Financial Analysis: NewtekOne (NASDAQ:NEWT) and Banc of California (NYSE:BANC)

Banc of California (NYSE:BANC) and NewtekOne (NASDAQ:NEWT) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, profitability, dividends, analyst recommendations, earnings, institutional ownership and risk.

Dividends

Banc of California pays an annual dividend of $0.40 per share and has a dividend yield of 2.6%. NewtekOne pays an annual dividend of $0.76 per share and has a dividend yield of 5.5%. Banc of California pays out -12.0% of its earnings in the form of a dividend. NewtekOne pays out 49.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Profitability

This table compares Banc of California and NewtekOne’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Banc of California	-21.99%	2.12%	0.17%
NewtekOne	14.94%	18.99%	2.96%

Earnings and Valuation

This table compares Banc of California and NewtekOne”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Banc of California	$429.87 million	5.55	-$1.90 billion	($3.33)	-4.56
NewtekOne	$206.40 million	1.65	$47.33 million	$1.55	8.86

NewtekOne has lower revenue, but higher earnings than Banc of California. Banc of California is trading at a lower price-to-earnings ratio than NewtekOne, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Banc of California and NewtekOne, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Banc of California	0	5	5	0	2.50
NewtekOne	0	3	0	0	2.00

Banc of California currently has a consensus target price of $16.45, suggesting a potential upside of 8.37%. NewtekOne has a consensus target price of $12.33, suggesting a potential downside of 10.17%. Given Banc of California’s stronger consensus rating and higher probable upside, analysts plainly believe Banc of California is more favorable than NewtekOne.

Volatility and Risk

Banc of California has a beta of 1.14, meaning that its stock price is 14% more volatile than the S&P 500. Comparatively, NewtekOne has a beta of 1.3, meaning that its stock price is 30% more volatile than the S&P 500.

Institutional & Insider Ownership

86.9% of Banc of California shares are owned by institutional investors. Comparatively, 38.3% of NewtekOne shares are owned by institutional investors. 7.4% of Banc of California shares are owned by insiders. Comparatively, 6.4% of NewtekOne shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

About Banc of California

Banc of California, Inc. operates as the bank holding company for Banc of California that provides various banking products and services in California. The company offers deposit products, such as checking, savings, money market, demand, and time deposits; certificates of deposit; retirement accounts; and safe deposit boxes. It also provides real estate loans to professional developers and real estate investors for the acquisition, construction, refinancing, renovation, and on-going operation of commercial real estate properties; commercial real estate mortgage, residential real estate mortgage, and real estate construction and land loans; commercial loans and leases, such as equipment finance, other asset-based, venture capital, secured business, warehouse, and other lending services; small business administration loans; and consumer loans comprising personal, auto, and other loans, as well as home equity and revolving lines of credit. In addition, the company offers international banking, multi-state deposit, and asset and investment management services, as well as cash and treasury management services; and online, mobile, remote deposit, and telephone banking services. It serves small and middle-market businesses, venture capital firms, non-profit organizations, business owners, entrepreneurs, professionals, and high-net worth individuals. Banc of California, Inc. was founded in 1941 and is headquartered in Los Angeles, California.

About NewtekOne

NewtekOne, Inc. operates as the bank holding company for Newtek Bank, National Association that engages in the provision of various business and financial solutions under the Newtek brand name to the small- and medium-sized business market. The company accepts demand, savings, NOW, money market, and time deposits; and provides loans including SBA loans, commercial and industrial loans, and commercial real estate loans. It is also involved in the provision of electronic payment processing services comprising credit and debit card processing services, check approval services, processing equipment, and software, as well as cloud-based Point of Sale systems for a various restaurant, retail, assisted living, taxi cabs, parks, and golf course businesses. In addition, it offers wholesale brokerage insurance agency services; and payroll management, and related payment and tax reporting services to independent business owners. Further, the company provides website hosting, dedicated server hosting, cloud hosting, web design and development, internet marketing, ecommerce, data storage, backup and disaster recovery, and other related services, including consulting and implementing technology solutions for enterprise and commercial clients as well as SMBs. The company was formerly known as Newtek Business Services Corp. and changed its name to NewtekOne, Inc. in January 2023. NewtekOne, Inc. was founded in 1998 and is headquartered in Boca Raton, Florida.