Banc of California: Wells Fargo upgrades to Overweight, raises PT to $20.

Banc of California: Wells Fargo upgrades to Overweight, raises PT to $20.

Wells Fargo & Company (NYSE: WFC) has recently upgraded its rating on Banc of California (NYSE: BANC) to "Overweight" and increased its price target to $20.00. This move reflects the investment bank's positive outlook on Banc of California's financial performance and growth prospects.

Wells Fargo's upgrade comes after Banc of California reported strong financial results in its latest quarter, including robust loan growth and improved net interest margins. The bank's total loans grew at an annualized clip of 6% in Q1 2025, reaching $24.1 billion, with commercial & industrial, warehouse finance, and fund finance all contributing to this growth. Additionally, Banc of California's net interest margin expanded by 11 basis points in late 2024 to hit 3.04%, driven by cheaper funding costs and more profitable lending Banc Of California Steps Up With Profits And Buybacks^[1].

The upgrade also takes into account Banc of California's strategic initiatives, such as its acquisition of Pacific Western Bank, which brought new scale and opportunities for cross-selling services. The bank's treasury services, payment processing (Deepstack), and tech-enabled community management (SmartStreet™) platforms are seen as additional growth drivers.

Wells Fargo's price target of $20.00 represents a potential 2% upside from the current stock price, indicating a modest expectation of further appreciation. However, the investment bank acknowledges potential risks, including credit quality pressure, deposit competition, and regulatory risks.