Banc of California: A Strong Finish to 2024, Setting the Stage for 2025

As we wrap up the fourth quarter of 2024, Banc of California (NYSE: BANC) has delivered a robust performance, marking a successful end to a transformational year. The company's strategic focus on non-interest-bearing deposits (NIB) and balance sheet repositioning has contributed to a notable expansion in net interest margin (NIM), setting the stage for continued growth in 2025.



Banc of California's strategic focus on increasing NIB deposits has significantly contributed to its NIM expansion. In the fourth quarter of 2024, the company achieved a notable increase in NIB deposits, which grew to 29.1% of total average deposits, up nearly 7% from the previous year. This growth in NIB deposits helped reduce the company's cost of funds by 27 basis points quarter-over-quarter to 2.55%. As a result, Banc of California expanded its NIM by 11 basis points to 3.04% in the fourth quarter.

To maintain this trend in the future, Banc of California is targeting deposit growth in the mid- to upper-single digits for 2025, with a focus on NIB deposits. The company is seeing less competition in deposit pricing and less demand for higher rates, which allows it to reduce deposit costs. Additionally, Banc of California has higher-cost deposits rolling over, which will help reduce overall deposit costs. By continuing to grow NIB deposits and managing its funding mix, Banc of California is well-positioned to maintain its expanded margins even in a potentially lower rate environment, supporting earnings stability going forward.



Banc of California's strong capital position and healthy loan growth present opportunities for investors. The company's loan growth is driven by increased activity, economic optimism, and growth in specific portfolios, such as warehouse, fund finance, and lender finance. Investors can expect this growth to continue in the coming quarters, driven by increased activity, economic optimism, and growth in specific portfolios. The company's focus on diversification and prudent management should support this growth and help mitigate risks.

However, investors should also be aware of the potential risks in the loan portfolio, such as credit risk, seasonal weakness, and competitive pressure. To mitigate these risks, investors can diversify their portfolio, monitor credit quality, and understand the impact of seasonal factors and competitive pressure.

In conclusion, Banc of California's strong finish to 2024, driven by its strategic focus on NIB deposits and balance sheet repositioning, sets the stage for continued growth in 2025. The company's healthy loan growth and strong capital position present opportunities for investors, while potential risks can be mitigated through diversification and careful monitoring. As Banc of California continues to execute its strategic initiatives and optimize its balance sheet, investors can expect a positive outlook for the coming year.