Anton Schutz on Banc of California, Home Street, and First Horizon Bank Stocks

Banc of California Investment Thesis

• 🏦 Banc of California (BNC) is attractive because it trades below book value, a key indicator for bank investments.
• 🎯 The bank has shrunk its balance sheet and brought credit under control, positioning it for future growth.
• 💰 Opportunistic capital allocation, including stock buybacks below book value, has further enhanced book value.
• 🤝 With private equity backing, investors can expect positive outcomes whether the bank performs well or is acquired.

Home Street Acquisition and Market Dynamics

• 🏠 Home Street was acquired by Mechanics Bank, another California-based institution.
• 📈 Due to its size and the acquisition, Home Street is expected to be added to the Russell 2000 index, driving significant demand.
• ⏳ The bank trades at approximately seven times next year's earnings, with potential for a sale within 18 months due to private equity interest.

First Horizon's Geographic and Fundamental Strengths

• 📍 First Horizon benefits from a strong geographic presence in desirable markets like the Southeast, Texas, and North Carolina.
• 🛡️ The bank operates with a conservative culture, avoiding excessive risk.
• 📈 It projects mid-single-digit loan growth and actively buys back its own stock.
• 🏆 Investors can profit either through a potential acquisition by a larger bank or by the company's continued fundamental performance and stock repurchases.