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Banc of California's Preferred Stock Yield Surpasses 8%

Banc of California Inc's preferred stock yields exceed 8%, drawing investor attention. As shares trade below liquidation preference, careful consideration is warranted.

Date: 
AI Rating:   7
Stock Yield and Performance
Shares of Banc of California Inc's 7.75% Dep Shares Rate Reset Non-Cumulative Preferred Stock (BANC.PRF) have recently shown a yield exceeding 8%. This yield is substantially higher than the average of 6.74% in the financial preferred stock sector, making it an attractive option for income-focused investors.

Discount to Liquidation Preference
At the last close, BANC.PRF was trading at a 2.56% discount to its liquidation preference, which is considerably better than the average discount of 12.15% in the financial category. This indicates a relatively better position for investors looking to minimize risks associated with liquidation scenarios.

Non-Cumulative Structure Implications
However, investors should note that the shares are classified as non-cumulative, meaning that in the event of a missed payment, there is no requirement for the company to make up any missed dividends, which could be a concerning factor during economic downturns or financial difficulties.

Overall Assessment
While the attractive yield and favorable discount to liquidation preference present a positive outlook, the non-cumulative nature of the shares poses potential risks. Thus, investors must weigh the risks associated with the non-cumulative structure against the current market yield. If BANC continues to maintain solid financial performance, including stable revenue growth and effective cash management, the preferred stock may hold value in the eyes of investors over the next few months.
Stocks:  BANC