Dj Ibd: Banc Of California Earns Relative Strength Rating Upgrade, Hits Key Threshold

What Happened?

A number of stocks jumped in the afternoon session after comments from a key Federal Reserve official boosted hopes for an interest rate cut. New York Federal Reserve President John Williams stated he sees “room for a further adjustment” in the near term, sparking a significant market rally. Following his remarks, the probability of the central bank cutting rates at its December meeting jumped from 39% to over 73%, according to the CME FedWatch tool. This positive sentiment provided relief to markets amid concerns over high valuations, particularly in AI-related stocks.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Regional Banks company Glacier Bancorp jumped 4.9%. Is now the time to buy Glacier Bancorp? Access our full analysis report here, it’s free for active Edge members.
• Regional Banks company Fulton Financial jumped 4.8%. Is now the time to buy Fulton Financial? Access our full analysis report here, it’s free for active Edge members.
• Regional Banks company Banc of California jumped 4.6%. Is now the time to buy Banc of California? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Glacier Bancorp (GBCI)

Glacier Bancorp’s shares are somewhat volatile and have had 11 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 3 months ago when the stock gained 6.5% on the news that the major indices rebounded, as Fed Chair Jerome Powell delivered dovish remarks at the much-awaited Jackson Hole symposium. Powell suggested that with inflation risks moderating and unemployment remaining low, the Federal Reserve might consider a shift in its monetary policy stance, including potential interest rate cuts. This outlook eased market concerns about prolonged high interest rates and their impact on economic growth. The prospect of lower borrowing costs bolstered investor confidence, particularly in sectors that have lagged, leading to a broad rally across the market.

Glacier Bancorp is down 15% since the beginning of the year, and at $42.19 per share, it is trading 28.4% below its 52-week high of $58.89 from November 2024. Investors who bought $1,000 worth of Glacier Bancorp’s shares 5 years ago would now be looking at an investment worth $1,012.

Wrapping up Q3 earnings, we look at the numbers and key takeaways for the regional banks stocks, including Banc of California and its peers.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

The 94 regional banks stocks we track reported a satisfactory Q3. As a group, revenues missed analysts’ consensus estimates by 1.1%.

In light of this news, share prices of the companies have held steady as they are up 1.4% on average since the latest earnings results.

Banc of California

Originally established in 1941 and now operating with a tech-forward approach that includes its SmartStreet platform for homeowner associations, Banc of California is a California-based bank holding company that provides banking services to small and middle-market businesses, entrepreneurs, and individuals.

Banc of California reported revenues of $287.7 million, up 32.8% year on year. This print exceeded analysts’ expectations by 1.8%. Overall, it was a strong quarter for the company with a beat of analysts’ EPS estimates and a decent beat of analysts’ revenue estimates.

Interestingly, the stock is up 2.6% since reporting and currently trades at $17.32.

Is now the time to buy Banc of California? Access our full analysis of the earnings results here, it’s free for active Edge members.

Best Q3: Customers Bancorp

Originally founded with a "high-tech, high-touch" branch-light banking strategy, Customers Bancorp is a bank holding company that provides commercial and consumer banking services through its Customers Bank subsidiary, with a focus on business lending and digital banking.

Customers Bancorp reported revenues of $232.1 million, up 38.5% year on year, outperforming analysts’ expectations by 7%. The business had a stunning quarter with an impressive beat of analysts’ net interest income estimates and a solid beat of analysts’ revenue estimates.

The market seems content with the results as the stock is up 2.7% since reporting. It currently trades at $67.34.

Is now the time to buy Customers Bancorp? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: The Bancorp

Operating behind the scenes of many popular fintech apps and prepaid cards you might use daily, The Bancorp is a bank holding company that specializes in providing banking services to fintech companies and offering specialty lending products.

The Bancorp reported revenues of $174.6 million, up 38.8% year on year, falling short of analysts’ expectations by 10%. It was a disappointing quarter as it posted a significant miss of analysts’ revenue and net interest income estimates.

As expected, the stock is down 17.8% since the results and currently trades at $63.29.

Read our full analysis of The Bancorp’s results here.

First BanCorp

Tracing its roots back to 1948 in San Juan, First BanCorp is a bank holding company that provides commercial banking, consumer financing, mortgage services, and insurance products across Puerto Rico, the U.S. mainland, and the Caribbean.

First BanCorp reported revenues of $248.7 million, up 6% year on year. This print lagged analysts' expectations by 1.3%. Taking a step back, it was a mixed quarter as it also recorded a beat of analysts’ EPS estimates but a significant miss of analysts’ net interest income estimates.

The stock is flat since reporting and currently trades at $20.43.

Read our full, actionable report on First BanCorp here, it’s free for active Edge members.

Fifth Third Bancorp

Named after the merger of Third National Bank and Fifth National Bank in 1908, Fifth Third Bancorp is a financial services company that provides banking, lending, wealth management, and investment services to individuals and businesses across the Midwest and Southeast.

Fifth Third Bancorp reported revenues of $2.30 billion, up 5.8% year on year. This number surpassed analysts’ expectations by 0.6%. It was a satisfactory quarter as it also put up a narrow beat of analysts’ tangible book value per share estimates.

The stock is up 6.5% since reporting and currently trades at $43.01.

Read our full, actionable report on Fifth Third Bancorp here, it’s free for active Edge members.

Market Update

Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.