dividend Yield Analysis

The dividend yield for Banc/PF is particularly compelling for income-focused investors. Using the stock’s closing price of $24.78 on May 8, 2025, the annualized yield can be calculated as follows:
[\text{Annual Dividend} = \$0.4845 \times 4 = \$1.938
]
[\text{Yield} = \frac{\$1.938}{\$24.78} \times 100 = 7.8\%
]
This yield aligns closely with the stock’s stated 7.75% fixed rate, reflecting the stock’s proximity to its $25.00 liquidation preference. Recent trading activity shows the stock trading at a 0.96% premium to liquidation value, offering investors a stable entry point with minimal downside risk.

Financial Strength Anchors Dividend Reliability

Banc of California’s ability to maintain consistent preferred dividends is underpinned by its robust financial position. As of March 31, 2025, the bank reported $15.1 billion in available liquidity and a Common Equity Tier 1 (CET1) ratio of 10.43%, well above regulatory requirements. These metrics signal financial resilience, even in uncertain economic conditions.

The company’s expanded $300 million stock repurchase program further demonstrates confidence in its capital management strategy. While this program primarily benefits common shareholders, the preferred stock’s fixed-rate structure insulates income from dilution risks associated with buybacks.

Market Performance and Liquidity Considerations

The Series F preferred stock’s recent trading activity reveals moderate liquidity. In May 2025, daily volumes averaged ~15,000 shares, with peaks reaching 51,451 shares on select days. While this volume is lower than that of large-cap preferred stocks, it remains sufficient for most retail investors to execute trades without significant slippage.

The stock’s price fluctuations in May 2025—between $24.45 and $24.85—reflect minor volatility, but its proximity to the $25 liquidation value suggests limited downside exposure for holders. The 3% discount available to common shareholders through Banc’s Dividend Reinvestment Plan (DRIP) adds further appeal for equity investors, though preferred shareholders cannot participate in this program.

Risk Factors and Caveats

While Banc/PF offers attractive income potential, investors should note its non-cumulative feature. Unlike cumulative preferred stocks, missed dividends are not owed to shareholders, though Banc has consistently paid its Series F dividends since issuance. Additionally, the perpetual structure means there is no maturity date, so investors must weigh the trade-off between steady income and the lack of principal return unless the shares are called.

Conclusion: A Solid Bet for Income Investors

Banc of California’s Series F preferred stock presents a compelling opportunity for investors prioritizing steady income. With a 7.8% yield and a financial foundation supported by strong liquidity and capital ratios, the stock offers stability without excessive risk.

Key takeaways:
- Yield Advantage: The 7.8% yield outperforms the average preferred stock yield of ~5.5% in late 2024.
- Safety Net: The stock’s proximity to liquidation value and the bank’s CET1 ratio reduce default concerns.
- Moderate Liquidity: Sufficient trading volume for most investors, though not ideal for high-frequency traders.

For income-focused portfolios, Banc/PF merits consideration—particularly as it trades near its par value, balancing yield with capital preservation. However, investors should remain aware of the non-cumulative clause and monitor the bank’s capital management updates for any shifts in dividend policy.

In a landscape where yield-starved investors chase returns, Banc of California’s preferred stock stands out as a disciplined choice for those seeking predictability without overextending into riskier assets.