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FIG Partners upgrades Banc of California

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FIG Partners upgrades Banc of California

Upgrades

* Sandler O'Neill & Partners LP analyst Stephen Scouten upgraded Conway, Ark.-based Home BancShares Inc. to "buy" from "hold" and increased the price target to $30 from $29. The analyst noted that he is more confident about the company following its earnings release for the fourth quarter of 2016. Scouten noted that the company plans to be much more active on the M&A front in 2017 and 2018.

"Not only do we expect 2017 and 2018 to be more active years for [Home BancShares], after the bank worked to stay under $10B-in-assets at year-end, but we also expect the bank to pursue larger deals given the potential for more accretion and a more impactful use of its currency," Scouten noted. The analyst thinks the company will be interested in the Florida market and potentially in states that would fill the gap between Arkansas and Florida.

* FIG Partners analyst Timothy Coffey upgraded Irvine, Calif.-based Banc of California Inc. to "market-perform" from "underperform" and increased his price target to $13.50. The analyst noted that the company's Chairman and CEO Steve Sugarman resigned amid the SEC's investigation into alleged inaccurate statements in the company's press releases.

"Our rating change reflects our belief the worst of the news is public," Coffey noted. The analyst thinks the company could face monetary penalties for the alleged misrepresentations, which may be reflected in the stock price.

In addition, he thinks Banc of California's interim management team will focus on reducing the company's costs in the near term and its core banking activities. He thinks it will be good for the company in the long term, but might create earnings headwinds in the near term.